Archive for November, 2008

Russian Energy Bears

 

& not talking about “bears” in the market sense either.

We are all familiar with the stories of Gazprom trying to muscle into neighbours energy markets, but something a little more interesting is quietly going on at Lukoil.

For those not in the know, Lukoil is the largest private oil producer in Russia, with a similar track record of acquiring majority stakes in neighbouring countries energy assets. This strategy is now being expanded, with Lukoil now in negotiations to acquire 30% of Spanish oil giant Repsol. You can get a good idea of Lukoil acquisition efforts from this press release source : Lukoil Corporate PR

The Spanish opposition is none too happy about this, as reported in the Barcelona Reporter , Spain’s conservative opposition leader Saturday hit out at the possible sale of a stake in oil major Repsol to Russian energy group Lukoil , saying he would do “everything possible” to prevent it.

“Nobody in Europe has sold its energy supply and put it in the hands of a Russian company,” Mariano Rajoy told a political meeting.

Interestingly enough, Gazprom had tried this earlier this year, as two of Repsols main shareholders (savings bank La Caixa & construction company Sacyr Vallehermoso) are being forced to realise a cash sale to stave off problems elsewhere. The combined stake is valued at up to $6B. Gazprom was rebuffed by the Spanish Government, after the Russian Deputy Prime Minister revealed that Gazprom were interested in the stake.

 Maria Teresa Fernández de la Vega , the Spanish deputy prime minister –

the government wanted Repsol to remain a company that was “managed by Spaniards … and guarantees supplies”.

So, back to Lukoil, which is 100% privately owned, mostly by minority shareholders, but also with a 20% holding by US oil firm ConocoPhil¨lips.

This wouldn’t have anything to do with the fact that the current Spanish administration feels as though it is not being taken seriously at the top table of global politics ? PM Zapatero, has been left out in the cold by the Bush administration for quite a while now, after Spains retraction from bilateral anti-terrorism activities. Recently Zapatero was heard to complain that he had not been invited to the latest G8 + 5 Summit in Washington.

All this going on while the European Commissioner Jose Manuel Baroso commented on EU efforts to secure non Russian dominated energy supplies.

The EU wants different sources of supply We must not sleepwalk into Europe’s energy dependence crisis.

Obviously the fact that Lukoil & ConocoPhillips are already partners in a lucrative Russian JV in the Timan Pechora oil & gasfields has no bearing on the decision making at all.

 

Tail wagging the dog ?

Brazil & ADRs (American Depository Receipts)

 

Was talking with someone a little earlier on Skype chat on Latin America & where these markets are headed when the Dow & NASDAQ & other western bourses are getting slammed.

Interestingly enough, although most indexes on LatAm are way down on a YTD basis, they are all showing signs of moving off their lows at present.

Brazil in particular seems to be attracting inward cash flow, which you can see here on Bank of New York Mellon’s ADR site

The chart below gives you an idea of where Brazil is going when compared to BoNY’s 100 Developing Markets Index, just starting to peak upward. Definitely worth keeping an eye on. With todays momentum, it looks as though its going to break a 10% gain.

Another increasing development is the ensuing wave of consolidation going on within Brazil’s banking industry, as outlined in the New York Times blog.

Banking mergers may be cooling down in the United States, but in Brazil they are just heating up.

The state-controlled Banco do Brasil announced Thursday that it was buying a 72 percent stake in Banco Nossa Caixa for 5.4 billion reals, or about $2.25 billion.

The all-cash deal comes just three weeks after a deal valued at 38.1 billion reals, or about $17.7 billion, was announced between the Brazilian banking giants Banco Itaú and Unibanco. That merger would create the largest bank in the southern hemisphere, with 21.5 percent of the nation’s deposits under its roof.

By acquiring Banco Nossa Caixa, Banco do Brasil would become only the nation’s second-largest bank, much to the chagrin of the Brazilian government.

“We want Banco do Brasil to be far bigger than any other bank in the country,” President Luiz Inácio Lula da Silva of Brazil told reporters on Tuesday.

India remains steady on outlook

 

Although the Bombay Stock Exchange has taken a battering, the same as everywhere else in the world, the national economic outlook doesn’t seem to be too bad, according to Montek Singh Ahluwalia of the Indian Planning Commission.

Speaking at the World Economic Forum-India Economic Summit on Tuesday, he stated that :

Despite an uncertain economic outlook, India is expected to grow around 7.5 percent this fiscal and the total number of jobs will not go down

More can be read on this here at India PRWire