Paul Krugman thinks the Cyprus bailout is all about the Russians.
As he noted in his New York Times blog:
You can sort of see why they’re doing this: Cyprus is a money haven, especially for the assets of Russian beeznessmen; this means that it has a hugely oversized banking sector (think Iceland) and that a haircut-free bailout would be seen as a bailout, not just of Cyprus, but of Russians of, let’s say, uncertain probity and moral character. (I think it’s interesting that Mohamed El-Erian manages to write about this thing, fairly reasonably, without so much as mentioning the Russian thing.)
Breaking pre-market news on Monday,
- Vodafone confirms in talks with Wind Hellas on possible business combination — statement. Read more
As the Great Socialist People’s Libyan Arab Jamahiriya comes crashing down, despite regime attempts to butcher demonstrators — here’s a timely reminder on corporate exposure.
Much of it, as you’d expect, is concentrated in oil production. (Output at the country’s Nafoora oil field had stopped on Monday due to strikes, incidentally.) Read more
The surge in US “unconventional” gas production is a “bubble” and gas prices will rise sharply in the next few years, the export chief of Russia’s Gazprom has said, the FT reports. Alexander Medvedev, deputy chief executive of Russia’s state-controlled gas company, likened the shale gas boom to the internet bubble, “which first blew up enormously and then flattened itself out to some rational and logical size”. Of course, moves to shale gas production have cramped Gazprom’s hopes to export its gas to the US market. Nevertheless, analysts believe that Medvedev’s forecast will prove accurate as gas producers drop out of the market and coal also rises in price.
Royal Dutch Shell and Gazprom have formed a strategic alliance little more than three years after an acrimonious dispute in which the multinational was forced to cede control of the giant Sakhalin II oil and gas project to the Russian company, reports the FT. The deal will pave the way for two of the world’s biggest gas companies to deepen cooperation in Russia and work together in other countries. The agreement, signed in Moscow on Tuesday, signals a recognition at the Russian company that it needs foreign allies to help globalise its gas business and expand further into oil.
Breaking pre-market news on Monday,
- Standard Chartered rights issue take-up 98.5 per cent – statement. Read more
Russia and gas disputes go hand-in-hand.
And the latest dispute of this nature is focused on Belarus. Read more
Gazprom, Russia’s state-owned gas giant, is preparing a bid to become one of the biggest fuel suppliers in Britain, the Sunday Times said. The company is expected to lodge an offer this week for a network of 800 petrol stations and the Lindsey oil refinery at Killingholme, Lincolnshire, the newspaper reported.
India’s Oil and Natural Gas Corp is in talks with Gazprom and Rosneft over taking equity stakes in oil and gas projects in Russia to help cement an energy partnership between New Delhi and Moscow. An official at India’s foreign ministry said on Thursday the talks would form part of an official visit by Vladimir Putin, Russia’s prime minister, to New Delhi on Friday.
India’s Oil and Natural Gas Corp is in talks with Gazprom and Rosneft over taking equity stakes in oil and gas projects in Russia to help cement an energy partnership between New Delhi and Moscow, the FT reported. An official at India’s foreign ministry said on Thursday the talks would form part of an official visit by Vladimir Putin, Russia’s prime minister, to New Delhi on Friday.
A tip of the hat to Nick Drew over at the Cityunslicker blog for drawing our attention to the following gem of a natural gas market story.
As reported by Reuters late last week: Read more
Breaking pre-market news on Monday,
- Citigroup said to plan sale of $10bn private-equity unit – Bloomberg. Read more
Breaking pre-market news on Wednesday,
- Natixis parent BCPE will guarantee €35bn of toxic assets as the struggling investment bank – Reuters. Read more
Oil companies from emerging economies are responsible for more than half the sector’s biggest mergers and acquisitions by value this year, according to a PwC report. Emerging economy buyers, led by Chinese and Russian companies, paid for $24.2bn of the total $48bn value of the 50 largest oil and gas deals agreed in the second quarter, compared with just one-fifth of the total value of deals last year. The leading buyers in the second quarter were state-controlled groups Sinopec of China, which agreed to pay $8.8bn including debt for London-listed Addax Petroleum, and Gazprom of Russia, which spent $8.3bn on a number of deals, including $4.1bn to buy a 20 per cent stake in oil subsidiary Gazprom Neft.
Right, it’s the 15th January – the annual Ukraine/Russia gas stand-off should be over by now.
But it’s not. Read more
Gazprom will complete on its purchase of a majority stake in TNK-BP by the end of 2008, according to Vedomosti, the FT’s associate paper in Russia. The paper cited sources close to Gazprom and TNK-BP and affixed a firm price on $20bn on the deal.
TNK-BP is currently a joint venture, 50 per cent owned by BP with the remainder owned by a trio of Russian billionaires. It is reported that state-controlled gas company Gazprom intends to buy out the Russian shareholders and has already agreed a deal with BP to acquire 1 per cent from them to gain control. Read more
Three days after the news emerged, Imperial Energy has fessed up to the fact that the supposed mystery suitor looking to buy 25 per cent of the London-listed Russian oil play is Gazprombank, the financial wing of the Russian state energy company.
A statement was made on Wednesday, at the behest of the Financial Services Authority: Read more
The financial arm of Russian giant Gazprom is understood to be the mystery bidder that has been looking to buy a 25 per cent stake in Imperial Energy, the UK-listed oil company. Last week, Imperial, which Russian officials have accused of overestimating its reserves, said it had received an unsolicited offer from an unidentified investor wishing to buy 25 per cent of the company. Imperial said the investor proposed to buy the stake at a discount to the prevailing share price, prompting a 1.7 per cent decline in Imperial’s shares to £13.53.
There’s probably nothing in this, but it sounds intriguing. Shares in French steel specialist Vallourec soared in Paris on Thursday as a tale did the rounds suggesting Gazprom is considering a bid. Such an acquisition would presumably cost the Russians something north of €12bn and we can only guess at the size of the the Gallic row it would spark.
But we’ve got to admit to being a little confused here. This is Gazprom, the state-owned Russian oil and gas giant, which recently pondered a rival bid for Dow Jones, before Murdoch sealed his $5bn takeover. Read more
Gazprom, the Russian state-controlled oil and gas giant, held talks about mounting a rival $5bn-plus offer for Dow Jones, publisher of The Wall Street Journal, to see off the bid from News Corp, reports The Times. A regulatory filing with the SEC revealed that Dow Jones had received several other solicited and unsolicited approaches besides News Corp’s $60-a-share bid. One of the approaches, on July 10, was from “an international oil and gas company”, which a source later confirmed was Gazprom. The news highlights Gazprom’s and Russia’s global ambitions.
Apart from market upheavals, sovereign wealth funds are the latest topic to occupy commentators, media and politicians of all kinds, particularly German, American, Canadian – not to mention British, although the Brits seem determined to show the world that they, unlike other western governments, remain unconcerned about the impact of these state-funded investment behemoths. In fact, Alistair Darling, UK chancellor, was at pains last week to show Britain welcomes the rise of the SWFs, as The Times reported.
Two sharply different views come from commentators Larry Summers (who prefers to be called “Lawrence Summers” in his FT columns) and John Gapper, as well as some cogent analysis of the SWF phenomenon from FT reporters.
Summers, former US Treasury secretary and now Charles W. Eliot university professor at Harvard, reminds us in his FT column on Monday of the (by-now widely cited) Morgan Stanley estimates that the build-up of SWFs in developing countries is now close to $2,500bn, and that this figure will increase to $5,000bn by 2010 and $12,000bn by 2015. Read more
Royal Dutch Shell has been criticised by a group of US pension funds over its activities in Iran, home to the world’s second-largest gas reserves. In a letter seen by the FT, a group of the largest US public pension funds, including Calpers and New York City Pension Funds, have written to Shell emphasising the risks of doing business in Iran. The funds have also written to several other energy companies with activities in Iran, including Total, Eni, Repsol, Gazprom and ONGC.
Gazprom, the state-controlled Russian gas company, could make its second small acquisition in the UK with the purchase of Natural Gas Shipping Services, based in Cheshire. NGSS is the sister company of Pennine Natural Gas, a company whose supply business was acquired last year by Gazprom Marketing and Trading, a Gazprom unit based in Kingston, south-west London. GMT has an option to buy NGSS, although it has not yet decided whether to exercise it.
The Russian gas monopoly Gazprom said at the weekend it was about to close a deal that would increase its presence in Britain but did not name the company, reports The Guardian. Alexander Medvedev, Gazprom’s deputy chief executive, said at a conference in St Petersburg that there would be a deal “in the near future” to further increase Gazprom’s UK customer base. “Anyone who will be in London for the Wimbledon tennis tournament will know about it.” Wimbledon starts at the end of this month. Gazprom has long been tipped to buy Centrica, the owner of British Gas, or other European companies as it seeks a greater presence in the markets for its gas and Mr Medvedev’s words may spark speculative interest in Centrica’s shares today.
Italy’s Eni and Enel won an auction on Wednesday for the second lot of assets belonging to the bankrupt Yukos oil group, including a key 20 per cent stake in Gazpromneft, the oil arm of state-controlled Gazprom, and gas producers ArcticGaz and Urengoil. But immediately after the results, Gazprom’s deputy chief Alexander Medvedev said the gas giant was interested in buying the stake in Gazpromneft and at least a 51 per cent stake in gas producers ArcticGaz and Urengoil.
If you’ve are tempted by the high-flying Russian stock market, you’d do well to avoid giving in, writes Vitaliy Katsenelson at the Contrarian Edge blog.
He describes Russia as a “dysfunctional play on high oil prices as well as commodities,” and says the country is no less bureaucratic than it was some fifteen years ago. Read more
Russian energy group Gazprom will make its first significant foray into carbon trading on Tuesday with Dresdner Kleinwort. The joint venture between Gazprombank and DK will invest in projects generating “carbon credits” under the Kyoto protocol, mainly in Russia and eastern Europe. The move could open up a €15bn market, with analysts estimating that companies could generate up to 1bn tonnes worth of credits. Under Kyoto, companies investing in projects such as energy efficiency schemes that reduce emissions in former Soviet countries are awarded a credit for each tonne of carbon dioxide saved. These can then be sold to countries such as Canada, Japan and EU members that need to reduce their emissions under the treaty. Hedge funds and other institutional investors, as well as governments and companies covered by the emissions trading scheme, are expected to be among the eventual buyers of the credits.
Robin Geffen, managing director and chief investment officer at Neptune Investment Management, thinks 2007 could see consolidation in the financial, tobacco and utilities sectors, reports Reuters.
Geffen bought shares in Dutch financial services group ABN Amro, which he believes is attractively priced and could be taken over. “It’s a very strong target for consolidation in European financials. It’s divested itself of a number of businesses in the U.S. and it’s looking increasingly likely that it’s a good fit for a U.S. bank wanting a European presence or a European insurance company looking to merge into a banking group,” he said. Read more
But Shell prefers to look at the potential resources it could develop. In the longer term, Shell could still do more in Russia. Van der Veer said the company would “consider all opportunities”.