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Tag: Russia-Ukraine war

  • Chevron buys Hess for $53 billion, 2nd megadeal in the oil patch this month as energy prices soar

    Chevron buys Hess for $53 billion, 2nd megadeal in the oil patch this month as energy prices soar

    Chevron is buying Hess Corp. for $53 billion and it’s not even the biggest acquisition in the energy sector this month as major producers seize the initiative while oil prices surge.

    Crude prices rose sharply in early 2022 with Russia’s invasion of Ukraine and are hovering around $90 per barrel after ticking another 9% higher this year. That has made big drillers cash rich and they are looking for places to invest.

    The Chevron-Hess deal comes less than two weeks after Exxon Mobil said that it would acquire Pioneer Natural Resources for about $60 billion.

    Upward pressure on oil prices are being applied from a number of fronts including the war in Ukraine. Oil markets are being stretched by cutbacks in oil production from Saudi Arabia and Russia, and now, a war between Israel and Hamas runs the risk of igniting a broader conflict in the Middle East. While attacks on Israel do not disrupt global oil supply, according to an analysis by the U.S Energy Information Administration, “they raise the potential for oil supply disruptions and higher oil prices.”

    Chevron said Monday that the acquisition of Hess adds a major oil field in Guyana as well as shale properties in the Bakken Formation in North Dakota. Guyana is a South American country of 791,000 people that is poised to become the world’s fourth-largest offshore oil producer, placing it ahead of Qatar, the United States, Mexico and Norway. It has become a major producer in recent years with oil giants, including Exxon Mobil, China’s CNOOC, and also Hess, squared off in a heated competition for highly lucrative oil fields in northern South America.

    “This combination is aligned with our objective to safely deliver higher returns and lower carbon,” Chevron Chairman and CEO Mike Wirth said in prepared remarks. “In addition, Hess increases Chevron’s estimated production and free cash flow growth rates over the next five years, and is expected to extend our growth profile into the next decade supporting our plans to increase our peer-leading dividend growth and share repurchases.”

    Chevron is paying for Hess with stock. Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. Including debt, Chevron valued the deal at $60 billion.

    And even with alarms being raised over climate change after a summer of record-smashing temperatures, elevated energy prices have driven more exploration and more drilling, and big payouts for investors.

    There have been a number of acquisitions focused on U.S. shale fields and another round of consolidation in the energy sector began during the pandemic as big producers sought to cut costs. In the summer of 2020, Chevron announced that it was buying Noble Energy for $5 billion. Chevron made the deal when crude prices were down more than 30% in the midst of the coronavirus pandemic. That same year, ConocoPhillips bought shale producer Concho Resources in an all-stock deal valued at $9.7 billion.

    Last month Britain gave the go-ahead for a major oil and gas project in the North Sea, ignoring warnings from scientists and the United Nations that countries must stop developing new fossil fuel resources if the world is to avoid catastrophic climate change.

    Chevron said the deal will help to increase the amount of cash given back to shareholders. The company anticipates that in January it will be able to recommend boosting its first-quarter dividend by 8% to $1.63. This would still need board approval. The company also expects to increase stock buybacks by $2.5 billion to the top end of its guidance range of $20 billion per year once the transaction closes.

    The boards of both Chevron and Hess have approved the deal announced Monday after six months of negotiations, and is targeted to close in the first half of next year. It still needs approval by Hess shareholders. John Hess, the company’s CEO, is expected to join Chevron’s board. His family owns a large chunk of Hess.

    Shares of Chevron Corp., based in San, Ramon, California, fell 3.7% Monday. Shares of New York-based Hess Corp. ended down 1%.

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  • Chevron to buy Hess for $53 billion as the biggest US oil companies get even bigger

    Chevron to buy Hess for $53 billion as the biggest US oil companies get even bigger

    Chevron is buying Hess Corp. for $53 billion and it’s not even the biggest acquisition in the energy sector this month as major producers seize the initiative while oil prices surge.

    Crude prices rose sharply in early 2022 with Russia’s invasion of Ukraine and are hovering around $90 per barrel after ticking another 9% higher this year, meaning big drillers are flush with cash and looking for places to invest piles of cash.

    The Chevron-Hess deal comes less than two weeks after Exxon Mobil said that it would acquire Pioneer Natural Resources for about $60 billion.

    Upward pressure on oil prices are being applied from a number of fronts including the war in Ukraine. Oil markets are being stretched by cutbacks in oil production from Saudi Arabia and Russia, and now, a war between Israel and Hamas runs the risk of igniting a broader conflict in the Middle East. While attacks on Israel do not disrupt global oil supply, according to an analysis by the U.S Energy Information Administration, “they raise the potential for oil supply disruptions and higher oil prices.”

    Chevron said Monday that the acquisition of Hess adds a major oil field in Guyana as well as shale properties in the Bakken Formation in North Dakota. Guyana is a South American country of 791,000 people that is poised to become the world’s fourth-largest offshore oil producer, placing it ahead of Qatar, the United States, Mexico and Norway. It has become a major producer in recent years with oil giants, including Exxon Mobil, China’s CNOOC, and also Hess, squared off in a heated competition for highly lucrative oil fields in northern South America.

    “This combination is aligned with our objective to safely deliver higher returns and lower carbon,” Chevron Chairman and CEO Mike Wirth said in prepared remarks. “In addition, Hess increases Chevron’s estimated production and free cash flow growth rates over the next five years, and is expected to extend our growth profile into the next decade supporting our plans to increase our peer-leading dividend growth and share repurchases.”

    Chevron is paying for Hess with stock. Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. Including debt, Chevron valued the deal at $60 billion.

    And even with alarms being raised over climate change after a summer of record-smashing temperatures, elevated energy prices have driven more exploration and more drilling, and big payouts for investors.

    Last month Britain gave the go-ahead for a major oil and gas project in the North Sea, ignoring warnings from scientists and the United Nations that countries must stop developing new fossil fuel resources if the world is to avoid catastrophic climate change.

    Chevron said the deal will help to increase the amount of cash given back to shareholders. The company anticipates that in January it will be able to recommend boosting its first-quarter dividend by 8% to $1.63. This would still need board approval. The company also expects to increase stock buybacks by $2.5 billion to the top end of its guidance range of $20 billion per year once the transaction closes.

    The boards of both Chevron and Hess have approved the deal announced Monday after six months of negotiations, and is targeted to close in the first half of next year. It still needs approval by Hess shareholders. John Hess, the company’s CEO, is expected to join Chevron’s board. His family owns a large chunk of Hess.

    Shares of Chevron Corp., based in San, Ramon, California, declined more than 2% before the opening bell Monday. Share of Hess Corp., based in New York City, rose slightly.

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  • A price cap on Russian oil aims to starve Putin of cash. But it’s largely been untested. Until now

    A price cap on Russian oil aims to starve Putin of cash. But it’s largely been untested. Until now

    FRANKFURT, Germany — For months after Ukraine‘s Western allies limited sales of Russian oil to $60 per barrel, the price cap was still largely symbolic. Most of Moscow’s crude — its main moneymaker — cost less than that.

    But the cap was there in case oil prices rose — and would keep the Kremlin from pocketing extra profits to fund its war in Ukraine. That time has now come, putting the price cap to its most serious test so far and underlining its weaknesses.

    Russia’s benchmark oil — often exported with Western ships required to obey sanctions — has traded above the price cap since mid-July, pumping hundreds of millions of dollars a day into the Kremlin’s war chest.

    With Russia’s profits rising, the Israel-Hamas war pushing up global oil prices and evidence that some traders and shippers are evading the cap, the first signs of enforcement are appearing 10 months after the price limit was imposed in December.

    But sanctions advocates say the crackdown needs to go further to really hurt Russia.

    Reducing oil profits “is the one thing that hits Russian macroeconomic stability the most,” said Benjamin Hilgenstock, senior economist at the Kyiv School of Economics, which advises the Ukrainian government.

    Oil income is the linchpin of Russia’s economy, allowing President Vladimir Putin to pour money into the military while avoiding worsening inflation for everyday people and a currency collapse.

    Moscow’s ability to sell more to the world than it buys means it’s weathering sanctions far better than expected. Its economy will grow this year while Germany’s shrinks, the International Monetary Fund estimates.

    Still, Russia’s main source of income is at risk from stepped-up enforcement. The U.S. Treasury Department sanctioned two ship owners last week, while U.K. officials are investigating violations.

    Since the invasion began, oil sanctions have cost Russia $100 billion through August, said an international working group on sanctions at Stanford University. But most of that, economists say, stems from Europe’s ban on Russian oil, which cost Moscow its main customer.

    “There are serious problems with the (price cap) policy, but it can work,” Hilgenstock said. “With some improvements, it can be very effective.”

    Vessels owned or insured by Western nations “persisted in loading Russian oil at all ports within Russia” in recent weeks as prices rose above the cap, the Helsinki-based Center for Research on Energy and Clean Air said in a report last week. “These occurrences serve as compelling evidence of violations against the price cap policy.”

    Russia’s oil income rose in September to some 200 million euros ($211 million) a day as global prices increased, the think tank said. Less oil available worldwide — with Saudi Arabia and Russia cutting production — pushed prices for Moscow’s key export grade crude to $74.46 last week, S&P Global Platts said. It’s been above $60 since July 11.

    The price cap is meant to limit what Russia can earn without taking its supplies off the market. Doing that threatens a shortage that could drive up fuel costs and inflation in the U.S. and Europe.

    It relies on a key fact of the shipping industry: many vessel owners, traders and most insurers are based in Europe or the Group of Seven major democracies that imposed the price cap. That puts those companies within reach of sanctions.

    To comply, shipping companies need to know the price of Russia’s oil. The cap, however, requires only a good-faith disclosure on a simple, one-page document with the names of the parties and the price. The actual sales contracts don’t have to be revealed.

    And that, analysts say, has been an invitation for unscrupulous sellers to fudge — and for some shippers to adopt a see-no-evil approach.

    Suspicions about evasion grew when analysts noticed that oil from the Russian port of Kozmino on the Pacific Ocean — responsible for a relatively small share of Russia’s exports — was trading well above the cap. That was even though many of the tankers stopping there were Western-owned, primarily Greek.

    There was little sign of enforcement action until last week, when the U.S. Treasury Department blocked a tanker owner in the United Arab Emirates and another in Turkey from dealings in the U.S. They’re accused of carrying Russian oil priced at $75 and $80 per barrel while relying on U.S.-connected service providers.

    U.S. officials have warned insurers away from vessels that appear suspicious, a senior Treasury official told reporters last week. The department also issued recommendations to scrutinize transport costs and watch for red flags of evasion.

    The U.K. Treasury says it is “actively undertaking a number of investigations into suspected breaches of the oil price cap.”

    There’s another opportunity to sidestep the cap: the price is set as oil leaves Russia, not what’s paid by a refinery in, say, India. The oil may be bought and sold several times by Russian-affiliated trading companies in countries not participating in sanctions.

    Excessive “transportation costs” may be added. The difference to the end price is pocketed by traders and stays in Russian hands, analysts say.

    “The problem is that no one really has any oversight as to what happens after the point of loading,” said Viktor Katona, lead crude analyst at data and analytics group Kpler. “And there’s a reason why the shippers haven’t really complained or haven’t flagged any issues with the oil price cap — because it’s very easily circumvented.”

    Russia’s top energy official, Deputy Prime Minister Alexander Novak, told Radio Business FM on Oct. 13 that the cap was “not only ineffective, but harmful; it can completely distort the entire market and has only negative consequences, including for consumers.”

    Russia does not recognize the cap, and a decree by Putin forbids its inclusion in sales agreements, Novak said.

    U.S. officials, on the other hand, point to the losses it has inflicted on Moscow when combined with Europe’s ban on Russian oil.

    That boycott forced exporters to send oil on monthlong voyages to Asia, instead of dayslong trips to Europe — essentially doubling Russia’s need for expensive shipping services.

    Another cost is the “shadow fleet” of used tankers that Russia bought to dodge sanctions. It has only a third of the vessels it would need to completely sanctions-proof its oil shipments, said Craig Kennedy, an associate at Harvard’s Davis Center for Russian and Eurasian Studies.

    That makes it hard for Russia to completely avoid Western-based shipping services.

    Combined with the EU oil ban, the price cap has added $35 per barrel in costs for Russian exporters, U.S. officials say — money that doesn’t go to buy weapons and military equipment.

    “The price cap is working,” says Nataliia Shapoval, vice president for policy research at the Kyiv school.

    But Western allies “should take really urgent measures” to push oil from Russia’s shadow fleet back to mainstream shipping, Shapoval said.

    To do that, the Stanford sanctions group says countries should demand proof of Western insurance before letting vessels pass chokepoints — now only recommended by the U.S. Treasury. Tanker owners also could be forced to take shipments only from approved oil traders based in sanctioning countries.

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    AP reporter Josh Boak contributed from Washington.

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    Follow more of AP’s coverage at https://apnews.com/hub/russia-ukraine

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  • 6 killed in Russian rocket strike on mail depot as Ukraine reports record bomb attack numbers

    6 killed in Russian rocket strike on mail depot as Ukraine reports record bomb attack numbers

    KYIV, Ukraine — A missile strike on a mail depot in the eastern city of Kharkiv killed six people, Ukrainian officials said Sunday, as Ukraine reported a record number of bomb attacks in the southern Kherson region.

    A further 17 people were wounded in the blast late Saturday, which is believed to have been caused by a Russian S-300 rocket, Kharkiv Gov. Oleh Syniehubov said on social media. All of the victims were employees of private Ukrainian postal and courier service Nova Poshta.

    The Ukrainian-held front-line city has been at the heart of fierce fighting as both Moscow and Kyiv push for battlefield breakthroughs amid the looming onset of wintry conditions. Russian President Vladimir Putin launched his war against Ukraine in February last year.

    In a statement, Nova Poshta said the air raid siren had sounded just moments before the attack, leaving those inside the depot with no time to reach shelter. It announced that Sunday would be a day of mourning for the firm.

    Ukrainian President Volodymyr Zelenskyy described the strike as an attack on an “ordinary civilian object.”

    “We need to respond to Russian terror every day with results on the front line. And, even more so, we need to strengthen global unity in order to fight against this terror,” he wrote on social media. “Russia will not be able to achieve anything through terror and murder. The end result for all terrorists is the same: the need to face responsibility for what they have done.”

    Elsewhere in the Kharkiv region, three people were wounded in Russian shelling on the city of Kupiansk, Syniehubov said.

    Officials in southern Ukraine said Sunday the Russian military had used a record number of aerial bombs over the country’s Kherson region in the previous 24 hours.

    Natalia Humeniuk, a spokesperson for the Ukrainian military’s Operational Command South, said that 36 missiles had been recorded over the area, with some villages being hit by several strikes.

    In a report released Saturday, the Institute for the Study of War said that Russian forces could be diversifying the mix of missiles, guided bombs, and drones used in strikes on Ukraine. The Washington-based think tank speculated that the change could be part of an attempt to find gaps in Ukraine’s air defenses ahead of further strikes over the winter.

    Ukrainian officials also reported Sunday that two people had been killed by Russian shelling in the Donetsk region. A 58-year-old man in the village of Kalinovka died in his home, while a 61-year-old man was killed in the town of Vasiukovka from a direct hit to his car, according to the Ukrainian prosecutor’s office.

    In a separate incident, Nikopol military district chief Yevhen Yevtushenko said that a 71-year-old man had been killed the previous day while fishing at a local reservoir. He said the victim had been found with a fishing rod in his hand, and accused Russian forces of deliberately targeting him with artillery fire.

    Meanwhile, Moscow-appointed officials said Sunday that they had intercepted three Ukrainian missiles headed toward Russian-occupied Crimea. Vladimir Saldo, the Kremlin-installed leader of the Russian-occupied portion of Ukraine’s Kherson region, said all three missiles had been shot down.

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    Follow AP’s coverage of the war in Ukraine: https://apnews.com/hub/russia-ukraine

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  • Fired Russian pundit predicts when his country could “collapse”

    Fired Russian pundit predicts when his country could “collapse”

    A former Russian state television pundit who was recently fired from his on-screen role for besmirching two foreign ministry officials has forecast that the Kremlin will fall into turmoil in the coming decade.

    In a recent video recording, Yevgeny Satanovsky, president of the Middle East Institute in Moscow, said that “the opportunity of collapse will be somewhere in the 2030s, because [Russian President Vladimir] Putin isn’t permanent; he’s aging.”

    “As always, strong leaders are followed by weak ones, and Putin is very strong in terms of holding power—though what I think about how he’s running the country is a separate topic,” he added, according to a translation by Wartranslated. “He’ll put some small, weak s*** in his place. [Former Russian President Dmitry] Medvedev was an example.”

    Newsweek approached the Russian government via email for comment on Sunday.

    Medvedev served as Russian president between 2008 and 2012 due to the Russian constitution barring Putin from serving a third consecutive term. He swapped places with Medvedev as prime minister, before returning to the presidency. In 2020, Putin changed the constitution so he could remain in power.

    Despite waning support at home for the Russian invasion of Ukraine, Putin has largely remained a popular figure among the Russian public—perhaps in part to pervasive propaganda and the Russian president’s deflection of the failings of the war onto his generals.

    Throughout his tenure at the head of the Russian government, he has projected the image of a strong leader surrounded by a coterie of loyal officials and oligarchs who risk being disposed of if they speak out against him.

    Russian President Vladimir Putin in Perm on October 19, 2023, and Yevgeny Satanovsky (inset), a Russian political scientist and former TV pundit. Satanovsky has predicted a period of turmoil when Putin’s presidency ends.
    GAVRIIL GRIGOROV/AFP via Getty Images

    But this vice-like grip on power from the former KGB agent has led to questions about who could replace him and continue to control such an expansive and an at-times fractious nation, whose relative stability after the fall of the Soviet Union has been marked by Putin’s hold on the Kremlin.

    The first chink in Putin’s political armor came earlier this year, when he faced an armed rebellion on the part of the now deceased Wagner Group leader Yevgeny Prigozhin. He had once been a trusted member of the Russian president’s inner circle before growing highly critical of Moscow’s military failings in Ukraine.

    As experts noted at the time, Prigozhin’s mutiny—which was halfway to Moscow before it ended—pierced the perception of Putin’s invincibility in the eyes of Russians and many around the world.

    There have also been questions asked of Putin’s health since the invasion of Ukraine, including speculation that he was suffering from some form of degenerative disease due to his appearances in public with a puffy face and tremors in his hands and arms—as well as his strict social distancing from others during and after the coronavirus pandemic.

    Satanovsky’s prediction comes after he was dismissed as a regular pundit on the state-run Russia-1 channel, where he typically appeared as a talking head alongside Kremlin mouthpiece Vladimir Solovyov.

    Satanovsky had accused Russian Foreign Ministry spokeswoman Maria Zakharova of being a “heavy-drinking” antisemite and said Russia’s Deputy Foreign Minister Mikhail Bogdanov was a “hopeless drunkard” in an interview.

    The political scientist claimed back in February that the ultimate goal of Russia was the “denazification and demilitarization of the United States,” as well as the removal of American military assets in NATO nations close to the Russian border.