Energy

EDF float paves way for massive value destruction

24 Oct 2005

The French electricity giant could sell up to E8bn of stock on October 28, the largest European float in years. But the group s plan to invest E40bn over the next five years could also set a record for squandered riches.

There’s still money in oil stocks

23 Oct 2005

Oil equities have taken a drubbing lately largely on fears that high oil prices will crimp demand and boost oil supplies. Yet there is little sign so far that high energy prices have caused either though it continues to do wonders for oil firms profits.

BP’s Asian oil push less appealing than it seems

14 Oct 2005

The UK oil major is pursuing major partnerships with India and China, to gain access to their huge domestic energy markets. Strategically, it is all very exciting. But it is also risky, and how profitable such projects will be is far from clear.

Italian intervention on Endesa reeks of hypocrisy

12 Oct 2005

It s hard to believe Italy is really interested in free trade between Spain and Portugal, as it claims in its petition to the EU. Italy's real agenda seems to be to pry open Spain's market for its own national champion. That may not be altruistic. But it's still valid.

Italy mulls mad energy tax

5 Oct 2005

The government wants to raise E800m by taxing distribution networks like Terna and Snam. But the grids can't pass the cost on to customers. This would wipe out profits. And even if the draft law is scrapped, Italian utilities will still face increased regulatory risk.

Private equity stars cash in on Texas Genco

3 Oct 2005

The heady $5.8bn price tag for the US power company means its private equity backers will have made an outstanding return in just one year. And the key to the big profit is simplicity itself using forward contracts to lock in strong current prices.

Gazprom takes control of Sibneft for $13.1bn

28 Sep 2005

Moscow has cashed out oligarch Roman Abramovich, owner of both Sibneft and Chelsea football club. Abramovich, should he wish, could now buy two full football teams a year, made up only of David Beckhams, for the next 21 years.

Bush tells US to cut the driving

28 Sep 2005

The president s call for petrol conservation isn t a bad idea, but it s well behind the curve. A serious approach to conservation requires more than talk. It requires higher prices and tougher fuel standards.

Endesa short changed by Gas Natural side deal

22 Sep 2005

Gas Natural plans to partfinance its bid for Endesa by selling on a chunk of assets to fellow Spanish utility Iberdrola. It looks like Gas Natural is giving a big freebie away to Iberdrola. That cuts into the premium it is paying Endesa.

Oil industry faces huge generational shift

22 Sep 2005

Many of the old oil chieftains at firms like BP, Exxon, Shell, Repsol and ENI are about to leave their posts or already gone. They ruled during the costcutting megamergers of the 80s and 90s, when oil prices were low. The new guard faces different challenges.

Hedging may be key to winning oil deals

20 Sep 2005

Some smaller oil companies are hedging production to justify highly priced acquisitions. That lets them outbid more conservative rivals. So far, the majors haven t followed suit. But if the oil price keeps rising, and reserves keep falling, they'll have to be more aggressive.

Drax receives £1.9bn approach

14 Sep 2005

USbased Constellation Energy and Perry Capital are looking to buy the UK power plant held by creditors. The irony is, Drax s former owner was an American firm that tried its hand in the UK market and lost. Is history repeating itself as farce?

E.on considers £11bn bid for Scottish Power

6 Sep 2005

The acquisition would make the German utility the largest electricity generator in the UK. But there are only modest economies of scale. Even if the regulatory hurdles can be overcome, it will be difficult for a deal to add value at the current share price.

Katrina could lead to soaring petrol prices

31 Aug 2005

The hurricane may have shut down oil production in the Gulf, but loss of US refining capacity means oil inventories should actually rise. That should keep a lid on the oil price. But the real problem is gasoline prices.

High oil pitches Indonesia into financial crisis

30 Aug 2005

Investors are worried about the cost of the government's fuel subsidies. It's ironic that Indonesia a big producer is in trouble. But the greater risk here may not be economic but political. Cutting the subsidy would be a risky move for the Yudhoyono government.

Is it time for US to tap emergency oil stash?

29 Aug 2005

Oil hit $70 after rigs in the hurricane hit Gulf of Mexico were evacuated, prompting calls on Bush to tap the Strategic Petroleum Reserve. The US doesn't have a clear policy on when to use the SPR. But it doesn’t look like now is the time to deploy it.

Suez walks political tightrope in Belgium

26 Aug 2005

The French group s bid for Belgian utility Electrabel appears simple it already has board approval and majority ownership. But Belgium s politicians could complicate matters. As the Walloon economic minister said: 'Electricity is more strategic than yoghurt.'

This oil squeeze could endure longer than the last

19 Aug 2005

What would be the optimal strategy for keeping oil prices skyhigh? Make exploration expensive and uncertain, and jack up taxes. That s just what the producing countries are doing, as Goldman Sachs points out. It's likely to prove more potent than the 1970s cartel.

Spanish politicians mess up electricity market

16 Aug 2005

Demand for power is surging partly because the state stops utilities charging a market rate for electricity. The best thing would be a price hike. But politicians are planning reforms that would embed even more perverse incentives in the system.

Suez offers E11.2bn Electrabel minority buyout

9 Aug 2005

The Belgian utility s rising stock price has finally forced the French utility s hand after years of dithering. The funny thing is that Suez is unlikely to regret its shotgun marriage.