Oil & Gas

Arctic debacle underlines Gazprom’s weaknesses

30 Aug 2012

The Russian energy giant has shelved plans to develop the giant Shtokman offshore field, all-but-killed by cost overruns and the shale gas revolution. The demise of the flagship development is a sign of the company’s waning strategic heft. Reversing that may prove impossible.

Obama’s gas guzzler curbs trump drill baby drill

29 Aug 2012

The White House is doubling fuel efficiency for U.S. vehicles. That’s more likely to cut drivers’ costs and reduce dependence on foreign oil than Romney’s crude exploration plan. But hiking the gas tax would be the smartest way to tackle America’s overreliance on Black Gold.

Refinery explosion emblematic of Hugo Chavez curse

27 Aug 2012

The blast hobbled PDVSA’s largest plant. The Venezuelan leader’s policy of placing loyalty before commercial prowess may not have caused the accident. But it has warped the nation’s business ethos. Recent moves like saddling the oil company with a weak partner make matters worse.

Exxon aims for smarter Russia bet as rivals fold

23 Aug 2012

ConocoPhillips’ exit from a JV means its 20-year Russian adventure is all but over. BP has had to retreat from some of its forays too. While making money, neither built the kind of business they hoped for. Armed with a few lessons and its world-beating clout, Exxon may do better.

China’s oil giant may need pricey Canadian boost

21 Aug 2012

CNOOC’s $15 bln tilt at Canada’s Nexen seems an expensive distraction, especially since the Chinese oil major has cut its dividend, has flat output and rising costs. Yet CNOOC needs a booster. Nexen’s drilling expertise could help it squeeze more out of its domestic business.

U.S. refiners gain from infrastructure bottlenecks

17 Aug 2012

Domestic WTI crude sells at a discount to globally traded Brent. That’s partly because there’s inadequate capacity to move the stuff around. Even when pipelines catch up, home-produced crude may still be cheaper. The boost for American oil processors could last a while.

New Petrobras oil worth little stuck underground

15 Aug 2012

Five years after an 8.3 bln barrel discovery vaulted Brazil into the big leagues, a Petrobras partner has talked of another huge subsea find. But state meddling has prevented the oil giant or rivals fully exploiting reserves. Unless that changes, the bonanza won’t yield riches.

Freer fuel price could start Indian chain reaction

14 Aug 2012

The country’s clever new finance chief, Palaniappan Chidambaram, needs a sharp idea to cut the fiscal deficit. Deregulating fuel prices would help in many ways, including a lower subsidies bill, more valuable state-run firms, more efficient resource allocation and eventually more investment.

Latam’s bad oil policies laid bare across an ocean

13 Aug 2012

Despite some tough regimes and far smaller reserves, Africa is set to overtake Latin America’s crude output this year. The unlikely reversal reflects investor-friendly approaches in the likes of Angola. It’s also the clearest sign yet of how misguided the Latin region’s course is.

Uncle Sam seeks to dance around own rules in Sudan

10 Aug 2012

The U.S. wants $3.5 bln for the African nation following a recent oil pact with its southern spinoff. But that could contravene 1997 sanctions, exposing aid providers and investors to a StanChart-like zap. It would be far better to just adopt a new policy altogether.

Chesapeake’s spendthrift chief can’t help himself

7 Aug 2012

Investors in the cash-strapped gas company were cheered by promises of belt tightening. A new shareholder-selected board adds credibility to this pledge. Yet with CEO McClendon boosting spending on new energy-rich land by 25 pct this year, owners shouldn’t get too excited yet.

Nasty Petrobras surprise won’t be its last

6 Aug 2012

The Brazilian oil giant’s first quarterly loss in 13 years reflects harmful state meddling. President Rousseff seems happy for Petrobras to miss production targets if fuel prices stay low. Big well writedowns may help reset expectations, but policy damage will be tough to gauge.

Shale writedown tarnishes BHP’s street cred

3 Aug 2012

The miner isn’t the only company to overpay for U.S. shale. But a $2.8 bln writedown on acreage it bought for $4.75 bln last year is embarrassing for a group that trades on its canny reputation. Gas may pay off for BHP eventually, but Marius Kloppers is right to waive his bonus.

Brazil’s Chevron ban straddles worst of two worlds

2 Aug 2012

Suspending the U.S. oil giant’s operations over a minor spill keeps Latin America’s biggest economy aligned with the likes of Argentina. Such meddling won’t help Brazil revive flagging growth. At the same time, the prosecutorial zeal apes bad practice from the developed world.

Conoco refining spinoff catches industry wave

1 Aug 2012

The May split that created Phillips 66, America’s largest refiner, was nicely timed. Cheaper oil and reduced competition helped the $24 bln company deliver a 14 pct surge in Q2 profit. It’s a useful start, but Phillips 66 still needs to beef up its promising chemicals business.

Chevron’s two-state oil pact gives Africa hope

31 Jul 2012

The U.S. oil giant’s $2 bln deal with Angola and Congo is a diplomatic coup. It unites two of the largest producers on a continent gushing with resource disputes. With Africa supplying a quarter of the world’s new oil, anything that could help resolve other clashes is welcome.

BP pain extends well beyond Gulf of Mexico

31 Jul 2012

Hobbled production at BP’s deepwater business contributed to the UK oil major’s clanger of a quarter. But it also struggled in Russia and took big write-downs on U.S. shale, refining, and an Alaska project. Even though these are mostly one-offs, the investment case looks challenged.

Chevron’s sputter shouldn’t dissuade investors

27 Jul 2012

The U.S. oil major’s overseas refineries helped stop the Q2 profit slide at 7 pct. Yet the growth in these less-prized assets isn’t the real story at Chevron. A heavier weighting toward oil and expected punchy output growth should narrow the value gap with bigger rival Exxon.

Growth gem Ghana needs to husband its resources

26 Jul 2012

Sitting President John Atta Mills died this week, five months before the next election. Ghana’s economy is among the fastest-growing anywhere, helped by new oil output. But there’s a risk the bonanza is wasted. Mills’ successor needs discipline to achieve long-term prosperity.

Exxon’s record profit belies missed opportunity

26 Jul 2012

The $15.9 bln bottom line may have been the best single quarter in corporate history, but it was greatly flattered by the sale of a Japanese refinery. Worse, Exxon’s U.S. crude output slipped and U.S. capex fell by a third. The domestic surge in oil production is passing it by.