2024-12-17 12:22

Dec 17 (Reuters) - U.S. oil and gas firm Kosmos Energy (KOS.N) , opens new tab walked away from its pursuit of West Africa-focused Tullow Oil (TLW.L) , opens new tab on Tuesday, without specifying any reason for the decision, prompting a 10% drop in Tullow's shares. Kosmos' announcement comes less than a week after the companies said they were in early talks for a potential deal that would have created a West Africa-focused producer. New York-listed Kosmos stock surged almost 13% in pre-market trading following the news. Had the deal gone through, the combined company could have produced more than 130,000 barrels of oil equivalent per day (boepd), based on the two companies' 2024 forecast, spanning Mauritania, Senegal, Ghana and Equatorial Guinea on Africa's western coast as well as the U.S. Gulf of Mexico. "There was logic to considering a transaction given the shared assets in Ghana and scope for operational synergies," said James Hosie, research analyst at Shore Capital Stockbrokers. "But any transaction would have required the support of the Ghanaian government and the creditors of both companies, which may have been challenging." The two heavily indebted firms are partners in key fields in Ghana. Kosmos had a deadline of 1700 GMT on Jan. 9, 2025, to make a firm offer for Tullow. However, it said in a statement it had reserved the right to reconsider its decision under certain conditions. Tullow said its board remained confident in its standalone business and was "well positioned to optimise its capital structure". "I felt it (the potential deal) was somewhat opportunistic ... coming soon after the news of Tullow's search for a new CEO," added Hosie. Tullow said earlier this month CEO Rahul Dhir would step down and also resign from the board next year. Sign up here. https://www.reuters.com/markets/deals/kosmos-energy-walks-away-tullow-oil-acquisition-2024-12-17/

2024-12-17 12:12

BRUSSELS, Dec 17 (Reuters) - The European Parliament gave its final approval on Tuesday to a one-year delay of Europe's landmark deforestation law, which from Dec. 2025 will ban the import of beef, soy and other goods linked to the destruction of forests. The lawmakers' approval paves the way for European Union countries to also approve the delay, which they are expected to do this week - as a formality, with no changes. After that, the postponement will pass into law. WHY IT'S IMPORTANT The delay to the world-first policy to address deforestation is a blow to the EU's green agenda, which is facing pushback among industries from automakers, to airlines, who say EU measures to fight climate change are too onerous. But the delay offers relief to the companies and countries that had opposed the policy. Brazil and Indonesia had branded the law protectionist and said it could exclude millions of poor, small-scale farmers from the EU market. The EU law, which was initially due to take effect from Dec. 30, 2024, will require companies and traders placing soy, beef, coffee, palm oil and other products onto the EU market to provide proof their supply chain does not contribute to deforestation. EU farmers would also be banned from exporting products cultivated on deforested or degraded woodlands. CONTEXT EU lawmakers had tried to also weaken parts of the policy, but those proposals were shelved in negotiations with EU countries. The two sides struck a deal earlier this month to simply delay the law by 12 months. BY THE NUMBERS At least 120 million metric tons of CO2 emissions were caused by deforestation associated with EU commodity imports in 2021-2022, according to campaign group Global Witness. Sign up here. https://www.reuters.com/business/environment/eu-parliament-gives-final-approval-deforestation-law-2024-12-17/

2024-12-17 12:07

Reuters poll graphic on U.S. 10-year Treasury yield forecasts: BENGALURU, Dec 17 - U.S. Treasury yield forecasts from bond strategists have marched higher for a second month amid expectations of limited remaining Federal Reserve rate reductions and rising inflation risks in 2025, a Reuters survey found. Having kicked off its easing cycle with a jumbo half-percentage point cut in September, the central bank has lowered its fed funds rate (USFOMC=ECI) , opens new tab by 75 basis points and looks set to trim another 25 bps on Wednesday to 4.25%-4.50%. Yet, since the first reduction, the benchmark U.S. 10-year Treasury yield , which moves inversely to prices, has shot up around 70 basis points - hitting a near six-month high of 4.50% last month. The resilience of the world's largest economy and President-elect Donald Trump's proposed policies from tariffs to tax cuts - all expected to be inflationary - have put a dampener on the Fed's easing plans and pushed yields higher, particularly on longer-dated bonds. While the benchmark 10-year yield has moderated to around 4.40%, the median forecast from a Dec. 12-17 Reuters poll was for it to fall modestly to 4.25% in a year - above the 4.10% recorded last month and 50 bps higher than an October median. Around 55% of forecasters raised their twelve-month 10-year note yield forecasts from November. "If Trump's policies focus on pushing growth up via increasing deficits, rates have even more room to move up," said Zhiwei Ren, portfolio manager at Penn Mutual Asset Management. "Over the coming two years, it's very hard to see those deficits coming down materially - which means the government will have to sell a lot of Treasuries to finance spending." An Oct. 28 estimate from the Committee for a Responsible Federal Budget, a budget-focused think-tank, found Trump's proposed policies could push up U.S. fiscal debt by $7.75 trillion over the next decade. "Inflation was coming down sharply during the summer, but now that has stopped. The labor market has weakened a bit, but is still strong. Consumer spending is resilient and equities are hitting record highs. Financial conditions may not be as tight as the Fed thinks," Ren added. "If the Fed keeps cutting in this raging bull market, long-end rates will move even higher." In line with interest rate futures, economists surveyed by Reuters last week now expect only three more quarter-point rate cuts next year - half the amount predicted earlier this year. Yet, forecasters remained mostly conservative in their point estimates for higher yields. Survey medians from 44 strategists showed the benchmark yield slightly below current levels at 4.30% in three months and 4.27% at end-May, but both higher than November. "Market rates are likely to remain around current levels," said Robert Tipp, chief investment strategist at PGIM Fixed Income. "While the Fed is likely to continue to cut, it definitely won't be the one-cut-per-meeting pace priced in at some points over the last several quarters." A 75%-strong majority, 15 of 20 strategists, responding to an additional question said the 10-year yield was unlikely to cross 5% next year. The last time it did so was in October 2023. "One of the scenarios we considered is a 'higher for longer' yield curve, where the 10-year yield could return to 5%. In that case, extending duration, i.e. buying longer-dated bonds, could be detrimental. But it's not our base case," said Hong Cheng, head of fixed income and currency research at Morningstar. Sign up here. https://www.reuters.com/markets/us/fed-caution-inflation-risks-propel-us-treasury-yield-forecasts-higher-again-2024-12-17/

2024-12-17 11:21

OSLO, Dec 17 (Reuters) - The Danish Energy Agency has granted a construction permit for 240-megawatt (MW) Jammerland Bugt offshore wind farm, which is expected to start operating in 2029, developer European Energy said on Tuesday. The project is located in the Bay of Jammerland, on the western side of the island of Zealand. The offshore wind farm is expected to produce power equating the electricity consumption of around 240,000 European households per year, the developer said. The company did not provide any details on the cost of the project, where it is the sole developer. At the end of November, European Energy already received consent to build the Lillebaelt Syd offshore wind farm, which will have an installed capacity of 165 MW, enough to power 148,000 households. As part of an agreement signed earlier this year, France's TotalEnergies (TTEF.PA) , opens new tab will become the majority owner of both the Jammerland Bugt and Lillebaelt Syd projects. The projects are two of only nine open-door projects confirmed by the Danish Energy Agency before it in December 2023 ended the scheme due to EU law conflicts. A recent Danish auction for at least 3 gigawatts (GW) of capacity in the Danish North Sea failed earlier this month, attracting no bids from developers. Sign up here. https://www.reuters.com/sustainability/climate-energy/denmark-issues-construction-permit-240-mw-offshore-wind-farm-2024-12-17/

2024-12-17 11:19

LONDON, Dec 17 (Reuters) - Shell's (SHEL.L) , opens new tab head of renewables in the Americas Amanda Dasch will leave the company to join Danish offshore wind giant Orsted (ORSTED.CO) , opens new tab in January as head of its U.S. operations. The departure of the veteran executive comes shortly after Shell announced it will halt investments in new offshore wind projects as CEO Wael Sawan focuses on higher margin operations. Dasch joined Shell nearly 20 years ago and has worked most of her career there in the upstream oil and gas division. Since 2022 she led Shell's offshore wind development in North America and renewables in South America. She will join Orsted on Jan. 13, the Danish company said in a statement on Monday. Orsted, the world's top offshore wind developer whose market capitalisation briefly exceeded Shell's in the aftermath of the COVID outbreak in 2020, has seen a dramatic reversal in fortunes in recent years due to supply chain cost inflation and technical issues. The company booked billions in impairments due to project cancellations and delays in U.S. projects in recent years. Orsted today has 11 gigawatts of projects in Americas, it said. "We're thrilled to welcome Amanda to our leadership team and to draw from her 20+ years of energy experience in the U.S. to guide and advance our plans to build an American energy industry across technologies, including offshore and onshore wind, solar, and battery storage," Orsted deputy CEO Rasmus Errboe said in a statement. Sign up here. https://www.reuters.com/business/energy/shell-executive-steps-down-lead-orsteds-us-offshore-wind-2024-12-17/

2024-12-17 11:17

STOCKHOLM, Dec 17 (Reuters) - Sweden is considering taking a stake in the new nuclear power plants it wants the private sector to build over the coming decades to meet an expected surge in demand for fossil-free electricity, the government said on Tuesday. "We haven't closed the door to that," Markets Minister Niklas Wykman told reporters on Tuesday. "In that case, it would be on strictly commercial terms." He said no decision had been made and gave no further details. The government forecasts demand for electricity will double to around 300 terawatt hours by 2045 as fossil fuels are phased out, and wants the equivalent of two full-scale nuclear reactors to be built in the next decade. But with worries over profitability hampering interest from the private sector, the government has accepted it will need to help finance construction costs, estimated to be around 400 billion Swedish crowns ($36.61 billion). A commission said the government should be ready to provide loans to cover 75% of the total amount and to guarantee prices for 40 years. Critics say recent projects like Hinkley Point C in Britain and Flamanville 3 in France show that reactors will end up being much more expensive than current estimates, with the taxpayer shouldering the burden. Supporting nuclear power could also squeeze out other fossil-free alternatives, some critics have said. "Given the climate ambitions we have, I find it inconceivable it would have any squeeze-out effect," Wykman said. Sweden aims to reach net zero emissions by 2045. ($1 = 10.9269 Swedish crowns) Sign up here. https://www.reuters.com/business/energy/sweden-could-take-stake-new-nuclear-power-plants-minister-says-2024-12-17/