Daily Archives: March 19, 2009

Ed Crooks

Taqa, the Abu Dhabi energy group that was one of the biggest buyers of oil and gas assets worldwide, has put the brakes on. It has reported results for 2008 that are pretty hard to interpret, given how much the company has changed as a result of all the deals it has done, but the interesting news is the comments by Peter Barker-Homek, the chief executive, who spoke to the FT earlier today. He reined back sharply Taqa’s estimate of how fast it would grow.

Oil prices charged above the $50 a barrel level on Thursday, leading a broad advance across commodity markets which rallied strongly after the Federal Reserve announced plans on Wednesday to buy $300bn in US Treasuries as the US central bank aggressively expanded its efforts to counter the financial crisis. Equity markets have also staged a rally.

Traders said the Fed’s shift was seen as very positive for commodity markets as it should support economic recovery and would push investors out of government debt and into higher-risk asset classes.

Kate Mackenzie

On Energy Source today:

Videos: Iraq and Libyan oil ministers on changing terms for producing nations

Opec countries and carbon capture and storage

FT climate change competition: voting is open

Does carbon need a floor price?

Determining who pays for carbon emissions

Elsewhere:

Competition: EU charges Eni over pipelines (Reuters)

Big oil: Can Exxon survive Obama? asks Portfolio, contrasting the company’s lack of enthusiasm for renewables with the new administration’s energy plans. An unhappy Exxon replies: check your facts (Portfolio)

Climate change: UK government’s chief scientists warns of ‘perfect storm’ by 2030, when rapidly growing demand for food, energy and water will be further complicated by climate change (BBC)

BP Texas City disaster: How the judge decided that the punishment did fit the crime (The Barrel/Platts)

Ethanol: Aventine becomes the latest corn ethanol maker to face bankruptcy (SeekingAlpha)

Cars: GM says Volt battery is on track; plans to build a prototype this summer (CNet)

Kate Mackenzie

Carola Hoyos wrote last month about the more favourable terms that oil companies can get in producing nations as falling prices shift power back towards the oil majors. Iraq is a particularly strong example of this – companies such as BP, Royal Dutch Shell, Chevron and Total will now receive stakes of 75 per cent rather than 49 per cent if their bid wins.

At the Opec meeting that is under way in Vienna, Iraq’s oil minister Hussein Shahristani told Carola about those sweetened terms.

But Libya’s oil minister, Shokri Ghanem, says resource-rich countires will remain important. Watch the videos after the jump:

Fiona Harvey

Opec countries could be the world leaders in carbon capture and storage, the UK’s energy and climate change minister, Mike O’Brien, told the Opec meeting in Vienna.

This will be news to those companies in the UK hoping to net a large slice of government funding for their CCS plans, as the competition for that funding was supposed to establish the UK as a leader in CCS.

Ed Crooks

The FT’s climate change challenge, trying to find a pratical, scalable business idea for cutting greenhouse gas emissions, is open for voting. The short-list has five strong ideas, including hub-caps for trucks, a microwave for creating biochar, solar-powered stoves, cooling ceiling tiles, and animal feed that cuts cows’ flatulence.

The FT’s judging panel, which is a high-powered set of people, liked these ideas the best, but we really want FT readers to contribute their thoughts and insight. So go there and vote, and please comment below with your views on the contenders.

Fiona Harvey

The collapse in price of carbon permits under the EU’s emissions trading scheme has been a cause of concern for months. The price is now about €12, having bounced back from a low of about €8 earlier this year, but that is still very low compared with the prices of more than €22 last year, and a long way from the peak last summer of about €30.

As the FT has noted, the slump in prices has meant that companies covered by the scheme no longer have much incentive to make the investment needed to lower their emissions.

It also means that the value of the global carbon markets is set for a sharp decline this year, for the first time.

Kate Mackenzie

US energy secretary Stephen Chu’s suggestion of taxing imports from countries that do not enact carbon reduction schemes has not been looked on too favourably by China.

China’s top climate negotiator had already been arguing for a quite different approach – that carbon produced in creating exports for western countries should not be considered part of China’s emissions, but instead that of the consuming countries. This idea gained momentum after a report last month that a third of China’s emissions were produced creating goods for export to western countries.

Carola Hoyos

Opec’s decision on Sunday against a further round of cuts was welcomed by consuming nations from around the world. The cartel has used the moment of enhanced credibility to tell the G20 that it was now the turn of rich countries to boost the economy.

But Opec’s decision not to cut may have had another reason. Some countries are just not able or willing to make any further reductions. Indeed, despite having promised to boost their compliance to near 100 per cent by the end of May, laggards Venezuela and Iran don’t appear inclined to follow through.

Energy news from elsewhere:

- China’s CNOOC to cut non-core spending as profit drops (Bloomberg)

- China’s State Grid to sell US$24.86bn in bonds to fund new power networks (WSJ)

- Valero beats ADM in bid for bankrupt VeraSun’s ethanol plants (Reuters)

- Auction for Gulf of Mexico oil leases is strong despite Obama policies (Reuters)

- Shortage of hydroelectric power should give small boost to gas demand (Platts)

- Uncertainty over Australian carbon plan reduces trading (Bloomberg)

- Nexus CFO quits as it fails to draw ‘acceptable’ offers for Crux project (Bloomberg)

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