Summit Notebook

Note to OPEC: Siberia not Saudi

September 11, 2009
   An episodic courtship between Russia, the world’s second largest oil exporter and its sometime rivals in the OPEC group of oil exporting nations, went cold at the beginning of this year when Russia failed to make good on hints that it might cut output in line with OPEC, dominated by Saudi Arabia and other desert states of the Middle East.     Prices for oil, the economic lifeblood of Russia and OPEC countries alike, had fallen below $40, OPEC argued, and supply cuts had to be made to boost prices and finance investment into the oil industry.     Alexander Medvedev, deputy chief executive of Russian energy giant Gazprom, told this year’s Reuters Russia Investment Summit that Russia had an excuse for avoiding the multimillion barrel cuts imposed by OPEC: the Siberian chill .    “It is a very simple explanation for this: We are not in a desert where it’s easily to regulate, we are in an extreme situation in Siberia where reserves could be damaged if you up and down your production levels.”     If Russia shuts down Siberian wells, its industry members argue, they could seize up forever as they go cold.     And Russia hardly left OPEC hanging, Medvedev argued: The financial crisis took its toll even on Russia’s cash rich oil companies: “Actually the supply was substantially lower in the first half of the year.”       Medvedev also said he was still struggling to understand where from the rival Nabucco pipeline will get its gas to rival Gazprom on European markets.      “Even at the (Nabucco) signing ceremony I looked at the photos and tried to find any gas supplier and with all my attempts I could not find any. And it looked strange.”

No more green shoots, but lots of bottoms

June 5, 2009

From the start, “green shoots of recovery” was not necessarily the British government’s wisest choice of words and after a few months of being on everyone’s lips, has given way to a more lowly metaphor.
Business Minister Baroness Vadera raised the hackles of the political opposition in January when she spotted “a few green shoots” on a day of large-scale job losses and collapsing share prices.
Evidence of economic revival is still elusive, but there are ever louder hints that we have at least seen the worst — or bottomed, to use the mot du jour.
Bottom as a noun and a verb was widely brandished by speakers attending Reuters Global Energy Summit this week, who based on their analysis on a slight increase in available credit, a tentative pick up in energy demand and rising commodity prices.
OPEC Secretary General Abdullah al-Badri has an interest in spotting the kind of confidence that has driven oil prices up from a low below $35 a barrel in December to almost double that.
“I have no doubt that the recession has bottomed out, but is it a V shape or a U shape?” he asked during a Reuters summit session.
Others were less convinced and the most bearish of them all was a representative of the very oversupplied tanker market, where freight rates have sunk to their lowest levels in decades, with not a green shoot in sight.
“We have seen lower than the bottom,” said Erik Ranheim, a manager at oil tanker association Intertanko.

Kinder: wind, solar not the answer to U.S. energy needs

June 2, 2009

Rich Kinder, CEO of Kinder Morgan Energy Partners, says the Obama Administration’s push to develop alternative energy sources such as wind and solar are not the answer to reducing the nation’s dependence on oil or reducing greenhouse gas emissions. Click below to hear where Kinder thinks the U.S. should be focusing its attention.

Kinder: wind, solar not the answer from Reuters TV on Vimeo.

from LEGACY Reuters Summits:

The best geologists want to be in Tullow’s team

June 2, 2009

Tullow Oil is the Manchester United of the energy world -- at least when it comes to recruiting the finest talent.
The oil industry has long complained of the difficulty of recruiting enough highly-qualified staff, but as Europe's largest independent oil explorer by market value, Tullow says it is a magnet for all those geologists ambitious to add discovering a new field to their CVs.
"If you are successful, you will always attract... like everyone wants to play for Manchester United," Aidan Heavey, chief executive of Tullow Oil, told the Reuters Global Energy Summit.
Many oil companies, he said, have ceased exploring, partly because of a difficult financial climate, partly because of a lack of opportunities.
Tullow's exploration successes include major finds in Uganda and offshore Ghana.
Apart from snapping up the finest geologists, Tullow has also been busy grabbing credit. Heavey said banks had made available $2 billion in credit in March this year.
"It's a huge achievement in the current market," Heavey said. "It's probably soaked up most of the credit available for small oil companies."

OPEC’s special relationship with the U.S.

June 2, 2009

The United States may fondly dream of independence from imported oil, but it would do well to remember that the traffic is not one way.
OPEC Secretary General Abdullah al-Badri told the Reuters Global Energy Summit he had been hearing for years that the world’s biggest oil consumer was seeking ways to avoid importing OPEC oil, but he was confident it would carry on burning fossil fuel for years to come.
“I am of an age when I can tell you I have been hearing this for the last 40 years,” Badri said. “We will see another president, with two terms, before we see any change.”
He also warned the U.S. it should be careful what it wished for.
“We would like to tell them they buy most of the resources of our member countries. We are sending them back more than 50 percent of that income to OECD countries, and the U.S. is one of them, to buy medicine, equipment, aeroplanes, spare parts, clothes.”
“Don’t forget the medicine,” he added.

Obama victory could help Gulf economies, Kuwaiti banker says

November 4, 2008

A Barack Obama victory in the U.S. presidential election on Tuesday could bring much-needed good news to the Gulf Arab region, the chairman of Kuwait’s banking association told a Reuters summit.
Gulf Arab stock exchanges have tumbled this year and its economies are forecast to slow as the price of oil, its main export, drops.
The prospect of conflict involving nearby Iran is often cited as a risk factor for investing in the oil-exporting region.
“Maybe the pressure that is on this region in terms of U.S.-Iran tension might ease up,” said Abdulmajeed al-Shatti, who is also chairman of Commercial Bank of Kuwait, the chairman country’s third-largest lender. “Obama has indicated he would engage Iran and if the U.S. wants to change Iran, it has to engage.”

Kuwait banks on luxury with third airline launch

November 3, 2008

As airlines around the world cut capacity and ground planes, the tiny Gulf state of Kuwait is stepping boldly into the global aviation crisis with the launch of a third carrier.
Kuwait National Airways hasn’t even taken delivery of its first plane yet, but when it does, it will be fitted with Recaro luxury leather seats.
Kuwaiti executives will be offered the lowest seat density Airbus A320 in the world, enjoy in-seat entertainment, and be able to use their mobiles phones and Blackberrys on board – at least for data — the airline’s CEO George Cooper told a Reuters summit.
Cooper is betting that the world’s seventh-largest oil exporter will remain an island of prosperity in the midst of a global financial crisis.
“Creating this airline is something that will work in Kuwait,” he said. “I can’t think of many other places in the world where it would.”
With only a business plan, the airline raised nearly $200 million in a 2006 initial public offering. Cooper, a former pilot who worked for many years at British Airways, said it will focus on ferrying businessmen around the region, with the first flight expected sometime in January.
The carrier, which will operate under the brand name Wataniya, is benefiting from the plight of airlines around the world as fears of a global recession loom.
It can now snap up pilots from around the world and capitalise on a glut of fuel as planes are grounded in the United States and Europe, Cooper said.
And high fuel costs that have plagued the industry are finally coming down – but that may not be entirely good news for Wataniya.
“Kuwait is a petrodollar economy, so there is a minimal oil price we want to see,” Cooper said.
But as the fate of recently-rescued Kuwaiti lender Gulf Bank shows, the country of 3.2 million isn’t entirely immune from the global crisis.
But even as its economy slows next year and prices for its main export drop, flying around the Gulf in plush leather seats may be too much for some Kuwaitis to resist.

Will environment be forgotten in crisis? OMV says no.

October 22, 2008

wolfgang_ruttenstorfer.jpgThere are some who say the economic downturn means ambitious plans to fight global warming should be put on ice.

A philosophical look at the habits of the super-rich

October 13, 2008

rtx8vgi.jpgThe credit crisis may be hitting the man on the street hard, but spending by the “other half” on the latest super yacht or Damien Hirst work of art looks set to carry on relatively unaffected.

AUDIO: Capital flight to cure what ails

September 8, 2008

pankin1.jpgSoaring oil prices have helped make Russia rich, but the flood of petrodollars means Russians face double digit price inflation. Dmitry Pankin, Russia’s deputy finance minister, sees a trade off in a recent market selloff: Russian companies might have trouble raising capital, but billions of dollars in capital outflows may be just the thing to help cool inflation.