Daily Archives: September 28, 2009

Tom Burgis

By Tom Burgis, FT West Africa correspondent, in Lagos

The talks between a Chinese oil company and Nigeria about wresting some prime oil blocks sitting on 6bn barrels of crude from western energy groups raise some intriguing questions – even if officials warn that the deal is by no means sealed.

Firstly, the price. Oil men in Lagos talk of the Chinese putting $50bn on the table.

Secondly, how would the deal be structured? China has struck some huge bargains – in places such as Angola and the Democratic Republic of Congo – to provide sorely needed infrastructure in return for the commodities on which its fast-industrialising economy runs.

But previous efforts to reach such agreements in Nigeria have ended in acrimony and Chinese oil groups appeared to have switched tack to buying stakes in listed producers such as Addax.

A third conundrum is how the Nigerian government could sell stakes in the two of the 23 blocks under discussion whose leases run until 2019. Similarly, the production-sharing contracts that cover the five offshore blocks end only in 2020. These, though, are meant to be restructured, in any case, under a bill designed to overhaul the Nigerian energy sector that is before the national assembly.

William MacNamara

On Energy Source:

Geo-political tensions outweighed by sluggish demand as oil prices drop

Further reading:

Cashing in on green investment agenda, ex-White House veteran Van Jones to launch fund (NYT)

Paul Krugman feels “despair over the fate of the planet” (NYT

California sets aside $3bn in biggest energy efficiency programme (MSNBC)

The future of scrap and landfill recycling (Oil Drum)

China’s M&A moves are now more sophisticated (FT)

Yemen at risk of becoming a failed state (FT)

Ed Crooks

Rising tensions between Iran and the West were shrugged off by petroleum investors on Monday, as concerns over sluggish demand continued to weigh.

Crude prices remained under pressure in spite of weekend missile tests by Iran. The country had already come under scrutiny before the weekend after it was announced by UK, US and French officials that a nuclear facility was being built near Qum.

“Whether this latest geopolitical bombshell will have what it takes to stem the severe price declines we have been seeing in energy in recent days remains to be seen,” said Edward Meir at MF Global.

“Energy’s underlying negative fundamentals continue to assert themselves in the interim. Furthermore, there is also quite a bit of spare capacity in the system, so there is no screaming need for Iran’s oil.”

Last week, unexpectedly large rises in inventories of crude and refined products drove US benchmark Nymex West Texas Intermediate 6 per cent lower over the five sessions. Meanwhile, much of the US data last week were unimpressive and lent no support to the demand outlook for energy markets.

By late morning in London on Monday, Nymex WTI was down 0.5 per cent to $65.72 a barrel, while Brent crude was off 0.5 per cent to $64.81.

(By Neil Dennis)

India to launch energy-efficiency trading
Also plans fuel-efficiency standards for transport sector (FT)

Veolia’s Proglio set to be new head of EDF
France hopes to nominate foreign directors to board (FT)

China official warns of ‘too fast’ nuclear plans
Top energy planning official cites safety concerns (Reuters)

UK’s Centrica carbon head downbeat on Copenhagen
Sceptical US will sign climate-change deal (Argus Research)

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