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Shenzhen power faces huge losses in oil deals: state media
Shanghai (AFP) Dec 1, 2008 Shenzhen-listed Nanshan Power, a state-owned thermal power generator, may lose two million dollars in unauthorized oil derivative deals with a Goldman Sachs subsidiary, state media reported Monday. The losses may widen further if global crude oil prices continue to fall, the official Shanghai Securities News website reported, citing industry sources. The Shenzhen-based company refused to comment on the potential losses when contacted by AFP on Monday. It revealed in October in a statement to the Shenzhen stock exchange that officials signed two unauthorized hedging contracts in March with J. Aron & Company, a Singapore-based Goldman Sachs unit, betting oil prices would rise. China's securities regulators ordered the company to cancel the illegal oil derivatives contracts for fear that it would expose the Chinese company to huge losses if oil prices fell too much. The company had received payment of 2.1 million dollars from J. Aron & Company on the first contract, which runs from March to December this year, and bet that oil prices would stay above 62 dollars a barrel. But crude oil prices have been falling sharply, slipping below 62 dollars since November, the level at which Nanshan Power must start paying the Goldman unit. Air China said last month its potential hedging losses stood at about 3.1 billion yuan (454 million dollars) at the end of October, from about one billion yuan at the end of September. China Eastern also said in its statement on Thursday it posted 1.83 billion yuan worth of potential losses from its fuel-hedging contracts as of the end of October. Related Links
Outside View: Energy crux of EU-Russia
Moscow (UPI) Nov 21, 2008 The 22nd EU-Russia summit, held in Nice, France, on Nov. 14, was largely symbolic, because its outcome was expected and predetermined long before the meeting. |
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