• IEA warned Europe on the over dependence on Russian Gas

The International Energy Agency warned the European Union’s energy security due to growing dependence on Russian gas piped through Ukraine and the monopolistic ambitions of Gazprom.  Russia is the largest gas producer in the world. EU countries excluding the 10 new members buy 40% of their gas import from the former Soviet Union, most of it through Gazprom.  Some of the new member state are entirely dependent on Russian energy.  This warning from the IEA is the first time calling the attention of EU about the risk of gas supplies from Russia.  IEA suggested that diversification of gas supply from Russia and Algeria are essential. They also pointed out the risks of political unrest in Ukraine.  The IEA calls for diversification away from Russian follows confirmation from Berlin who was actively encouraging the investment of German energy companies in the Russian oil sectors. (Source: Financial Times)

• Kyoto setback – Limiting carbon emissions damages growth, says US

The gulf between the US and Europe on climate change widened after Washington told an International Conference signatories in Buenos Aires that limiting carbon emissions in line with Kyoto protocol would damage growth. Harlan Watson, senior climate change negotiator for the US State Department, told the meeting of signatories that Kyoto Protocol’s success would depend on “whether or not the Kyoto parties will be willing to take on what we believe would be non-growth economic policies”. This stand a direct opposition to the European Union which will implement its emissions trading scheme to limit industrial emissions of carbon dioxide in January, and the UK has taken a strong stand on climate change.  Paul Bledsoe, Director of Strategy for the National Commission on Energy Policy conceded – “The US is the lone major emitter among developed nations that has not pledged to reduce greenhouse gases.  The result is that Europe believes the US is willing to risk the health of the world for the sake of its economic hegemony”. (Source: Financial Times).

• China plans three large steel mills

China has approved the constructon of three huge steel mills which are expected to free the country from dependence on imports in about three years.  The steel project approved by Beijing includes a 10 million tonnes per year facility in Zhanjiang City in the southern province of Guangdong; 5 million tonnes a year in Maanshan, Anhui province and a 1.5 million tonnes per year of stainless steel mill in Taiyuan, Shanxi province. The three steel plants are all scheduled to produce high grade steel that is currently imported.  The Zhanjiang steel mill will be implemented in two phase worth US $5 Bn project that will produce hot rolled plates and coil and then followed by cold rolled galvanised and color coated sheets.  Taiyuan Iron and Steel comapny (largest stainless steel producer in China) started expanding last September and plans to complete the project in 2006.  The Maanshan Iron and Steel plans to spend US $ 2.4 Bn in the next three years to build its 5 m tonnes facility which will produce rolled coil for vehicle and consumer electronics manufacturing. (Source: Financial Times).

• Statoil eyes potential bid for FCP

Statoil, the Norwegian energy group, has emerged as a leading contender in the impending auction of First Calgary Petroleum (FCP), a Canadian independent oil and gas company with extensive interest in Algeria.  Total of France, Royal Dutch Shell and Anadarko have also expressed preliminary interest in making a bid for FCP.  It should be noted that FCP had reported 7000 cu. ft. in proved, probable and possible gas reserved as of 31st of December 2003 and they have noted that its exploration programme could boost reserves to 20000 cu. ft. (Source: Financial Times)

• Ciments Francais bid for Suez Cement

Ciments Francais (Cimfa), the International branch of Italcimenti group, launched a US $550 million bid to take over the Egyptian government’s share in Suez Cement in what would be Egypt’s largest privatisation to date.  Suez Cement which controls around 22% of the Egyptian market reported last week a 94% increase in 9 months net profit to US $29 Mn.  The state remained ownership of two thirds of Suez Cement after selling a third of the company to Cimfa in 2001.  Cimfa is bidding for the state’s remaiining share in a consortium of so far undisclosed Arab and other foreign investors. (Source: Financial Times)

• Gazprom lines up € 10 Bn loan.

Six global investment banks are poised to lend Gazprom €10 billion to fund the Russian state controlled gas monopoly’s likely takeover of Yuganskneftegas, the main production unit of Yukos.  The loan syndicate was led by Deutsche Bank.  It was noted that Gazprom appeared to have secured the loan before its receiving formal approval from the shareholders to bid for Yuganskneftegas.  Analysts said this again demonstrated that the decision to buy Yukos main production unit came had been made by Kremlin rather than by Gazprom’s shareholders or managers (Source: Financial Times)