9 JUNE 2011
Four directorsto leave ENRC
KEN Olisa, one of two directors yester-day voted off the board of resourcesgroup ENRC after voicing corporategovernance concerns at the FTSE 100company, said the firm must be “pret-ty vulnerable” to an investigation by the UK listing authorities.Olisa told
City A.M.: “
When we wentpublic the people selling shares madecommitments that they would notget involved in the running of thecompany.”He added that the shares marketnow would decide “whether it wantsto invest in a company which is soclearly in the orbit of its controllingshareholders”.Olisa was removed from the boardalong with City grandee Sir RichardSykes after a vote by shareholders. The group is still controlled by itsmajority Kazakh shareholders, who voted against Olisa and Sykes. Twoother directors are understood tohave stepped down. The board of ENRC has been thesubject of repeated reports of internaldisagreements, particularly after acontroversial deal last year involvingthe purchase of a disputed licence tomine copper in the DemocraticRepublic of Congo, which is still thesubject of a legal dispute. The grouplaunched a “comprehensive” corpo-rate governance review.
Rejoice: Opec’s days are numbered
THERE was a time when theOrganisation of the PetroleumExporting Countries (Opec), the cartelof oil producing nations, was the world’s Enemy Number One. Thegroup wielded terrifying powers: itcould make or break economies by increasing or reducing the supply of oil, sending its price rocketing orcrashing. No longer: Opec, while still adestructive force, has mutated fromscary to ridiculous. Rather than fear-ing its meetings, people are starting tosee their funny side: a bunch of squab- bling, self-interested nations that areunable to agree on anything. Take yesterday’s meeting. It washoped Opec would hike output, per-haps by 5-6 per cent, to compensate forthe reduced supply from Libya and try and dampen oil prices, now so elevat-ed that they are cutting demand andactually hitting producers. It was notto be. The meeting descended intofarce, with members angrily gangingup on each other and describing thegathering as the worst-ever. Less amus-ingly, the price of oil jumped on newsof the bust-up.Marc Ostwald, a strategist atMonument Securities whose notes areinvariably interesting, convincingly argues that yesterday’s fiasco con-firms that Opec is moving closer to break-up. This would be wonderfulnews for oil consuming nations – andit would finally eliminate a 40-odd year distortion at the heart of the glob-al economy. All cartels are bad – butcartels of states are the worst. The problem for Opec is that itsmembership’s interests are so diver-gent. It has 12 member countries: sixin the Middle East (Saudi Arabia,Kuwait, Qatar, the United ArabEmirates, Iran and Iraq), four in Africa(Algeria, Angola, Libya and Nigeria),and two in South America (Ecuadorand Venezuela). Algeria, Venezuela,Iraq were definitely against increasingoutput, as almost certainly were Iran, Angola and Nigeria. This suggests only the Gulf Cooperation Council coun-tries, friends of the West, backed anincrease. The biggest beneficiaries of the cartel’s dwindling influence may well prove to be non-Opec energy pro-ducers such as Russia and Kazakhstan. This would come with its own prob-lems, of course, but competition isalways better than monopolies,including in the supply of oil.So why did so many countries not want to increase output, despite thehigh price of oil? Opec countries aredesperate to use foreign exchangereserves from oil sales to subsidise theprice of increasingly expensive foodimports to avoid a popular uprisingand thus the fate of Egypt and Tunisia.Many Opec members would struggleto increase their production, mostnotably Iran, or need a lot more invest-ment to do so (Algeria, Angola, Iraq,Nigeria and Venezuela fall into thiscamp). Last but not least, many Opecnations hate the US as much as ever.Opec’s woes are another reminderthat the post-World War II interna-tional order is disintegrating. TheEurozone, the World Bank/IMF, thedollar’s rule as the world’s reserve cur-rency, the illusion of unity at the G20and even the United Nations are los-ing their credibility. Instead of bemoaning this collapse of outdatedinstitutions, we should look forwardto building a much looser, less Western-centric, network-based globalorder, built on trade, globalisationand security pacts rather than on bureaucracies. One thing is sure: thenew world order has no room for obso-lete cartels such as Opec.
firstname.lastname@example.org Follow me on Twitter: @allisterheath
NISSAN is to make a £192m invest-ment to build the new version of theNissan Qashqai car in the UK.Prime Minister David Cameron, who invited Nissan chief Carlos Ghosnto Downing Street to announce thedecision, is keen to present the compa-ny’s decision as a coup for UK car man-ufacturing. Nearly a million NissanQashqai cars have been producedsince its release, with most of the partscoming from UK suppliers.Designing and building the new ver-sion is expected to preserve 6,000British jobs. The firm also has plans toinvest £420m in its Sunderland factory to produce the Nissan LEAF, an electriccar, from 2013 onwards.Ghosn said: “The UK has been a cor-nerstone of Nissan manufacturingsince 1986... It’s the home of theQashqai, one of Nissan’s biggest prod-uct successes.” Nissan employs 12,500across Europe and last year produced528,000 cars at factories in the region.
PM cheers UK cars boost
Prime Minister David Cameron said Nissan’s decision is “fantastic news”
NEWS | IN BRIEF
Exxon spends $1.7bn on shale
Exxon Mobil said it bought privately heldnatural gas company Phillips Resourcesand related company TWP Inc for$1.69bn (£1bn) last week, picking upabout 317,000 acres for exploration in theMarcellus shale basin. The action high-lights the importance Exxon is placing onnatural gas assets after spending about$30bn last year to buy natural gas compa-ny XTO Energy, adding one of the leadingdevelopers of shale gas and a resourcebase of 45 trillion cubic feet of gas equiva-lent.
KKR eyes stake in ING business
Private equity giant KKR & Co is eyeing aminority stake in ING’s US online bank,ING Direct USA, a source familiar with thesituation said last night. General Electricand Capital One Financial are also under-stood to have submitted bids. ING wasforced to split its insurance and bankoperations and agreed to divest INGDirect USA by 2013 to obtain EuropeanCommission approval for €10bn (£8.9bn)of Dutch state aid received in 2008 duringthe financial crisis. The bank has said itwould repay the remaining €3bn by May2012.
Floor, Centurion House,24 Monument Street, London, EC3R 8AJTel: 020 7015 1200 Fax: 020 7283 5334Email: email@example.com www.cityam.com
Business Features Editor
Head of Distribution
This newspaper adheres to the system of self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the Editor’sCode of Practice, a copy of which can be found at www.pcc.org.uk
Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS
If you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or firstname.lastname@example.org
Ken Olisa, who is also aThomson Reutersdirector, criticisedENRC’s board and wasvoted off it
BRISTOL WATER SALE LOOMS
The owners of Bristol Water haveappointed Citigroup to advise on a pos-sible sale of the company, according topeople familiar with the matter, in amove that paves the way for the firstdeal in the privatised UK industry since the financial crisis. Agbar, theSpanish water specialist majority-owned by France-based SuezEnvironnement, should expect tofetch about £370m for the utility, based on typical takeout multiples.
OPHIR SET FOR $1BN LONDON FLOAT
Ophir Energy, the African explorer backed by Lakshmi Mittal, one of Britain’s richest men, is set to tap intothe demand for energy stocks by announcing this morning its inten-tion to float on the London market. The flotation is expected to valueOphir at more than $1bn (£607m),making it one of the largest explo-ration IPOs in London. Ophir hopes toraise up to $400m through the sale of new shares to fund exploration.
TEMASEK CHIEF TO STEP DOWN
Ho Ching, the executive director andchief executive officer of Singapore’s Temasek investment fund, is likely tostep down in August, according to peo-ple familiar with the matter.If con-firmed, her departure would come ata time when the fund, whose soleshareholder is the Singaporean gov-ernment, has fully recovered from thefinancial crisis, during which the value of its portfolio fell from S$185bn($150bn) to S$130bn.
US SOLAR NEARS COMPETING ON PRICE
US solar power will compete on price with conventional generation withinthree years without subsidy thanks toplummeting costs, industry leaderssay. In a breakthrough for renewablegeneration, the cost of solar power inCalifornia is near that of gas-firedplants at times of peak demand.
FACEBOOK SPARKS PRIVACY ROW
Facebook secretly changed users’ pri- vacy settings to turn on technology that automatically identifies people inphotographs, renewing concernsabout the social networking site’spractices. The feature uses facial recog-nition technology to analyse photo-graphs of users then asks Facebook friends to “tag” them. But Facebook does not give its 500 million users theoption of not being tagged in this way.
L’ORÉAL PEACE TREATY IN TATTERS
The family feud that racked theL’Oréal empire last year broke outagain yesterday after the daughter of heiress Liliane Bettencourt sought tohave her placed under legal protec-tion. Françoise Bettencourt-Meyerstook action after a judge ruled inMarch that her mother, who has a
14.5 billion fortune, was no longer infull possession of her faculties.
ONE IN EIGHT STRUGGLE TO PAY BILLS
Sharp increases in energy and foodprices mean household budgets are being stretched to breaking point, leav-ing six million people unable to pay their bills on time. The figure has morethan doubled since last summer, from5 per cent to 12 per cent today. It meansmany are turning to debt to cover theshortfall in their household incomes.
HOUSE OF LORDS GETS £6M EXPENSES
Figures released by Parliament show that peers received more than £6 mil-lion in allowances during the firstthree months of the new regime, com-pared to around £4.25 million the year before, when the old system was stilloperating. Among those who claimed were two Conservative peers, Lord Taylor of Warwick and LordHanningfield, who have since beenconvicted of fraud after being foundguilty of cheating on their expenses.
GENETICS CLUE TO E. COLI OUTBREAK
The culprit behind Europe's E. coli out- break appears to be an evolved andextremely toxic version of a bug firstidentified in Münster, Germany, in2001, according to genetic analyses.Identifying the bug’s ancestor may help scientists identify the origin,spread and source of the disease.
PORTUGAL BEGINS COALITION TALKS
Portugal’s prime minister-elect PedroPassos Coelho and the conservativeDemocratic and Social Center Party started official talks yesterday to forma coalition government that will allow Lisbon to quickly implement a
78 bil-lion ($114.54 billion) bailout program.Passos Coelho’s center-right SocialDemocratic Party won general elec-tions late Sunday, defeating theSocialist Party of Prime Minister JoséSócrates, but falling short of having amajority in Parliament.
WHAT THE OTHER PAPERS SAY THIS MORNING