The close: Well, there's always JulyRTGAMFor a while there, it looked as though the U.S. stock market would put in a respectable finale to the second quarter of 2008, turning in a decent gain as crude oil prices came off the boil and gold calmed down.
No such luck.The Dow Jones industrial average closed at 11,350.01, up just 3.5 points or flat on a percentage basis - after it gave up about 50 points in the final half-hour of trading.
The broader S&P 500 followed a similar trajectory, closing at 1280.01, up 1.63 points or 0.1 per cent, after being up 9 points in the late afternoon.Financials were particularly weak as the seconds ran out on the quarter. You could blame this on institutional investors jettisoning their losers before they must submit quarterly reports on their holdings.
Or, if you're less inclined to blame the smart money, you could simply point to deteriorating hope for the U.S. economy and the housing market in particular.American International Group Inc. fell 4.7 per cent, Bank of America Corp. fell 2.9 per cent and Citigroup Inc. fell 2.8 per cent, with the losses accelerating toward the end of the day. Exxon Mobil Corp.,
meanwhile, rose 1.8 per cent after oil held at $140 (U.S.) a barrel.In Canada, the final day of the second quarter proved to be a snapshot of everything that is right and wrong with the stock market. Yes, the S&P/TSX composite index ended the day significantly higher, closing at 14,467.44, up 112.23, or 0.8 per cent. But once again, the winners were confined to the usual two sectors - energy and materials - while most of the rest of the market languished. Financials, in particular, fell 0.9 per cent.Among individual names, EnCana Corp. rose 3.9 per cent, Potash Corp. of Saskatchewan Inc. rose 2.7 per cent and Canadian Natural Resources Ltd. rose 0.4 per cent. On the downside,
Research In Motion Ltd. continued its decline to seven straight days, a trend that has existed since the BlackBerry maker disappointed the market with its quarterly results. Its shares fell 1.9 per cent. BCE Inc. closed at $35.55, down $1.21, or 3.3 per cent, on renewed speculation that its takeover deal could be delayed and possibly re-priced.
And Canadian Imperial Bank of Commerce fell 3.7 per cent to a new 52-week low on concerns about more writedowns ahead. Welcome to the third quarter.Copyright 2001 The Globe and Mail
Monday, June 30, 2008
Well, there's always July...
Friday, June 27, 2008
Oil soars past $142 on sliding dollar
Oil soars past $142 on sliding dollar
DAVID McHUGH
Friday, June 27, 2008
LONDON — Oil prices climbed to a record above $142 (U.S.) a barrel Friday as the U.S. dollar's protracted slump and falling stock markets prompted investors to take refuge in oil.
Prices were also lifted Thursday after OPEC's president said crude prices could rise well above $150 a barrel this year and Libya said it may cut oil production.
Light, sweet crude for August delivery rose as high as $142.26 a barrel before pulling back to $141.40, up $1.76 in electronic trading on the New York Mercantile Exchange by early afternoon European time. The contract Thursday rose $5.09 to settle at a record $139.64.
The previous trading record for a front-month contract was $139.89, set on June 16.
The rise follows a sharp fall in U.S. stocks on Thursday and in Asia on Friday. “We need to observe that financial flows were leaving the equity markets as those markets are breaking below their support levels,” said analysts at Petromatrix in Switzerland. “When money has nowhere to go, it is parked in commodities as it is one of the few investment instruments that actually rises the more money you pour into it.”
The dollar also slipped against key currencies, as U.S. data showed sluggish economic growth and pointed to a struggling labour market. Oil is priced in U.S. dollars, and some investors buy oil contracts to protect the value of their assets against accelerating inflation when the dollar falls.
“The dollar movements caused the surge in oil pricing and the bullish trend remains intact,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “The oil market is subject to further spikes in the coming weeks.”
On Friday, the dollar was unchanged in early afternoon European trading, with a euro buying $1.5782.
Also driving crude futures higher were remarks by Chakib Khelil, president of the Organization of the Petroleum Exporting Countries, who said Thursday he believes oil prices could rise to between $150 and $170 a barrel this summer. Mr. Khelil also said prices will decline later in the year, and aren't likely to reach $200 a barrel.
Mr. Khelil joined a long list of forecasters who have made predictions of sharply higher prices this year. Each new forecast, such as Goldman Sachs' recent prediction that prices could rise as high as $200, causes a jump in prices as speculative buyers are drawn into the market.
Meanwhile, the head of Libya's national oil company said the country may cut crude production because the oil market is well supplied, according to news reports.
Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut, said in a research note that Shokri Ghanem, the nation's top oil official, has declined to say when a decision would be made on whether to lower production, or give any indication of the size of the cut under consideration.
But analysts expressed skepticism over the comments out of Libya, saying the current level of oil prices provides an incentive for producers not to cut output.
“I doubt that any real effort in cutting output would be forthcoming, considering that pricing continues to hit new records,” Mr. Shum said. “There's no economic reason to cut output at this time so it's just talk.”
Oil prices have more than doubled over the past year on concerns about rising demand in fast-growing economies such as China and India, and supply disruptions in the Middle East and Nigeria.
Analysts have also attributed oil's rapid climb to speculative buying, with traders jumping into the market purely on the expectation that futures will continue to rise.
“Even though we have continued to see weakening demand in the U.S., other markets in the developing world still show growth,” Mr. Shum said. “The tight market has empowered speculators to invest in oil and the oil market is subject to further spikes in the coming weeks.”
In other Nymex trading, heating oil futures rose 6.55 cents to $3.9489 a gallon (3.8 litres) while gasoline prices rose 4.62 cents to $3.5575 a gallon. Natural gas futures rose 12.4 cents to $13.372 per 1,000 cubic feet.
Brent crude futures rose $1.32 to $141.15 a barrel on the ICE Futures exchange in London.
© Copyright The Globe and Mail
Asian markets tumble as oil spikes, and Wall Street wobbles
JEREMIAH MARQUEZ
Friday, June 27, 2008
HONG KONG — Asian stock markets tumbled Friday amid growing alarm as oil prices spiked above $141 a barrel for the first time and Wall Street plummeted overnight.
The sell-off spread across the entire region, with every key index in the red.
Shanghai's benchmark plunged more than 5 per cent to 16-month low. India's Sensex was down 3.8 per cent in afternoon trade. Japanese stocks dropped for a seventh day to a two-month low. Markets in Hong Kong, South Korea, New Zealand and the Philippines were off around 2 per cent.
Sentiment took a hit after U.S. stocks sank Thursday, with the Dow Jones industrial average sliding more than 3 per cent to its lowest level in almost two years.
Worries about the outlook for the U.S. economy — a vital export market for Asia — intensified after dismal news about a number of industries. Analysts downgraded General Motors Corp., Citigroup and Merrill Lynch & Co., while tech companies Oracle Corp. and BlackBerry maker Research In Motion Ltd. offered disappointing forecasts.
Oil prices, which climbed above $140 (U.S.) a barrel late Thursday, surged above $141 in Asian trading Friday, spurring further concern about inflation and rising costs.
“We've still got bad news on the credit crunch, we've got bad news about consumers,” said Garry Evans, pan-Asian equity strategist with HSBC in Hong Kong. “The macro environment is not a good one and people are very risk averse.”
In China, the Shanghai Composite Index sank 5.3 per cent to 2,748.43 points, the lowest close since February 9, 2007. Aside from record crude prices, reports of speculation about possible bank rate hikes were spooking investors.
Institutional investors are becoming disappointed with the authorities for staying hands-off during this year's slide, said Xu Zhiyuan, strategist at Capital Edge Investment and Management in Shanghai.
“Investors are selling shares regardless of the loss,” he said.
Huaneng Power International Inc. was one of the hardest-hit stocks, falling nearly 10 per cent. Airlines also suffered from the oil news, with China Eastern Airlines falling 9.7 per cent and China Southern Airlines falling 9.5 per cent.
Tokyo's benchmark Nikkei 225 index shed 2 per cent to 13,544.36, the lowest finish since late April. Honda Motor Co. lost 2.7. Sony Corp. dropped 4.3 per cent.
Indian stocks sank as investors worried about inflation that has risen to 13-year highs and that recent interest rate hikes would temper consumer spending.
“Sentiment is bearish. There are fears that crude will touch $180, this is a worry that cannot be stamped out easily,” said Gul Tekchandani, a Mumbai-based investment adviser. “Few can stomach this volatility, plus there are weak global cues with the U.S. economy also down.”
Hong Kong's Hang Seng index trimmed earlier losses to close down 1.8 per cent at 22,042.35. Refiner China Petroleum & Chemical Corp, or Sinopec, lost 3.6 per cent, and airline Cathay Pacific was down 1.7 per cent.
Mobile phone maker Foxconn International Holdings, Motorola's primary contract manufacturer, tanked almost 8.5 per cent amid fears over consumer demand.
Elsewhere, the main Philippine Stock Exchange Index ended 2.2 per cent lower, it's lowest finish in 21 months.
In currency trading, the dollar stood at 106.86 mid-afternoon in Tokyo, little moved from 106.91 yen in New York late Thursday. The euro stood at $1.5772 in mid-afternoon in Tokyo, compared with $1.5751 in New York.
© Copyright The Globe and Mail
Jeff Rubin and Benjamin Tal warned Thursday, saying that gasoline could surge to $7 a gallon
As oil hits $140, a new low for Detroit
GREG KEENAN
Thursday, June 26, 2008
Chrysler LLC trotted out celebrated retired chairman Lee Iacocca to rally employee spirits on Thursday, but investors were more interested in bankruptcy rumours that continued to haunt the auto maker and yet another fresh high for energy prices that are pounding the entire industry.
The Chrysler rumours and a downgrade of General Motors Corp. stock by Goldman Sachs Inc. knocked down the shares of major North American auto makers and their suppliers.
“There is no basis for the rumour,” said Chrysler spokesman David Elshoff, after the speculation started up in Europe and swirled throughout the North American auto industry, sparking a meltdown of auto industry stocks on Bay Street and Wall Street.
Hours later, Mr. Iacocca, told cheering employees at the company's headquarters in Auburn Hills, Mich., that the third-largest Detroit auto maker will ride out the storm the way it did when he was at the helm more than 25 years ago. Mr. Iacocca is still regarded as a saviour who helped keep it from falling into the financial abyss during the early 1980s.
The message didn't work as well with the Street. Making matters even more dour, oil surged above $140 (U.S.) a barrel again on the New York Mercantile Exchange and closed t a record $139.64.
The Detroit auto makers are reeling from a collapse in sales of pickup trucks and sport utility vehicles in the U.S. market amid gasoline prices above $4 a gallon and the U.S. real estate collapse.
It could get even worse, CIBC World Markets Inc. economists Jeff Rubin and Benjamin Tal warned Thursday, saying that gasoline could surge to $7 a gallon, which will cause Americans to abandon some of their vehicles and send sales through the floor.
Ford and GM have already scaled back truck and SUV production twice in recent weeks. Chrysler announced last November that it will slash production this year, but has insisted it will plow ahead with a redesign of its Dodge Ram pickup and has not adjusted production to deal with the recent slide in the U.S. market.
There are forecasts that June sales in the United States could reach a 16-year low of 12.5 million on an annualized basis – a bad sign because April, May and June are key months for sales.
“If you don't sell vehicles in April, May and June, you're screwed for the rest of the year,” the source said.
A day with wave upon wave of bad news is becoming a regular occurrence for auto makers – especially Detroit, where the U.S. housing crisis and the soaring price of gasoline are combining to cause what could be the worst situation the three auto makers have faced.
“We think GM's automotive cash flow burn this year and next is likely to lead it to look to raise capital, which we believe could lead to significant shareholder dilution and/or a cut to the company's dividend,” Goldman analyst Patrick Archambault wrote in a research note.
GM shares fell 11 per cent to a 33-year low and Ford Motor Co. shares briefly dipped below the $5 level to $4.94, a penny below their 52-week low.
Mr. Archambault urged investors to stay away from parts makers that have the bulk of their business with the Detroit Three.
That includes Magna International Inc.,which generates 53 per cent of its sales from Chrysler, Ford and GM, and has a close relationship with Chrysler that goes well beyond simply supplying the auto maker with parts.
The Motor City Meltdown spilled over to Magna's shares and sent them cascading. The stock fell $3.72 (Canadian) or 5.6 per cent Thursday and closed at a seven-year low of $62.27 on the Toronto Stock Exchange.
The growing crisis in Detroit overshadowed the positive news for Magna that Porsche AG has chosen the auto parts giant's Magna Steyr assembly division in Austria to build Boxster and Cayman sports cars beginning in 2012.
With files from Reuters and Associated Press
© Copyright The Globe and Mail
Thursday, June 26, 2008
Oil At 170 Per Barrel? Read This About Libya
Crude Oil Rises as Dollar Drops, Libya Warns of Production Cut
By Mark Shenk
June 26 (Bloomberg) -- Crude oil jumped more than $3 a barrel as the dollar weakened, Libya threatened to cut production and OPEC's president said prices may reach $170 by the summer.
Libya may curb output because of U.S. efforts to intimidate OPEC, the head of the national oil company said. The group's president, Chakib Khelil, said crude may surge on a European interest rate increase, France 24 reported. Oil, gold and copper climbed today as the dollar dropped because the Federal Reserve gave no signal of higher interest rates yesterday.
``OPEC's president said prices might be going to $170 at the same time Libya said it may cut output, which touched off buying in a market that was already moving higher on the weak dollar,'' said Jim Ritterbusch, president of Galena, Illinois-based energy consulting firm Ritterbusch & Associates. ``Traders then piled on because they were afraid they missed something.''
Crude oil for August delivery rose $3.60, or 2.7 percent, to $138.15 a barrel at 11:29 a.m. on the New York Mercantile Exchange. Prices touched $138.95 today, the highest since reaching a record $139.89 on June 16.
``These days there are so many people with fingers poised on the trigger that moves are exaggerated,'' Ritterbusch said.
The dollar is also lower on a forecast that the European Central Bank will boost interest rates. The currency's drop against the euro made commodities cheaper for buyers outside the U.S. The dollar was at $1.573 per euro as of 11:30 a.m.
``There's no reason for prices to rise $4 in 10 minutes,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``Things are very unsettled and now the worry is that the European Central Bank may raise rates, which would be the same as another Fed cut.''
Benchmark Rate
The Federal Reserve yesterday left its benchmark interest rate at 2 percent and said ``uncertainty about the inflation outlook remains high'' as energy and commodity prices continue to rise. Leaving the interest rate unchanged ended the most aggressive series of rate cuts in two decades.
``Commodities are rallying because there's a lack of confidence that the Fed will raise rates,'' said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. ``They didn't raise rates yesterday and it doesn't look like they will raise them soon. Their statement yesterday was too wishy-washy.''
The Reuters/Jefferies CRB Index of 19 commodities jumped 9.88, or 2.2 percent, to 462.02, after earlier reaching a record 462.34. The index gained 48 percent in the past year.
A decision by the ECB to increase interest rates in July may cause the dollar to decline and prompt investors to buy more oil, Khelil, who is also the Algerian oil minister, told the Paris- based television channel. Prices would ease toward the end of the year, he said.
Summer Support
Threats against Iran would also support prices during the summer, he said. A political crisis that would stop Iran's oil production would push prices over $200 a barrel, to possibly $400 a barrel, he said.
Saudi Arabia pledged it will pump an extra 200,000 barrels a day next month to calm the oil market at a June 22 meeting. The kingdom hosted the summit of 35 producing and consuming countries in the Red Sea port of Jeddah.
``The Saudis go out of their way to have this specific meeting outside the OPEC frameworks, and if you're the OPEC president, you want to be important, so you come out of it and say $150 to $170,'' said Roger Read, an analyst at Natixis Bleichroeder in Houston. ``He's trying to prove he matters and OPEC matters and the Saudis don't make all the decisions.''
Libya's National Oil Corp. Chairman Shokri Ghanem declined to say when a decision would be made on whether to lower Libyan production or give any indication of the size of the cut under consideration. Libya ranks third in terms of oil production in Africa, behind Angola and Nigeria.
`Around the Corner'
An oil price of $150 a barrel may be ``around the corner,'' Ghanem said in a Bloomberg Television interview.
He said the reductions may also be made because of threats of sanctions against Iran and U.S. legislation allowing lawsuits against the Organization of Petroleum Exporting Countries.
``If they want the production capacity of OPEC to increase, they should facilitate foreign investments, not threaten with freezing their assets in the U.S,'' Ghanem said.
President George W. Bush has said he'd veto a so-called NOPEC bill passed in May by the House of Representatives, because it may limit the availability of gasoline and further increase fuel prices.
Brent crude oil for August settlement rose $3.62, or 2.7 percent, to $137.95 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.
Last Updated: June 26, 2008 11:59 EDT
Eldorado Gold Insiders Selling
Erratic gold offers few clues
ALLAN ROBINSON
June 26, 2008
Swings in gold bullion during the past few weeks have been erratic, to say the least, as traders attempt to divine the course of the U.S. dollar and inflation; but investors should look at gold as just another commodity facing supply constraints, said John Ing, the president of Maison Placements Canada Inc.
"Really the market is so myopic trying to read the tea leaves," Mr. Ing said.
During June there have been daily swings up and down from $10 (U.S.) to $25 with gold falling $14.60 an ounce to $874.60 late yesterday morning before closing at $882.30.
WHAT ARE THE EXPECTATIONS?
In the short run, higher U.S. interest rates will help the greenback and hurt gold, but inflation pressures in the form of rising prices of oil, food and other commodities will continue because of growing demand, a shortage of supply and continuing stimulative fiscal and monetary policies south of the border, Mr. Ing said. "Any dollar strength will prove to be temporary," he said.
Although the price of bullion recently reached record levels, it has lagged other commodities. There have been few gold discoveries, while mine development costs have soared, resulting in poor stock market performance for the gold mining companies. "Energy costs make up one-third of the cost of gold production," Mr. Ing said. As a result, gold prices need to go higher to help justify the huge capital expenditures needed to develop new mines, he said.
Among the larger companies Mr. Ing likes with new mines under development are Agnico-Eagle Mines Ltd. and Kinross Gold Corp., while his junior favourites are Aurizon Mines Ltd. and Eldorado Gold Corp.
"Everybody calls prices going up 'inflation,' but a lot of the prices going up are not inflation but are supply and demand signals," said Martin Murenbeeld, chief economist at Dundee Wealth Management Ltd. "The U.S. Federal Reserve Board has essentially zero control over food and energy prices," he said. "They can just jawbone and hope food and energy doesn't work itself through the labour force wage structure."
And U.S. inflation is not the major problem. The countries with the most rampant inflation with poor monetary policies are Russia, China and some in the Middle East, which are not allowing their currencies to rise against the U.S. dollar, Mr. Murenbeeld said.
Wednesday, June 25, 2008
Fed holds rates steady
Fed holds rates steady
MARTIN CRUTSINGER
Wednesday, June 25, 2008
WASHINGTON — The Federal Reserve, navigating treacherous economic waters, decided on Wednesday to leave a key interest rate unchanged, bringing an end to a string of consecutive rate cuts.
The central bank announced that it was keeping the federal funds rate, the interest rate that banks charge each other, at 2 per cent, marking the first time in 10 months that the central bank has failed to reduce interest rates at one of its regular meetings.
The Fed is confronted with the twin perils of a possible recession and rising inflation pressures, stemming from this year's surge in oil and food prices.
In a brief statement explaining the decision, Fed Chairman Ben Bernanke and his colleagues cited both the threats to growth and rising inflation pressures as problems confronting the economy at the moment.
The statement said that the downside risks to growth “appear to have diminished somewhat” while adding that “the upside risks to inflation and inflation expectations have increased.
The Fed action was approved on a 9-1 vote with Richard Fisher, president of the Fed's regional bank in Dallas, casting a dissenting vote. Fisher objected to the action, saying he would have preferred an immediate increase in interest rates to fight inflation.
The decision to leave rates unchanged had been widely expected by financial markets.
Because of the Fed's decision, short-term borrowing costs on millions of consumer and business loans tied to banks' prime lending rate will remain unchanged. The prime rate is currently at 5 per cent, its lowest level since late 2004.
Investors are split about the Fed's actions for the rest of the year. Some analysts believe the Fed could start raising rates, possibly as soon as the next meeting in August because of concerns about inflation. Other economists argue that the weak economy and rising unemployment will keep the Fed on the sidelines until at least after the November elections.
While saying that the upside risks to inflation have increased, the central bank repeated its forecast that it expected “inflation to moderate later this year and next year.”
The opposing forces of weak growth and recession put the central bank in a bind. Its main policy tool — changes in interest rates — can only address one of those problems at a time. The Fed can cut interest rates to spur consumer and business spending and economic growth or it can raise interest rates to slow spending and growth and ease inflation pressures.
From September through April, the Fed aggressively cut interest rates seven times. However, after a series of sizable rate cuts as the credit crisis was roiling global financial markets at the beginning of this year, the Fed at its last meeting in April reduced rates by a more modest quarter-point and signalled that the rate cuts could be coming to an end.
Even as Fed policy-makers were meeting Tuesday and Wednesday, the economic news has continued to be bleak including a report showing that consumer confidence in June dropped to the lowest level in 16 years. Soaring gasoline prices, plunging home values and rising unemployment are all weighing on confidence.
The Bush administration is hoping that the government's $168-billion (U.S.) economic stimulus program, which is sending rebate payments to 130 million households, will help dissolve some of the gloom and bolster consumer spending in the months ahead.
Against the backdrop of economic weakness have been rising signs of inflation pressures stemming from crude oil prices which have shot up this year to above $130 per barrel, pushing gasoline prices to all-time highs above $4 per gallon and also prompting other companies to boost their prices.
On Tuesday, Dow Chemical Co. announced it was raising prices on a wide range of products by as much as 25 per cent, an increase that is coming on top of price hikes of up to 20 per cent it announced on June 1.
In a speech on June 9, Mr. Bernanke took a tough line on inflation, saying that the Fed would “strongly resist an erosion of longer-term inflation expectations.” Those comments and tough talk from other Fed officials unnerved investors who went from thinking the Fed might leave rates unchanged for most of this year to starting to worry that rate hikes could begin this summer.
Other analysts, however, said they believed Mr.Bernanke wanted to send out a strong anti-inflation warning, especially since it was coupled with a comment in an earlier speech about the Fed chief's concerns that the weak U.S. dollar was adding to U.S. inflation problems. The remarks taken together had the impact of bolstering the dollar, which had been tumbling.
Some economists saw the comments by Mr. Bernanke and his colleagues as an effort to convince the markets that the central bank is serious about fighting inflation without having to start raising interest rates at a time when the economy remains very weak.
The last thing the central bank wants is a repeat of the 1970s, when successive oil price shocks did trigger a wage-price spiral that sent inflation soaring and was only subdued when the Fed under Paul Volcker pushed interest rates to levels not seen since the Civil War.
© Copyright The Globe and Mail
Tuesday, June 24, 2008
Oil prices rise as market focuses on Nigeria
GEORGE JAHN
Tuesday, June 24, 2008
VIENNA — A faltering U.S. dollar, Mideast tensions and concerns over supply disruptions out of Nigeria propelled oil prices above $138 (U.S.) a barrel Tuesday, less than $2 away from crude's trading record.
The crude futures market was also showing disappointment over Saudi Arabia's modest production increase announced Sunday at a meeting of oil producing and consuming nations. The kingdom said it would pump more crude oil this year if the market needs it. That fell far short of hopes for a larger increase.
Light, sweet crude for August delivery rose $1.38 to $138.10 a barrel by noon in European electronic trading on the New York Mercantile Exchange. The contract rose $1.38 to settle at $136.74 a barrel Monday.
The increase put crude close to the trading record of $139.89 reached early this month.
Prices increased as the U.S. greenback weakened — in morning European trading, the euro bought $1.5559, up from $1.5499 the night before in New York and other major currencies also gained on the dollar.
When the dollar loses ground, investors tend to buy oil and other commodities seen as a hedge against inflation. Many analysts believe the dollar's protracted decline has been one of the main reasons oil has nearly doubled in value over the past year.
Investors were also closely watching developments in Nigeria. Royal Dutch Shell PLC has said it cannot meet contractual obligations to export oil from a Nigerian oil field following a militant attack, and news reports say Chevron Corp. has been forced to shut down a Nigerian oil facility, also after a militant attack. Chevron's workers in Nigeria also reportedly walked off the job Monday after talks with the company over staffing levels broke down.
“Markets are still concerned about oil supply, particularly after disruptions last week in Nigeria,” said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.
The production outages in Nigeria appeared to overshadow a cease-fire declaration by the Movement for the Emancipation of the Niger Delta, or MEND, the largest militant group in Nigeria. Attacks by MEND have sliced about one quarter from Nigeria's normal oil daily oil output, helping buoy crude prices in international markets.
EU nations approved new sanctions Monday against Iran, imposing additional financial and travel restrictions on a list of Iranian companies and experts — including the country's largest bank. The 27-nation bloc stopped short of banning oil and gas exports from Iran, OPEC's second-largest producer, in response to its nuclear program plans.
With upward pressure predominating, “the Saudi hike in output that they announced on Sunday is not enough to cause prices to come down,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
Saudi Arabia said it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May, raising total daily output to 9.7 million barrels.
“There's a broader review, in the market, of whether the increase in Saudi output will be sufficient to meet the ongoing demand for oil, particularly from developing economies,” Mr. Moore said.
In the U.S., Democratic members of Congress said Monday they intend to tighten investment restrictions on pension funds, investment banks and other large investors that they blame for driving up fuel prices. Investors have increasingly pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls.
Vienna's JBC Energy, in its daily market report, noted that skyrocketing prices at the pump apparently were having an effect on U.S. driving habits, citing U.S. Department of Transportation reports showing a 2.1 percentage point decrease in U.S. vehicular travel from January through April, year on.
Looking at gasoline demand for the whole year, JBC predicted a 1.7 per cent drop compared to 2007.
Analysts said the oil market was also supported by tight fundamentals.
“It's not just speculators or just fundamentals,” Mr. Shum said. “Global oil markets are at this time structurally tight, meaning demand keeps growing and supply is playing catch-up with demand. That has attracted speculators into oil,” Shum said.
In other Nymex trading, heating oil futures added nearly 5 cents to $3.8460 a gallon while gasoline prices rose by almost 4 cents to $3.4936 a gallon. Natural gas futures added close to 5 cents to $13.250 per 1,000 cubic feet.
Brent crude futures rose $1.23 to $137.14 a barrel on the ICE Futures exchange in London.
© Copyright The Globe and Mail
Talisman eyes Iraq
Energy giant wants to extend its reach into Northern IraqBy MARKUS ERMISCH, SUN MEDIA
Talisman Energy is zeroing in on northern Iraq as the Calgary-based company is trying to extend its global reach.
The company said yesterday it expects to initially spend about $95 million on two oil blocks in the area controlled by the Kurdistan regional government (KRG).
Company spokesman David Mann said the "KRG has a big potential to become a new core area for Talisman."
Talisman will gain a 40% stake in an established production sharing contract area, with Canada's WesternZagros Resources Ltd. holding 40% and the KRG retaining the remainder.
The company also entered into a two-year seismic services agreement with the KRG on another block, after which it will have the option to gain 60% and commit to one well in the first year.
Additionally, it will pay $220 million to build social infrastructure in the KRG zone, such as roads and hospitals.
The news comes a month after CEO John Manzoni announced that Talisman will sell about $3-billion worth of its less productive international assets.
Proceeds from the sales will be invested in North American unconventional natural gas plays as well as in expanding Talisman's global footing, most notably in Southeast Asia and the North Sea.
Compared to southern Iraq, which is still marked by civil unrest, the northern part of the country is relatively safe and has been awarding contracts to international companies for some time.
"As that part of the world goes, it's very stable," Mann said.
"It seems to be somewhat of a haven in the midst of some fairly troubled areas."
The population in northern Iraq, he said, is generally in favour of development.
But despite the relatively more peaceful conditions, Mann said Talisman gas checked into the security of the area.
He said that spending money on social infrastructure is not an unusual requests, noting that it fits with the company's corporate practices.
Monday, June 23, 2008
Talisman Energy Signs Agreement With KRG
Talisman Energy Signs Agreement With KRG
10:03 EDT Monday, June 23, 2008
CALGARY, ALBERTA--(Marketwire - June 23, 2008) - Two wholly-owned subsidiaries of Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) have entered into agreements with the Kurdistan Regional Government (KRG) within Iraq for interests in Blocks K44 and K39 respectively, effective upon completion of certain conditions, which Talisman expects will be satisfied within 60 days.
"This is an exciting opportunity in a world class hydrocarbon basin," said John A. Manzoni, President and Chief Executive Officer. "It is a great fit in terms of Talisman's global expertise and the strategic objectives of our exploration program, with the potential to become a core producing area for us.
"We have done extensive due diligence, including careful review of legal, regulatory, security and corporate responsibility issues. Block K44 is an established Production Sharing Contract (PSC) area, entered into by the KRG prior to the effective date of the new Iraqi constitution. The block is in the early stages of exploration with a well currently drilling. Both blocks are within the territory widely recognized as being on the KRG side of the 'Green Line' boundary that currently demarcates the region of Kurdistan within Iraq."
Talisman will acquire a 40% interest in Block K44, with WesternZagros Limited (a wholly owned subsidiary of WesternZagros Resources Ltd.) holding 40% as operator and the KRG retaining 20%. Talisman plans to spend US$80 million on the block, including past costs and a three well commitment.
Talisman has also entered into a seismic services agreement with the KRG on Block K39 for a period of two years, following which Talisman will have the option to enter into a PSC as operator of the block with a 60% working interest and a one well commitment in the first year. Talisman estimates exploration costs associated with the initial work program on this block to be US$10-15 million.
As part of the transactions with the KRG and in keeping with Talisman's corporate responsibility policies and practices, the Company will pay US$220 million plus further conditional contributions to the KRG for the sole purpose of providing financial support to infrastructure and capacity building projects for the benefit of the people in the region and, in particular, the local communities in the agreement areas. The KRG is bound to adhere to the principles of the Extractive Industry Transparency Initiative (EITI) pursuant to the Kurdistan Regional Oil and Gas Law. Talisman and the KRG have confirmed their mutual commitment to revenue transparency in the spirit of the EITI, as well as to promoting respect for and compliance with human rights principles, including those set forth in the Voluntary Principles on Security and Human Rights.
Talisman Energy Inc. is an independent upstream oil and gas company headquartered in Calgary, Alberta, Canada. Talisman has operations in Canada and its subsidiaries operate in the UK, Norway, Southeast Asia, North Africa and the United States. Talisman's subsidiaries are also active in a number of other international areas. Talisman is committed to conducting its business in an ethically, socially and environmentally responsible manner. The Company is a participant in the United Nations Global Compact and included in the Dow Jones Sustainability (North America) Index. Talisman's shares are listed on the Toronto Stock Exchange in Canada and the New York Stock Exchange in the United States under the symbol TLM.
Talisman will act as operator of the exploration project, OMV said.
OMV Buys 30% Stake In Norwegian Exploration License
04:46 EDT Monday, June 23, 2008
VIENNA -(Dow Jones)- Austrian oil and gas company OMV AG (OMV.VI) Monday said it has acquired a 30% interest in a Norwegian offshore exploration license, bringing its total exploration projects in the Scandinavian country to six.
"We are well on track to build up a strong position in Norway and seek to further this by securing additional high quality exploration acreage in the future," OMV executive board member Werner Auli said in a statement.
The new license is located in the Norwegian North Sea 300 kilometers southwest of the city of Stavanger. OMV's Norwegian subsidiary OMV AS acquired the 30% stake from the Norwegian unit of Canadian Talisman Energy Inc. (TLM) and Danish energy company DONG's Norwegian subsidiary DONG E&P Norge AS.
Talisman and DONG continue to hold stakes of 42% and 28%, respectively. Talisman will act as operator of the exploration project, OMV said.
OMV was awarded four offshore exploration licenses in Norway in 2007, and one in February 2008. Of the total six licenses, two are located in the Barents Sea, two in the North Sea and two in the Norwegian Sea.
Company Web site: www.omv.com
-By Flemming E. Hansen, Dow Jones Newswires; +43 1 513 69 22 10; flemming.hansen@dowjones.com (END) Dow Jones Newswires
06-23-08 0446ET
Copyright (c) 2008 Dow Jones & Company, Inc
Talisman CEO sees $90.00 per barrel oil
Talisman CEO Sees Oil Prices Staying Above $90/Bbl Next 2 Yrs
07:37 EDT Monday, June 23, 2008
(This article was originally published Friday)
CALGARY (Dow Jones)--Crude oil prices are likely to stay above $90 a barrel in the next couple of years as resource-rich nations continue to squeeze out foreign investment, Talisman Energy Inc.'s (TLM) chief executive said Friday.
Speaking at an event in Calgary, John Manzoni added that the oil market was clearly "in a structural fix" with supply growth lagging demand, rather than speculative activity fueling the high prices.
"It's going to stay structurally high for a year or two," Manzoni said, adding "certainly not at $140 a barrel...but at $90 plus."
The back end of the oil price curve reflects the marginal cost of supply, he said, noting that oil prices flattened out at the $70/bbl level a few years ago as it became more economical to bring on higher-cost crude, such as from Alberta's vast oil sands.
But the multibillion-dollar revenues generated by oil companies as prices surged past $100/bbl have prompted a number of oil-rich nations to renegotiate contract terms, sometimes forcibly, as in Venezuela and Russia. Some Canadian provinces such as Alberta have also raised their share of energy revenues.
"It's not money in this world that's short, it's opportunity," Manzoni said. " It's the opportunities to invest that money which are the limiting factors."
He added that natural gas prices were also likely to remain above $8-$9/mmBtu, noting that half of new U.S. supplies were coming from high-cost tight gas plays.
Alternative sources are still "another technology cycle and a half" away, and only a major slowdown in demand will curb the oil price rally, Manzoni said.
Oil producers such as the Organization of Petroleum Exporting Countries have consistently maintained that speculative fund money and the weakening dollar have powered the surge in oil prices, rather than an imbalance in supply and demand.
While speculation and currency fluctuations are issues, they aren't driving the long-term oil price, Manzoni said. He noted that the amount of money piling into longer-dated oil contracts has increased "dramatically,"but it's not all speculative fund money that's investing for the short term.
-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669; hyunyoung.lee@ dowjones.com (END) Dow Jones Newswires
06-23-08 0736ET
Copyright (c) 2008 Dow Jones & Company, Inc
Sunday, June 22, 2008
Saudi's increase oil without citing any specific output increase.
Saudis offer more oil TheStar.com - World - Saudis offer more oil
AP PHOTO/ / CARL DE SOUZA
Britain's Prime Minister Gordon Brown, left, talks with Saudi Arabia's Foreign Minister Prince Saud Al-Faisal, in Jiddah, Saudi Arabia, Sunday June 22, 2008.
June 22, 2008
JIDDAH, Saudi Arabia (AP) – Saudi Arabia is willing to produce more oil if customers need it, the kingdom's oil minister said Sunday without citing any specific output increase.
Saudi Arabia, the world's largest oil exporter, has been under intense pressure from the U.S. and other oil consumers to increase its crude output to help slow the soaring price of oil.
The kingdom already announced modest increases and said it would pump 9.7 million barrels a day beginning in July. But those increases have not done much to stem the skyrocketing price of oil, which closed near $135 a barrel on Friday.
The high prices are affecting consumers and economies across the United States, Europe and much of the world. Many countries have experienced social unrest as rising fuel prices have driven significant increases in the cost of food and other basic goods.
The cost of gasoline has also become a sore point in the U.S. presidential race, with U.S. President George W. Bush and Republican candidate John McCain calling for lifting of a long-standing ban on offshore oil and gas drilling to increase domestic oil production. But Democratic candidate Barack Obama has said such steps will do nothing in the short term to ease American consumer's pain.
It was unclear if Oil Minister Ali al-Naimi's remarks Sunday at a high-level oil summit in the port city of Jiddah would quell concerns.
Al-Naimi, who was expected to formally make the announcements in a speech later Sunday, reiterated his government's position that the recent run-up in prices has not been caused by a supply shortage. But he said he also believes each country must do what it can "to alleviate these difficult conditions.''
For the remainder of the year "Saudi Arabia is willing to produce additional barrels of crude oil above and beyond the 9.7 million barrels per day which we plan to produce during the month of July, if demand for such quantities materializes and our customers tell us they are needed," al-Naimi said in the speech, a copy of which was obtained by The Associated Press in advance.
Al-Naimi also said that the kingdom was willing to invest to boost its spare oil production capacity above the current 12.5 million barrels per day planned for the end of 2009, reversing previous statements that the country would not go beyond that figure.
"In addition, we have identified a series of future crude oil mega-increments totaling another 2.5 million barrels per day of capacity that could be built if and when crude oil demand levels warrant their development," he said.
The U.S. and other Western nations have put increasing pressure on Saudi Arabia to increase production, saying insufficient oil production has not kept pace with growing demand.
Earlier Sunday, King Abdullah also said Saudi Arabia was not to blame for soaring oil prices and instead pointed his finger at speculators, high fuel taxes in consuming countries and increased oil consumption in developing economies.
"There are several factors behind the unjustified, swift rise in oil prices and they are: Speculators who play the market out of selfish interests, increased consumption by several developing economies and additional taxes on oil in several consuming countries," the king said.
Abdullah urged the summit's delegates to "uncover the truth'' and dispel rumors to get the "real and full reasons" behind the skyrocketing price of oil.
Saudi Arabia increased oil production by 300,000 barrels a day in May, and a Saudi official confirmed Saturday that the country would add another 200,000 barrels a day in July – for a total of 9.7 million barrels a day.
British Prime Minister Gordon Brown also called for future commitments from producers for increased oil and gas supply but urged that all countries should improve energy efficiency and develop alternative sources of energy, including nuclear power.
Earlier Sunday, U.S. Energy Secretary Samuel Bodman again called on Saudi Arabia to increase production, saying it has not kept pace with growing demand.
Bodman said world oil consumption growth has averaged about 1.8 percent per year since 2003 with the largest share of that growth coming from developing countries like China, India and countries in the Middle East, he said.
But for the past three years, global oil production has remained constant at roughly 85 million barrels a day, and OPEC production has remained largely flat, he said in a written statement.
"I believe that most of us agree on one thing: Prices are too high at present. And unless we act, the situation will remain unsustainable," he said in the statement.
The kingdom called for Sunday's unusual meeting in Jiddah between oil producing and consuming nations as a way to show that it was not deaf to international cries that high oil prices have caused social and economic turmoil.
The Gulf nation also has become increasingly concerned that record oil prices could hinder growth in the U.S. and other major industrialized economies, potentially leading to a decline in oil demand and a sharp drop-off in prices.
Also Sunday, Abdullah called for the creation of a $1 billion energy initiative for poor countries to help them combat the rising cost of fuel. He also said Saudi Arabia would contribute $500 million to help give poor countries loans to finance development and energy projects.
Friday, June 20, 2008
Israel held a rehearsal for a bombing attack on nuclear facilities in Iran
By Grant Smith
June 20 (Bloomberg) -- Crude oil rose in New York, recovering from yesterday's decline, as the weaker dollar enhanced the appeal of commodities as a currency hedge.
Israel held a rehearsal for a bombing attack on nuclear facilities in Iran, the New York Times reported, adding to concern that conflict may cut supply from OPEC's second-largest producer. Oil fell the most in more than a week yesterday after China unexpectedly raised fuel prices by at least 17 percent.
``We're seeing prices rebound after last night's losses as the euro strengthens and traders believe the longer-term trend is upwards,'' said Andrey Kryuchenkov, an analyst at Sucden (U.K.) Ltd. in London. ``Reports of an Israeli training exercise could be stoking concern about Iranian supplies.''
Crude for July delivery climbed as much as $2.55, or 1.9 percent, to $134.48 a barrel in electronic trading on the New York Mercantile Exchange. It was at $133.19 at 12:41 p.m. London time.
Oil workers at Chevron Corp.'s Nigerian unit plan a disruption on June 23 after talks with management failed to resolve a labor dispute, a union official said. Royal Dutch Shell Plc is assessing the impact of an attack yesterday that closed it 190,000 barrel-a-day Bonga platform off Nigeria.
The threat of further disruptions in Africa's second- largest producer has helped push Brent's premium over New York crude to 45 cents, its highest since Feb. 6. West African exports are priced using Brent.
Oseberg Fire
Brent's premium was also supported by the halt of 150,000 barrels a day of North Sea Oseberg crude for a fifth day following a fire at a StatoilHydro ASA platform.
Brent crude oil for August settlement gained as much as $2.88, or 2.2 percent, to $134.88 a barrel on London's ICE Futures Europe exchange. It was at $134.50 at 12:42 p.m. London time.
An Israeli military exercise involving more than 100 Israeli F-16 and F-15 fighters seems to have been a rehearsal for a bombing attack on Iran's nuclear facilities and long-range conventional missiles, the New York Times reported, citing several unidentified U.S. officials.
The dollar headed for a weekly decline against the euro on speculation the Federal Reserve will hold off from raising interest rates next week to support the U.S. economy. It traded for $1.5620 against the euro at 12:11 p.m. London time, from $1.5493 earlier.
Oil futures climbed to a record $139.89 on June 16 and prices are 91 percent higher than a year earlier.
Jeddah Meeting
Saudi Arabia, the world's largest exporter, is gathering producers, oil companies and consuming governments in Jeddah this weekend to discuss surging prices. The kingdom may announce output increases of between 200,000 and 500,000 barrels a day, according to OPEC and media reports.
``We can call it too little, too late,'' said Farzam Kamalabadi, president and chairman of Future Trends International said in a television interview. ``It's not only the issue of supply and demand. There are the issues of the currency, speculation and on top of this more and more the issue of geopolitics.''
Yesterday, oil in New York dropped $4.75, or 3.5 percent, the biggest decline since March 31.
Oil fell after China's National Development and Reform Commission said the world's second-biggest energy consumer will increase gasoline and diesel prices by 1,000 yuan ($145) a ton.
Merrill Lynch
The move will reduce the country's demand growth by 1.5 percent, according to Merrill Lynch & Co. The U.S. Energy Department in a report on June 10 said China's oil consumption is expected to rise 440,000 barrels to an average 8.02 million barrels a day this year.
The decision may actually bolster demand for crude oil as refiners ramp up output to take advantage of higher processing profits, Lehman Brothers Holdings Inc. and Goldman Sachs Group Inc. said in reports.
In the medium term, the price jumps will only reduce demand growth by 6 percent for 2008, said a briefing note written by Goldman's Giovanni Serio and Samantha Dart.
Last Updated: June 20, 2008 07:43 EDT http://www.bloomberg.com/apps/news?pid=20601072&sid=afxp4NUh3pNk&refer=energy
”Irrational” to call for more OPEC oil: President
”Irrational” to call for more OPEC oil: President
Friday, June 20, 2008
ALGIERS — Demand by consumer countries for OPEC to increase its offer of oil is “illogical and irrational,” OPEC President Chakib Khelil told the Algerian official news agency APS.
“Asking OPEC member countries to increase their offer is illogical and irrational,” Mr. Khelil told APS in an interview published on Friday.
His interview came ahead of a meeting of oil producing countries, consumer countries and oil firms in Saudi Arabia on Sunday.
“The (Saudi Arabia) meeting would clarify the positions about the reasons behind this oil prices rise,” he added.
He cited speculation, geopolitical tensions and limited refinery capacities as the “most important reasons” behind the soaring oil prices.
Mr. Khelil, who is Algeria's energy and mining minister, suggested there would be no decision by OPEC as a cartel at the meeting in Saudi Arabia.
“I'm invited as Algeria's energy and mining minister. So, I have no OPEC mandate for a position by this organization,” he said.
OPEC members who would take part at the meeting would give their views, said Mr. Khelil.
Commenting on media reports that Saudi Arabia had hiked production, Khelil said: “The media had reported a 300,000 barrel per day output increase by Saudi Arabia but its impact on the market is nil, the barrel is always at $136 (U.S.). I do not believe that is the problem.”
“OPEC's output accounts for 40 per cent of the world total production while the most big producers are the United States, Norway and Russia which are not OPEC members,” he added.
© Copyright The Globe and Mail
Oil prices rebound as traders sense chance to buy
TD Newcrest initiates coverage on EnCana, Talisman, Nexen and Canadian Natural
Posted: June 18, 2008, 9:00 AM by Zena Olijnyk
Finally, Mr. Friesen struck a promising, but cautionary note on Talisman Energy Inc. (TLM/TSX), giving it a price target of $28, up 14% from its current levels around $25.While the stock is trading at “an attractive discount valuation that may temp the patient value investor,” he wrote, he doubts that substantial change could be brought inside the next 12 to 18 months.
Friday, June 20, 2008
NEW YORK — Oil futures rebounded Friday as Pentagon officials said a large scale Israeli military exercise in the Eastern Mediterranean early this month was intended in part as a demonstration of Jerusalem's ability to attack Iranian nuclear facilities.
At the pump, gas prices rose slightly.
Light, sweet crude for July delivery rose $3.08 to $135.01 (U.S.) a barrel on the New York Mercantile Exchange, recovering much of the ground lost Thursday after China announced it was raising fuel prices.
While Thursday's news from China reduced investor concerns about surging global demand for oil and fuel, Friday's news from Iran injected fresh supply worries into the market.
Adding to the news of the military exercises in the Middle East, Nigerian oil workers have decided to strike at a Chevron Corp. facility beginning Monday, a move that could further cut oil supplies from Africa's largest producer.
The dollar also fell against the euro. Many investors buy commodities such as oil as a hedge against inflation when the greenback weakens. A falling dollar makes oil less expensive to investors overseas.
At the pump, meanwhile, gas prices inched 0.2 cent higher to a national average of $4.075 a gallon Friday, according to AAA and the Oil Price Information Service. Gas prices have drifted lower this week since hitting a record $4.08 a gallon on Monday.
© Copyright The Globe and Mail
Thursday, June 19, 2008
RCMP charge former Nortel executives
RCMP charge former Nortel executives
Thursday, June 19, 2008
The RCMP Thursday laid criminal charges against three former Nortel Networks Corp. executives in the once-mighty telecommunications company's accounting scandal.
Former chief executive Frank Dunn, former chief financial officer Douglas Beatty and former corporate controller Michael Gollogly were arrested Thursday, the RCMP said.
Mr. Dunn, 54, Mr. Beatty, 53, and Mr. Gollogly, 49, who were fired by the company in April, 2004, arrived in court in Newmarket, Ont., Thursday morning for a bail hearing.
The charges include fraud affecting public market, falsification of books and documents and false prospectus, the RCMP said in a statement.
"I'm very happy that these investigations have come to a culmination now," Kevin Harrison, the officer in charge of the RCMP's Toronto area Integrated Market Enforcement Team, told the Globe and Mail.
Asked if the charges send a message, he said: “There's a deterrent message with respect to rules that govern the capital markets. And those that look to breach those know there is someone out there that will be looking at them, and looking to identify them, prosecute them and ultimately incarcerate them.
"There's been some criticism of our program and certainly [the arrests] send a message to the public that our program is alive and well."
The RCMP alleged Mr. Dunn, Mr. Beatty and Mr. Gollogly fraudulently misstated Nortel's results. Among the accusations are that the three “made false entries and omitted materials particular in the books and documents in regards to the financial results of Nortel.”
Each of the former executives faces seven counts.
Police further alleged the three “circulated or published a statement or an account ... knowing that it was false in a material particular, with the intent to deceive or defraud the members, shareholders or creditors of Nortel Networks Corp.”
The RCMP said all charges relate to the period between Jan. 1, 2002, and June 30, 2003, and allege that Nortel's financial statements during that time frame were misstated. The period in question included all of 2002 and the first and second quarters of 2003.
None of the men charged commented immediately on Thursday. In documents filed last November with the U.S. Securities and Exchange Commission, Mr. Dunn and Mr. Beatty rejected SEC allegations in civil fraud charges.
Mr. Dunn said any accounting issues under his watch were simply mistakes, rather than fraud, and that “in this challenging business environment, Frank Dunn rescued the company by implementing a painful and massive company-wide restructuring plan.”
Nortel said in a statement that it was neither charged nor a target of the probe, and that it has cooperated fully with the RCMP.
“Nortel is rebuilding a great Canadian company while upholding the highest standards of integrity and ethics,” the company said in a statement. “... Nortel and its employees are highly determined to compete and win in the marketplace and today's announcement by the RCMP does not distract the company from the work ahead.”
The RCMP said the force was aided in the probe by the Ontario Securities Commission, the FBI in Dallas, the SEC and the company.
The charges against the former executives came as ex-officials of another company, Royal Group Technologies Ltd., were also charged after a lengthy investigation.
The RCMP's Mr. Harrison said 50 people worked on both cases. The Nortel case alone involved more than 20 million documents, he said.
“These files are very complex in nature,” he said. “Both files had international components to them. That massive amount of material certainly takes some time to go through it, review it and assess it.”
In a statement, the RCMP said: “Protecting and enhancing Canada's economic integrity is one of the RCMP's strategic priorities. This investigation demonstrates that although capital market investigations can be lengthy and complex, they are most effective when an integrated approach is used from the outset.”
© Copyright The Globe and Mail
Royal Group Technologies founder De Zen and others charged with fraud
Royal Group Technologies founder De Zen and others charged with fraud
1 hour ago
TORONTO — A decade after the alleged wrongdoing, RCMP have laid fraud charges against Royal Group Technologies Ltd. founder Vic De Zen and other former executives of the plastic building products manufacturer.
Police said Thursday that De Zen and three other former executives defrauded the company of $27.4 million in a deal involving property north of Toronto.
De Zen and four other men, including two named in the other charges, are also alleged to have defrauded Royal Group of $2 million in the sale of a subsidiary.
The alleged offences occurred during 1997 and 1998, and the charges come almost five years after De Zen stepped aside as chief executive officer.
Royal Group, based in Woodbridge, north of Toronto, was acquired in late 2006 for C$1.7 billion by Georgia Gulf Corp. of Atlanta.
The long-running police investigation triggered the resignation of Greg Sorbara as Ontario finance minister in October 2005 after he was linked to the probe. He returned as finance minister in May 2006 after a judge found no reason for his name to have been included on a search warrant. Sorbara left cabinet last October but remains an MPP.
"The charges laid today illustrate the scope and complexity of the work being done by IMET teams across the country every day," stated Chief Superintendent Stephen White, head of the RCMP's Integrated Market Enforcement Teams.
"It is our hope that these types of results will act as a strong deterrent by demonstrating that Canada's financial markets are being policed."
The alleged $27.4-million fraud arises from a deal in which land in Vaughan is said to have been purchased by individuals closely associated with Royal Group and then sold to the company at an inflated price.
In addition to De Zen, those charged include Douglas Dunsmuir, who was Royal Group's general counsel and succeeded De Zen as president, along with two former chief financial officers, Gary Brown and Ron Goegan.
The alleged $2-million fraud relates to the sale of Royal Group subsidiary Steelwood Doors to Premdor Inc., which included a warrant to buy 200,000 Premdor shares. RCMP charge that the warrant was not entered into Royal Group's books and instead was exercised by senior executives for their own benefit.
Charged in this case are De Zen, Dunsmuir and Goegan, along with Luciano Galasso, a former vice-president of Royal Group, and Gordon Brocklehurst, former director of accounting.
Royal Group, making plastic pipe, window frames, outdoor furniture and a range of other products, was founded by De Zen in 1970 as Royal Plastics Group.
The company developed a construction technique in which plastic frames are filled with concrete, and grew rapidly, going public in 1994.
Its stock price rose steeply - while De Zen retained voting control and paid himself hefty bonuses - and sales grew to $2 billion annually by 1997, when the corporation was renamed Royal Group Technologies.
Investor unease set in during 2003 as earnings sagged and the stock price tumbled from over $30 to under $7, though it revived in following months as De Zen resigned as CEO while remaining chairman.
The shares fell again when RCMP and the OSC announced in early 2004 that they were investigating land deals in the Caribbean, and again later that year when the purchase of the 75-hectare plot north of Toronto came under scrutiny, prompting the departure of De Zen, Dunsmuir and Goegan.
RCMP said the IMET investigation was conducted in conjunction with the Ontario Securities Commission, the Canada Revenue Agency and federal prosecutors.
An RCMP spokesman said a court appearance in the case was set for Aug. 11.
In addition to Sorbara, the Bank of Nova Scotia had its name dragged into the probe when RCMP set up a mobile command post outside its head office at King and Bay streets while seizing documents in February 2005.
Shell shuts down Nigerian oil field after attack
Shell shuts down Nigerian oil field after attack
EDWARD HARRIS
Thursday, June 19, 2008
LAGOS, Nigeria — Royal Dutch Shell said it shut down production from an offshore oil field that produces about 200,000 barrels per day after the most powerful militant group in Nigeria launched an attack on an installation there Thursday.
Oil prices rose in Asia on the news, which raised concerns about possible supply outages in Africa's largest oil producer.
The group also said it captured an American worker on a supply vessel in the area of the rig.
A leader of the Movement for the Emancipation of the Niger Delta told The Associated Press militants attacked the Bonga oil field more than 85 miles from land. But the fighters weren't able to enter a computer control room, which they had hoped to destroy.
The militant leader spoke on condition of anonymity to avoid punishment by authorities.
“The location for today's attack was deliberately chosen to remove any notion that offshore oil exploration is far from our reach,” the group said in a subsequent statement. “The oil companies and their collaborators do not have any place to hide in conducting their nefarious activities.”
Olav Ljosne, a spokesman for Royal Dutch Shell, confirmed an attack, but gave no details. He said production had been stopped from the field, which normally produces about 200,000 barrels of crude per day.
That accounts for about 10 per cent of Nigeria's current daily output of about 2 million barrels per day production — already significantly off the amount produced before years of militant attacks on crucial oil infrastructure.
The militants also said they kidnapped an American worker from a supply vessel they encountered while returning home from the attack. The seizure was confirmed by private security officials, speaking on condition of anonymity because they are prohibited from speaking to the media. The officials said two other seamen on board were injured in that attack.
Over 200 foreign hostages have been seized since an upsurge of violence that began in early 2006. The hostages are normally released unharmed after a ransom is paid.
Attacks against offshore facilities are exceedingly rare. Oil industry officials consider their operations on the high seas much safer than those in the creeks and swamps of Nigeria's southern Niger Delta, where most of the attacks during two years of increased violence have taken place.
Militant attacks on oil infrastructure have trimmed about a quarter of total oil production in Nigeria, which is Africa's biggest producer and a member of OPEC.
The turmoil in Nigeria's south has helped send oil prices to historical heights, giving the militants more leverage in their drive to force the federal government to send more oil industry proceeds to their areas.
Despite being the home of almost all of Nigeria's petroleum reserves, the country's south is as desperately poor as the rest of the country, which is Africa's most populous with 140 million people.
But criminality and militancy are closely linked, with many of the militant groups accused of stealing crude oil from wells and pipelines for sale in overseas market and helping politicians rig elections.
© Copyright The Globe and Mail
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