Daily Archives: May 16, 2011

Kiran Stacey

Chris HuhneI speculated this month somewhat idly on whether the UK or US energy secretary would be the first to quit his post. Many in the gossipy world of Westminster politics are betting on an imminent departure of Chris Huhne. But after one of the stormiest weekends of his political life, it is difficult to say whether he is now stronger or weaker.

The story that might yet kill Huhne’s political career, at least in the short term, is entirely non energy-related. Police are considering whether to investigate claims that he asked another person to take driving penalty points on his behalf for a speeding offence. He denies any wrongdoing.

Bob Dudley, BP chief executive, and Vladmir Putin, Russian prime minister, when the BP-Rosneft deal was announced in January 2011BP was fighting on Monday to save its planned $16bn deal with Russian state-run oil group Rosneft before the deadline on the deals lapses at midnight.

The UK group was in talks with Rosneft and with the Russian oligarchs who have blocked the Rosneft deal to protect their interests in BP’s existing Russian joint venture, TNK-BP. As the FT has reported, a buyout of the oligarchs – possibly for around $30bn – is one of the options of the table. But, with three parties to the negotiations, and the Russian state involved, nothing will be agreed until everything is agreed.

Contrary to popular belief, analysis of the latest CFTC position data is beginning to show that it wasn’t so much the ‘froth‘ in the market that was responsible for this month’s run-up and subsequent commodity price collapse, but the professional fund community.

John Kemp at Reuters has pored over the latest data set and concluded, amongst other things that:

There were no significant changes among producers, consumers and merchants, or in the “other reporting” category. Swap dealers’ trimmed their massive short position, but that was the mirror image of long liquidation among the hedge funds and small speculators, for whom the swap dealers act as market makers and counterparties.

—–

Long liquidation in the week ending May 6 was equivalent to the mean plus two standard deviations, which was not abnormally large. There have been four larger adjustments this year alone and five in 2010, a period characterised by unusually low volatility.

Kiran Stacey

Tepco president Masataka Shimizu

Tepco president Masataka Shimizu

The news last week that the Japanese government was close to agreeing a bailout plan for Tepco, the electricity company that owns the Fukushima nuclear plant, should have come as a relief for the company and its debt holders.

But the opposite appears to be true. Amid uncertainty over the structure of the bailout and when it might finally be agreed, Moody’s has taken the proactive step of downgrading the company’s debt, saying that the plan as it looks so far actually increases the risk of a default.

The clause that particularly seems to trouble the ratings agency is the one that Tepco will only be insured for compensation payments of up to Y120bn. Anything above that limit will be the company’s liability.

FT Energy Source

- Iraq set to miss output goals – FT

- BP in last-ditch bid to save Arctic ambition – FT

- Shell poised to get Alaska permits – WSJ

- Oil groups get one-year lease extension – FT

- Obama says he will lift US oil output – WSJ

- Second largest US refinery under flood threat – Bloomberg

- Oil price helps Petrobras profits rise 42% – FT

- Total and ExxonMobil sign Polish shale deal – Argus

- Cores damaged at three reactors – WSJ

- Markets fret over Japan rescue plan – WSJ

- Electricity market plans under fire from MPs – FT

- Electricity reforms may hide nuclear subsidy – The Telegraph

- Government report reveals fear of sudden rise in oil prices – The Times

- David Cameron could score points from carbon budget row – The Guardian

- Hydropower’s resurgence and the controversy around it – NY Times

- Rome’s emperor of energy – FT

- Whitehaven Coal ends sale process after bids fall short – Argus

- Solar plane makes maiden international flight – Reuters

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