Energy

Eni’s dividend cover looks tight

1 Mar 2004

The Italian energy group says dividend sustainability is not a problem, as capex is set to fall. But such promises have to be taken with a pinch of salt, especially as the Kashagan oil field will cost the group billions to develop.

Currency moves distort commodity prices

24 Feb 2004

Commodity prices appear to be soaring. That suggests the world economy is recovering too, right? Not quite. It s only true in dollar terms. Use euros, and prices are actually falling. A currency basket provides the truest picture.

Total leaves other European oil firms in the shade

19 Feb 2004

The French oil group is growing output, increasing its dividend, and delivering handsome returns. It latest plans to spin off its chemicals operation may provide more momentum. The stock s discount to BP looks increasingly undeserved.

Statoil-Norsk Hydro merger talks spume black smoke

11 Feb 2004

No one likes to advertise their failures, so it s odd that Statoil and Norsk Hydro publicised the collapse of their recent discussions. This doesn t mean a merger won t happen one day. In fact, the industrial logic is too strong to ignore.

BP only flattered by comparison to Shell

10 Feb 2004

The oil company says it will buy back shares. Shell didn t. It is also growing production and replacing used reserves. Shell isn t. But BP has its disappointments too. The culprit appears to be poor returns in oil exploration and production supposedly BP s strong suit.

So much for Royal Dutch/Shell’s mea culpa

5 Feb 2004

Chairman Phil Watts won t resign over the reserves cut. He says he understands investors disquiet, and will listen to their concerns. But that s it for now. Bar some internal tinkering, bigger changes to Shell s clunky structure will have to wait for Watts successor.

Closer Iberian ties a spur to Spanish M&A

30 Jan 2004

Portugal and Spain have never got on. Yet that seems to be changing. As it does, the possibility of crossborder M&A rises too. Speculation is already rife of energy and banking deals. Many of them make industrial sense too. It is surely only a question of time.

Royal Dutch/Shell needs a revolution

20 Jan 2004

Chairman Phil Watts' mishandling of a reserves restatement is symptomatic of deeper problems at the oil giant. Chopping off the King s head will not be enough to change the firm. What is needed is a change of its archaic dualstructure too.

Pollution trading to wake up energy markets

16 Jan 2004

The introduction of carbon emissions trading this coming year will mark the biggest change in European energy markets in two decades. The idea is to cut carbon emissions, and so curb climate change. But this greenery comes at a cost: higher energy prices for all.

You can’t be sure of Shell

9 Jan 2004

Another booboo from the oil giant. Shell has cut its estimate of proved reserves by a whopping 20%. This is equivalent to lopping $7bn off future cash flows. The firm has not adequately explained why it overestimated in the first place.

Oil prices set for another strong year

31 Dec 2003

Many thought that crude prices would collapse in 2003. Instead, they continued to rise. Many believe that oil prices will surely tumble in 2004. While that is possible, it is also unlikely.

EDP – another national champion is born, almost

17 Dec 2003

Portugal s plans to carve up statecontrolled energy company Galp and hand out the best bits to utility EDP have hit a snag. Italian oil firm Eni, which owns a third of Galp, opposes the restructuring. It could potentially wreck Portugal s grandiose plans.

Yukos and Sibneft to end Russian oil tie-up

17 Dec 2003

The two firms may treat the split as a separate transaction. That would make the original $11bn deal one of the world s briefest mergers ever.

Suez move increases likelihood of a break-up

15 Dec 2003

The French utility has upped its stake in Belgian subsidiary Electrabel to over 50%. This makes a Suez breakup more, not less, likely. After integrating its energy operations more fully with Electrabel s, as it plans to do, Suez s water business could then be spun off.

Saddam’s capture a boost for markets

14 Dec 2003

To the extent the world is now a safer place, the dollar and equities should rise. Safe haven assets like gold will suffer. Oil will slip. But the effects will likely be shortlived as it s not clear there was much of a war premium or discount embedded in these assets anyway.

Bust UK power firms start to see the light

12 Dec 2003

Drax's creditors turned down International Power's restructuring offer. They became owners of Britain's largest power station instead. Now other banks are doing much the same with their portfolio of bust UK generators.

Russian oil game reopens

10 Dec 2003

With the Yukos/Sibneft merger heading for the rocks, the way may be open for other bidders to reenter the fray. Foreign firms like Exxon, Chevron and Total may already be prowling around both firms. Sibneft looks especially attractive.

Opec considers dumping the dollar

4 Dec 2003

Even though oil prices are high, exporting countries say they are no better off because of the falling dollar. Hence the sudden interest in pricing oil in euros or a basket of currencies.

Abramovich 2: rivals 0

2 Dec 2003

The oil mogul seems to have exploited the troubles of his rival Khodorkovsky. Sibneft may get the top jobs if its Yukos merger is revived. A bit like Abramovich's success on the football pitch where his Chelsea has taken the lead from ManU.

Yukos, Sibneft halt $14bn oil merger

28 Nov 2003

Whatever the reason, a $1bn break fee suggests the deal is not dead yet unless Sibneft is about to shop itself to a US buyer. Neither company has said why. It may be that Sibneft is simply trying to squeeze better terms after Khodorkovsky s arrest.