Nothing like the words “Arctic” and “oil drilling” to get the environmental campaigners excited.
Add banks to the mix, and you have the perfect mix for a modern day witch-hunt.
The latest targets are Cairn Energy and the Royal Bank of Scotland. In a joint press release, PLATFORM, Friends of the Earth Scotland and the World Development Movement on Tuesday said they “condemn [the] link between public money and Cairn’s Arctic drilling – RBS provided loan to oil company one month before it acquired rig for arctic drilling.”
The amount in question is a reported $100m lent by RBS – majority owned by UK taxpayers – last December.
The (first) problem with their point, however, is that RBS is a corporate broker to Cairn -so the $100m is likely to be just a fraction of the total it lent to the oil company last year. There seems to be no evidence to show that this particular $100m and the Arctic drilling are linked.
Secondly, the environmentalists’ outrage at taxpayer money financing oil drilling bizarrely stops with the Arctic. Drilling in Rajasthan – where Cairn in fact gets most of its oil – doesn’t seem to be a problem. Yet why is it less acceptable to drill near barely-populated frozen landmass than in the middle of India, where actual people may be affected by the drilling operations?
Maybe because polar bears are much cuter than people?
Testimony this week in the US Coast Guard and Bureau for Ocean Energy Management investigation has often been tedious and repetitive.
Lawyers, representing more than a dozen clients, are asking the same questions, leading to those overseeing the proceedings to jump in repeatedly, trying to speed things up. But these are top lawyers, used to getting their way, and so the investigators relent, and the testimony drones on. On Tuesday it went over 10 hours.
That said, some nuggets have cropped up. So for those who can withstand the testimony, making it through the day with frequent trips to the back of the room for the hot coffee on offer, the hearing is worth attending. For those who cannot be there in person, it can be watched online.
Elsewhere this Wednesday:
- The Gates path to an energy revolution
- Oil: Save it for the combine
- Will robots clean up oil spills in the future?
- Peter Tertzakian: As US economy sputters, China’s importance to oil producers grows
- Insurers paying high price for disasters
Elsewhere this Tuesday:
- The illusion of individual risk
- Can Africa break its ‘resource curse’?
- Rethinking how to cool the Indian Point nuclear plant
- Gulf oil spill investigators focus on who knew what and when
- Pemex and Statoil to talk Gulf
Here’s the latest from the FT’s Lex on the decision by KNOC to launch a hostile bid for Dana Petroleum:
Korea National Oil Corporation must want North Sea oil badly. Why else go hostile in its £18-a-share approach for Dana Petroleum, which values the UK-listed exploration and production group at nearly £1.9bn? The astonishing agression from the Asian state entity, which has seen similar deals slip away before because it was too timid in its approaches, has raised the stakes all around.
To continue reading, please go to the website.
Small wonder there’s a mini M&A boom at the moment – just at look at the cost of borrowing for big, stable companies like BHP Billiton.
Citigroup reckons the $45bn credit facility put in place by the miner to finance its hostile offer for PotashCorp is likely to be just 3-4 per cent.
Key conclusion is that funding cost at current rates will initially be <2% (3 month LIBOR ~33bps, 1 year ~91bps), but this is likely to increase to 3-4% as the US$25b “bridge” loan is termed out to 5 to 10 year fixed rate via the corporate bonds.
We were assuming a cost of funding for the deal of closer to 5%, which would have created an annual interest bill of around $2.1bn; we estimate the above facilities could drop the cost of funding by at least $1bn in the short term.
Obviously, the 3-4 per cent figure needs to be put in the context of sub-3 per cent 10-year US government bond yields and the Fed’s near zero interest rate.
Elsewhere this Monday:
- Can we solve two problems at once – unemployment and preparing for power down?
- Analysts warn of threat to oil price stability
- Peak oil alarm revealed by secret official talks
- What did we learn from the Gulf oil spill?