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People

Oil price decline a ‘double-edge sword’ for energy sector

Engineering is in Ollie Folayan’s DNA. His father considers himself to be number 23 in a long line of engineers. It meant a career in engineering was a natural choice for Mr Folayan, who loved tinkering with gadgets as a youngster. Mr Folayan, who is now the Aberdeen-based chairman of the Association for Black and minority ethnic Engineers (AFBE-UK), said: “When I was younger I always tended to break everything electronic. I tried to figure out how it worked. It could be as simple as trying to get the aerial to work on the TV to trying to understand cars.” Mr Folayan, 41, moved into a full-time engineering job at Babcock after earning his doctorate in fuels and combustion at Leeds University.

Oil & Gas

China’s economic growth declines to six-year low

China’s economy decelerated in the latest quarter but stronger spending by consumers who are emerging as an important pillar of growth helped to avert a deeper downturn. The world’s second-largest economy grew by 6.9% in the three months ended in September, the slowest since early 2009 in the aftermath of the global financial crisis, data showed. That was down from the previous quarter’s 7%. Weakening trade and manufacturing have fuelled concern about possible job losses and unrest. The communist government has cut interest rates five times since last November in an effort to shore up growth. The latest figures highlight the two-speed nature of China’s economy in the midst of a marathon effort by the Communist Party to nurture self-sustaining growth based on domestic consumption and reduce reliance on trade and investment. Manufacturers are shrinking and shedding millions of jobs while consumer-oriented businesses expand.

Markets

Japanese stocks decline, led by mobile carriers, oil explorers

Japanese stocks fell, dragged down by energy explorers as oil prices declined and mobile carriers after Prime Minister Shinzo Abe called for lower phone rates. Mobile carriers NTT Docomo Inc., KDDI Corp. and SoftBank Group Corp. sank at least 5.5 percent after Abe said reducing the burden on households from mobile phone fees is an important issue to tackle. Energy explorer Inpex Corp. declined 6 percent as crude oil traded below $45 a barrel. Kansai Electric Power Co. climbed 1.9 percent as utilities led gains on the Topix index. Shipper Kawasaki Kisen Kaisha Ltd. jumped 1.8 percent after Mitsubishi UFJ Morgan Stanley Securities Co. raised its investment rating. The Topix slipped 0.9 percent to 1,466.37 as of 12:58 p.m. in Tokyo, swinging from a gain of 0.5 percent after last week capping its biggest weekly increase in almost two months. Volume was 34 percent below the 30-day intraday average. The Nikkei 225 Stock Average dropped 1.4 percent to 18,001.12. Both the Federal Reserve and Bank of Japan are holding policy meetings this week.

Opinion

Oil: How low can she go?

With WTI on the precipice of breaking below $40/bbl, chatter abounds on just how low oil prices can go from here, with some discussing prices in the low $30s, or potentially lower. While this type of price action is not without possibility, Bentek does not believe this is rooted in fundamentals, but rather, would be a short term phenomenon spurred by speculative trade capitulation and/or a brief storage shock. In terms of the former, should the paper losses from traders holding long positions in oil become too difficult to bear, the market has the potential for a short term rout if/when there is a liquidation of positioning.

Oil & Gas

Santos chief exec Knox to step down as oil price slump prompts review

Santos Ltd. Chief Executive Officer David Knox will step down after seven years in the role as the Australian oil producer reviews its options amid a plunge in crude prices, the company said Friday. Knox will depart once a successor has been named, the Adelaide-based company said in a statement after reporting an 82 percent drop in first-half profit. The slide in oil prices has put pressure on Santos as the company prepares to start its $18.5 billion liquefied natural gas project in Queensland state. The Australian energy producer has cut spending and jobs while flagging the possibility of asset sales as it copes with the oil market downturn. Santos shares have fallen 62 percent in the last year.

Markets

Asian bonds drop as Fed rate bets propel dollar; oil advances

Bonds in Asia declined as speculation US interest rates will be raised as soon as next month underpinned the dollar. Copper and gold fell as shares in the region were mixed. Crude oil rallied. The Bloomberg Dollar Spot Index extended gains at a four- month high, up 0.2 percent by 1:52 p.m. in Tokyo, as yields on 10-year debt from New Zealand to Japan climbed. Oil rose a second day, continuing its recovery from Monday’s rout, while copper resumed losses with gold. The MSCI Asia Pacific Index dipped 0.2 percent as US index futures increased 0.2 percent after Apple Inc. drove equity losses Tuesday. Traders boosted bets on a September rate hike in the US after Federal Reserve Bank of Atlanta chief Dennis Lockhart said he would only endorse putting it off should there be a significant deterioration in economic data. Oil’s rebound steadied commodity markets, quelling losses among energy and mining stocks ahead of a swag of services industry data from China to Japan and the US Thailand is projected to keep benchmark borrowing costs unchanged at a review Wednesday.

Oil & Gas

Oil recession impact on firms varies

Listed UK manufacturers weighed the effects of the global oil and gas downturn on their businesses revealing mixed results yesterday. Engineering components firm Meggitt hailed a 6% boost to its half year profits thanks to its aviation spare parts business which offset a decline in its oil and gas valves business. Meanwhile, pump actuator maker Rotork said its oil and gas business saw revenues drop £15million as it was hit by weak oil prices and political instability. Meggitt rose to the top of the FTSE-100 leaders board last night, up 8% after half-year results showing pre-tax profits up 6% to £152 million at the engineering group.

Oil & Gas

Stirling Group boss aims for leading role in offshore revolution

The oil and gas industry downturn is a chance to revolutionise health and safety services, Stirling Group managing director Angus Neil said yesterday. But firms must not use the lower oil prices as an excuse to relax their commitment to high safety standards offshore, he warned. He added: “Training, for example, is an easy target in a downturn but companies must take the potential impact on safety and risk into their cost-cutting considerations. “Oil and gas companies simply cannot afford to cut corners in safety critical areas.”

Opinion

Opinion: There’s more than one way of responding to the oil price crash

“Necessity is the mother of invention.” So the saying goes and so it is true that crises can stimulate creative thought and challenge established norms in a way that seems difficult to achieve when all is calm and ticking over. In calmer waters thinking reverts to ‘continuous improvement’ and its promise of a more steady and paced level of delivery. With a familiar sigh of relief, comfort levels are restored and with it the pressure to challenge deeply held beliefs and working practices. So how is all this relevant to $60 oil? The answer is simple: The industry has an opportunity to make a real difference, to capitalise on a situation that is marked by great uncertainty but equally offers boundless possibility. It is a straight choice – the industry has only to give itself permission to frame it in terms of the latter.

Markets

Malcolm Webb: More jobs could go despite budget reforms

A North Sea leader has warned that more jobs will have to be cut in the sector despite a “regeneration” package announced in the Budget. Malcolm Webb, chief executive of Oil and Gas UK, said the industry must put pressure on itself to reduce costs and improve efficiency, but urged firms to do it in a “careful” way. He was speaking the day after the Treasury met demands for greater support during the downturn, announcing cuts to the supplementary charge, petroleum revenue tax and incentives for exploration. Scottish Secretary Alistair Carmichael claimed on Wednesday that the measures would help protect thousands and potentially tens of thousands of jobs. However, Mr Webb said there were still difficult decisions to be taken in the offshore sector.