Cheap Oil, how low it can go???

Since June, Oil prices  has dropped from about $115 for a barrel to $80 or so, a reduction of more than  a quarter and its  being forecasted the prices will likely to fall further as there is no anticipated huge increase  in demand  for the next few quarters.

If prices settle at today’s level, the bill for oil consumers will be about $1 trillion a year lower. That would be a shot in the arm for a stagnating world economy. It would also have big political consequences.  For some governments it would be a rare opportunity & for others a threat.  Countries like India, Indonesia  and few others  find the low prices  reason enough to fast-forward oil sector reforms and decontrol retail prices specially Diesel, by far the most used petroleum product.

If speculators truly are the major cause of the price decline, then it increases the chance of a faster recovery in oil prices.  The other reasons could be the result of unexpected and maybe short-lived developments. War torn Libya somehow pumping 40% more oil.  Saudi Arab’s decision to boost output to protect its market share and hurt American shale producers and see off new developments in the Arctic.

The prices may rebound once U.S. shale producers start decreasing production. Its believed that 33% of U.S. oil production becomes uneconomical at $80 a barrel. In fact, according to analyst at $80 a barrel, oil production would rise only 5%, and at $ 70 production growth will  halt entirely.  Almost similar is the case for Canada’s  sand oil.

Saudi Arabia, which derives 80% of its government revenue from oil and dominates the cartel's actions, needs $95-per barrel oil to remain solvent. Venezuela @ $120, Iran @$140 though  the  production cost  of oil  which could be much lower say  $5 - $30 or so.   These countries aggressive foreign policy, investment decisions, extravagant spending schemes etc are  based on such numbers.  So they will try to somehow push the prices up for their own survival. So cheaper oil is welcome, but it is not trouble-free.

Platform Specialty Products Signs Definitive Agreement to Acquire Arysta for Approximately $3.51 Billion

Platform Specialty Products Corporation (NYSE:PAH) ("Platform"), a global specialty chemicals company, announced  that it has entered into a definitive agreement to acquire Arysta LifeScience Limited ("Arysta"), backed by the Permira funds for approximately $3.51 billion, subject to regulatory approval.

Arysta has reported net sales of $1.5 billion for the full year 2013 and regions such as Latin America, Africa, Central and Eastern Europe, China and South Asia represented over 65% of Arysta's sales in 2013. 

Arysta's President and Chief Executive Officer, Wayne Hewett, is expected to join Platform's senior leadership team as its President and to lead Platform's three agrochemical businesses i,e  Chemtura AgroSolutions ("CAS"), Agriphar, and Arysta.

The transaction, which is expected to close in the first quarter of 2015, is expected to be funded through a combination of cash on hand,  debt, and equity. The acquisition will not have any impact on Platform's status as a U.S.-domiciled company.

FMC Corporation Announces Agreement to Acquire Cheminova for $1.8 Billion

• Cheminova a Denmark-headquartered multinational crop protection company.
• Broadens market access in key geographic regions.
• Expands position in existing crop segments and accelerates access to additional crops.
• Provides new technology applications, including research and formulation expertise.
• Enhances portfolio with complementary products and technologies
• Accretive to adjusted earnings in the first full year.
• Modifies previously announced separation process  ( Alkali + Lithium to be listed as a separate entity as FMC Minerals) with new plan to divest Alkali Chemicals only.  proceeds used to reduce acquisition-related debt.

source: FMC website