Energy

Sibneft deal would solve Putin’s Abramovich problem

26 May 2005

The Russian president is fed up with Abramovich, the owner of Chelsea football club and oil firm Sibneft. Meanwhile, the oligarch wants out of Russia. Having a stateowned firm like Gazprom buy Sibneft solves both their problems.

Valuation fever cools for small oil firms

26 May 2005

Disappointments at wildcat explorers such as Regal and White Nile have sliced back valuations in the sector. Ironically, that may flush out trade buyers although they are more likely to be other small firms paying in shares, not cash.

Scottish Power sale may spur further M&A

25 May 2005

The UK utility s sale of PacifiCorp may encourage other European utilities to dump poorly performing US operations. Attention will now focus on E.on's weak US subsidiary.

Scottish Power sells its US business for $5.1bn

24 May 2005

The UK utility has done the right thing and extricated itself from its illthoughtout foray into the US. It plans to return $4.5bn to shareholders when the deal closes. Better yet, the sale tarts up the group for a possible merger.

Hedge funds slip up on oil

19 May 2005

Credit markets are not the only place where financial investors have been squeezed. They ve also been caught out by an unusual contango in oil markets.

Wannabe Russian oligarchs scupper Gazprom merger

18 May 2005

Putin himself wanted to merge the gas giant with oil company Rosneft. But Rosneft s Kremlininsider bosses opposed the idea. Their success at thwarting Putin s plans may now have given birth to a new class of oligarchs, every bit as powerful as the old ones.

Italian government chucks Eni boss

13 May 2005

For years, Vittorio Mincato, the oil firm s steely CEO, has staved off political interference from Rome. As a result, Eni has done well. Now the politicians have had their revenge. The worry is that he will be replaced by a more malleable figure in the shape of Paolo Scaroni.

EDF strikes deal with AEM to remain in Edison

13 May 2005

In order to resolve its squabble with the Italian government, the French group has to share control with a local utility. When the two partners buy out Edison s minority shareholders, too, EDF will have to bear a disproportionate part of the cost.

German utilities are undervalued

12 May 2005

RWE and E.On both trade at a sharp discount to their European competitors. This is largely unwarranted. Of the two, RWE looks a better bet given E.On s renewed hunger for acquisitions.

UK inches towards new £10bn nuclear programme

4 May 2005

Once the election is out of the way, Blair seems likely to bow to environmental realities and launch a new programme. But for investors to buy into it, the politicians will have to show them they can earn a decent return through future electoral cycles.

Oil bankers get over-excited about M&A

28 Apr 2005

The Chevron/Unocal and Valero/Premcor mergers have raised hopes that a series of mega copycat deals will follow soon. The idea is fuelled by the idea that high oil prices are here to stay. Yet historically, consolidation takes place when oil prices are low.

Chinese revaluation would keep oil prices high

18 Apr 2005

The west is worried about oil prices. It is also worried about China s fixed exchange rate. But solving the latter might worsen the former. A renminbi revaluation would cut China s oil import bill. But these savings could support an even bigger Chinese thirst for oil.

EDF faces Italian dilemma

8 Apr 2005

The French group is at a crossroads. It can either sell all of its Edison unit to Endesa, or share control with an Italian utility. EDF may prefer a partnership, to avoid a retreat from Italy. That could give the Italians an edge, even if they offered a lower price.

Will Enel’s fourth tranche deliver gains?

6 Apr 2005

The sale of a fourth chunk of the Italian utility will raise lots of interest given the cracking returns investors made on the last tranche. But now that Enel s restructuring is largely complete, future returns are likely to be more modest.

Fuel subsidies are a problem but not a solution

4 Apr 2005

The IEA wants to eliminate the distortions caused by belowmarket energy prices in developing countries. That makes sense. But the effect of subsidies is too small for cuts to make much difference to oil demand. Higher taxes are likely to be more effective.

Small oil stocks are overvalued

3 Apr 2005

Soaring oil prices and one or two lucky finds has put a gusher under smallcap oil exploration and production companies. It s not just cash shells or tiddler companies that are soaring. Shares of relatively large firms have also hit the roof.

Spain’s Union Fenosa soars on bid rumours.

21 Mar 2005

Draw up a checklist for what might make a company a hot M&A candidate in Spain, and the midsized utility has it all. Fenosa may not be sold today and its biggest investor has said as much. But with its credentials, Fenosa will sell at some point.

Suez should spin off Electrabel.

10 Mar 2005

The French group has owned half the Belgian utility for years. The plan was to end this inefficient arrangement by taking full control. But a better plan would be for Suez to give its Electrabel stake to its own shareholders.

Gazprom merger hits another speed bump

4 Mar 2005

The Russian gas giant has fallen out with oil firm Rosneft over their proposed merger, a central plank of Moscow s energy strategy. Such problems are to be expected from such a controversial deal, but they are not enough to stop it. Moscow remains too committed.

US oil producer Unocal attracts suitors far and wide

4 Mar 2005

It s a dowdy asset made sexy by the difficulties of oil majors to boost reserves and the desire of developing nations to secure supply. The risk for ChevronTexaco or others, coming after China s interest, is that they may find themselves bidding against an irrational buyer.