Though the Kirchner government called it ‘hydrocarbon sovereignty’ and ‘in the national public interest’ when making its move to nationalise YPF, in which Repsol owned a stake, according to Argentina’s Clarin.
China’s Sinopec is eyeing a €2.7bn stake in Spain’s Repsol as Sacyr Vallehermoso, the indebted Spanish builder, races to offload half of its shares in the oil company to pay back loans in order to avoid a possible collapse, the FT reports, citing people familiar with the talks. Sacyr is scrambling to refinance a loan expiring on Wednesday that was taken out at the height of the credit bubble to buy 20 per cent of Repsol. The building group has identified two possible buyers for a quick sale of up to half its holding worth €2.7bn at current market prices. Sinopec, the state-controlled oil group that last year struck a $7.1bn deal to buy 40 per cent of Repsol’s Brazilian operations, has been approached by Sacyr’s advisers to purchase up to 10 per cent of the Spanish oil group’s shares. Sacyr also remains confident that an unnamed Latin American oil group is also interested and could bid before Wednesday.
Libya’s oil output has plunged by at least a fifth as foreign companies have shut down production, running the risk of turning Middle East turmoil into an oil crisis, reports the FT. Oil prices surged on Tuesday after Eni of Italy and Repsol YPF of Spain, the largest oil producers in Libya, said they were shutting down output. Traders said two of the four Libyan oil ports were closed and refineries had also been affected. In a sign of deepening crisis, Ali Naimi, Saudi oil minister, said the Opec oil cartel stood ready to boost production if necessary, adding that the oil market was well-supplied for now. Saudi Arabia retains about 4m barrels a day of spare production capacity, which Naimi stressed could help offset losses in Libya. The NYT adds that concerns about broader disruption to Middle East supplies are also driving oil prices.
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
China Petrochemical Corp, or Sinopec, is paying a 76% premium for its stake in the Brazilian unit of Spanish group Repsol, as the world’s biggest energy user switches its hunt for oil reserves to Latin America from Africa, reports Bloomberg. Sinopec agreed on Oct 1 to pay $7.1bn for a 40% stake in Repsol’s unit, which has reserves in the same area as the biggest oil discovery in the Americas this century. That amounts to $15 a barrel compared with the $8.50 Petroleo Brasileiro paid last month for assets in Brazil, said an analyst at Sanford C Bernstein & Co.
European stocks were starting the new quarter on the front foot, tracking Asian bourses, after an upbeat survey of China’s manufacturing sector eased concerns the world’s second-biggest economy was struggling to emerge from its mid-year sticky patch, reports the FT. The FTSE All-World index was higher by 0.3 per cent, adding to last quarter’s 14 per cent advance, as many stock investors remained optimistic about the prospects for global growth, or that central banks remained poised to provide support if required. News of an $18bn joint venture between Chinese refining major Sinopec and Spain’s energy giant Repsol, added to the positive mood, with traders reasoning the tie-up was indicative of the strong demand for resource assets and another example of a developing M&A trend as financial markets recover and corporate animal spirits return.
Breaking pre-market news on Friday,
– Repsol agrees to sell $7.1bn stake of Brazil unit to Sinopec – Bloomberg. Read more
Anadarko, the US oil group, and partners Woodside of Australia, Repsol of Spain and Tullow Oil of the UK, on Wednesday confirmed the discovery of an offshore oil region from Sierra Leone to Ghana, in which they expect to find more huge oil fields in the next five years. Shares in Anadarko, which has 40% of Venus; Tullow, with 10%; and Woodside and Repsol, each with 25%, surged on the news which was based on drilling results from the Venus well, 1,100km from Ghana’s Jubilee field, Africa’s largest deep-water field.
Anadarko, of the US, with partners Woodside, Repsol, and Tullow, the UK-listed oil company, will reveal as early as Wednesday that they have established a new oil frontier that stretches 1,100km along the coast from Ghana to Sierra Leone. The announcement will be made off the back of discoveries made by the Venus well Anadarko has been drilling off Sierra Leone, the FT said, citing people close to the US company said.
India’s Oil and Natural Gas Corporation is seeking a partner for a possible $17bn bid for YPF, the Argentine arm of Spanish oil group Repsol, according to an ONGC executive who told the FT on Thursday that the group was exploring opportunities and partners for a bid, though talks were at an early stage. He spoke after reports that Repsol, which owns 84% of YPF, was discussing the sale of its stake in the Argentine company with Chinese oil companies CNPC and CNOOC.
There’s obviously a lot of damage-control going on in China, and possibly in Argentina and Spain, following a report on Tuesday – and a denial – of talks over what could rank as the energy deal of the year, and one of China’s biggest overseas investments.
The mystery – apart from whether the talks are on or off – is why Chinese companies would want to pay $17bn for less than premium upstream and downstream oil resources? Read more
Stephen Schork of the Schork Report sets out the case very succinctly on Friday:
Thus, while we were led to believe that demand for oil was rising in the second quarter, hence the justification for that 40 percent surge on the NYMEX, we now have the balance sheets from Exxon, Shell et al. that prove it was a lie. Read more
Spain’s Sacyr Vallehermoso, the troubled construction group, on Monday agreed a €7.9bn deal to sell its toll road business, Itínere, to Citi Infrastructure Investors, a fund run by Citigroup, but questions remain over the Spanish group’s debt burden. Once completed, the sale of Itínere would allow Sacyr to cut total group debt to €12.5bn, from about €18.5bn now. Cash proceeds from the deal would probably be used to cancel some of the €2.1bn debt due next year, say analysts. But Ana de Pro, managing director of Sacyr, said Monday the company was “still negotiating” the sale of its 20% stake in Repsol, the Spanish oil group. Early speculation had been that the sale of Itínere would relieve this pressure. Lukoil, the Russian oil company, is among top candidates to buy the shares as part of the purchase of up to 29.9%, but there are fears that a sale to Lukoil, or another suitor, could lead to a full takeover bid for Spain’s only integrated oil and gas group. Meanwhile, time is running out for Sacyr, warns Lex.
European credit derivatives markets weakened on Tuesday, with both the benchmark iTraxx Crossover index and the investment-grade iTraxx Europe index moving wider.
By mid-morning, the Crossover index of 50 mostly high-yield corporate borrowers widened about 3bp to 331bp, while the Europe index added 1bp to 45bp. Investors are waiting for the resumption of US trading after the long Labour Day weekend, as well as for key US manufacturing data, due at 14:00GMT. 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.