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$4.2bn swoop on Kazakh producer will help to slake growing oil thirst

Terry Macalister, The Guardian
China flexed its growing corporate muscle on the world stage again yesterday, announcing ground-breaking plans to buy oil producer PetroKazakhstan for $4.2bn (£2.3bn).

The move by China National Petroleum Corporation would rank as the largest overseas takeover by a Chinese firm to date.

It is aimed at helping to slake the country’s huge thirst for oil and comes weeks after China National Offshore Oil Corporation failed to buy Unocal in America.

State-controlled CNPC hopes to tie up the acquisition of one of Kazakhstan’s leading oil producers – formally based in Canada, and listed in Toronto and London – by October, but the Chinese face competition from an Indian consortium and could meet political resistance in Kazakhstan.
(23 August 2005)

Kazakh oil coup for China, India cries foul

Staff, Asia Times with Asia Pulse/XIC/news services
… The CNPC bid was met with dismay in the Indian press August 23, with the Times of India complaining that “[PetroKazakhstan] played foul to put ONGC-Mittal Energy out of the race”. OME [a combine of India’s Oil & Natural Gas Corporation and the steelmaking Mittal group], had been negotiating with PetroKazakhstan for months and its initial bid was higher than CNPC’s. Most of the complaints centered on the allegation that OME was never allowed the opportunity to match a late increase in CNPC’s bid. The New Delhi-based Financial Express newspaper said the original bids for PetroKazakhstan were submitted on August 15; at this time, the CNPC bid was lower than the OME bid. But while CNPC revised its bid to $4.18 billion, the ONGC-Mittal combine was neither given a chance to match the bid, nor was it allowed to re-bid.

Sources told the Financial Express that the Chinese were allowed to raise their original bid price because they were ready to proceed without any conditions, whereas the OME bid was conditional. It is also believed that the CNPC offer included a large cash component. CNPC’s offer of $55 a share represented a 21.1% premium over the stock’s closing price at the New York Stock Exchange on Friday. In effect, therefore, CNPC offered to overpay for PK, partly in cash, without asking any awkward questions; and PK preferred this to the Indian bid.

OME officials seemed baffled Monday by the sudden turn of events. A senior ONGC official said: “We have no explanation as to why we were not given a chance to re-bid or even submit the clarifications sought from us.” And ONGC chairman Subir Raha, while admitting that “it seems we have lost by a narrow margin”, added, “if PetroKazakhstan asks us for a counterbid, we will do it. Our merchant bankers are already working on it.” ….

There appeared to be at least a glimmer of hope for OME. Due to the strained relations of PK management with Kazakh regulators and the “goodwill” OME partner Mittal enjoys in Astana (according to the Times of India), the Kazakh government has tended to be supportive of the OME offer. The final decision will be made at a PK shareholders’ meeting in October, the date of which has not yet been announced.
(24 August 2005)

How to Escape the Oil Trap

Fareed Zakaria, Newsweek
Both Iran and Saudi Arabia are now awash in oil money, and no matter what the controls, some is surely getting to unsavory groups. …

If I could change one thing about American foreign policy, what would it be? The answer is easy, but it’s not something most of us think of as foreign policy. I would adopt a serious national program geared toward energy efficiency and independence. Reducing our dependence on oil would be the single greatest multiplier of American power in the world. I leave it to economists to sort out what expensive oil does to America’s growth and inflation prospects.

What is less often noticed is how crippling this situation is for American foreign policy. “Everything we’re trying to do in the world is made much more difficult in the current environment of rising oil prices,” says Michael Mandelbaum, author of “The Ideas That Conquered the World.”
(Aug. 29 – Sept. 5, 2005 issue)
The nationalist argument for US energy self-sufficiency. Also posted at the Washington Post. -BA

Winter forecast for heating homes: costly

Ron Scherer, Christian Science Monitor
Big bills for natural gas and heating oil could follow on the heels of this summer’s steep prices at the pump.
NEW YORK – It appears that Americans will be walloped by energy sticker shock right through this winter.

With the price of both oil and natural gas significantly higher than last year, the cost of heating a home will take yet more money out of wallets. Early estimates are that it will cost at least 30 percent more than last year for homeowners in the Midwest who use natural gas to heat their homes, and as much as 20 percent higher for those in the Northeast using heating oil. Those are conservative estimates, however, and expenses could be higher, depending on the weather.
(23 August 2005)

What’s a luxury car driver to do?

Matt Nauman, San Jose Mercury News
As the price of premium gasoline soars past $3 a gallon, owners of high-performance luxury cars are changing their driving habits, complaining about rising costs or, more likely, just responding with a shrug.
(23 August 2005)

Will GOP pay for high gas prices?

Steven Thomma, Knight Ridder Newspapers
WASHINGTON — Americans are mad as heck about soaring gas prices, and Democrats hope they will take it out on the Republicans who control the federal government in next year’s midterm elections.

“Bush does nothing to combat rising prices,” the Democratic National Committee said last week in a new attack seeking to link President Bush, his party, gas prices and oil-company profits in the public mind. “Republicans are in the oil companies’ pockets, and Bush is in the oil companies’ pockets.”

The White House responds that no one can turn around gas prices instantly, that Bush fought for years to enact an energy bill and that the new plan, signed into law this month, will take years to produce results.

… [Democrats] said Republicans had received $67 million in contributions from the oil-and-gas industry since 2000.

Yet Democrats received $17 million from the industry during that period, according to the nonpartisan Center for Responsive Politics, and many also voted for the energy bill: 75 in the House, 25 in the Senate.

What would the Democrats do to curb prices? They would investigate the oil companies and their profits, Earnest said. They also would take some of the oil from the Strategic Petroleum Reserve to the marketplace in an effort to ease prices.
(23 August 2005)
If the Bush administration is clueless about energy, the Democrats quoted in this article are even more so. (Confession: I’m a lifelong registered Democrat.) -BA