The Oil and the Glory

The Weekly Wrap: Jan. 28, 2011

Tunisian contagion, but not in big petro-states: As street protests have struck Egypt and Yemen, we have seen general forecasts of a shakeup in Middle Eastern dictatorships, inspired by the successful popular uprising against Tunisian leader Zine El Abidine Ben Ali. Yet, while Yemen has some liquefied natural gas, we have seen no signs of ...

Tunisian contagion, but not in big petro-states: As street protests have struck Egypt and Yemen, we have seen general forecasts of a shakeup in Middle Eastern dictatorships, inspired by the successful popular uprising against Tunisian leader Zine El Abidine Ben Ali. Yet, while Yemen has some liquefied natural gas, we have seen no signs of unrest in the region’s serious petro-states. That might seem counter-intuitive, since for example there is a well-documented home-grown opposition in Saudi Arabia. One presumes that the security apparatuses of these states are pre-emptively clamping down. Here, Right Side News discusses Saudi.

 

 

Working with NOCs: Where you find people cornered and trapped, you also encounter strange bedfellows. So it is in Russia. At Davos, Bloomberg conducted an interesting interview with Peter Voser, CEO of Shell (video above). Voser noted that BP and ExxonMobil are attracting much attention this week for their collaborative deals with Russia’s Rosneft, but that Shell embraced Russia awhile back, last year for example signing a global deal to explore alongside Gazprom. The strange part of course is that all three Western oil majors have been stung by Russia, in BP’s case numerous times. So why are they back for more? Because if you want access to gigantic oil and gas fields, there is almost nowhere else to go. In his interview, Voser also discusses the potential for China’s energy appetite to be much lower than currently projected, thus shaking up current economic models.

A Russian leverage scheme: Speaking of Russia, the oligarchs behind TNK-BP have sued in London to halt BP’s share swap with Rosneft. The oligarchs say they’ve been left out in the cold, but one might wonder at the risk of challenging Prime Minister Vladimir Putin – who blessed the deal – and his energy maven, Igor Sechin. Yet it seems to us that the strategy is clear – Mikhail Fridman, the lead oligarch in TNK, isn’t trying to stop the deal, but position TNK for an ultra-big payday by selling out to BP and Rosneft.

Oil price nirvana: Are we getting the best of all worlds? Oil prices have been steadily falling, thus helping consumers at the gasoline pump. Yet the share prices of the major oil companies have been rising – both ExxonMobil and Chevron have been setting new 52-week highs – hence cheering the moods of Wall Street. The Financial Times pours a bit of cold water on the party, noting that Exxon is trading 16 percent off its May 2008 peak, and BP 24 percent off its own.  As for oil prices, they have seemed pumped up with air by traders, who are not going away, and are bound to return and try to push up the per-barrel prices into the $90s again.

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