Daily Archives: August 4, 2009

Kate Mackenzie

The US Cogressional Budget Office has published a brief on how carbon offsets might work under the Waxman-Markey bill’s regime. Like the European Union scheme, Waxman-Markey proposes to allocate a set amount of allowances to polluters covered by the bill, but those who exceed over their limit could, in addition to buying allowances from other organisations, also pay for offsets – emissions reduction projects either in the US or overseas.

This would be somewhat cheaper than paying for extra allowances, and would in turn reduce pressure on the price of allowances themselves. Read more

Kate Mackenzie

On FT Energy Source:

Heritage: In for a penny, in for a pound in Kurdistan Read more

Kate Mackenzie

London-listed small oil company Heritage and Turkey’s Genel, in attempting to consummate their merger, had to deal with the pesky problem of a $1.1bn of liabilities owed by Genel to the Kurdistan Regional Government.

Under the arrangement with the KRG, Genel’s parent company Cukurova was to pay $605m of the liability, while the remaining $495m became a long-term liability of the new merged company. Instead, Heritage and Genel are proposing to pay it off all at once by issuing equity to the regional authority.

This was hinted at by Heritage’s chief financial officer Paul Atherton last month when he mentioned an ‘equity consideration’ could be part of the settlement. Today Heritage announced that the entire liability would be paid for in equity, with KRG to  be issued 96m shares in the new company. Read more

Commodity markets paused for breath on Tuesday after sprinting to their highest levels of the year in the previous session following a sharp weakening of the US dollar and positive manufacturing data which bolstered hopes for an early global economic recovery.

In energy markets, Nymex September West Texas Intermediate oil held above the $70 a barrel level, trading $1 lower at $70.58 after reaching $71.95 in the previous session. Read more

Kate Mackenzie

Oil prices quickly fell back to earth after Brent crude yesterday reached a year-high of $73.50 — an unsurprising rise given the positive manufacturing data from China and the US, a weaker US dollar and a surge in global equities.

So oil surged on a number of macro-economic factors, despite the oil majors being almost universally pessimistic in their demand outlook in last week’s second-quarter results. Read more

Fiona Harvey

It was an extraordinary thing for the British Wind Energy Association to say.

In a briefing note sent to journalists late on Friday, the BWEA admitted that there was no business case for building a new manufacturing plant for onshore wind turbines in the UK. Nor was there a business case for Vestas to keep its wind turbine manufacturing plant open.

This is a blow to the UK government’s low-carbon industrial strategy, which relies on attracting wind manufacturing jobs to the UK, as well as jobs in wind farm installation and maintenance.

Onshore wind is a limited market in the UK because of the huge difficulty of gaining planning permission for wind farms.

The BWEA argues that in order for a turbine maker to set up a factory in the UK, or for Vestas to convert its factory from making blades for the US to making blades for the UK, the company would need to be confident of having about 1GW of new orders per year. There is no chance of that happening, given that the cost of doing so would make the company’s products uncompetitive compared with rival products from Denmark, Germany and Spain, where most of the turbines installed in the UK come from. Read more

James Fontanella-Khan

Energy agency warns on oil price increases
Economic recovery at risk, says IEA (FT)

Banks and oil groups lead rally
Markets reach highest level this year (FT)

Joint venture revives Italy’s nuclear hopes
Tie-up between EDF and Enel hints at comeback for industry (FT)

China refiners boost diesel output on fishing season
Auto sales should also support gasoline consumption (Bloomberg)

Chesapeake 2nd-quarter profit, more asset deals seen
Sees $2.35bn to $3.05bn in 2009 asset deals (Reuters) Read more