Oil/gas industry - Jan 18
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Mergers in pipeline as oil industry's fairytale era ends
Terry Macalister, Observer (UK)
A new wave of mergers is likely to sweep through the oil industry as cash-rich companies such as ExxonMobil eye up smaller rivals - possibly even Shell - after the collapse in the price of crude.
Analysts think many firms have made themselves vulnerable to takeover because they took on major new commitments when the oil price was rattling up to its summer high of $147 a barrel, compared with the current level of under $40.
... Exxon is likely to be the lead predator in a new wave of consolidation because it has $40bn of free cash and a pile of highly valued Treasury bonds.
(18 January 2009)
Gulf states run risk of losing investors
Daliah Merzaban, Reuters via Globe and Mail
Gulf Arab countries must start publishing timely and detailed economic data to convince investors alarmed by weak oil prices and the global financial crisis that they are still prime targets for investment.
Some Gulf Arab states have not released economic growth data for 2007, let alone late 2008, a situation investors find increasingly unacceptable in such uncertain times.
During the region's six-year oil boom – now a distant memory – patchy economic data posed few questions among investors accustomed to secretive conservative Gulf regimes. They based investment decisions on the strength of oil prices, not the level of transparency.
(18 January 2009)
The Case Against Dirty Oil
Peter McKenzie-Brown, Language Matters
... the US market for oilsands producers may not be as secure as Canadian producers may hope. Canada can compete in the market, but it may increasingly be at the expense of other global oil producers as this continent’s energy mix changes. There are a lot of caveats to that theme – not least of which is that the drive to greener bitumen production is now an almost unstoppable force. In Canada’s traditional export market, the greenest producers may become the most successful players.
American legislators have already begun to target it as an easy way to reduce emissions without hurting American voters. For example, Congress has already passed a law banning federal government agencies from directly promoting energy projects that will emit greater greenhouse-gas emissions over their entire life cycle than conventional oil. A section of the US Energy Independence and Security Act of 2007 prevents federal agencies such as the military from entering into fuel contracts that directly encourage unconventional energy development. This could include the oilsands.
For its part, California has passed regulations requiring fuel suppliers to reduce the emissions from the fuel they sell – and to account for those emissions right back to the original source of production.
Energy calculus of this kind is unprecedented, and if followed to its logical conclusion could be devastating for Canada. The world’s largest per capita consumers of energy, Canadians are also the world’s largest per capita producers of CO2. Regulations that limit the carbon quotient in other imported goods could shut a variety of Canadian products out of American markets. Whether or not such rules will ever apply to other commodities, for oilsands producers these developments are immediate matters of deep concern.
(17 January 2009)
Clowns to the Left of Me, Jokers to the Right (Ukraine gas dispute)
Steve LeVine, The Oil and the Glory (blog), Business Week
Why has Russia’s natural gas dispute with Ukraine stretched out so long?
A key reason is the subtext from Russia’s side: an effort once and for all to tar and discredit much-detested neighbors who have become darlings of the West, and end the West’s intrusion into Moscow’s claimed sphere of influence.
Despite some self-inflicted damage, the gambit so far has been relatively successful.
In the fall, Russian Prime Minister Vladimir Putin and his junior partner, President Dmitry Medvedev, managed through skillful public relations to turn their full-scale invasion of Georgia into a reflection on the sanity of Georgian President Mikhail Saakashvili. It was one of those kernel-of-truth cases — Saakashvili in fact is a rash, immature leader (and may indeed have initiated the original fighting in South Ossetia that preceded Russia’s invasion of Georgia proper).
Saakashvili’s personality flaws hardly justified Russia’s seizure of the Georgian port of Poti and the bombing of the Baku-Ceyhan pipeline route, and Putin and Medvedev suffered black eyes. Yet Saakashvili’s image in the West and at home was severely — and perhaps permanently — damaged. (And, not incidentally, the U.S. was revealed to be largely impotent in what it had hubristically claimed as a pro-Western new region.)
(17 January 2009)