Oil & Gas

Exxon’s Poland exit raises frackers’ PR challenge

19 Jun 2012

Poland was unusually receptive to the controversial drilling technique, but the U.S. major thinks the prospects there aren’t bright enough. It’s leaving after two disappointing wells. Europe’s would-be frackers must now find richer fields, and persuade more hostile governments.

Petrobras risks becoming too much like Pemex

14 Jun 2012

The $120 bln Brazilian oil giant dialed down output goals to an underwhelming level. Lower production is symptomatic of state meddling, as Petrobras diverts funds to money-losing areas like refining. Shareholders should beware the growing similarities to Mexico’s energy king.

Oil plunge offers crude contrarians a foothold

14 Jun 2012

The price of Brent has fallen by nearly a quarter in two months. It could fall further still in the event of ’Eurogeddon’. But with investors at their most bearish on commodities since 2009 and Iran tensions festering in the background, contrarians must be tempted.

OPEC can’t afford to give residents cheap oil

13 Jun 2012

It may sound like a cheap perk to appease the populace. But the practice costs OPEC members $120 bln in lost revenue, and encourages wasteful consumption. Both exporters and importers would ultimately benefit from lower subsidies. The politics are tricky, though.

Iran’s oil sanctions are just beginning to hurt

13 Jun 2012

The Islamic Republic’s oil revenue may have already fallen by one third on the back of declining exports and prices. With U.S. sanctions set to tighten and China’s apparent readiness to comply, Iran’s finances are thrown into the red.

Iraq rise will upset OPEC power balance

11 Jun 2012

The war-torn country is already the cartel’s third biggest producer and has grand ambitions. But an unchecked increase would lead to durable oversupply and lower prices. OPEC has to find a way to keep Iraq in the cartel with a reasonable quota. Negotiations will be delicate.

BP needs to get its Kremlinology right this time

11 Jun 2012

A sale of the UK oil major’s 50 pct interest in TNK-BP would end a lucrative but loveless Russian marriage. If state-owned Rosneft were the buyer, BP could end up with a desirable mix of cash and Arctic access. Price matters. But the real trick will be playing the politics well.

OPEC ill-placed to stop oil price slide

8 Jun 2012

Some of the cartel’s worst infighting in its 50-year history hangs over next week’s meeting. That won’t help it cope with the euro crisis, which shows no signs of easing and augurs poorly for the price of crude. The evidence suggests OPEC won’t be able to do much about it.

Booming U.S. oil is rare advert for big capitalism

6 Jun 2012

America now boasts the world’s fastest-rising oil production outside OPEC. That leaves Brazil’s growth trailing, while output in Mexico is falling. With banks in particular in the doghouse, it’s a reminder that private enterprises seize opportunities better than governments.

Latam’s new oil king dons large and heavy crown

4 Jun 2012

Colombia’s Ecopetrol is jockeying to surpass Brazil’s Petrobras as the region’s biggest oil producer by market value. Solid management has lured billions in capital away from rivals in meddling nearby states. But Ecopetrol may struggle to live up to the high hopes for its reign.

Chesapeake board ups governance; now to govern CEO

4 Jun 2012

Finally, investors including Carl Icahn will get to pick four directors at the beleaguered U.S. gas firm, and all board seats will be less secure than before. But even vigorous directors have their work cut out reining in Aubrey McClendon, the company’s founder and 23-year boss.

Exxon tweaks chemistry to hedge U.S. gas exposure

1 Jun 2012

The energy giant bet heavily on gas with its $31 bln purchase of XTO. With domestic prices still sagging two years on, the company is set to turn some of its gas into more lucrative chemicals for export. Exxon’s new plant may even do rivals a favor by shrinking the glut of gas.

Oil’s fall below $100 won’t make economy rise

1 Jun 2012

The 18 percent decline in the price of crude in May shows that when fear rises to hysterical levels even easy money cannot support all asset prices. In theory, cheaper oil should stimulate importers’ economies. In practice, the benefits will be lost in the financial morass.

BP’s Russian exit would lead to existential limbo

1 Jun 2012

The UK oil major could turn grief into $20-$30 bln of cash if a deal materialises from the approaches for its half of the TNK-BP joint venture. But BP would then need to find new growth assets. And that could mean other difficult partners in challenging jurisdictions.

Exxon’s fracking gag makes Chesapeake look good

30 May 2012

That’s a rare feat. The troubled gas firm is infamously opaque. But Chesapeake’s openness on the risks of fracking puts larger rivals like Exxon to shame. After another large minority vote from investors for more information, Big Oil should follow its troubled cousin’s lead.

Chesapeake may need to sacrifice more than assets

29 May 2012

The embattled U.S. gas producer is already dispensing with energy fields to raise cash. Now investors, including uppity Carl Icahn, want directors ousted. Replacing two up for election without Chesapeake’s OK is near impossible. But resistance is counterproductive at this stage.

BP’s latest Russian spat spells more aggro

28 May 2012

The UK oil major is at odds with its oligarch partners in TNK-BP after one of them quit as the joint venture’s CEO. Mikhail Fridman’s exit could be a passing storm. But as BP’s force in Russia declines, such drama is more likely to presage a messy endgame to the partnership.

Indian oil producers may be due a windfall

28 May 2012

Delhi presently subsidises refiners, and forces state-owned oil companies to bear part of the cost. Growing deficits mean that can’t continue. A logical move is for the government to let the price of diesel rise, which could mean a boost for the likes of Oil and Natural Gas Corp.

Chesapeake could use a fresh start in a new home

24 May 2012

The embattled U.S. gas producer faces a shareholder vote to reincorporate in Delaware. The board’s argument that Oklahoma’s stiff takeover defenses better serve shareholders is a stretch. Chesapeake needs a governance overhaul. A new legal address would be a good first step.

Petrol hike pumps hope for deflated India

24 May 2012

It’s a small start, which will be meaningless unless followed with bolder action to cut subsidies and reform the economy. But the direction of travel is right and, if it proves more than a false dawn, it will help India rediscover its credentials as a high growth economy.