Monthly Archives: November 2013

Few readers, even of the Financial Times, will feel much sympathy for executives in the international energy business who complain about their lot. Paid in the hundreds of thousands (at least), travelling around in executive jets and chauffeured cars, pampered by executive assistants and personal assistants – life surely can’t get much better.

But there is a real and serious problem that merits some attention. Many senior executives are exhausted and burnt out. Across the business world, there have recently been a number of high-profile cases of executives who have given up their jobs because of the stresses involved. António Horta-Osório, chief executive of Lloyds Banking Group, and Hector Sants, former head of compliance at Barclays, are the most prominent names. In the energy sector, companies and individuals shun publicity. But, in the past few weeks, I have heard of four cases of individuals who have in one way or another collapsed under the pressure of their jobs. One leading company is undertaking a thorough analysis of the psychological health of its top 50 people, and I would be surprised if others don’t follow. 

Ukraine, to coin a phrase, is a far way country of which we know little. Its geographic misfortune is to be the buffer state between western Europe and Russia. With all eyes on Iran, too little attention is being paid to the fact that Ukraine is being forced back under the control of the Kremlin.

This week’s events send a very negative signal to western investors who had hoped to develop Ukraine’s extensive shale gas resources both for local use and for export to other parts of eastern and central Europe. The assertion of Russian power over President Viktor Yanukovich and Prime Minister Mykola Azarov will also send a shiver across the other former Soviet satellite states in eastern Europe. Some, like Poland and Romania, are safely within the EU. Many others are not, to say nothing of the major energy producers around the Caspian Sea, such as Azerbaijan and Kazakhstan. 

The US energy sector must be bitterly annoyed with President Obama. The deal with Iran agreed in Geneva over the weekend does not lift sanctions but it sends an unmistakeable signal that the door to doing business is opening again. Many many companies around the world will be flying in, most with the full support of their Governments. The only ones who won’t and can’t are American companies forced to respect to the letter every sentence of the sanctions legislation until it is repealed. 

Two years and one month after the death Muammar Gaddafi, the continuing power struggle in Libya is beginning to affect the oil market. So far the impact is slight, indicating the extent of OPEC’s spare capacity. The bigger risk will come if the instability spreads from Libya across North Africa or to other parts of the region. For investors, events in Libya are a reminder that any investments in the Middle East carry a large political risk. 

UK-based energy companies who have held investor relations meetings in the US in recent weeks have encountered a bleak response. The UK energy sector, they were told, is “uninvestable”. This is the market’s response to two months in which the certainties of the UK energy market have been undermined by politics. Given the scale of new investment required as old capacity is retired, this stark conclusion is very damaging and must be addressed by the Chancellor in his autumn statement on December 5.