It’s time to throw good money after Batista 18 Oct 2013 Liquidating Brazil’s OGX probably would bring creditors just 10 cents on the dollar for their $3.6 bln of bonds. A $150 mln injection, while ousting founding tycoon Eike Batista, may buy enough time to get production going at its main field. In this case, it’s the least bad plan.
OPEC’s past 40 years suggest less powerful future 17 Oct 2013 The cartel proved in 1973 it could shake the richest economies of the world. But the club’s member nations failed to use oil wealth to create diverse economies or solid democracies. Meanwhile profligate spending left OPEC states reliant on high oil prices, inviting competition.
Brazil faces a "lose, lose" in bailing out Batista 15 Oct 2013 Giving the fallen entrepreneur extra time to pay his debts puts Brazil’s government in a dilemma. Letting his OSX shipyard collapse makes it hard for drillers to obey “buy local” rules. Yet rescuing the unpopular tycoon is politically pricey for President Dilma Rousseff.
Solvay pays up to tap into fracking market 7 Oct 2013 The Belgian chemicals group is paying $1.3 bln for Chemlogics, a privately owned U.S. specialist in compounds used in the oil industry. The deal, Solvay’s biggest since 2011, looks pricey. But there should be tax savings, a sales boost, and a chance to ride the global shale boom.
Brazil’s oil emperor models a worrisome suit 4 Oct 2013 The 7 bln barrels of oil Eike Batista’s OGX once touted is now more like 88 mln. For investors who bought into the hype, it’s yet another gut-punch. The lack of oversight on such claims also raises questions about the credibility of a 12 bln-barrel find Brazil is auctioning.
Breakups are one oil spill welcome to spread 26 Sep 2013 The spinoff of Conoco’s refinery arm last year fueled a trend that has created plenty of value among energy giants. Now oil service firms like Noble and National Oilwell are putting similar moves in the pipeline. It’s time for investment laggards like Transocean to catch up.
Only PDVSA can make Petrobras look commercial 24 Sep 2013 The unreliable Venezuelan state oil firm isn’t paying its way, so the Brazilian giant is taking over a joint $17 billion refinery project. It shows how political deals can go astray. Brasilia should take note. The more it interferes, the more Petrobras looks like another PDVSA.
Failed petrostates threatened by new oil bounty 20 Sep 2013 Oil majors are becoming less tolerant of the political risks and corruption they’ve coped with in the past. That’s bad news for the likes of Nigeria or violence-prone Libya. With safer crude on offer in the U.S. and elsewhere, troubled states risk an exodus of expertise.
Oxy’s quest for value looks half-cocked 17 Sep 2013 The oil giant is considering selling a stake in its Middle East wells. Not only does CEO Stephen Chazen appear to have put a cheap price on the asset. It also means he’s eschewing a better way to boost returns for shareholders: offloading products like chemicals and pipelines.
Eike Batista’s blame game is depressingly familiar 16 Sep 2013 The collapse of the Brazilian tycoon’s $60 bln empire seems to be everyone’s fault but his own. He claims no “special knowledge.” Chiefs at firms like Lehman, Bear Stearns and Enron all passed the buck, too. Bruised investors can take a Batista comeback at his word, and avoid it.
Repsol’s Gas Natural sale shows Caixa the exit 13 Sep 2013 Repsol might shed its 30 percent holding in Gas Natural, the Spanish utility. The stake never made much sense. The sale would dilute the oil group’s relationship with its largest shareholder, Caixabank. Parting ways makes sense for all involved.
Big Oil’s growth addiction is counterproductive 11 Sep 2013 The industry pours billions into projects with marginal returns to keep production rising. Yet the oil majors’ huge size means big new finds barely move the needle. Oil bosses should ditch their fixation with growing output. The sector’s best option may be to shrink.
Batista’s bravado hastening his own death spiral 10 Sep 2013 Sinking oil firm OGX has every right to insist founder Eike Batista honor a pledge to inject $1 bln. But Brazil’s one-time richest man no longer has the cash. Even a down payment would require stock sales in his other plunging firms, hastening the demise of his empire.
Kazakh deal shows China’s enduring thirst for oil 9 Sep 2013 Buying into the Kashagan oilfield gives China’s national oil producer access to one of the world’s last great finds. The $5 bln cost of the stake - plus $3 bln to help Kazakhstan fund a tricky expansion - shows that, for China, resources are still scarcer than capital.
Middle East turmoil perpetuates OPEC charade 5 Sep 2013 Increasing energy supply from North America might have caused a global glut. But a steady stream of crises - in Iran, Iraq and Libya - has restrained OPEC’s output, and spared the cartel the difficulty of enforcing strict quotas on its more unruly members.
Petrobras biggest loser of Brazil’s currency blues 3 Sep 2013 With the bulk of revenue in reais, the state oil giant will find servicing its $70 bln of U.S. dollar-denominated debt a painful affair. While a default looks unlikely, the currency mismatch will make it harder for Petrobras to fund its $236 bln capital expenditure plan.
Botched Batista bankruptcy another risk for Brazil 30 Aug 2013 Having to restructure Eike Batista’s collapsing empire is embarrassing enough for Brazil. But Latin America’s most chaotic bankruptcy regime now threatens further harm to the country’s reputation. A high-profile fleecing of foreign creditors would imperil future investment.
Fracking may change U.S. foreign policy for good 28 Aug 2013 The abundant supply of hydrocarbons made accessible by hydraulic fracturing has brought America much closer to energy independence and created a buffer for the global oil price. The shift gives Uncle Sam new latitude in handling problems in Syria and throughout the Middle East.
UK fracking furore reflects skewed view of risk 23 Aug 2013 If protests against the drilling technique keep up, they could scupper the country’s shale ambitions. Opponents cite risks which look manageable and often gloss over the problems of other sources of energy. Such fearful and narrow analysis is an invitation to bad policy.
Markets are poor judge of Egyptian violence 15 Aug 2013 A bloody crackdown on protesters has intensified the political crisis in the Middle East’s most populous country. Oil prices and Egyptian CDS are up. The ramifications may be far wider than the initial reaction suggests. For now, the market response can be only backward-looking.