Oil & Gas

Overbearing Brasilia at fault in ethanol shortage

4 Oct 2011

Lack of investment and squeezed margins mean Brazil’s biofuel production is not keeping up with demand. Government efforts to change that are now affecting oil giant Petrobras. It’s the kind of tangle of unintended consequences that follows excessive government meddling.

Shell, Total have little to lose staying in Syria

28 Sep 2011

The two oil majors are still pumping in Syria, in effect helping to finance the deadly crackdown on anti-government protesters. But while both companies could easily afford to make a moral point and pre-emptively withdraw from their investments, doing so might not achieve much.

Gazprom raids escalate EU-Russia energy war

28 Sep 2011

An anti-trust investigation into the Russian gas giant’s European subsidiaries should be seen in the context of a wider diplomatic conflict. Moscow is obstructing the EU’s plans to import Caspian gas. It looks like the EU has found a way to retaliate. The row could worsen.

Richest Brazilian talks his book on protectionism

27 Sep 2011

Eike Batista thinks the U.S., like Brazil, should shield young industries from overseas competition. But it’s hard to take him very seriously when it’s his wallet talking. Batista’s oil rig-building firm, OSX, is placed to be a big winner from his country’s local content rules.

Commodity meltdown is good stimulus

27 Sep 2011

The fear of bad economic news is the standard explanation for falling raw material prices. But price drops could kindle stronger growth. They are like a tax cut in weak Western economies, and ease inflation in emerging ones. Policymakers shouldn’t undo this healthy stimulus.

Oil price jitters turn up heat on Gulf producers

22 Sep 2011

Governments are sweating as Brent creeps lower with worsening global economics. At $108 a barrel, oil is $18 above the threshold at which producers feel real pain. But shrinking oil revenues leave less room for manoeuvre. And any OPEC supply squeeze will complicate the problem.

Ruling is blow for Yukos compensation bid

20 Sep 2011

The European Court of Human Rights has offered only weak support for the claim that the Russian government expropriated the Yukos oil company, and ruled in favour of Russia on crucial points. The legal battle isn’t over, but Russia will breathe a sigh of relief.

Repsol is wrong to get heavy with activists

16 Sep 2011

The Spanish oil giant is angry at a new shareholder pact between construction firm Sacyr and Mexican energy group Pemex. The activists’ interests may conflict with those of other shareholders. But their immediate demands make some sense, and a big battle benefits no one.

Iraq’s oil ambition looks fragile

15 Sep 2011

The oil-rich country is on the verge of lowering its official output targets and exports have been disrupted. Infrastructure is a major problem. But the politics at home and away mean Iraq’s path to becoming a global oil giant again is set to get longer and tougher.

Petrobras should choose its own business partners

14 Sep 2011

Offering 40 pct of a new Brazilian refinery to Venezuela’s state oil group seemed politically smart in March 2008. But PDVSA’s cash is not forthcoming, so Petrobras is on the hook. It has the money, so there’s no big loss - just a warning against deals inspired by Brasilia.

Crude traders vulnerable to sudden falls

12 Sep 2011

With rich-nation growth slowing to a crawl, crude should be getting cheaper. Instead at $112 a barrel, Brent oil is not much down on recent peaks. While Chinese demand remains strong and Libyan output may revive only sluggishly, crude is susceptible to a rapid reversal.

Ukraine-Russia gas spat likely to cost Gazprom

8 Sep 2011

Autumn is coming and Russia and Ukraine are again squabbling over gas. Neither has an interest in a rerun of the 2006 and 2008 supply disruptions. The likely outcome is that Russia lowers prices in return for political concessions. State-backed Gazprom would be the real loser.

Ohio oil promises new bonanza for Texas bankers

7 Sep 2011

The first takeover deal in the Utica shale may be modest, but it’s only a start. Some $38 bln of shale-related deals this year account for 80 pct of U.S. exploration M&A. If Ohio’s rock formation yields even half its touted oil trove, energy financiers should be sitting pretty.

Tony Hayward joins risky Kurdish oil rush

7 Sep 2011

The ex-BP boss’s M&A vehicle has landed its first target, a $4 bln merger with Kurdistan’s top oil producer. The deal is part regulatory arbitrage, and part a bet that Iraqi politics will turn good for oil firms. On conventional metrics, it’s a bargain. But it brings major risks.

Libya should adopt oil-wealth transparency

5 Sep 2011

The country’s new leaders must decide how to manage Libya’s oil wealth after funding reconstruction. Opaque handouts might be a tempting way to win tribal loyalties. But it would be better to copy oil-rich Norway and create a transparent and accountable sovereign fund.

Tar sands pipeline environment fears are overdone

30 Aug 2011

Despite a sanguine State Dept, there’s heavy opposition to a $7 bln pipeline bringing Canadian oil to Texas. But oil sands are less dirty than their reputation, and the U.S. buys crude from worse polluters. There are better ways to control emissions than boxing in Canada’s oil.

Big oil faces big unknowns in Libya

24 Aug 2011

With Brent crude at more than $100 per barrel, foreign entities have a strong incentive to restart production as soon as security is ensured. But Libya’s new rulers may want to reshuffle the cards. Even once the fighting stops, oil companies should expect a bumpy ride.

End game in Libya could herald oil slump

22 Aug 2011

The rebel push into Tripoli came sooner than expected. Libyan oil exports should follow suit. The possibility of regional unrest remains. But global growth concerns, and IEA and Saudi moves to make up for the disruption, could turn tight markets into oversupplied ones.

Mexico needs to open door to its oil wider

19 Aug 2011

Bringing foreign firms into a few wells is a positive, if overdue, development. But more radical action is needed if the country is to make the most of its reserves. Only juicier deals for outsiders and better management of its state monopoly Pemex will revive ailing output.

Europe shouldn’t dally on Syrian oil boycott

17 Aug 2011

Proceeds from the country’s oil exports are helping to prop up an increasingly brutal regime. Global markets can withstand the loss of Syria’s supplies. Even if there is a chance that Syria can circumvent sanctions, they remain the best tool available to weaken the regime.