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Shell forced into oil sands U-turn
Daniel O’Sullivan, Investors Chronicle
Royal Dutch Shell chief executive Peter Voser cannily chose the safe ground of an exclusive interview with the Financial Times to finally admit the all-too-obvious – the Canadian oil sands development Shell has touted as a major growth driver is instead a costly distraction, on which time is now being called. Mr Voser said the massive expansion the company had previously planned for its Athabasca Oil Sands Project (AOSP) – envisioning growth from the current 155,000 barrels per day (bpd) capacity to an eventual 770,000bpd – was now ‘”clearly scaled down” and would be “very much slower”…
(27 Jan 2010)
There is a full transcript of the interview here.
IEA to Meet CFTC, OPEC, Banks on Curbing Speculation
Shigeru Sato and Yuji Okada, bloomberg.com
The International Energy Agency will meet OPEC, banks and U.S. and U.K. regulators in Tokyo next month to discuss limiting energy-price speculation.
IEA Executive Director Nobuo Tanaka said today he has asked U.S. Commodity Futures Trading Commission Chairman Gary Gensler, officials of the U.K. Financial Services Authority, and bank executives including Lawrence Eagles, head of commodities research at JPMorgan Chase & Co., to take part. The two-day meeting will start Feb. 25.
The CFTC has proposed curtailing investments by large banks and swaps dealers in oil, natural gas, heating oil and gasoline amid concern speculators drove crude prices to a record $147.27 a barrel in 2008. Speculative net-long positions in oil futures, or bets prices will rise, were the highest in at least 27 years in the week ended Jan. 12.
“OPEC and regulators must have come to the conclusion that a flow of big money from bloated global banks into the commodities market is responsible for big swings in prices for oil and metals,” said Tetsu Emori, a chief fund manager at Astmax Co. Ltd. in Tokyo. “Like President Barack Obama, regulators may have to take decisive measures to limit investment by banks.”…
(27 Jan 2010)
Clueless about oil prices
Steve Hargreaves, cnn.com
Two very different views on where oil prices are going by the year’s end are emerging – one says $60 or lower, the other $100 or higher, and there’s little consensus as to which is right.
The bulls say stronger global economic growth and low interest rates will lead to higher demand, pushing prices up from their current level of around $75 a barrel.
The bears say a rising dollar, weaker economic growth and greater efficiency will cause oil prices to fall as the year progresses.
“It underscores the volatility of the market and the various assumptions about the economy,” said Antoine Halff, Deputy Head of Research, Americas, Newedge USA, a joint venture brokerage subsidiary of Calyon and Societe Generale…
(20 Jan 2010)
Team of Rivals
Peter McKenzie-Brown, Language Instinct
A year ago, Stan Odut was chairman of the Small Explorers and Producers Association of Canada (SEPAC), and he was deeply worried about the industry’s immediate future. “The sources of capital for the junior sector are equity, debt and cash flow,” he said, “but many companies are already mired in debt and credit lines are being pulled. You can’t get additional debt coverage. You can’t raise any equity because there is no reason for investors to put money into the energy business right now (because of collapsing commodity prices). And governments (provincially in particular) have strangled cash flow. So help me with the equation: you’ve got to get one of those factors to change to get the business going again.”
In the last year, what has changed? I put the question to Gary Leach, SEPAC’s executive director. He describes a cautious sense of optimism within the junior sector of Canada’s petroleum industry. There’s been a strong recovery in oil prices, for example, although gas prices are still languishing. “In recent months equity markets have been more supportive of the industry,” he adds, although they have been “selective”. They are targeting companies with “strong management, in certain commodity niches. But there is no tide that is lifting all boats.” Bank credit is still a problem for some companies; many are carrying a lot of debt, and lower commodity prices have reduced the value of their assets in the ground. Technically, this is known as a double-whammy…
(26 Jan 2010)
