Energy

Iberdrola’s E6.4bn US energy deal isn’t convincing

26 Jun 2007

The acquisition of Energy East looks like another case of growth for growth s sake for the Spanish utility. Iberdrola has grown at a vertiginous pace in the last year, starting with Scottish Power. It still needs to convince the plan makes sense. The move may help dilute an awkward shareholder. But it's not clear there's any strategic logic.

PetroChina is three times lucky

21 Jun 2007

The company will float in the world s hottest stock market and serves a country whose oil demand is growing fast. It may also get access to the biggest oil deposit on the planet. Winning that trifecta could make it the oil industry s leading firm.

Why has Frere invested E2.2bn in Iberdrola?

31 May 2007

The Belgian financier targets companies where he can push for big changes. On that basis, the Spanish utility fits the bill. With the Spanish utility sector in flux the chances of a deal materialising, possibly with Suez, look high. Just not in the short term.

E.on changes tack with E7bn buyback

31 May 2007

The Germany utility is buying back E7bn of shares and splashing out on internal investment. That appears to leave little leeway for deals. That looks a double dose of good news for its investors. E.on s taste for acquisitions left its shares at a steep discount to peers.

UK government finally starts British Energy sale

30 May 2007

Ten months, two faulty nuclear reactors and one energy white paper later, the UK is finally selling a 25% stake in the nuclear energy group. The delay may have cost about £500m, yet the government has still doubled its money. But how will it invest its £2.2bn proceeds?

Gaddafi now a safe pair of hands

30 May 2007

BP is coming back to Libya, with the Brotherly Leader s blessing. He s changed a lot since he nationalised the BP concession in 1971. But so has the energy world. An erratic but friendly autocrat provides useful diversification from Putin and Chavez.

GdF needs breathing space

28 May 2007

If the merger with Suez doesn t go through, the former French gas monopoly will have to start looking for other options. A merger with electricity counterpart EdF will not pass EU muster. The first step to a new strategy is privatisation, with or without Suez.

What comes after $70 oil? Maybe inflation

22 May 2007

Nigerian disruption and Opec complacency have pushed up the price of Brent to the highest level in almost a year. There could easily be more to come. The return of rising oil prices shows how hard it is to keep asset price inflation away from consumers.

Is power Wall Street’s new subprime?

22 May 2007

Bear Stearns pricey acquisition of Williams power assets is the latest in a string of purchases by investment banks in the power markets. Banks got burned when they piled late into subprime. With the power industry overheating, are banks set to get zapped again?

Spanish utility reshuffle leaves Repsol vulnerable

17 May 2007

Key shareholders have so far shielded the oil firm from unwanted bids during Spain s energy M&A frenzy. But Repsol s failure to seal a deal with Gas Natural means those same investors may not be so supportive for much longer.

EdF bid for RWE looks politically fraught

11 May 2007

A merger between the French power giant and the German utility would create an E160bn champion, and be a springboard to EdF privatisation. But the political obstacles would be formidable: competition issues; German national sensitivities; and, of course, EdF worker opposition.

Kremlin makes a killing out of Yukos

11 May 2007

The whole affair drove a coach and horses through notions of legality. That will leave an enduring stain. But the Kremlin s brilliant milking of Yukos also left the Russian state some $100bn richer. Not only did Putin get to lock up a pesky political opponent; he made a fortune out of dismembering Khodorkovsky's oil company. Stateowned Rosneft bought Yukos's assets for a pittance, and got global investors to fund the whole exercise at much higher valuations.

Market may be misreading Sarko on Suez

9 May 2007

Investors are expecting the new president to resurrect its merger with GdF. But he was never a supporter of the deal. He may not want to spend political capital on it when he has bigger fish to fry. It s not even as if GdF and Suez themselves seem keen.

Last Yukos sale marks end of easy years for Rosneft

3 May 2007

The Russian firm has risen from almost nowhere to become one of the world s biggest oil companies in less than four years. But that is largely thanks to special access to Yukos assets sales and these are now drawing to a close.

Browne makes ignominious early exit from BP

1 May 2007

The BP boss had no option but to leave early after it emerged he had lied on oath over allegations about his personal life. Browne is leaving £15m on the table, but the cost to his alreadybruised reputation is likely to be higher.

Eni need not fret over Enel comparisons

1 May 2007

Chattering classes in Italy are speculating what Eni's Scaroni might do after Enel s Conti, his former employee, bought Endesa. Repsol is the obvious target. But it doesn t look terribly appealing and Madrid is unlikely to let two champions go.

Oil price rally could endure

25 Apr 2007

The price of crude is up 30% since the January low. But higher prices are hardly slowing down demand, especially in Asia. Supply is held back by inefficient producers and bad politics. A global slowdown may be the fastest way for customers to regain control.

Enel gets easy ride on Endesa financing

23 Apr 2007

The Italian utility is borrowing heavily to finance a noncontrolling stake in the Spanish group. That means it ll be dependent on dividends to repay that debt even though it won t be able to control Endesa s dividend policy.

Enel incurs E2bn hidden Spanish liability

13 Apr 2007

That's the cost to the Italian utility of giving Acciona a put option over a 25% stake in Endesa, using a standard BlackScholes model. Enel's cost, by contrast, is Acciona's gain. No wonder the Spanish construction group's shares have done better.

Endesa carve-up shows worrying Italianisation of Spain

10 Apr 2007

How did Acciona gain control of a E40bn firm like Endesa with a mere E2bn outlay? Simple. It used an Italian style corporate cascade. The irony is that such structures are expanding in Spain just as Italy s most infamous example at Telecom Italia is on the edge of collapse.