• Norway expected to join EU Emissions Trading Scheme

Following meetings between Norwegian ministers and the EU President last week, both parties are confident of reaching an agreement on linking the two’s emissions trading schemes to each other from 1 January 2005. (Source: Energy-Directory.com)

• EU steps into Portugal’s gas deal

The European Commissions (EC)  has formally sumitted a chargesheet indicating their concerns regarding a potentially anti-competitive deal that would combine Portugal’s leading gas producer and electricity group. The chargesheet, known as a statement of objections, attacks the offer by Electricidade de Portugal (EdP) and Italy’s Eni to buy Gas de Portugal. The EU fears that this deal would remove a natural competitor to EdP in energy business and raise the bar to break into the Portuguese market. Unless, the companies involved can satify the EC objections, the deal is likely to be blocked or to face a demand of significant concessions such as divestment. If the commission did decide to block the takeover, it would send a strong signal that Brussels will not tolerate similar deals in other countries.  This could be particular important for France where a combination of state-owned Electricite de France and Gaz de France has been considered by the French Government. (Source: Financial Times)

• Consortium to bid for Shell’s LPG business unit

Goldman Sachs Capital Partners has teamed up with Kohlberg Kravis Roberts (KKR – a US private equity firm) to bid for Shell’s liquefied petroleum gas (LPG) business unit which is valued at € 1.4 bn.  The sale of the LPG unit is part of the US $10-$12 Bn asset disposal programme to be implemented by Shell in the wake of its reserves overbooking scandal.  The company is currently selling underperforming asset and non-core operation to help it finance US$45 Bn of capital spending over the next three years as it tries to revitalise stagnant exploration and oil production business. Included in the planned multi-billion dollar disposal programme will be the possible sale of INTERGEN (power generaton company with Shell owning 68%) and the planned US$5 Bn of asset sale in exploration and oil production for the next 3 years and this includes the recent sale of all of its oil fields in Bangladesh.  Options for Bassel plastics (Shell joint venture with BASF) are now also being assessed. (Source: Financial Times)

• Gazprom and Petro-Canada signed memorandum on LNG supply

Gazprom, Russian gas monopoly, and Petro-Canada hope to start delivering Russian Liquefied Natural Gas (LNG) to the North American market by 2009 under a memorandum signed by two companies during the visit by the Canadian Prime Minister Paul Martin in Moscow last week. The two companies will consider building an LNG terminal in the Baltic port of Ust Luga which will produce about 3.5 million tonnes per year at a cost of US$1.2 to $1.5 Bn and a re-gasification terminal in Canada worth US$ 500 Mn. Industry source has also noted that Gazprom has been keen in talk with BP (UK oil group) to swap its pipeline gas business in Europe for BP produced LNG and begin delivery as early as next year.  Gazprom has said that the swap would allow them to learn more about the industry before it started producing their own natural gas from their Artic Shtokman field and clinches a long term supply deals with US companies.  This effort clearly indicates the LNG business is growing faster than the traditional gas business (Source: Financial Times/Reuter)

• US Steel eyes Eastern Europe

US steel is looking to extend its presence in Eastern Europe through acquisition of steel mills and mines to provide raw materials. Giving his first public comment since taking over the top job at the US’s biggest steelmaker two weeks ago, John Surma – CEO of US Steel – has said that he is keen to build on the acquisitions made in recent years of steel mills in Slovakia and Serbia and is looking at Croatia, Ukraine, Romania and Bulgaria as potential place for further acquisitions. It also examining buying European mines for iron ore or coking coal to lessen its dependence on outside vendors.  This year, US steel is expected to produce 22.5 Mn tonnes of steel (15 Mn tonnes from the US plants), making it the world’s sixth largest steel producer.  US Steel has more than doubled its annual steel output from 10 million tonnes 6 years ago  through the takeover of National Steel and acquisition of its Slovakian unit. Finally, Mr Surma said that US Steel may be interested in taking a stake of Erdemir (Turkish state owned steel company) that will be partly privatised.  Arcelor (World’s largest steel maker) is also interested in such a move. (Source: Financial Times)

• Vattenfal bids for Elsam

Vattenfall has made an offer to buy 54% of Danish power company Elsam. The offer grants the shareholders a put option for shares, which they are entitled to acquire under pre-emptive rights in relation to a recent acquisition by the oil and gas company DONG.  Elsam is Denmark’s leading producer of electricity and heat with activities both within Denmark and abroad. It operates mainly on Jutland, with more than 3.6 GW of coal- and waste-fired cogen capacity and 417MW of wind-power plant. For Vattenfall, the tie-up with Elsam would consolidate its already strong position in the Nordic market. The group also has major holdings in Germany and Poland. (Source: Energy-Directory.com)