Energy

Markets return from winter holiday

23 Feb 2005

Financial markets have generally been optimistic since the beginning of 2005. Shortcovering coincided with New Year s cheer. One bad day does not mean that pessimism will prevail. But rising US rates and the enormous US trade deficit justify a gloomy prognosis.

EDF may face two more Italian taxes

22 Feb 2005

The French giant wants to avoid buying all of Edison, its Italian venture. That may mean selling a stake to Italian groups on the cheap. EDF also wants Italy to lift a 2% voting cap on its Edison stake. To secure that, it may have to give Italian rival Enel access to France.

Is the world running out of oil?

15 Feb 2005

A glance at oil firms latest results suggests so. None of the majors fully replaced the oil that they pumped last year with fresh reserves. Yet the problem is not the level of reserves, but how they are counted. The industry lacks an acceptable common standard.

Saudis act to preserve oil kingpin status

14 Feb 2005

The mulled plan to hike production by 50% is designed to push up market share and crowd out expensive nonArabian exploration. Rich countries might like the lower prices. But will they want to keep so many eggs in the fragile Saudi basket?

BP shines next to Shell

8 Feb 2005

BP is growing production and replacing reserves faster than Shell. Best of all, it has increased its dividend by 26% in dollar terms. By allocating more cash to dividends, BP has signalled that it believes it can sustain this outperformance.

Good may yet spring from bad in Yukos debacle

7 Feb 2005

On the face of it, Russia could do what it wanted with Yukos oil assets. Yet reality proved more complicated. This is a good thing. The contortions that the Kremlin has gone through to maintain a semblance of propriety make any similar action more unlikely.

Shell earnings hit the roof; reserves hit the floor

3 Feb 2005

The oil giant tripled profits in the fourth quarter. Dividends are up, and share buybacks are to start again. But there is a sting in the tail. Shell s reserves replacement rate has fallen again.

Investors should be more bullish about oil stocks

31 Jan 2005

The worry is that last year s bumper profits are solely due to high oil prices, which mask deep problems the industry faces. This pessimistic view is a hangover from the oil glut of the late 1990s, when crude prices tanked. It is time the mindset changed.

British Energy’s comeback ignores risks

17 Jan 2005

After a painful restructuring, the UK nuclear generator has returned to the stock market with a valuation less than half its previous peak. But this still looks generous, given the challenges ahead.

BP takes Yukos’ place as Russian oil bellwether

17 Jan 2005

The Yukos debacle may have accelerated capital flight from Russia, but TNKBP is moving the other way moving onshore and listing. This is designed to promote it as a good corporate citizen. With so many assets in Russia, that's probably the logical thing to be.

China switches from US debt to US companies

7 Jan 2005

To date, China has largely recycled its trade surplus into US bonds. Increasingly, it is spending it on hard US assets. Buying oil firm Unocal may be controversial. But the US needs to attract $600bn a year to fund its trade gap, and beggars can t be choosers.

State firms to dominate oil markets in 2005

30 Dec 2004

In the 1990s, $30 a barrel proved a ceiling for oil prices. Now it looks like a floor. But the biggest beneficiaries of higher oil prices are likely to be stateowned oil companies rather than western oil majors.

Gazprom merger ties itself in knots

30 Dec 2004

The Kremlin s plans to renationalise the Russian oil industry have hit a local snag. Meanwhile, Deutsche Bank is curiously trying to stop a US court from interfering. Weirdness is begetting further weirdness.

Putin shows his roots over re-nationalisation

23 Dec 2004

The Russian premier's attitude to markets comes straight from Lenin and the oligarchs. And their idea of a normal market is pretty cruel. There is a rough justice in renationalisation. And rough tends to beget rougher.

Political reality holds back Russian dreams

22 Dec 2004

The setback in Ukraine and the destruction of Yukos are sign of a dysfunctional government. Oil revenues are not changing the culture. Putin wants to centralise, and is not concerned about foreign interests. Investors have few reasons to be confident.

Yukos show-auction lacks only confessions

20 Dec 2004

The pantomime sale of Yugansk is an instructive farce. The Russian government is showing that it won't be deflected by outside pressure. This drama is not yet a tragedy. The oligarchs have mostly left the country and energy exports continue. It could easily get worse.

EDF challenges Italy over Edison

17 Dec 2004

The French utility threatened to walk away from its investment in the Italian utility unless Italy drops a law capping EDF voting rights. But it would take some creative financing for the group to walk away from its obligation to buy out minority shareholders. Selling would be difficult. But the threat could indirectly give the group leverage in Rome.

Investors play with fire in Gazprom share trade

7 Dec 2004

Gazprom's share price has rocketed this year even though the Russian state is about to become the gas monopoly's majority owner. That looks illogical, given Moscow's scant regard for investors' right in the recent past. Yet ironically, it is Gazprom's main attraction.

Oil price premium continues to unwind

2 Dec 2004

Panic buying and speculators drove the oil price higher this year. Saudi Arabia s oil minister reckons this added $15 to the long run price. That s a fair estimate. It also shows how big the premium has become: about 40% over oil s long run price. No wonder prices are falling.

Singapore derivatives scandal is a warning sign

2 Dec 2004

China Aviation Oil racked up mega losses on derivatives, despite the existence of apparently strict internal controls. This may have been a naive corporate out of its depth. But at least four major investment banks have also suffered fallout.