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Mexican newspaper El Universal reports from Oslo that Norway’s Statoil is looking to partner with Pemex, Mexico’s national oil company. Statoil wants the chance to tap the oil and gas believed to lie beneath the deep waters of Mexico’s Gulf Coast. A quick visit to Google Earth shows the gaping hole in drilling activity in the area caused by Mexico’s restrictive laws and its mismanagement of Pemex. But will Norway be able to fill the void? Does Statoil have the experience? Would it accept the narrow terms it would be likely to get? At least one upside is that the Mexicans are unlikely to turn to the regional player with the most deep water experience.
As our commodities correspondent, who has a penchant for good food (as long as it’s Spanish) and all things oil and Latin American, quips: “Letting Petrobras tap their fields would be like a Spanish embassy inviting a French chef to cater the most imortant state dinner of the year.”
Amid the very recent rise in oil prices and the longer-running fears that we may be storing up a supply crunch for when energy demand finally does recover, the NY Times looks at the contrarian view in a piece that wonders talks to some of the demand bears, such as Nouriel Roubini and Ed Morse, who maintain that demand recovery will be worse than many expect:
But a growing chorus of analysts and economists is questioning that notion. While theirs is a minority view, they see troubling conditions in the oil market that could still push prices down sharply — and a global economy that is getting worse, not better. Some are predicting that oil could fall to $20 a barrel and stay low for years.
As Opec’s decision on whether to change production levels draws near, there is ever more scrutiny of the levels of compliance by its members with the cumulative cuts of 4.2m barrels per day since September. True compliance levels are notoriously difficult to confirm but most observers have put the figure at around or slightly above 80%.
Abdalla El-Badri, Opec’s secretary-general, reportedly said in Doha yesterday that compliance was now around 85 per cent. Intelligence on compliance levels to date will be carefully considered by Opec members when they meet on Sunday. Bloomberg is reporting that Qatar‘s oil minister, Abdullah bin Hamad al- Attiyah, said the cartel should achieve 100% compliance before making further cuts. However he also sounded a bearish note on demand, which we noted yesterday is thought to be worsening. Read more
Results from Eon of Germany this morning feature an 82 per cent drop in profits and a statement from Wulf Bernotat, the chief executive, that reads like the script of an Ingmar Bergman film. The shares are off more than 8 per cent in early trading. Whatever happened to the idea that utilities were defensive investments? Read more
Buffett, who invests in several utilities and ConocoPhillips, says the economy should be fixed first, but also that ‘the future does have to have a constituency’. He also describes it as a regressive tax (where the tax rate decreases as the amounts being taxed increase): Read more
Energy news from elsewhere:
- Agriculture secretary Vilsack urges US to boost ethanol blend in gasoline (Associated Press) Read more
Energy news from the FT:
- Investors plot a change of tack on commodities
Plan to raise exposure but shift away from passive indices Read more