Sovereign Wealth Fund Institute

Since the 1960s, oil sands have been in development in Alberta. In recent years, the speed of development has accelerated especially in the Athabasca region, thus drawing institutional investor money. Asian public investors, like the Korea Investment Corporation (KIC) have parked cash into the oil sands sector in private firms like Osum Oil Sands Corp. In February 2010, Athabasca Oil Sands entered into a joint venture with Petrochina before Athabasca’s initial public offering providing nearly $2 billion in capital. Oil sands can be viewed as a hybrid of infrastructure and energy.

Oil sand projects require patient capital, as planning projects and hurdling through regulatory obstacles can be cumbersome and expensive. Larger and more complex projects risk delays and cost overruns. Investing in oil sand projects bear risks such as: environmental risk, financial risk, regulatory risk, execution risk, and oil price risk.

Oil sand projects are experiencing a boom in capital and projects are being executed.

New production methods have been invented and implemented, thus lowering extraction costs and increasing environmental efficiency. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

EIG Global Energy Partners, LLC (EIG), an institutional investor in the global energy sector, has reached a definitive agreement with the China Investment Corporation (CIC). The CIC is in agreement to purchase a minority stake in EIG.  The CIC is an investor in EIG-managed funds.

The China Investment Corporation is betting big on natural resources, energy, and global infrastructure. By investing in an asset manager that specializes in energy and infrastructure, the CIC could potentially learn and benefit from possible expertise and robust deal flow.

Separated in January 2011, EIG was formerly the Energy & Infrastructure Group at Trust Company of the West (TCW). The CIC has also invested in Chesapeake Energy Corporation. In November 2011, Chesapeake sold EIG $500 million of perpetual preferred shares of a newly formed entity, CHK Utica, L.L.C.

South Africa has been a key investment destination for China due to its natural resources, lower political risk profile compared to other African nations, and growing demographics. In fact, the China-Africa Development Fund has been an active investor in the country. The China Investment Corporation (CIC) will purchase a 25% stake in the Shanduka Group for 2 billion rand (US$ 245 million). Johannesburg-based Shanduka is led by former secretary-general of the ruling African National Congress Cyril Ramaphosa and has investments in McDonald’s franchises and coal. It is an unlisted holding company. Recently, the Shanduka Group gained majority control of a coal venture that it operates with Glencore. It increased its stake in Shanduka Coal from 30% to 50.01%, giving it control. Shanduka’s coal mining operations include Springlake, Middleburg Townlands, and Graspan.

The CIC is buying the shares mostly from Investec and Old Mutual Private Equity. Standard Bank was the exclusive financial advisor for the Shanduka Group.

“This partnership will allow us to jointly explore future investment opportunities in South Africa and other parts of Africa,” Ramaphosa said in the statement regarding the recent transaction.

Over the past few years, solar energy has been in demand driven by government subsidies, rising cost of fossil fuels, shifting regulatory environments, and organizations wanting to go greener. Aggressive public policy from various states and nations have further increased stimulus and awarded tax credits in the renewable sector to foster industry growth. Then in 2008, the financial crisis hit, causing meltdown in the capital markets. Some solar companies had trouble accessing capital; not all solar manufacturers experienced this. Through market distortion, these global subsidies coupled with the financial crisis, created the environment for an oversupply of solar panel manufacturers. The effect was a major decline in the price of solar panels, thus eroding profit margins in the solar manufacturing sector. In fact, on Wednesday Germany solar company Solar Millennium filed for insolvency which is probably not the last to file for bankruptcy. In the United States, the headline solar company to fail was American taxpayer-backed Solyndra based out of Fremont, California. Yes, solar energy was losing its luster in 2010, but if priced right, it can be a reliable investment.

Polysilicon prices have plunged more than 90% percent in three years.

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The Libyan Investment Authority (LIA) is aggressively trying to get back into the swing of things. Recently, Indonesia-based PT Medco Energi International Tbk through a wholly owned subsidiary Medco International Ventures Limited signed a commercial agreement with the Libyan Investment Authority (LIA) for its Area 47 field. MedcoEnergi is an integrated energy company.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Globally, Qatar Holding LLC has been investing in natural resource and commodity companies for quite some time. They recently picked up a significant stake in European Goldfields Limited which included funding support for the company to develop gold deposits in Greece.

Qatar Holding LLC is setting up a subsidiary called QH Indonesia to deploy $1 billion in targeting Indonesia’s raw materials and natural resources. Indonesia is centrally located near key markets such as India, China, and Australia. The sovereign wealth enterprise will be based in Jakarta. Indonesia is a heavily populated Muslim country in Southeast Asia and a major exporter of palm oil and rubber.

Nearly 85% of palm oil is produced in Indonesia and Malaysia.

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According to the press release, “His Excellency Dr. Mohammed bin Saleh Al-Sada, Minister of Energy and Industry of the State of Qatar, and Peter Voser, Chief Executive Officer of Shell, signed today a Heads of Agreement that sets the scope and commercial principles for the development of a world-scale petrochemicals complex in Ras Laffan Industrial City, Qatar. This agreement follows the conclusion of a joint feasibility study conducted by the partners, Qatar Petroleum and Shell.

The scope under consideration includes a world-scale steam cracker, with feedstock coming from natural gas projects in Qatar; a mono-ethylene glycol plant of up to 1.5 million tonnes per annum using Shell’s proprietary OMEGA (Only MEG Advantaged) technology; 300 kilotonnes per annum of linear alpha olefins using Shell’s proprietary SHOP (Shell Higher Olefin Process); and another olefin derivative. The complex will produce cost-competitive petrochemicals products to be marketed primarily into Asian growth markets. Qatar Petroleum will have an 80% equity interest in the project and Shell 20%.

His Excellency Minister Al-Sada said: “This critical petrochemicals project fits well with Qatar’s strategy to strengthen and further diversify its growing chemicals industry and represents an important milestone on our journey to become a significant global petrochemicals producer. In line with directives of His Highness, the Emir, Sheikh Hamad Bin Khalifa Al Thani, this large petrochemicals complex will provide Qatar with another viable option to extract optimal value from its natural gas resources.”

Peter Voser added: “This agreement marks the beginning of another partnership with Qatar Petroleum for the development of a world-scale petrochemicals project in Qatar. Coming on the heels of the inauguration of Pearl GTL, this new venture demonstrates the commitment of both parties to deepen our relationship even further. Shell values the opportunity to bring to Qatar the expertise and technology necessary to deliver a petrochemicals project of this scale and looks forward to its successful delivery.”

Qatar Petroleum and Shell have delivered Pearl Gas-to-Liquids (GTL) and Qatargas 4 this year; two of the world’s largest projects built in Ras Laffan Industrial City.”

Read more: Shell Press Release

The press release states, “Samsung C&T and the Korea National Oil Corporation (“KNOC”) will jointly acquire US oil and gas company Parallel Petroleum LLC (“Parallel”). Samsung C&T Oil & Gas Parallel Corp., Samsung C&T’s local subsidiary in the US, and KNOC signed a Purchase and Sale Agreement with PLLL Holdings, LLC, which owns Parallel, in Midland, Texas on November 29th, 2011. Upon completion of the transaction, Samsung and KNOC will respectively own 90% and 10% of Parallel.

Parallel currently operates 8 oil and 2 gas producing fields in the states of Texas and New Mexico. Parallel produces approximately 8,400 barrels of oil and gas per day and has approximately 69 million barrels in reserves.

Through the deal, Samsung C&T will secure 50 professionals experienced in developing oil and gas fields. This will give Samsung C&T the ability to enhance its industry capabilities and strengthen its competitiveness.

Along with the investment in the Ankor oil fields in 2008, the acquisition of Parallel marked the significant foundation for the expansion of our natural resources business in the US market.

In 2008, Samsung C&T and KNOC jointly acquired the Ankor assets (daily production of approximately 16,000 barrels and reserves of approximately 71 million barrels) located in the Gulf of Mexico. Ankor currently produces oil from 17 platforms in 5 offshore oil fields, and Samsung C&T produces and explores for oil and gas from 10 other oil and gas fields around the world.”

Read more: Press Release

According to the press release, “the Caisse de dépôt et placement du Québec has announced that it has entered into definitive agreements with ConocoPhillips to purchase its 16.55% interest in Colonial Pipeline Company and Colonial Ventures LLC (“Colonial”) for US$850 million.

Colonial Pipeline is the largest refined petroleum products pipeline in the United States. It extends more than 8,800 kilometres between the Gulf of Mexico and the Northeastern U.S. and transports the equivalent of 2.3 million barrels per day.

Prior to being finalized, the transaction will be subject to a right of first refusal (ROFR) by the shareholders of Colonial Pipeline. Based on the outcome of the ROFR exercise, the Caisse could close the transaction during the first quarter of 2012.

“The Caisse is always interested in quality assets that yield stable, long-term returns,” said Normand Provost, Executive Vice-President, Private Equity and Chief Operations Officer at the Caisse de dépôt et placement du Québec. “This particular investment targets an infrastructure project in a regulated industry that we know well through our investments in Gaz Métro, Interconnector, Enbridge and Fluxys.”‘

Read more: Press Release

Khazanah Nasional, a Malaysian sovereign wealth fund plans to invest directly into India in sectors such as financial services, infrastructure, and energy. India is one of the BRIC economies that had increased its economic growth tremendously this past decade. In addition, India is slowly opening up its economy to foreign investors by loosening some investment restrictions and regulations. Earlier in June, Khazanah and the Infrastructure Development Finance Company Limited (IDFC) agreed to set up a joint venture to produce a dedicated infrastructure development company that focuses on road transportation development. Khazanah would hold 80.1% of the equity share of capital in the proposed joint venture.

Khazanah Nasional is also evaluating proposals in India’s geothermal and hydroelectric business segments. In fact, much like the rest of Southeast Asia, India has strong demand for electricity and current power plants are not meeting demand.

More and more sovereign investors are seeing value investing directly into European companies.  Abu Dhabi’s International Petroleum Investment Company (IPIC) increased its stake in OMV Aktiengesellschaft from 20.4% to 24.9%. IPIC now holds 81,490,900 shares. The IPIC is an active investor in energy companies and a long-term investor in OMV. In fact, IPIC has invested in OMV for around 17 years.

This increased position occurred around two weeks after OMV stated they would get rid of unprofitable refining and marketing assets by 2014.

Investing in new energy infrastructure is a blossoming area for many sovereign investors. There are numerous risks inherent in these types of projects such as political risk, financing risk, and developmental risk. In the past, the China Investment Corporation (CIC) has invested in AES Corp. stock. AES Corp. and the CIC have partnered strategically and financially. Recently, the CIC and AES Corp have partnered in a Vietnamese infrastructure project. By partnering with the China Investment Corporation and Posco, AES Corp has lowered political risk in the project, since the deal is involving foreign governmental investors.  Vietnam has a growing economy in which energy demand has exceeded supply. Energy generation capacity is trailing behind demand.

After completion this will be the biggest private sector power plant in Vietnam and will set precedence for future foreign investment in Vietnamese infrastructure.

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Qatar Holding LLC, the sovereign wealth enterprise of the Qatar Investment Authority now owns 2.018% of Energias de Portugal, S.A. share capital. Energias de Portugal, S.A. is near being fully privatized by the Portuguese Government. At a share purchase price of EUR 2.16, the stake is estimated to cost EUR 159.4 million. The Qatar Investment Authority has been an active investor in utilities in Western Europe. The QIA has also invested in Spain’s Iberdrola SA. Qatar Holding LLC is the third largest shareholder in Iberdrola SA.

The market adoption of natural gas as a source for vehicle fuel is growing rapidly in the world. Natural gas fueling services are positioned to propagate in the United States and Canada. In North America, Clean Energy Fuels Corporation is a major provider of natural gas fuel for transportation.

The company has operations in LNG and CNG vehicle fueling. Three investment entities, including Temasek Holdings have agreed to invest US$ 150 million in the company through the form of 7.5% convertible notes due in 2016. Notes will be convertible to shares of common stock at US$15.00 per share. The other major investor in this deal is RRJ Capital founded by Richard Ong. Earlier in April 2011, Temasek Holdings partnered with RRJ Capital on a deal to take a large controlling stake in Frac Tech Holdings.

Deal Investors:

1. Springleaf Investments Pte. Ltd – Sovereign Wealth Enterprise of Temasek Holdings
2. Lionfish Investments Pte Ltd – Subsidiary of Seatown Holdings International Pte. Ltd
3. Greenwich Asset Holding Ltd – Subsidiary of RRJ Capital Master Fund I, L.P.

“This investment by Temasek, Seatown and RRJ demonstrates their confidence in the opportunity for fueling natural gas vehicles as well as in Clean Energy’s position as the leader in growing this market,” said Andrew J. Littlefair, President and CEO of Clean Energy. “Our development program for fueling station-building is expanding rapidly and we welcome the support provided by the funds.”

Source: Press Release

The press release states, “as a first milestone of this cooperation, advanced exclusive talks on a €2.3 billion minority investment by CIC in the Exploration & Production division of GDF SUEZ to accelerate the development and on the €0.6 billion acquisition by CIC of a 10% stake in the LNG Atlantic liquefaction plant in Trinidad and Tobago.

GDF SUEZ and China Investment Corporation (“CIC”) have signed a Memorandum of Understanding (“MoU”) for cooperation across multiple businesses and regions, in particular in Asia Pacific. GDF SUEZ and CIC will cooperate on a non-exclusive basis to help accelerate their respective strategies by exploring areas of cooperation and co-investment opportunities. The MoU will be deployed across GDF SUEZ Group’s businesses (gas, power, water and waste, and energy efficiency services) and sets up the framework for cooperation in three areas:

(i) joint investment opportunities in existing and new energy-related projects in Asia Pacific;

(ii) financing cooperation in new projects in Asia Pacific;

and (iii) commercial sponsorship and support to GDF SUEZ in Asia Pacific region, including China, by CIC’s affiliates.

The MoU will be administered through a Steering Committee chaired by the two groups’ respective CEOs.

As the first milestone of this cooperation, CIC is in advanced exclusive talks with GDF SUEZ regarding a €2.3 billion minority investment in the Exploration & Production division of GDF SUEZ (“GDF SUEZ E&P”) (excluding the 22.5% equity stake in E.F. Oil and Gas Limited (“EFOG”)). CIC will own 30% of GDF SUEZ E&P, following a capital increase and a financial restructuring of GDF SUEZ E&P reducing its net financial debt to €0.7 billion.

The minority investment of CIC will reinforce GDF SUEZ E&P’s capital structure and will contribute to accelerate the development of this important activity for GDF SUEZ by providing the appropriate financial flexibility. Initiated in the 1990s via acquisitions followed by strong organic development, GDF SUEZ E&P has 2P reserves of 815 mmboe at the end of 2010, an annual production of 51 mmboe in 2010 and a significant portfolio of contingent resources and exploration prospects. With more than 1,500 employees in 13 countries, it generated €2.2 billion of revenues and €1.4 billion of EBITDA in 2010. The transaction values GDF SUEZ E&P (excluding EFOG) at c. €8.1 billion in enterprise value.

As part of the transaction, CIC would also acquire from GDF SUEZ a 10% stake in the train 1 of the Atlantic LNG liquefaction plant located in Trinidad and Tobago as well as production payments associated with trains 2, 3 and 4 for an amount of €0.6 billion.

The potential acquisition by CIC of a 30% stake in GDF SUEZ E&P and of its 10% stake in the LNG Atlantic liquefaction plant is part of GDF SUEZ’s portfolio optimization program of €10 billion, announced at the 2010 annual results presentation and would result in net cash proceeds of €2.9 billion. The transaction will be subject to condition precedents being satisfied and will be presented for consultation to GDF SUEZ’s employee representative bodies. The transaction could be finalized by the end of 2011. The GDF SUEZ Board of Directors views the cooperation with CIC and the transaction as having a strong strategic interest for GDF SUEZ.”

Read more: GDF SUEZ Press Release

The China Investment Corporation has a history of investing in energy companies and energy-related investment projects, especially in the Americas. A few notable deals include: AES Corp, Penn West Energy Trust, and the Chesapeake Energy Corporation. GDF Suez SA is a French firm that is involved with liquefied natural gas, energy efficiency services, independent power production and environmental services. GDF Suez SA is near closing a deal with the China Investment Corporation. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Shale gas is becoming a conventional source of energy; however, it is much more expensive than convention oil and gas drilling. Sovereign wealth funds such as Temasek Holdings have been investing in companies that are involved with the process called hydraulic fracturing.  Japan’s Mitsui has already been investing in shale projects in Poland.

Europe may have another local commodity-based sovereign wealth fund on its hands. Poland’s domestic energy needs are largely dependent on coal power and Russian gas imports.

Luckily for Poland, big deposits of shale gas have been discovered in the country. First, this could dramatically reduce the need of Poland importing energy from Moscow, which currently provides around 64% of Poland’s total gas imports. Second, it can provide for windfall profits to be taxed and moved into a sovereign investment vehicle.

Poland would most likely model the prospective SWF after Norway’s Oil Fund.

Poland has already given 87 licenses to companies to explore for gas trapped in shale rocks. According to the United States Energy Information Administration, Poland’s recoverable reserves of shale gas may amount to 5.2 trillion cubic meters, which could supply more than 300 years of domestic consumption.

Brazil seems to be the Latin American darling of the Middle East. Over the past few years, Brazil has been improving its macroeconomic stability and building up significant foreign reserves. Brazil was one of the first emerging market economies to recover from the financial crisis. The Government of Brazil even created a sovereign fund. In early May 2011, the Mubadala Development Company expressed interest in possibly investing in Brazilian industries such as mining, energy, aluminum, agribusiness, and logistics.

Mubadala believes that emerging markets like Brazil, India, and China will yield the best risk-rewards in growth over time.

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The press release states, “Statoil ASA has decided to divest a 24.1% direct and indirect stake in Gassled joint venture (jv) for a consideration of NOK 17.35 billion. Following this transaction, Statoil will continue to own 5.0% in the jv.

The buyer is Solveig Gas Norway AS, a holding company that is approximately 45% owned by Canada Pension Plan Investment Board, 30% by Allianz Capital Partners, a subsidiary of Allianz SE, and 25% by Infinity Investments SA, a wholly owned subsidiary of the Abu Dhabi Investment Authority.

“This transaction contributes to a further streamlining of Statoil’s portfolio. The divestment is part of our continuous efforts to increase capital efficiency and maximize shareholder value creation,” says executive vice president for Marketing, Processing and Renewable in Statoil, Eldar Sætre.

Gassled is the owner of the integrated gas transportation grid and processing facilities on the Norwegian Continental Shelf (NCS), transporting Norwegian gas by pipelines from the producing fields to consumers on the European continent and United Kingdom. Gassled was established in 2003 by the merger of the majority of the gas pipeline joint ventures into one joint venture.
Gassled provides transportation services with third party access on a non-discriminatory basis to producers on the NCS. Statoil’s divestment in Gassled enables a re-deployment of capital into assets and projects that yield higher rates of return. This is part of Statoil’s continuous efforts to increase capital efficiency and create shareholder value.

Statoil is committed to the development and supply of Norwegian gas and will continue to be the largest shipper in Gassled.

“Reliable, safe and cost-efficient operation of the system is the key to secure continued interest for our gas among European customers. We are therefore fully committed to maintain our role as TSP for the major part of the transportation and processing systems,” Sætre says.

The financial effect of the transfer will be as of 01.01.2011

The transaction will be subject to government approval from the Norwegian Ministry of Petroleum and Energy (MPE) and the Norwegian Ministry of Finance (MF).”

Read More: Statoil

According to the press release, “President Goodluck Ebele Jonathan has said that his Administration was fully committed to making Nigeria’s oil assets a vehicle for wealth creation, economic diversification and development.

In his remarks after signing the 2011 Appropriation (Amendment) Bill and the Nigerian Sovereign Investment Authority (NSIA) Bill into law at the Presidential Villa, Abuja, on Friday, May 27, President Jonathan said that the new NSIA will provide the country with a “strong, transparent and effective tool for the management of our nation’s petroleum wealth for the good of all Nigerians.”

The President announced that apart from its One Billion US Dollars seed capital, the NSIA will be funded every month by the excesses of budgetary revenue from oil coming into the Federation account.

He said that revenues accruing to the authority will be invested by it through three special funds – the Nigeria Infrastructure Fund, the Future Generations Fund and the Stabilisation Fund.

According to President Jonathan, the infrastructure fund will be dedicated to investments in the development of critical national infrastructure, with ten percent of it going to agriculture and government-sponsored projects that promote economic development in under-served sectors or regions of the country.

He said that the future generations fund will build an inter-generational savings base by investing in longer term assets that generate returns to accumulate wealth for future generations of Nigerians while the stabilization fund will help to protect annual national budgets by providing a stable, last resort source of financing during periods of fiscal deficit resulting from a sustained fall in oil prices.

President Jonathan commended the leadership and entire members of the National Assembly for the passage of the two bills.

He also applauded the committed efforts made by the Minister of Finance, Mr. Olusegun Aganga towards the passage of the NSIA Bill.

The signing of the two bills into law was witnessed by the Senate President, Chief David Mark, the Speaker of the House of Representatives, Mr. Dimeji Bankole, the Secretary to the Government of the Federation, Alhaji Yayale Ahmed, the Attorney General of the Federation, Mr. Mohammed Adoke, the Minister of National Planning, Dr. Shamsudeen Usman and the Minister of Finance.”

Source: Nigeria First – Official Website of the Office of Public Communications

The press release states, “Aabar Investments PJS (“Aabar”) today confirmed an investment of $850 million in Glencore International plc (“Glencore”) as a cornerstone investor with an intention to invest an additional $150 million in the Global Offer. Glencore is one of the world’s leading integrated producers and marketers of commodities. This investment makes Aabar the largest cornerstone investor in the IPO.

His Excellency Khadem Al Qubaisi, Chairman of Aabar: “We are pleased to count ourselves as the largest new shareholder of Glencore post its IPO. Glencore is known for its achievements and value creation in the resources space and we are excited about the potential opportunities between Abu Dhabi and Glencore given Abu Dhabi’s leadership in petrochemicals and hydrocarbons domestically and around the world. The investment is consistent with our policy of investments and strategic partnerships with global market leading businesses and, we are looking forward to a successful partnership with the company”.

The $850 million investment represents the foundation of Aabar’s commitment as the largest cornerstone shareholder in Glencore and the sovereign wealth fund intends to acquire additional shares in the Global Offer to bring its initial investment up to $1 billion in the short term.

“Given Aabar’s focus on value enhancing investments and the great opportunity that global commodities offer we intend to explore in due course areas of co-operation between the two firms. This is an important milestone in Aabar’s development strategy and we are proud to lead this effort.” adds Mohamed AlHusseiny, CEO of Aabar.”

Read more: Aabar Investments Press Release

According to an interview by Reuters, Gita Wirjawan, Chairman of the Badan Koordinasi Penanaman Modal (BKPM), says the China Investment Corporation is planning to offer $4 billion in infrastructure project loans. The BKPM is an investment board that coordinates business between businesses and government. Its aim is to increase foreign direct investment in Indonesia. Another goal is for the agency to improve the lives of its citizens by creating domestic jobs. The types of Indonesian infrastructure projects were not specified. Indonesia is an Asian emerging economy with a growing middle class in desperate need of infrastructure. If the proper infrastructure is not built in a timely fashion, it can harm economic growth and decrease country competitiveness.

Most sovereign wealth funds prefer to invest in developed infrastructure in Western economies. Developed infrastructure is less risky and cash flows do not vary as much as infrastructure projects. In addition, regulation and government transparency are key planks for SWFs to plunk down significant amounts of capital. Indonesia is at an economic crossroads. The country is aiming to build over 20,000 km of roads and provide at least 15,000 MW through power plants in the next few years. Indonesia is also ripe with natural resources in oil and gas. Lastly, Indonesia is fortunate enough to be able to reap the benefits of hydroelectric power, a renewable source of energy that contributes to an overall low carbon economy.

Frac Tech Holdings LLC is a Texas based provider of oil and natural gas well stimulation services. They have expertise in high-pressure hydraulic fracturing. The company has operations across the United States. Temasek Holdings is on a campaign to booster its energy industry portfolio. Maju Investments formed a consortium to purchase a 70% stake in Frac Tech Holdings LLC with RRJ Capital.  [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

The press release states, “the Abu Dhabi sovereign wealth fund, International Petroleum Investment Company (IPIC), which currently owns 47.06% of CEPSA’s share capital, has announced today, through a significant event filed with the Spanish Securities Market Commission (CNMV), that it will launch a public takeover bid on the entire share capital of CEPSA. The offer price will be €28 per share, which assumes a €0.50 dividend that CEPSA will pay out prior to the settlement of the takeover bid (otherwise, the price would be adjusted so that the amount received by shareholders who accept the offer, adding up the price plus the dividend, would be €28.50 per share).

• TOTAL has undertaken to tender all of the shares it owns in CEPSA in this offer, representing 48.83% of the share capital
• The offer price has been set at €28 per share, plus a dividend of €0.50 which will be paid out to shareholders before the settlement of the bid
• The transaction is conditional on obtaining all the required approvals and clearances from the Spanish Securities Market Commission (CNMV) and the competition authorities

As a result, the total deal would be valued at approximately €3,970 million if the offer were to be accepted by all shareholders. TOTAL has irrevocably undertaken to tender all of the shares it owns in this offer, equivalent to 48.83% of CEPSA’s share capital. These shares are held by TOTAL through its subsidiary Odival. The takeover bid, apart from requiring authorization from the Spanish Securities Market Commission, CNMV, must also obtain the necessary approvals and clearances from the competition authorities.”

Read more: CEPSA Press Release

New Ownership Structure

Singapore’s GIC is active in energy infrastructure whether it’s in a developed or developing economy. The GIC partnered with ArcLight Capital Partners, LLC and GE Energy Financial Services to become investment partners in five Georgia natural gas-fired power plants. [Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Reuters reports, “German utility E.ON has granted a consortium of foreign bidders exclusive rights to make an offer for Britain’s second-largest electricity distribution network, the Sunday Times reported. E.ON has given a consortium comprising the Abu Dhabi Investment Authority, the emirate’s sovereign wealth fund, and Canada Pension Plan until mid-January to put together a firm bid, the paper said.

The utility group delivers power to more than 5 million customers across Central England via its distribution business. It has hired JP Morgan to handle the sale while the consortium is being advised by Lexicon Partners and Goldman Sachs, the paper added. An agreement could be reached before the new year, the paper said, citing sources close to the process.”

Read more: Reuters

BNN Summary: “Sovereign Wealth Funds have been a big part of the Middle East’s economic growth. They were all the rage years ago. So what about now? BNN speaks to Michael Maduell, President, Sovereign Wealth Fund Institute.”
see video BNN News

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Temasek Holdings has invested $400 million in Odebrecht Oleo e Gas for a 14.3% stake in the unit.  Odebrecht Oleo e Gas is part of Odebrecht, a large conglomerate.  Odebrech Oil and Gas view the investment essential to help them grow capital expenditures to tap into Brazil’s blossoming offshore oil trade.

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According to Reuters, “Angola’s oil industry is booming as money pours in after the end of three decades of civil war, and officials say output could increase by as much as two-thirds over the next five years. Buoyed by a scramble for energy and raw materials by China and other emerging nations, oil companies are spending tens of billions of dollars drilling oil and gas wells deep below the Atlantic many miles off the African coast. Production capacity has increased steadily over the last two years and oil analysts say Angola could now comfortably pump at least 2 million barrels per day (bpd) and is increasingly only held back by political constraints. Angola is a member of the Organization of the Petroleum Exporting Countries (OPEC), holding the presidency of the 12-member grouping this year, and has been limiting output with other OPEC states to help stabilize oil prices in the wake of the global economic crisis. But dozens of new Angolan oilfields will come on stream between 2011 and 2015 and oil analysts expect output to increase steadily to between 2.5 and 3.0 million over this period.

‘By 2015, Angola should be looking at oil production closer to 3 million bpd,’ said Thomas Pearmain, African energy analyst at IHS Global Insight. ‘Production will be pretty flat from now through until about 2011 and then we will see a number of very big projects come on over the following three to four years.’”

read more: Reuters

According to the press release, “CNOOC Limited (the “Company”) announces that an investor group led by AIG Asian Infrastructure Fund II, L.P. (“AIGAIF”), GIC Special Investments Pte. Ltd. (the private equity arm of the Government of Singapore Investment Corporation (“GIC”)) and American International Assurance (“AIA”) have invested approximately US$210 million in the equity shares of the Company. The share placement closed on April 7, 2000. The Company will use the proceeds from the placement to finance its capital expenditure and working capital requirement as well as to repay its existing bank debt.

AIGAIF, with US$1.7 billion in commitment, makes equity and equity-linked investments in infrastructure and infrastructure-related sectors in Asia. American International Group, Inc. is the sponsor and GIC is the principal investor of AIGAIF. The principal adviser to AIGAIF is Emerging Markets Partnership.

GIC is a fund management company entrusted with the mandate to manage Singapore′s foreign reserves.

The Company′s Chairman and CEO Liucheng Wei emphasized the significance of this investment: “With this investment, we gain access to international financial market to fulfill our growth plans for 2000 and beyond. We have set a clear goal for the Company: to establish ourselves as one of the world′s premier exploration and production companies. Offshore natural gas is an increasingly important source of clean and reliable energy for China and will be a key growth area for the Company. We are pleased to have support from sophisticated international investors such as AIGAIF, GIC and AIA.”

The Company was formed on October 1, 1999 through the reorganization of parent company China National Offshore Oil Corporation (“CNOOC”) and is one of the world′s largest exploration and production companies. The Company dominates the offshore oil and natural gas exploration and production in China. During the 12 months ended 1999, the Company had US$1.8 billion in revenues, US$495 million in net income and averaged daily production in excess of 210,000 barrels of oil equivalent. As of December 31, 1999, the Company had reserves of approximately 1.8 billion barrels of oil equivalent.

Through CNOOC, the Company has the exclusive right to enter into production sharing contracts (“PSCs”) with international oil and gas companies to conduct joint exploration and production activities offshore China and to sell such petroleum in China. Under the PSCs, the Company has the right to acquire up to a 51% participating interest in any oil or gas field discovered in the contract area after the foreign party has independently undertaken exploration and discovered commercial quantities of oil or gas.

CNOOC Ltd. is the largest producer of oil and gas offshore China and is one of the largest independent oil and gas exploration and production companies in the world with net proved reserves of approximately 1.8 billion barrels-of-oil equivalent as of December 31, 1999.”

Read more: Press Release