Energy

Opec seeks to protect market share

10 Jun 2003

The oil cartel wants independent producers to join it in making any future output cuts, should the need arise. It may not need to. Oil firms' financial discipline has limited their scope to jack up output in the longer term.

EdF’s pain in Italy isn’t over

30 May 2003

One way or another, the French electricity giant seems destined to have to sink yet more capital into Edison. EdF will either be forced to buy out all the minorities at an inflated price or give leading shareholders a juicy sidedeal.

SSE buys Midlands for less than its debt

22 May 2003

Even so, SSE is not getting a steal. The £1.1bn offered is 10% more than the value of Midlands regulatory asset base. For Scottish & Southern's bid to go through, Midland bondholders have to take a 14% haircut.

Russia remains a goldmine for investors

12 May 2003

Strong oil prices have helped turned the country from a black hole to one awash with black gold. Russian capitalism has matured too. Lingering perceptions of risk are captured in stilldepressed relative valuations. Such discounts may have room to narrow.

EdF could lose from reported move on Edison

2 May 2003

The reason why financier Zaleski could be increasing his stake to 15% of the Italian energy group is unclear. He may be exploiting Italy's takeover rules to get a virtual put option on the stake. And who would he put it to? EdF, the old sugardaddy.

Big Oil earnings hit the roof

2 May 2003

First quarter profits tripled at Exxon, more than doubled at BP, and rose 96% at Shell all thanks to high oil prices. There are peak earnings. So is it downhill from now on? Perhaps. But a fall in oil prices is not the biggest risk for the Three Sisters.

OPEC ties itself in knots over output cuts, Iraq

25 Apr 2003

The speedy end of the Iraqi regime has vastly complicated OPEC s already delicate balancing act. It is always easier for the oil cartel to up output. Far harder is ensuring compliance to production cuts.

Italenergia looking at E1.9bn final tab for Edison

23 Apr 2003

An attempt get the market to share some of the pain was largely unsuccesful. Outside investors only stumped up E180m. So Fiat, EdF and friends who have already put in E1.5bn must put in another E400m of equity.

Yukos and Sibneft agree to merge

22 Apr 2003

The deal, creating a $35bn supermajor, protects key Russian oil assets against foreign takeover. Oil companies have spearheaded Russia s corporategovernance reforms. But this has left them vulnerable.

US-led Iraq should not rush into oil deals

22 Apr 2003

Iraq should focus on restructuring its oil industry, not entering into hasty contracts with majors. It is in the interests of the oil companies to be patient. Future Iraqi governments may not honour raw deals.

Enel’s new strategic plan protects dividend

27 Mar 2003

To date, a 7% dividend yield has been one of the stock s main attractions. Enel can keep that up for a while but only by using capital gains. Beyond that, operating cashflow will have to take all the strain.

Oil victory discount ousts war premium

21 Mar 2003

The price of oil has fallen by a quarter over the past two weeks. But is that premature? Global inventories are low. So any whiff of supply disruptions such as torched Iraqi oil fields sends prices soaring again.

Gas Natural bid has impact beyond sector

11 Mar 2003

For one, it highlights Spain s maze of crossshareholdings, such as La Caixa s stakes in Gas Natural and Repsol. These muddy shareholder interests and suck up capital that would be better deployed elsewhere. They should be scrapped.

Gas Natural in E24.5bn Iberdrola hostile bid

10 Mar 2003

The Spanish utility sector is hotting up again, with Spain s biggest hostile bid yet. Local rules stop Iberdrola from launching a counterbid. But another utility may step in. Then the sparks will really fly.

Enel may take stake in EdF nuclear plants

24 Feb 2003

This is part of a master plan by EdF to curry political favour in Rome for its march into Italy. But Enel investors must keep on their toes. This may give Enel cheap power, but it may not actually open the French market to competition.

Edison looks for new sugar daddy

19 Feb 2003

Less clear is why anyone would step in at this late stage in the game. It s clear why exisiting shareholders wriggling on a painful hook would want to find someone to take their place.

Italian decree opens way for Enel stock sale

17 Feb 2003

By bundling proposals for liberalising the energy sector into a single decree, Italy has fasttracked Enel s regulatory regime. A secondary Enel offering can now go ahead though the transaction may not be a straightforward one.

BP in $6.75bn deal with Russia’s TNK

11 Feb 2003

BP has not forked out a stiff premium. But it is paying a lot of cash at the top of the market. And Russia is cheap with good reason. The UK oil firm helped close the door for foreign investment in Russia after the Sidanco fiasco five years ago. It hopes to reopen it.

Shell promises to do better

6 Feb 2003

Now Shell says it will hit its 13%15% return on capital targets next year part of a broad industry shift to value and away from growth. Europe s largest oil company admits that the $16bn that it spent on acquisitions last year diluted financial returns.

Oil markets do the splits

31 Jan 2003

The presumption is that future oil prices will fall sharply, postIraq. But there are good reasons why they may not. And it looks increasingly anomalous. Crude oil prices have risen by 55% over the past year. Yet oil firms shares have fallen by 25%.