Fossil Fuels

Peak oil is another reason to shun OPEC club

26 Jun 2023

The oil-producing organization wants Guyana to join, but the tiny South American nation prefers to pump while it can. Cartels are difficult to maintain at the best of times because members can cheat. When future demand is finite, there’s even less incentive to cooperate.

Eni’s bet on gas comes at an acceptable price

23 Jun 2023

The Italian group and Var Energi, in which it holds a 63% stake, are buying Neptune Energy for $4.9 bln. The seller’s private equity owners once hoped for an IPO at twice that level. Bulking up in fossil fuels carries risks, but Eni’s price at least creates some sort of buffer.

Green alliance crisis is more than just a US drama

19 Jun 2023

Most insurers have quit their industry’s UN-backed climate body. Sector specifics and fear of US lawsuits partly explain why, but so do European governments focusing on energy security rather than net-zero targets. The same dynamic may affect banks and fund managers.

Capital Calls: Oil M&A, Bud backlash, L&G’s CEO

15 Jun 2023

Concise views on global finance: Two oil-well servicers find a way to make decline more palatable, while brewer Anheuser-Busch discovers that money doesn’t always buy friends in politics. In the UK, insurer L&G picks a new CEO to try and address its Brexit discount.

Shell makes risky pitch for the middle ground

14 Jun 2023

The $195 bln group’s new CEO Wael Sawan boosted shareholder payouts and refrained from new oil output cuts. His bet is that Shell can echo US peers by lingering in oil, while placing its green bets on less tricky low-carbon areas than European rivals. It’s not certain to work.

Saudi’s oil lollipop reflects its sticky situation

5 Jun 2023

The kingdom has secured OPEC+ consent to extend output cuts into 2024, and will also lop another 1 mln barrels off its own daily production. But if traders bought OPEC’s demand forecasts, oil prices should be higher anyway. Saudi may also struggle to slash output any further.

IPO pops are iffy adverts for Gulf capital markets

1 Jun 2023

ADNOC L&S, like other floats by the UAE energy giant, surged on its first day of trading. Yet the 50% rise looks contrived. Abu Dhabi’s listings boom is narrow, and mostly involves state-linked firms. Its dreams of being a go-to destination for global capital are remote.

Oil’s feuding forecasters may both be wrong

15 May 2023

The International Energy Agency, which represents developed-world crude buyers, recently slammed producer club OPEC’s output cuts. Yet the pair share the same demand estimates for 2023. If they’re wrong, IEA fears and OPEC hopes of surging oil prices may prove wide of the mark.

Capital Calls: Amazon, Aramco

9 May 2023

Concise views on global finance: Rising costs and cautious consumers are driving the e-commerce giant to sell goods through mobile games and push incentives; the $2 trillion Saudi oil company’s new dividend policy is one way to interest investors in future share sales. 

Europe’s oil major sweet spot could yet turn sour

4 May 2023

Shell, BP and Total are still making fat profits, and investors seem fine with a slower route out of oil. Rising rates also make wind projects look even less enticing than fossil fuel ones. But longer term, Europe’s oil titans may lose their head start in the shift to net zero.

Capital Calls: BP, Japanese M&A

2 May 2023

Concise views on global finance: The oil giant will buy back $1.8 bln of shares over the next three months, which is less than investors hoped for; Astellas Pharma is making the most of cheap debt for its $5.9 bln pounce on U.S. eye-treatment specialist Iveric Bio.

Oil AGMs presage awkward investor decoupling

28 Apr 2023

BP sailed through its annual shareholder meeting without much blowback on how it had backtracked on climate goals. That will embolden competitors to dismiss pro-green investors’ concerns, and give more to the opposite camp. It is becoming harder to please both sides.

OPEC’s oil cut is less surprising than it looks

3 Apr 2023

The producer group’s shock call to slash output by another 1 mln daily barrels will annoy Joe Biden and spur inflation fears. But de facto leader Saudi Arabia had already shown it would ignore US wishes. And Chinese demand is sufficiently uncertain to justify pre-emptive action.

Ferrari’s green journey takes surprise turn

30 Mar 2023

Europe’s plan to support carbon-neutral fuels is good news for the $50 bln luxury carmaker, CEO Benedetto Vigna says on the Exchange podcast. It will allow the group to flog the roaring engines that made its fortune. Electric cars remain a goal, but self-driving Ferraris are not.

Europe throws ignition cars a thin lifeline

28 Mar 2023

A last-minute EU deal will exempt autos running on carbon-neutral propellants from a 2035 combustion engine ban. That may help sports carmakers like Ferrari. Such fuels are costly and energy-intensive. Brands betting big on electric rides, like VW, will struggle to change tack.

Economic asphyxiation puts Russia in China’s orbit

20 Mar 2023

Moscow needs up to $90 bln to fund its budget deficit this year. As sanctions keep biting, financing the shortfall will slowly add to the economy’s woes. Russia’s need to use the yuan for trade and payments will also increase Vladimir Putin’s dependence on Beijing.

Capital Calls: Ritchie Bros founder regret

13 Mar 2023

Concise views on global finance: The industrial equipment auction company’s $7 bln deal for scrap-yard operator IAA has drawn one last opponent: the company’s own co-founder.

Capital Calls: World Bank, Bumble, Wood Group

23 Feb 2023

Concise views on global finance: The U.S. picks ex-Mastercard boss Ajay Banga to run the multilateral development bank; while the dating app’s shares are down, private equity owner Blackstone is still in the money; the UK oil services group has turned down three bids from Apollo.

UAE gas IPO’s $50 bln valuation looks like a floor

22 Feb 2023

The Emirates’ energy giant ADNOC is selling at least 4% of its gas processing arm via an Abu Dhabi listing. As with Saudi Aramco, buyers will have to put up with minimal say on strategy. Unlike Aramco’s IPO, the mooted $50 bln valuation may be an underestimate.

IMF’s outlook on Russia is too rosy to be true

10 Feb 2023

The International Monetary Fund expects the Russian economy to avoid a recession this year after contracting by 2.2% in 2022. That is much more optimistic than Moscow’s own forecasts. Unless oil prices stage an improbable rally, investors should trust the locals’ gloomier view.