Daily Archives: July 3, 2009

Ed Crooks

On Energy Source:

What future for Repsol YPF?

Oil keeps falling

The IAEA’s new director-general

Elsewhere:

Russia accuses Mol of Hungary of licence violations in West Siberia (Platts)

…but has turned nice again for Total and Shell (The Oil and the Glory)

BP’s Tanggugh LNG project to deliver its first gas to Korea on Saturday (Platts)

Fuel price rises don’t stop drivers in China and India (Reuters)

A threat of more hurricanes in the Gulf of Mexico, caused by El Nino (Science via Bloomberg)

Why Mexico should stop exporting oil (Gregor)

Wesley Clark fights to defend the US ethanol industry (CNN)

A question everyone should ask: “what if I am wrong?” (The Oil Drum)

And another attempt to break the laws of thermodynamics bites the dust (R-Squared)

Ed Crooks

The news that Repsol YPF has been approached by Chinese companies seeking to buy or take interests in the majority of its upstream assets is something of a mixed blessing for the Spanish group.

On the one hand, Repsol has been trying for years to extract itself from the horrible mess of Argentine politics that embroils YPF, and the prospect of a well-funded buyer that is not too concerned about short-term returns coming along to pay a good price for the unwanted business seems like a godsend.

On the other hand, YPF provides about 60 per cent of Repsol’s production. The parallel approach from CNOOC, if consummated, would presumably mean surrendering even more control over oil and gas reserves.

So what would the future for Repsol look like without YPF?

Oil slipped further on Friday amid light trading as bleak US jobs data continued to weigh on the market.

Crude dropped almost 4 per cent on Thursday after closely watched non-farm payrolls data showed the jobless rate in the world’s largest economy hit a 26-year high, dashing latent hopes that commodities would continue to rally on the back of a sharp global economy.

The US Independence Day holiday meant the US market was closed and volumes of West Texas Intermediate trades were at a minute fraction of their normal level.

“We have repeatedly warned that the bullish market sentiment was overdone,” analysts at Commerzbank said. “We also believe that the market needs to be positively surprised, in order to maintain current price levels”.

Nymex WTI for August delivery fell 25 cents to $66.48 a barrel, meaning the US benchmark has now fallen almost 10 per cent since rising to an eight month high overnight on Tuesday. ICE August Brent shed 23 cents to $66.38.

Base metals also dropped, with copper losing 1 per cent to $4,985 per tonne, and aluminium falling 0.3 per cent to $1,634 per tonne.

Gold however recovered a small amount of ground, rising 0.2 per cent to $934.3 a troy ounce, as the US dollar weakened slightly, thus boosting the appeal of the dollar denominated yellow metal.

Ed Crooks

The International Atomic Energy Authority (IAEA) has appopinted a new director-general, Yukiya Amano of Japan, to replace Mohamed ElBaradei.

The decision marks the end of an era. Mr ElBaradei, who steps down at the end of November, has been in office since 1997, having been re-appointed in 2001 and 2005, in spite of frequent criticism from countries including the US and Britain.

Mr Amano’s public statements do not suggest he will take a very different line from Mr ElBaradei, however. And while the face may be different, the challenges are very much the same.

- ‘Rogue broker’ at PVM blamed for oil spike
Loses $10m on unauthorised trades (FT)

- UN nuclear watchdog chooses new head
Japanese diplomat to lead IAEA (Reuters)

- Chinese talk to Repsol about Argentine arm
Spanish group in talks to sell YPF to CNPC (FT)

- China’s oil ambitions take it to new frontiers
CNPC’s bid shows Chinese firms are potent competitors (FT)

- Exelon sets out ‘final’ bid for NRG
Sweetens hostile bid to $7.5bn (FT)

- BP takes risk in Iraq while others balk
CEO Hayward’s decision may pay off (FT)

- Spain reprieves ageing nuclear plant
Economic pressures postpone closure (FT)

- Suspicion of Russian reliability fuels change of heart
Ukrainian spat with Moscow focuses attention to nuclear (FT)

- Gas feud sets scene for Indian test case
Reliance Industries fights court ruling (FT)

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