A tale of two oil companies’ investment strategies
Chevron and Exxon’s contrasting strategies are examined in today’s FT by my colleague Sheila McNulty. Exxon is famed for its robust finances and profitability. But is Chevron’s strategy of spending more on production investment a better long-term strategy than Exxon’s approach of substantial dividends and buybacks?
The Source: Sustainable rallies; Oil as money; Obama and trains
On Energy Source today:
Looking for more sustainable rallies
Elsewhere on the web:
Production: Two Saudi projects delayed – The National
US oil security: A defence of the domestic oil and gas industry - Energy Outlook
Obama: ‘I am always jealous of European trains‘ – The Infrastructurist
Coal: Everything you wanted to know about surface mining – Bit Tooth Energy
Biodiesel: The great shutdown: some plants are producing no fuel at all – Green Inc/NY Times
Nigeria: Shell in court over alleged role in executions (Observer)
Electric cars: Company plans UK network of 20-minute charging stations (The Times)
Burma: Daewoo extends Myanmar oil, gas field exploration (Reuters)
A carbon reduction to-do list
It’s hard not to be sceptical of corporate blogs; they are after all essentially PR-managed efforts which can conflict with the transparency and openness demanded from blogs. Nevertheless, Shell’s climate change advisor David Hone makes some interesting points on his blog ahead of the pre-Copenhagen negotiations taking place in Bonn this week. (Our environment correspondent Fiona Harvey will also be there, and will be writing about the meetings for FT Energy Source).
Hone despairs of the different sentiments being expressed by various countries’ negotiators ahead of the talks: China wants 40% below 1990 levels by 2020; the US is downplaying the significance of 2020 in favour of focusing on the ‘longer term trajectory’ and Germany says that even under Obama the US is not doing enough. Then he looks at the difficulty of even returning to 1990 levels by 2020.
Oil as money?
Chris Cook, former director of the International Petroleum Exchange, has written at The Oil Drum and SeekingAlpha about his idea of using energy as a form of denomination for international trade. He argues that this is in fact already happening: “oil is not priced in dollars: dollars are priced in oil”.
The key elements:
“The concept is extremely simple, and it is that international trade should be denominated not in dollars, but in energy. Producers of energy, such as Russia and Iran may then-–in exchange for value received–issue Units redeemable either in electricity, or in “energy vector” fuels such as gasoline, heating oil, fuel oil and above all natural gas, which all have a fixed value denominated in energy.
Looking for more sustainable rallies
After a couple of rallies in the past fortnight spurred by fiscal and monetary efforts to stabilise the world economy, Goldman Sachs and Stephen Schork are looking to more sustainable
Goldman Sachs’ commodities team says rallies on optimism around fiscal and monetary stimulus will probably continue to be brief “for the time being”, and that the surplus of crude and product inventories will have to reverse before such rallies can be sustained. However:
“We maintain that such a shift is likely to occur in 2H2009 as the current policy activism increases the likelihood that improving economic activity will support oil demand growth against supplies tightened by OPEC cuts and accelerating non-OPEC decline rates.
Spot News
Energy news from elsewhere:
- England may become more like Portugal in climate-changed future (Bloomberg)
- Britain’s water companies flush away £1m every day (The Times)
- Gazprom likely to cut spending (WSJ)
- Technip would consider nuclear, wind projects amid oil slump (Bloomberg)
- Areva’s Congo deal must be public, people protected, group says (Bloomberg)
- BP, Total tell suppliers to cut costs up to 40% amid $50 oil (Bloomberg)
Pink Picks: Rio-Chinalco, Gazprom, Qatar LNG
Energy news from the FT:
- Chinalco open to adjusting Rio terms
Chinalco not entirely opposed to its $19.5bn deal with Rio Tinto, whose shareholders remain divided on fundraising.
- Gazprom
LEX: The share price slide looks excessive with firm trading on less than 5 times prospective 2010 earnings.
- Qatar remains undeterred on LNG projects
World’s leading exporter of liquefied natural gas is pushing ahead with its multibillion dollar gas projects.
- Chevron and Exxon follow different paths to strike it rich
Analysts are eager to see how the two US oil majors compete during the next few difficult years.
- Australia gas decision nears
Chevron’s Gorgon liquefied natural gas project off the coast of western Australia to be given the go-ahead.
- Rio eyes $10bn rights issue option
Rio Tinto ready with a rights issue of about $10bn if $19.5bn fundraising plan with Chinalco falls through.
- Jet-setters to have chance to donate to charity
Social conscience can soon make contributions on every ticket bought.
Energy Source is no longer updated but it remains open as an archive.
Insight into the financial, economic and policy aspects of energy and the environment.
