Sunday, July 06, 2008

Weekend Beach Reading: July 06, 2008

BioFuel Energy (BIOF-$2.60) started commercial operations at its two 115 million gallons per year ethanol plants in Wood River, Neb., and Fairmont, Minn. Surging corn costs suggest that the debt-riddled ethanol producer will be struggling just to keep the two plants online.

A recent fight between Moscow and British Petroleum plc (BP-$66.34) over expatriates at its Russian-affiliate
is more than a minor dispute over extending foreigners’work visas. From Bolivia to Venezuela to Kazakhstan to Russia, a trend of energy nationalization and putting domestic companies first, threatens the access of international rivals to lucrative oil & gas deposits.

China Sunergy (CSUN-$7.17) entered into a $400 million purchase agreement with Norwegian-based Renewable Energy, the world’s largest producer of silicon wafers to the solar industry, for the supply of 156-millimeter monocrystalline wafers for the seven years from 2009 through 2015. The company does not operate any of its own polysilicon manufacturing facilities.
Access to secure supplies reduces the company’s historic reliance on the spot market for its feedstock needs and could address the adverse affect of rising raw material costs on its margins.

Alexey Miller, chairman of Gazprom OAO’s (OGZPY-$55.05) management committee, told the Financial Times
in a recent interview that OPEC doesn’t have any real influence on the global oil market nowadays, and that the Russian energy giant will be the most influential energy firm in the world in coming years. Gazprom is years away from reaching peak extraction capacity for its oil and gas reserves; and, production problems and domestic demand could interfere with its ambitious plans for global domination.

Editor David J. Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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