Coal India’s record $3.5bn share sale might be in great demand – it was subscribed more than 15 times the offering – but accounting errors that emerged in its IPO prospectus on Friday are a reminder that the state-run group has poor corporate governance standards.
Investors have even been given the option of withdrawing their subscription bids after India’s capital markets regulator found that figures in Coal India’s prospectus had been mistakenly interchanged. Few, however, are likely to pull out.
Shares in Transneft, the Russian oil pipeline monopoly, were trading down over 2 per cent on Friday morning, having slipped close to 6 per cent on Thursday after the Kremlin confirmed it would not be included in its planned $60bn in asset sales. But investors hoping to buy some of the assets on sale shouldn’t be too disheartened.
While a Transneft share sale would have increased the liquidity of the company’s traded stock, and, in idealists’ minds, perhaps have improved the company’s transparency, its exclusion from the short list will lend more seriousness to the rest of the government’s asset sale plans.
Chevron’s announcement that it will lead a $7.5bn investment in the deepwater Gulf of Mexico underlines how eager the industry is to get back out there despite BP’s accident.
Certainly the new permitting process will have its challenges, but the majors need the gulf to bolster production in a world of increasingly inaccessible resources.
Wood Mackenzie, the energy research firm, underlines in a recent report how important deepwater has become to the industry:
A push into deeper water has been one of the key industry themes of the last 20 years. Over 130bn barrels of oil equivalent have now been discovered in these frontier regions, with $130bn of value created by explorers in the last decade. Oil production from deepwater fields will contribute 7 per cent of global output in 2010, up from 2 per cent in 2000, and the proportion is expected to increase to over 10 per cent by 2020.