Daily Archives: May 17, 2011

Sheila McNulty

The amount of private equity moving into the US oil and gas sector has risen dramatically over the past year, drawn by a long-term bet on rising commodity prices and heightened demand for energy infrastructure. This is according to PwC, the consultancy, which put out a report on US energy sector deals on Tuesday.

Overall, there were eight private equity-backed transactions in the first quarter of this year, representing $4.8bn, or 9 per cent of total deal value, compared to just one during the same period last year, worth $767m, the report said.

Chart showing overall value of PE-backed oil and gas deals

Figures from PwC

BPBP shareholders breathed a sigh of relief on Tuesday on the collapse of the Rosneft deal talks, with the stock climbing over 1 per cent.

And quite right too. In its original form, the deal with the Russian state’s oil champion was a high-risk venture hard to sell to shareholders. But not impossible, given the potential rewards in developing the Russian Arctic.

The final version, involving a costly and awkward compromise with BP’s existing Russian partners, was fatally flawed. But BP must not give up on the Arctic. It should try again  – perhaps after Russia’s 2012 presidential election.

Sheila McNulty

Deepwater Horizon explosionThe big question for months has been what would happen if there was a significant spill in the deepwater outside the Gulf of Mexico. Following BP’s Macondo disaster, the industry worked together to build two spill response systems for this area. But nobody said what would happen if a deepwater disaster unfolded in the waters offshore Ghana or Brazil.

Now the industry has gathered together to address that question. Nine of the world’s biggest oil and gas companies – BG Group, BP, Chevron, ConocoPhillips, ExxonMobil, Petrobras, Shell, Statoil and Total have launched the Subsea Well Response Project (SWRP), an initiative designed to  enhance the industry’s capability to respond to subsea  well control incidents.

BP‘s bid for a strategic alliance with Rosneft, the Russian state oil champion, collapsed on Tuesday after the UK oil group failed to reach agreement to salvage its $16bn share swap before a midnight deadline expired.

Rosneft was not willing to extend the deadline further, a person close to the state company said, after talks failed over a deal to buy out BP’s partners in TNK-BP, its existing Russian joint venture. A person familiar with the matter said Rosneft would now seek new partners for the Arctic exploration deal it had proposed for the alliance with BP.

FT Energy Source

- Deadline expires for BP-Rosneft deal – FT

- Why BP’s Russian deal collapsed – Robert Peston, BBC

Petrobras first quarter profit exceeds estimates – Bloomberg

ExxonMobil defends right to Nigerian upstream blocks – Argus

Supply factors could still support crude – FT

Poorest will suffer most from lasting high oil price – The Times

Ministers divided over remit for green bank – FT

- Cameron backs Huhne over lie allegations – FT

- Japan says reactor woes won’t delay cleanup – WSJ

- Sasol expects quake to push up gas prices – FT

- Natural gas trucks face long haul – WSJ

- Wood Group plans £1.05bn share buy-back – FT

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