Oil & Gas

Texas cracker spat hides Petrobras waste at home

22 Apr 2014

The state-run energy giant paid too much in buying a U.S. refinery for $1.2 bln in 2006, when President Rousseff chaired the board. But at $20 bln, a plant in Brazil is costing far more than similar facilities abroad. It’s a cash drain Petrobras and its investors can ill afford.

Exxon tries to make $133 mln of CEO pay invisible

16 Apr 2014

The U.S. oil giant says Rex Tillerson takes home less than peers – and far less than shown in SEC filings. Yet including stock he knows he’ll get later, he’s in the top spot. While delaying pay by up to 10 years is shareholder-friendly, claiming the CEO doesn’t receive it is not.

U.S. oil majors demand export satisfaction

4 Apr 2014

Energy Secretary Ernest Moniz threw down the gauntlet last month, effectively challenging the industry to make the case to ship crude overseas. Producers have laid out fresh evidence of benefits to GDP and jobs. Even if overstated, it’s a unique battle Big Oil needs to fight.

Anadarko’s $5.1 bln settlement adds up in market

4 Apr 2014

The U.S. oil driller’s pollution payment is at the low end of a court-defined range, which had a midpoint of around $10 bln. The 15 pct gain in Anadarko’s market cap equals that gap plus a small bonus for relief. And it brings the stock’s 12-month rise back in line with the S&P.

Oi’s botched offering besmirches Brazilian markets

3 Apr 2014

The telecom firm’s $10 bln share issue grants favors to top owners while severely diluting minority holdings. And the CEO’s big mouth almost derailed the deal. Still smarting from the failures of tycoon Eike Batista, Brazil can’t afford to test investor patience much further.

GM could use a tip from BP on contrition’s risks

2 Apr 2014

The automaker hinted it might compensate victims of faulty cars, despite the legal shield of its bankruptcy. The energy giant made similar concessions after the Gulf oil spill, with disastrous financial results. The cases differ, but both are reminders of conciliation’s perils.

Weir may struggle to extract a merger from Metso

1 Apr 2014

The Scottish engineer has tentatively bid for its $5 bln Finnish rival. A merger makes sense. But Metso has just shed a problem unit, has clear self-help plans, and is at a cyclical low thanks to its focus on mining. With two powerful backers, the Finns can afford to be patient. 

Ukraine needs gas efficiency more than imports

31 Mar 2014

Congress is debating speeding up U.S. gas exports to curb Russia’s sway over its former satellite. A cheaper solution lies closer to home. Ukraine is the world’s second most wasteful energy user. Merely matching Romania’s efficiency would slash Ukraine’s gas bill by two-thirds.

U.S. LNG exports set for boost from Ukraine

28 Mar 2014

Though liquefying America’s plentiful gas for export makes business and economic sense, approvals are enmeshed in politics. U.S. gas wouldn’t reach Europe for years, but the energy implications of Kiev’s standoff with Moscow provide cover for lawmakers to give projects the nod.

Venezuela’s oil diplomacy is past its sell-by date

27 Mar 2014

The Bolivarian Republic still gives about $9 bln a year in free crude to the likes of Cuba. Even ignoring domestic shortages of staples, that’s enough to cover, say, a year of debt service. With economic cracks widening, President Maduro could start by cutting off this largess.

Exxon finally warms to climate change disclosure

24 Mar 2014

Investors fear that a crackdown on carbon emissions could make much of the energy giant’s crude reserves all but worthless. The company has agreed to reveal its assessment of that risk. The move could put Exxon ahead of rivals in weathering - and accounting for - global warming.

Elusive U.S. manufacturing boom is just delayed

24 Mar 2014

Job growth in the sector of just 5 pct since 2010 hardly counts as a renaissance, even though U.S. firms pay only half as much for energy as European and Asian rivals. But the advantage looks set to continue for years. That leaves time for industrial activity and jobs to return.

Hugo Dixon: How EU can wean itself off Russian gas

24 Mar 2014

The Ukraine crisis has highlighted the EU’s dependency on Russian gas, although Moscow is even more dependent on exports. EU leaders want to intensify plans to diversify supplies. There will be a cost – either in cash or in the environmental impact. But it’s one worth bearing.

Pirelli ownership structure imitates Russian dolls

17 Mar 2014

Russian oil group Rosneft has bought half of the investment company that owns the biggest stake in Pirelli. The move has some industrial logic and still leaves tycoon Marco Tronchetti Provera in control at the tyremaker. But it dampens hopes of a premium bid for the company.

RWE’s $7.1 bln oil deal brings respite not rescue

17 Mar 2014

The struggling German utility is selling its DEA oil and gas unit to investors led by Russia’s Mikhail Fridman. RWE has secured a good price which reduces its future capex burdens. But the disposal leaves unanswered questions about RWE’s financial strength.

Total’s solar boast may prove short-lived

17 Mar 2014

The French oil giant’s CEO has bragged about the profit made on a $1.5 bln stake in SunPower. But that’s hardly the benchmark if Total’s aim is to build a long-term solar business. Moreover, the panel maker’s rich valuation and dimming prospects could soon weigh its shares down.

Shell could use BP tips to make U.S. shale pay off

13 Mar 2014

Disappointing returns on North American investments have pushed the Anglo-Dutch firm to cut jobs and sell assets. But BP is spinning off shale operations into a more nimble unit. The British oil giant’s entrepreneurial approach gives it a better shot at pumping out profits.

Chevron looks to be best of Big Oil’s bad bunch

11 Mar 2014

Like its rivals, the energy giant is facing a stagnant crude price, soaring drilling costs and slower output. Yet even after trimming forecasts, Chevron’s production will rise five times faster than at larger peer Exxon. That makes Chevron’s cheaper valuation most attractive. 

Russia, not Ukraine, is Gazprom’s real problem

7 Mar 2014

The 20 pct slide in the gas giant’s shares during the Kiev-Moscow spat looks like an overreaction. Gazprom has become less reliant on Ukraine as a transit point. Its valuation reflects its status as a Kremlin tool. A chillier investment climate in Russia is a bigger threat.

Big Oil faces no-win on rampant cost inflation

6 Mar 2014

Energy bosses at an industry shindig in Houston this week agreed that a doubling of labor and equipment prices over the past decade is their biggest headwind. Meanwhile, on recent form, they’ve struggled to keep production flowing. Cutting costs is likely to dent future output.