2023-11-23 06:00

MILAN/MADRID/LONDON, Nov 23 (Reuters) - QatarEnergy is the company to which Spanish power utility Endesa (ELE.MC) will have to pay $570 million following an arbitration ruling over a liquefied natural gas (LNG) contract dispute, three people familiar with the matter told Reuters on Wednesday. The Spanish firm said on Monday it would have to pay the sum to an unidentified LNG producer following a ruling by the International Court of Arbitration of the International Chamber of Commerce in a dispute over a retroactive price adjustment. The opposing party was seeking around $1.28 billion, Endesa said in its financial report in October. State-owned QatarEnergy didn't immediately reply to a request for comment outside of usual office hours. An Endesa spokesperson declined to comment. Earlier on Wednesday, Endesa Chief Executive Jose Bogas said the other party in the dispute was from Qatar, Nigeria or Algeria. "We are still calculating the impact but I believe a big part of it - something around $500 million - could be recouped with the new price mechanism on the same contract in two years and a half," Bogas said, speaking on the sidelines of an event of Endesa's parent company Enel (ENEI.MI). Qatar is the world's leading LNG exporter at a time when competition for LNG has increased following the war in Ukraine. European countries in particular have rushed to offset dwindling pipeline imports from Russia with gas supplied by sea. Thanks to its extensive LNG infrastructure, Spain has emerged a key European hub for Europe's LNG imports. https://www.reuters.com/business/energy/qatarenergy-is-beneficiary-570-mln-ruling-against-endesa-sources-2023-11-22/

2023-11-23 05:59

Nov 22 (Reuters) - Bayer (BAYGn.DE) held a call with investors on Monday after a raft of bad news led some of them to question whether the German group had been upfront about its prospects ahead of a $5.75 billion bond issuance, three sources familiar with the situation said on Wednesday. The bad news prompted some bond investors to question whether Bayer should sweeten the terms of the deal or outright pull it, one of the sources said. The drug-to-pesticides group priced the investment grade bond on Thursday last week, with the deal closing on Tuesday. On Sunday, it was hit by a major drug development setback when it aborted a large late-stage trial testing a new anti-clotting drug, that promised billions in revenue, acting on recommendation by an independent trial monitoring board. Then in two separate lawsuits, Bayer was ordered on Friday to pay $1.56 billion to plaintiffs over its Roundup weed-killer, followed by another order on Monday to pay $165 million to employees of a school northeast of Seattle. "From our conversations with clients, many are angry and are seriously wondering whether Bayer management rushed to bring the deal ahead of the news," said Andrew Brady, CreditSights head of basic industries research, referring to investors. A Bayer spokesperson declined comment. The company's bankers held a call with some of the top investors on Monday in a bid to placate them, two of the sources said. On the call, the investors asked for clarity on whether the bad news would have material impact on the company’s earnings, one of the sources said. The company told investors it had reserves to deal with Roundup litigation, and could not have predicted the jury verdicts, the source said. It is rare for investment-grade bonds to be pulled after they have priced, according to the sources, who are market participants. In March 2021, Nomura Holdings flagged a possible $2 billion loss at a U.S. subsidiary, and shelved a hefty bond issuance. Bayer priced bonds with maturities between three to 30 years. It was the 10th largest investment grade bond deal by an industrial company this year and attracted more than $22 billion in orders, according to Informa Global Markets. Citigroup (C.N), JP Morgan (JPM.N), SMBC Nikko Securities America [RIC:RIC:SUMFGT.UL] and Wells Fargo (WFC.N) were the bookrunners on the deal. All the banks declined comment. The credit spreads, or the premium charged over Treasuries, on some of the bonds on Wednesday were bid 5 basis points to 23 basis points wider than where they priced last Thursday. The events were "not enough to trigger a material adverse change clause in bond documents for investors to ask to be paid back," said CreditSights' Brady. https://www.reuters.com/business/healthcare-pharmaceuticals/bayer-holds-call-with-bond-investors-after-raft-bad-news-2023-11-22/

2023-11-23 05:50

Nov 23 - Carbon capture and underground storage (CCUS) is touted by proponents of fossil fuel production and consumption as the technology that will keep oil and gas in the global energy mix. It is, and at the same time it isn't. The International Energy Agency (IEA) delivered a dose of reality on whether CCUS can be deployed at sufficient scale and with viable economics in its latest report, released on Thursday. While the global oil and gas industry is well placed to scale up technologies to help achieve the goal of net-zero emissions by 2050, the IEA warns of pitfalls. One of those is what the agency, which represents developed nations, called "excessive expectations and reliance on CCUS". It called CCUS an "essential technology for achieving net-zero emissions in certain sectors and circumstances, but it is not a way to retain the status quo". The key word in the above quote is 'certain', meaning that CCUS is a viable technology to reduce emissions in some cases, but it is far from the silver bullet it is often made out to be, largely by major oil and gas producers and their supporters. The IEA produced some sobering numbers in its report, The Oil and Gas Industry in Net Zero Transitions. If oil and natural gas consumption does evolve as projected under current policy settings, the IEA said this will require an "inconceivable" 32 billion metric tons of CCUS by 2050. This would include some 23 billion metric tons sequestered by direct air capture technologies, which in turn would require some 26,000 terawatt hours of electricity generation to operate in 2050, which is more than the world's electricity demand in 2022. If there is still hope for widespread CCUS as the solution for oil and gas production, the IEA further said $3.5 trillion in investment will be needed every year from now to 2050. In other words, CCUS as the preferred solution of oil and gas companies trying to secure a long-term future in a carbon-constrained world is largely a pipe dream. That said, CCUS does have a role to play and it can be expanded, as long as governments get the policies in place to incentivise storing carbon. The IEA said about 45 million metric tons of carbon dioxide is currently captured globally by CCUS projects, although three-quarters of this is used for enhanced oil recovery, in other words the stored carbon is used to produce more fossil fuels that will release emissions when combusted. While the IEA said more than $3 billion was invested in CCUS projects in 2022, only 5% of the ventures have reached final investment decisions, representing only 10 million metric tons of carbon capture and 20 million of storage. LACK OF INCENTIVES The slow pace of advancing CCUS is largely because of a lack of incentives for investors to take on what are usually large and complex projects, involving multiple partners. It is perhaps ironic that oil and gas companies and many of their political backers, especially on the conservative side of the spectrum, tout CCUS as a major solution, but at the same time don't push hard for the financial and policy settings that would enable a faster roll out. Another issue for widespread and large-scale CCUS is gaining confidence that it will work as intended. The largest operating CCUS project in the world, at Chevron's (CVX.N) Gorgon liquefied natural gas plant in Western Australia state, has a mixed record. While it is storing carbon, Chevron acknowledged earlier this year that it is operating at a third of capacity amid operating difficulties. In some ways Gorgon is symbolic of the challenges facing CCUS as a whole. It has shown that CCUS can work at scale, but at the same time it has also shown just how difficult it is to run a project of that size and complexity. There is little doubt that the oil and gas industry will learn from experience and get better at doing CCUS. They have a strong track record of innovation and finding engineering solutions. But there is a massive gap between CCUS hopes and realities, and the IEA report goes a long way towards identifying the issues. The opinions expressed here are those of the author, a columnist for Reuters. https://www.reuters.com/markets/commodities/carbon-capture-storage-hopes-are-pipe-dreams-now-russell-2023-11-23/

2023-11-23 05:45

LONDON, Nov 23 (Reuters) - The euro edged up on Thursday after data suggested the downturn in the euro zone economy may be starting to ease, although holidays in the U.S. and Japan kept trading activity muted. With markets shut in Japan and the U.S. for Thanksgiving holidays, currencies traded with some volatility, as liquidity was thinner than usual. A flurry of preliminary surveys showed recession in economic powerhouse Germany may be shallower than expected, which offset a downbeat read of French business activity. Earlier in the day, the euro rose against most other major currencies, following the surveys. "There's been a bit of an upside surprise on Germany and the euro zone and yes, it's an improvement on the prior, but all this is saying is things are getting slightly less bad," TraderX strategist Michael Brown said, of Thursday's flash Composite Purchasing Managers' Index (PMI) for November. The survey showed the euro zone economy is on track to contract again in the fourth quarter. The PMI covering the bloc's dominant services industry rose to 48.2 this month from 47.8, slightly above the Reuters poll estimate for 48.1, but firmly in contraction territory. Manufacturing activity, which has contracted every month since July 2022, fell again in November. Its PMI rose to 43.8 from 43.1, beating the poll expectation for 43.4 but was still below breakeven. "It's not exactly cause for much optimism ... and basically reiterates what we already knew: that the economy is facing a tough winter ahead," Brown said. The euro was up last up 0.18% on the day at $1.09075, having traded as high as $1.0931 earlier in the day. "Euro/dollar trades back above $1.09 but may face formidable resistance above at $1.096," Saxo Bank strategists said in a note. Markets offered a muted reaction to a shock victory by anti-EU far-right populist Geert Wilders in Wednesday's parliamentary elections in the Netherlands. Sterling recovered some ground against the dollar after dropping 0.3% on Wednesday when British Finance Minister Jeremy Hunt delivered a budget update that projected far less growth than previously forecast and a flurry of tax cuts and subsidies for Britain's struggling economy. A separate read of UK business activity showed companies reported a marginal return to growth in early November after three months of contraction, which gave the pound a small boost. Sterling was last up 0.3% on the day at $1.2538, having risen to a high of $1.2575 after the PMI data. The dollar index fell 0.14%, down for the first time since Monday, having bounced off 2-1/2-month lows the day before, after data showed the number of Americans filing new claims for jobless benefits fell more than expected last week. Another worrying indicator for the Federal Reserve was a survey from the University of Michigan that showed consumers this month anticipate higher inflation both in the near and long term. Markets have dialled back expectations of Fed rate cuts in 2024, with futures now showing a 27% chance that the Fed cuts its target rate at the March 2024 policy meeting, a likelihood that increases to 40% by May, according to CME Group's FedWatch tool. The weakness in the dollar has buoyed the yen, along with expectations the Bank of Japan may shift away from its ultra-loose monetary policy next year. After pulling back from the brink of 152 per dollar at the start of last week, the yen hit a two-month high of 147.155 on Tuesday. It last traded at 149.59. In cryptocurrencies, Binance CEO Changpeng Zhao has stepped down and pleaded guilty to breaking criminal U.S. anti-money laundering laws as part of a $4 billion settlement resolving a years-long investigation into the world's largest crypto exchange. Bitcoin fell 1% to $37,047, having risen by nearly 5% on Wednesday. https://www.reuters.com/markets/currencies/holiday-thins-trading-after-data-nudges-dollar-higher-2023-11-23/

2023-11-23 05:39

A look at the day ahead in European and global markets from Vidya Ranganathan. The minutes of the European Central Bank's October meeting and flash PMIs for a host of European countries are Thursday's highlights in markets otherwise lulled by the Thanksgiving holidays in Japan and the United States. The forward-looking flash November PMIs due out globally should help investors assess recession risks and how quickly rate cuts will begin. The euro zone PMI is already below the 50 number, suggesting economic activity is contracting. It is the same in Britain, while the U.S. Oct manufacturing PMI contracted sharply. On ECB, the market is on a rumour-and-fact strategy, for it does seem like investors globally are so dovishly biased that they are only going to react to strength in data. Interest rate futures show the market is pricing in rate cuts by April and more aggressively so in June . Still, it's Thanksgiving time, so traders know not to trust every market move. ECB speakers haven't made it easier, either, to second-guess policy, given dovish comments from Mario Centeno, Governing Council member Joachim Nagel's line on rates being close to their peak, and ECB President Christine Lagarde's warning against premature celebration. Later on Thursday, Sweden's central bank will announce its latest policy decision in what is expected to be a very close call on whether to hike again. A Reuters poll showed 10 of 19 economists looked for a rise, while market pricing is leaning against a move. A steady decision would likely be taken as the end of the cycle and put the crown under pressure, which argues for a hike today. Meanwhile, sterling and the UK's FTSE 100 (.FTSE) had a sobering take on UK finance minister Jeremy Hunt's autumn budget and the accompanying sluggish economic outlook. Gilt yields are up, too, as investors took note of Hunt's obvious pre-election ploy, and the future implications of tax cuts without funding. Key developments that could influence markets on Thursday: Econ: Global flash PMIs, Riksbank policy decision, ECB October policy meeting minutes Earnings: Ackermans & Van Haaren NV (ACKB.BR), Powszechny Zaklad Ubezpieczen SA, Virgin Money UK Speakers: ECB's Isabel Schnabel and Robert Holzmann, Bank of France governor Francois Villeroy de Galhaun Bond auctions: German re-opening of 12-year and 15-year government debt auctions https://www.reuters.com/markets/europe/global-markets-view-europe-2023-11-23/

2023-11-23 05:27

MUMBAI, Nov 23 (Reuters) - The Indian rupee was little changed on Thursday as continued dollar demand from domestic oil companies and importers offset the relief from IPO-related inflows and easing oil prices. The rupee was 83.33 as of 10:50 a.m. against the U.S. dollar, barely changed from its close at 83.32 in the previous session. Asian currencies were mixed as the Thai baht and Indonesian rupiah weakened, but the offshore Chinese yuan rose 0.2% to 7.1491. "Oil companies have been buying at all levels and importer demand is also holding up," a foreign exchange salesperson at a private bank said. The dollar index last quoted lower in Asia at 103.72, but staged a slight recovery overnight on Wednesday after initial jobless claims data fell more than expected last week. Initial claims for state unemployment benefits dropped to 209,000 for the week ended Nov. 18. Economists polled by Reuters had forecast 226,000 claims for the latest week. Brent crude oil futures were last quoted lower at $80.98 after the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, delayed a meeting where they were expected to discuss oil output cuts. The rupee is likely to have a quiet session on Thursday on account of muted dollar liquidity due to the Thanksgiving holiday in the United States, said Gaurang Somaiya, an FX and rates researcher at Motilal Oswal Financial Services. But the bias is slightly tilted towards appreciation till next week as IPO inflows could help the rupee amid a soft patch for the dollar, Somaiya added. IPOs worth a total of about $900 million are lined up in the domestic market this week. https://www.reuters.com/markets/currencies/rupee-flat-importer-dollar-demand-offsets-comfort-ipo-inflows-2023-11-23/