Energy

Oil investors should beware of the super contango

2 May 2006

Rising crude prices and a flood of speculative money has ensured that the oil show has played to packed audiences. A steepening of the oil market s current contango into a super contango could see investors suddenly rushing for the door.

Bolivian nationalisation adds to pressure on oil prices

2 May 2006

But history suggests their own economies will suffer the most. Longerterm, weaker supply is likely to lead to even higher oil prices. High oil prices are tempting populist leaders such as Bolivia s Morales and Venezuela s Chavez to sieze control of their energy industries.

Echoes of dot-com era heard in emerging markets

28 Apr 2006

One day Dmytro Firtash is afraid to disclose his ownership of a lucrative gas trading company. The next he s planning a London IPO. It s a rapid change. But he has little to fear from London investors. Enthused for Russian stocks, they are failing to ask tough questions.

There’s still money left in BP

25 Apr 2006

Capex may be rising and production falling, but thanks to the oil price, BP is throwing off prodigious amounts of cash. But BP s shares are still only discounting an oil price in the low $40's per barrel. That s far too pessimistic.

What should Russia do with its petrodollars?

19 Apr 2006

The World Bank thinks Russia should spend them on foreign assets including equities. Russia does need to invest outside its energy sector. But its petrodollars would be better spent at home in building up a broader economy.

Oil price still doesn’t reflect Iran crisis

18 Apr 2006

At $70 a barrel, the price is up by 25% over the last year. That makes it a laggard among commodities. The oil price would rocket with even mild Middle Eastern chaos. But the standoff over Iran s nuclear plans makes chaos much more likely.

Total gets better of Santander in Cepsa war

4 Apr 2006

The two sides fell out when Santander tried to force Total to buy it out of the Spanish oil company in 2003 by raiding the shares. The French have seen off the Spanish bank through the courts, ending up with near control on juicy terms.

Enel bid may flounder through lack of political support at home

22 Mar 2006

The Italian centre left, which is likely to take power next month, now seems at best lukewarm about Enel making a hostile bid for Suez. If Enel's board postpones a decision on whether to bid until after the April elections, that may be the end of its ambitions.

Could Conti secure a compromise?

17 Mar 2006

Certainly, Suez and GdF won t want to give much away. But EU competition commissioner Neelie Kroes may yet force them to. The Enel boss has yet to call Suez to suggest a compromise. That may be because he doesn t think there s a facesaving deal available.

Western banks accomplices in Yukos expropriation

16 Mar 2006

A consortium of 14 banks, led by Societe Generale, pushed the Russian oil company into bankruptcy. The banks have got their money back. In return, the Kremlin doesn t have its fingerprints on the final stage of Yukos liquidation.

Oil majors like BP should break themselves up

16 Mar 2006

The notion is based on more than mere financial wizardry or broking whimsy. It also makes good strategic sense. There are few good reasons for oil firms to keep their upstream and downstream units together. There are many to split them apart.

Suez not as easy to defend as it should be

15 Mar 2006

French political support is considered Suez s strongest defence against a hostile bid from Italy s Enel. But it also hampers a fullblooded capitalist defence: slashing costs of its merger partner GdF, breaking itself up and gearing up.

Enel bid shouldn’t be driven by a desire to save face

15 Mar 2006

Having stirred up a political hornets nest, Enel s Conti will look foolish if he doesn t actually bid for Suez. But his board should only authorise a war if it is satisfied that a combination would have compelling logic.

Worried Suez hikes dividend again

9 Mar 2006

The French utility s impressive full year results will reinforce the sense that the terms of the planned GdF merger are inadequate. With rising political opposition in Belgium and the market discounting a possible counterbid from Enel, Suez is right to be worried.

Arab petrodollars return to the US through hedge funds

6 Mar 2006

The US ports controversy has raised Arab concerns about direct investment in the US. Nevertheless, Gulf oil money is returning to the US through offshore hedge funds.

Enel would struggle to add value by bidding for Suez

6 Mar 2006

Sure, the Italian utility could tap three sources of value if it goes hostile: synergies, leverage and the chance to break Suez up. But Enel might have to offer a fancy premium to overcome hostility. Meanwhile, warehousing the water business might be risky.

Enel-Eni merger would be cock-eyed

1 Mar 2006

In the wake of France s merger of Suez and GdF, Italian politicians are toying with harebrained schemes to defend their national champions. The government has given the EnelEni idea short shrift. But, in the midst of an election, there is a risk of populism gaining traction.

Suez sells itself to GdF at a discount

27 Feb 2006

True, that's based on current share prices. If you use prespeculation numbers it looks as if Suez is simply selling for no premium. But that's cold comfort for shareholders who have been denied the chance of a premium from a third party.

Suez pulls off merger with GdF

25 Feb 2006

The deal may deliver some synergies, but Suez shareholders will gain the French state as a powerful minority shareholder. The French government gains a new national champion, but Suez shareholders lose out on the chance of a bid at a premium or a breakup.

Enel move on Suez tests French power again

24 Feb 2006

Following fast on Mittal s Arcelor bid, Enel s interest in breaking up Suez suggests it's open season for snapping up national champions. Paris will try to block this. Deterring Enel from bidding is one option; blessing a defensive merger between Suez and GdF is another.