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Exxon Mobil is still interested in visiting Venezuela despite Trump's rebuke
Exxon Mobil is still interested in visiting Venezuela, and it's prepared to send a team of assessors there, according to a source who knows the company strategy. This was reported on Monday, just a day after?U.S. Donald Trump has said that he may keep Exxon Mobil out of Venezuela. Darren Woods, Exxon's CEO, said that Venezuela had to change its laws and protect investment before Exxon was willing to operate in the country. Days later, Trump said to reporters aboard Air Force One that "he didn't like Exxon’s response," and that he would prefer to keep the oil major out. Sources said that Exxon executives had been surprised by these events because Woods told Trump that he thought the administration could help solve Venezuela's problems. Woods told Trump that Exxon would be able to send a team of technical experts to Venezuela within weeks to evaluate oil infrastructure and other assets. Exxon Mobil didn't immediately respond to our request for comment. The White House meeting was held less than one week after American forces had captured and ousted Venezuelan President Nicolas Maduro during an overnight raid. Trump has called on American energy companies to invest $100 billion in Venezuela's oil sector. Exxon ConocoPhillips, and Chevron, were the key partners of Venezuela's PDVSA state oil company before former President Hugo Chavez, between 2004 and 2007, nationalized it. Chevron has negotiated and agreed to stay in the country. ConocoPhillips, however, left and is now owed over $13 billion after long arbitration proceedings. Three industry experts have told us that Exxon and ConocoPhillips still face long-term challenges, even though they met Trump last week. Chevron, the only American oil company currently in Venezuela, emerged from the meeting with a better position, as it can invest more in its current operations to increase production. This was the opinion of a former oil executive. Energy analyst: "Exxon will not flinch if they are not first in line to get in," declining to discuss a client. He added that Trump's remarks would not influence long-term plans for any of the companies. American Petroleum Institute President, Mike?Sommers, said on Monday that the oil industry would have to undergo policy reforms and greater security measures before it could move into Venezuela. This includes measures ensuring contract sanctity. Sommers stated that debts from past asset?expropriations would be "a significant hurdle" for many companies who may be worried about investing in Venezuela's oil. He said that the energy assets of the country are large enough to attract interest, and he is confident the Trump administration will understand the industry's concerns. Sommers stated that the Venezuelan asset base is vast and its potential for investment very large. Sheila Dang reported from Houston, and Nathan Crooks edited the story.
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Concerns about Iran's supply disruption drive up oil prices
The price of oil edged up on Tuesday as concerns about Iran and possible supply disruptions overshadowed the possibility of an increase in crude?supply coming from Venezuela. Brent futures rose 28 cents or 0.4%, to $64.15 per barrel, by 0101 GMT. They were hovering close to a two-month peak?achieved?in the prior session. U.S. West Texas Intermediate Crude rose by 28 cents or 0.5% to $59.78. This is the highest price since December 8, which was reached earlier in the session. Iran, a major producer of oil in the Organization of Petroleum Exporting Countries (OPEC), is experiencing its largest anti-government protests in many years. Donald Trump, the U.S. president, warned of possible military action if the violence perpetrated against the protesters was lethal. Trump is expected to meet with senior advisers to discuss options regarding Iran on Tuesday, according to a U.S. official. The U.S. President said Monday that any country doing business with Iran would be subject to a 25% tariff on all business conducted with 'the United States. The development is important for the?oil market as Iran is a major producer sanctioned and any escalation in tensions could disrupt supply, or add geopolitical risks. Barclays stated in a report that "unrest in Iran added approximately $3-4/barrel to the geopolitical premium on oil prices." The markets are also concerned about the additional supply of crude oil that will hit the market as Venezuela is expected to resume exports. Trump announced last week that, following the ouster President Nicolas Maduro's, the government in Caracas was set to deliver up to 50 million barrels (oil) to the U.S., which would be subject to Western sanctions. The global oil trading houses are ahead of the U.S. energy majors in the race to control Venezuelan crude flow. Geopolitical tensions have escalated in other places as Russian forces launched Kharkiv, located in the northeastern part of Ukraine, was one of two cities attacked early Tuesday morning, according to Ukrainian officials. The United States has a wide range of Trump administration The Federal Reserve has redoubled its attacks against the Federal Reserve. This has heightened concerns about the independence of the central bank and increased uncertainty regarding future economic conditions and the oil demand. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Jacqueline Wong)
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Johnson & Johnson's $1 Billion loss from the robotics takeover is reduced by Delaware's top court
Johnson & Johnson persuaded Delaware's highest Court to dismiss part of a $1 billion damages award due to its breach of a 2019 agreement to buy Auris Health - a manufacturer of surgical robots. In a?unanimous ruling on Monday, Delaware’s Supreme Court set aside a part of the September 20,24 award made to former Auris investors who claimed that Johnson & Johnson had failed to support Auris’ iPlatform Technology and was too slow in gaining regulatory approvals for bringing?devices onto the market. After recalculation, damages and interest could be reduced by several hundred million dollars. Fortis Advisors, the company representing the shareholders, has accused J&J for fraudulently?inducing Auris into accepting payments contingent upon achieving certain'milestones' instead of receiving more money upfront. The deal valued Auris's shares at $3.4 billion. Justice?Abigail LeGrow, in an 87-page ruling, rejected a Delaware Chancery Court judge's conclusion that Johnson & Johnson was under an implied obligation to seek approval for an iPlatform abdominal procedure product by the end 2021. The Supreme Court upheld the majority of Vice-Chancellor Lori Will’s findings and ordered that she recalculate damage. Johnson & Johnson of New Brunswick, New Jersey said that it was evaluating the next steps. The company stated that it was pleased with the decision of the court to reverse the trial judge's improper substitution for its subjective opinions the parties' carefully negotiated agreement regarding milestone regulatory requirements. "We are disappointed the court did 'not follow the contract language in allowing the remainder of the trial courts decision to stand." Philippe Selendy is a lawyer at Fortis. He said that the ruling showed?that Johnson & Johnson had "inexcusably violated the merger agreement" and deprived Auris of its transformative, life-saving, surgical robot. It also revealed the J&J fraud against Auris.
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How long can Wall Street ignore Trump's "visible hand"? McGeever
If the record high U.S. stocks prices accurately reflect the investors' assessment of Trump 2.0's first year, it is a glowing scorecard for the most intervening government in decades. The U.S. President, who has become the "activist in chief" of the markets, is yet another example of how the world's economy has gone topsy-turvy. He is questioning and even renouncing the global norms of the last 40 years. Under Donald Trump's leadership, the U.S. Government has taken direct equity stakes and demanded that CEOs be fired. It also tried to dictate compensation for CEOs. The government was assured of a cut in the exports of Big Tech chips, as well as a desire to fire Federal Reserve officials. Trump also ordered the purchase $200 billion in mortgage-backed securities and directed U.S. companies to conduct business in Venezuela. He tried to stop defense firms from purchasing back shares until they increased production. And he called for an annual cap on credit card interest rates, as his Justice Department threatened to indict Fed Chair Jerome Powell. That's all in the last week. INEFFICIENT MARKET HYPOTHESIS? Imagine an alternate future in which Kamala Harris had won the U.S. Presidential election in 2024 and was approaching her first year in office. She would have pursued a similar controversial set of unorthodox policy. Would the markets shrug this off so easily if Kamala Harris won in 2024? Investors would likely have reacted strongly to the news. There has been almost no turmoil in the real world since Trump's "Liberation Day", tariff announcement, which took place in April. Last year was indeed a record-breaking year for stocks, and other asset classes. According to HFR, hedge funds, which are not a fan of government interference in the private and free market, saw their assets under management reach $5 trillion. William Henagan is a research fellow with the Council on Foreign Relations. He agrees that it's a bit of a "conundrum", given the Trump administration's interventionist approach towards Wall Street and Main Street. Henagan asserts that investors don't necessarily perceive the market interventions to be a substantial erosion of the rule of law or property rights which underpin the financial markets and economic system. Perhaps public markets aren't the most efficient or all-seeing. Investors ignore erosion of these fundamentals at their peril. CASE FOR THE DEFENSE The answer to the question "How confident are you in the market?" is usually binary. Investors are confident in the market structure and financial system as long as they remain so. Government intervention in the market economy is not a new thing, and it is also not a bad idea. Many sectors are in favor of it. It can be necessary for reasons like national security, energy safety, or providing a social security net. A year into Trump's second tenure, the "visible" hand of the president can be felt by many parts in USA Inc., pushing aside the invisible market hand posited by Adam Smith, an eighteenth century economist. Trump's capriciousness is still capable of causing volatility, however. Lockheed Martin shares fell 7% on Wednesday night after Trump announced he would stop defense companies from paying dividends or buying back stock. They then recovered 8% after-hours when Trump demanded that the defense budget be increased by 50% to $1.5 trillion. The broader market is continuing to rise, apparently unaffected by what has been the most interventionist government in decades. Wall Street did lag behind its global counterparts last year, but not by much. This could be a sign of Trump's visible hand unnerving investors. But, at least for now, there is no flashing warning light. You like this column? Open Interest (ROI) is your indispensable source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X.
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Officials in Ukraine claim that Russian missiles have struck Kyiv and killed one person in Kharkiv.
Ukrainian officials reported that Russian forces attacked two of?Ukraine?s?largest?cities early on Tuesday morning, killing one in Kharkiv, a city located to the northeast. Tymur Tkachenko is the head of Kyiv’s military administration. He said that missiles were attacking the capital. Mayor Vitali Klitschko confirmed that air defences are in operation. Witnesses heard "explosions" in the city but no word was immediately available on injuries or damage. Oleh Syniehubov, the Regional Governor of Kharkiv (which is 30 km from the Russian border, and is also a popular Russian target), said that one person had been killed in an attack on a outskirts. Syniehubov claimed that three people had been injured. Reporting by Valentyn OGIRenko in Kyiv, Lidia Kelly in Melbourne, and Ron Popeski. Editing by David Gregorio.
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Sources say that Trafigura and Vitol offer Venezuelan crude oil to Indian and Chinese refiners in March for delivery.
On Monday, several sources reported that Vitol and Trafigura had begun discussions with refiners from India?and China about the sale of Venezuelan crude oil for cargoes due to arrive in March. Global commodities traders confirmed Friday that they had reached agreements with the United States. The?government will help market Venezuelan oil that is stranded, just days after the interim Venezuelan government agreed to export 50 million barrels to the U.S. Their marketing efforts are expected to accelerate the sale and purchase of Venezuelan oil through the U.S. program, allowing OPEC producers to resume their exports that have been halted ever since President Nicolas Maduro was ousted. Trafigura CEO says it will load the first cargo for the U.S. in this week. PETROCHINA INDIAN RIFFINERS Two sources said that Vitol was approaching Indian refineries to sell oil. One of the sources?said that a trader had offered a cargo to ICE Brent at a discounted price of $8-$8.50 per barrel on a delivered basis. Sources told us last week that refiners Indian Oil Corp. and Hindustan Petroleum Corp. would be interested in buying Venezuelan crude oil. Both have not responded to our requests for comment. Reliance Industries said that it would re-consider a return to Venezuelan crude purchases if the sale of Venezuelan oil to non-U.S. customers is permitted by U.S. regulations. Three sources claim that Vitol, Trafigura, and PetroChina have all approached PetroChina to explore interest. PetroChina was a major purchaser of Venezuelan Merey heavy sour crude oil as well as fuel before the U.S. sanctioned began, they said. One of them stated that traders should first approach the large state oil traders, rather than teapots. Independent refiners are usually those who buy sanctioned cheap oil in China. PetroChina didn't immediately respond to our request for comment. Vitol refused to comment. Trafigura said it provides logistical and marketing support to facilitate the sale Venezuelan oil but declined to comment. Second-Half March Delivery A second source confirmed that Vitol and Trafigura have cargoes available for delivery during the second half of march. Shipping data on Kpler revealed that Vitol had loaded the first cargo of naphtha to Venezuela from the U.S. onto the Panamax-sized Hellespont Protector on Sunday. The ship is expected to arrive in the Port of Jose, Venezuela, on January 28. Venezuelan heavy crude oil is thinned with naphtha to make it easier to transport and process. The imminent return of Venezuelan oil has offset fears of a possible supply disruption in Iran that could cap gains on global oil futures. (Reporting from Nidhi verma in New Delhi; Siyi Liu in Singapore, Chen Aizhu in London, and Shariq Khan at New York. Additional reporting by Julia Payne and Shariq in New York. Editing by Jan Harvey.
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After over a decade, Australia's Lynas rare earths CEO will retire
After 12 years, Lynas Rare Earths, an Australian company, announced that its Chief?Executive Officer and Managing Director, Amanda?Lacaze was retiring. Lynas, in a press release, said that the board had already started a search for a new leader to take over as 'the world's largest producer of rare earths outside China. The company said that Lacaze will remain with them until the end of the current fiscal year to ensure a smooth transition. Lacaze became the chief of the company in 2014, after working as a nonexecutive director for the miner. Lynas has become a dominant player in the production and sale of rare earths elements under her leadership. The stock price has increased more than 12 times since she became CEO. According to LSEG, its market capitalization has risen from A$15 'billion ($10.06 bn) to A$15 'billion (about $10.06 mn). Lacaze was previously the managing director of marketing for Telstra, Australia’s largest telecom company, and held positions at Nestle.
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M&A boom unlikely to be disrupted by Japan's increased oversight of foreign investment
Experts say that the Japanese plan to allow authorities to order foreign investors retroactively to divest acquisitions aims to protect major companies and supply chains. However, it is unlikely to reduce increased M&A activity. Japan proposed Wednesday amendments to the foreign investment screening laws that would give authorities the?option of forcing foreigners to sell their investments deemed as posing risks to national and economic security. The proposals are being made as the administration of 'Japanese' Prime Minister Sanae Takayichi steps up its efforts to reduce risks posed by an inflow foreign money into Japan's economy and control over major supply chains. Currently, foreign investors who wish to purchase stakes in Japanese firms outside sectors critical to national or economic security do not have to notify the government beforehand, so officials are unable to intervene. These new powers are targeted at high-risk investors, such as those who might work with foreign powers for intelligence gathering. Since 2017, Chinese companies are required to?cooperate with the country's spy agencies. The period in Japan during which transactions may be reviewed rétroactively is around five years. Nicholas Benes of the Board Director Training Institute of Japan said, "Japan wants to prevent Chinese companies from purchasing top-quality Japanese technology and companies." A government source stated that the proposed changes include stricter requirements on indirect investments made by foreign parents in Japanese companies. This is to bring Japan up to par with its allies, such as the U.S.A, Britain, and Germany, in terms of security. According to documents from the Ministry of Finance, these countries can order divestitures retroactively. Benes, an expert in corporate governance, said that "in principle, this doesn't stand out as it is similar to other countries' practices." FIRST MAJOR OVERHAUL EVER SINCE 2019. Japan is making its first major overhaul of its foreign investment screening laws since 2019. The threshold for reviewing stock purchases by foreign entities has been lowered from 10% to 1%. The 1% threshold is a significant increase in the number of pre-transaction submissions that the Japanese government must deal with compared to other countries. However, the revisions will reduce the scope of the businesses subject to review. Yohsuke Higashi, a partner and M&A attorney at Mori Hamada and Matsumoto said that the scope of pre-transaction filing requirements needs to be significantly narrowed in order to achieve a balance. This is because post-closing interventions will be permitted and indirect investment requirements will be introduced. He said that Japan should also put more resources into enforcing the risk-mitigation requirements attached to approvals, and catching risky deals through post-closing intervention. The review team was overloaded. I understand the need to prioritize more important cases. Another lawyer who worked on inbound investment deals, but declined to be identified, as they weren't allowed to speak publicly, agreed. The changes to the foreign investments rules are a result of corporate governance reforms that were led by the Japanese government. These reforms?led to an increase in overseas interest in Japan, and helped to push the stock exchange to record highs. According to LSEG, inbound M&A activity jumped 45% compared to a year ago to $33 billion. Experts say that the proposed changes will not have a significant impact on foreign investment. Higashi stated that the changes will not discourage M&A involving Japanese companies or other direct investments in Japan. Yuki Kanemoto is a senior research scientist at the Daiwa Institute of Research. She also predicts little impact. He said that the relatively low number of cases that were formally rejected could lead some to believe Japan was more permissive at the moment than Europe or the United States. "But I suspect that there are a number of cases where an effective rejection was made behind the scenes." Japan has only rejected one deal in 2008 under its Foreign Investment Screening Law - the attempt to purchase Electric Power Development by London's Children's Investment Fund. (Reporting and editing by Sam Nussey, Thomas Derpinghaus and Anton Bridge. Additional reporting by Makiko Yamazaki)
Lukoil attracts buyers for its foreign assets
The foreign assets of Russian oil giant Lukoil, which are located in Egypt and Kazakhstan, are attracting bidders. Time is running out for the deals to be completed before U.S. sanctions can be enforced. As part of their efforts to get the Kremlin into peace talks on Ukraine, the U.S. has imposed sanctions on Lukoil. They have already blocked Lukoil’s attempts to sell foreign assets before the deadline of November 21, sanctions. Lukoil has also been affected by the sanctions in Iraq, Finland at pump stations and Bulgaria in a refinery. Governments and partners want to buy its foreign assets cheaply as its empire crumbles. Lukoil did not respond to comments.
CIRCLE OF BIDDERS
KazMunayGas, the state-owned firm of Kazakhstan, is examining a bid to acquire Lukoil assets in the country. Two sources with knowledge of the matter confirmed this.
Lukoil, Eni, Shell, Chevron, and KazMunayGas all have a stake at Karachaganak - one of the largest gas and condensate field in the world.
Kazakhstan's Energy Ministry said that any new partnership would be decided by project participants taking into consideration the sanctions.
Two other sources have confirmed that Shell is interested Lukoil’s deepwater blocks located in Ghana and Nigeria. Shell has declined to comment.
A fifth source with knowledge of the situation reported that Lukoil had indicated to the Egyptian government its potential plans to sell. Lukoil has three concessions in Egypt. Egypt's Petroleum Ministry did not respond to a comment request.
Serdgiu Spoiala, director of the Chisinau Airport, said that the government of Moldova had begun talks to nationalize Lukoil’s infrastructure. Bulgaria is getting ready to take over Lukoil’s Burgas Refinery. Azerbaijani state company Socar and Cengiz Holding from Turkey bid jointly for the refinery prior to the sanctions.
Turkish media this week reported that Cengiz intends to move forward with the deal. Cengiz did not immediately respond to an inquiry for comment.
LUKOIL'S OPTIONS
Lukoil is faced with difficult decisions, according to Sergey Vakulenko. He was a former director of strategy for Russian oil company Gazprom and a senior fellow in the Carnegie Russia Eurasia Center.
The U.S. Treasury could freeze the proceeds if the company sold its assets.
Vakulenko and Igor Yushkov, from the Financial University of Russian Government, both said that delaying action could result in the state taking over some assets or freezing them.
"There is no need for Lukoil's to hurry," said Yushkov. If assets are frozen then they will remain frozen. Wait until the conflict in Ukraine is over, then perhaps sanctions will be lowered. "That's probably the lesser of two evils."
Lukoil could try to copy the strategy of Rosneft - a Russian oil company whose three refineries were placed under German trusteeship by 2022. Berlin controls the plants, but Rosneft owns them.
Vakulenko explained: "Either sell the item yourself and hope to get the proceeds or try to keep ownership." Reporting by Anna Hirtenstein in London and Enes Tunagur in Moscow. Mohamed Ezz is Cairo. Shariq Khan is New York. Isaac Anyaogu is Lagos. Alexander Tanas, Chisinau. Tamara Vaal, Astana. Dmitry Zhdannikov, Mark Potter and Dmitry Zhdannikov edited the article.
(source: Reuters)