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.
Energy titans tap yet another dry well: inequality 5 Mar 2014 The industry’s grandees are gathered for their annual confab in Houston, celebrating shale and lamenting higher costs. Amid the hoopla, Chevron CEO John Watson said renewable policies hurt the poor while BHP boss Andrew Mackenzie claimed oil can help them. That’s all a bit rich.
Mexican oil cash cow could go dry absent tax fixes 3 Mar 2014 Pemex’s quarterly pre-tax profit dropped 30 pct to $10 bln, but the energy giant had to pay $16 bln in government levies. Investment and production predictably suffered. President Peña Nieto’s revenue-raising reforms and plans to let in foreign cash can’t be enacted too soon.
Citi’s Mexico fraud besmirches industry further 28 Feb 2014 The mega-bank has been cheated out of $400 mln by an oil services firm in one of the most basic businesses in banking – accounts receivable. Citi’s Banamex didn’t even spot it – Mexico’s government did. Missing such simple fraud is something that should worry Citi’s rivals, too.
Big Oil could use some venture capital mojo 28 Feb 2014 An unwillingness to tackle small wells meant oil majors missed out on the lucrative U.S. shale oil boom. Exxon and its ilk were too focused on mega-projects. Seeding a new generation of nimbler upstarts, a strategy that worked for Big Pharma, might renew verve and boost output.
Repsol makes the best out of bad YPF deal 26 Feb 2014 The Spanish oil group will get $5 bln from Argentina as compensation for the expropriation of its stake in YPF. It’s half what Repsol wanted and will be paid in government bonds. Still, the final deal enshrines that Repsol must ultimately receive the value Buenos Aires promises.
At least Venezuela’s unrest is simply economics 25 Feb 2014 Ukraine’s split is ethnic, Thailand’s regional and Syria’s religious. Venezuela is ethnically and religiously united and even has oil wealth. But income inequality and chaos bedevil the Latin nation. In theory, these problems can be alleviated even without political upheaval.
Exxon CEO’s Nimby-ism threatens his shareholders 24 Feb 2014 Rex Tillerson hands ammunition to anti-frackers by seeking to block a water tower to supply drillers near his opulent home. Buying $31 bln shale explorer XTO was the big bet of his tenure. Exxon may now struggle to convince the public to accept hydro-fracturing’s side effects.
Sinopec spinoff shows desire to pump valuation 24 Feb 2014 The Chinese oil giant plans to sell up to 30 percent of its marketing division, which operates 30,000 forecourts and brings in half the group’s revenue. Exposure to China’s consumer boom should lure investors. More importantly, it suggests Sinopec is serious about boosting value.
JPMorgan in awkward place in Essar Energy buyout 21 Feb 2014 The investment bank led the troubled Indian group’s London IPO, and remains a house broker. So it’s far from ideal that JPMorgan is now advising independent directors on a potential buyout by the majority owners. Board members urgently need a fresh outside perspective.