Energy

French-Spanish bid for E46bn Iberdrola could make sense

30 Jan 2008

French nuclear powerhouse EDF and Spanish construction company ACS are reported to be thinking about a bid for the Spanish utility. A tieup would create a panEuropean carbonlite energy giant, but there are obstacles to be overcome: financing, price and politics.

CME’s $11bn bid looks good for Nymex

28 Jan 2008

The Chicago futures giant offered an 11% premium for the New York energy exchange. That looks a bit generous. After all, Nymex uses CME s trading platform Globex, a hurdle for other bidders. And Nymex is largely a play on energy. But CME may make the deal pay off nonetheless.

Conoco’s clouds could have silver linings

23 Jan 2008

The oil major beat estimates handily, but its stock didn t pop. Investors fear its exposure to businesses like refining and natural gas where profits are being squeezed. But if oil prices take a plunge, those segments just might help it weather the storm better than its rivals.

Oil has much more room to fall

22 Jan 2008

Fears of recession have cooled the redhot oil market. But there is still a lot of froth left in it. Demand is slowing and supply continues to grow. If enough traders change their bullish tune, the oil price could take a sharp fall.

Wind looks like big winner in renewable energy

18 Jan 2008

The EU is launching an ambitious plan to boost nocarbon nonnuclear energy. But solar remains uncompetitive, hydro has peaked and biomass is environmentally questionable. That leaves wind as the renewable of choice. With favourable regulation, it isn t even too expensive.

Gazprom gobbles Serbia – on the cheap

16 Jan 2008

The Russian behemoth is offering to buy control of Serbia s oil and gas stateowned monopoly at a knockdown price. Other bidders might pay more. But they can't offer Serbia diplomatic support at the UN in advance of a key vote on Kosovo, or access to huge reserves.

Exxon yields to new world order in Kazakhstan

14 Jan 2008

The oil major has been the most reluctant to submit to rising oil nationalism around the globe. Now it has followed Italy's Eni in accepting tough terms for its stake in the huge Kashagan field. Exxon can no long afford to just walk away. Other harsh compromises will follow.

Boone Pickens deals blow to Wall Street energy gusher

11 Jan 2008

The Texas billionaire s Exco Resources abandoned a planned $1.5bn master limited partnership IPO citing adverse market conditions . The shelving of the granddaddy of energy MLPs is a setback to a profit centre that Wall Street was banking on.

UK nuclear investors get much-needed certainty

10 Jan 2008

The UK government has given the global nuclear industry the confidence to invest in newbuild stations. It s a good thing too. With 30 new nuclear power stations being built around the world, it needs to win over the big nuclear companies, as well as its own populace.

Dong’s E2bn IPO could ring investors’ bells

8 Jan 2008

The Danish government is planning to float 28% of the country s dominant utility. Equity markets are tough, but Dong has lots to offer: a handsoff government and good growth prospects from its North Sea gas and a more open European energy market. It should be an easy sell.

$100 oil: the price of market history

3 Jan 2008

A US trader has become the first person to pay $100 for a barrel of oil by paying well over the market price. No doubt the $600 trading loss was worth it for the certificate and a place in market history. If so, here are a few other trades he should consider in 2008.

Job cuts underline how Big Oil doesn’t love big oil prices

2 Jan 2008

Shell s costcutting is getting into gear as the black stuff touches a record $100 a barrel. High prices don t boost the majors profits that much. Instead, they squeeze margins and force up costs. Shell s cuts may not be enough to counter rampant cost inflation.

Iran energy deals signal return to normalcy

28 Dec 2007

With the US now unlikely to pursue military action, Iran has been busy sealing deals that were previously on hold. The country is softening terms to attract foreign investment, which could encourage Japanese and European oil companies to pump billions into the country.

Can Europe live up to its green promises?

27 Dec 2007

In 2008, the EU must decide how to make good on its ambitious promise to slash greenhouse gases by 20% and to generate 20% of its energy from renewable sources by 2020. Get ready for a big fight: if Brussels is to get its way, it will have to tread on some big business toes.

Merger Monday returns – to shareholders’ chagrin

17 Dec 2007

Ingersoll s paying $10.1bn for Trane and Grant Prideco s going for $7.4bn to National Oilwell. After a dearth of activity, this warms investment bankers hearts. But shareholders have nothing to be thankful for: both deals destroy value.

Opec was right not to increase production

5 Dec 2007

The oil cartel has decided not to dump more crude onto a wellsupplied world market. When oil was flirting with $100 a barrel, that decision might have seemed harsh. But crude has dropped by about $10 in a month. A production hike cut would have turned that fall into a rout.

Buffett may beat Kravis’s return – with less risk – on TXU bet

3 Dec 2007

Berkshire bought $2bn of the debt at a big discount. Its yield could be more than the buyout s equity investors KKR and Goldman reap on a portion of the deal. And Buffett has secured a moresenior position in TXU s capital structure.

Chavez vulnerable to oil price downturn

3 Dec 2007

The Venezuelan caudillo s referendum loss prevents him cementing himself in power. The nation s economic difficulties are increasing, and a drop in oil prices would bring economic crisis. At that point, Chavez s popular support may no longer be enough to prolong his rule.

Gazprom $5 trillion ambitions suffer from Putin’s diktats

30 Nov 2007

The Russian oil giant wanted to be the world s first $1 trillion company. But PetroChina beat it handily. Now its chairman jokes it should aim for the $5tr mark. Even this will remain a pipe dream as long as the Kremlin, and not shareholders, call the shots.

Opec could come to regret a production hike

28 Nov 2007

The oil cartel is under pressure to push up production quotas by 2%. But this highly speculative market is already wellstocked. Additional supply could push the price down sharply, as happened a decade ago. A repeat would cripple some Opec members oildependent economies.