Biofuels pump up price of wheat
Wheat prices rose on the news that UK grain was once again likely to be used in bioethanol production after the UK government’s announced that it had backed moves to boost biofuel levels at petrol pumps.
Westminster yesterday said that motorists across the UK would now see a greener fuel available on the forecourts with the introduction of E10 at petrol stations in September.
“Following a consultation with drivers and industry, the introduction of E10 fuel, which is a mixture of petrol and ethanol made from materials including low-grade grains, sugars and waste wood, will boost the government’s ambitions to reach net zero by 2050,” said Grant Shapps, the Secretary of State for Transport.
The bio-ethanol plant operated by Vivergo Fuels at Hull in the north of England, which hadbeenmothballedforalmost three years, will reopen on the backofwhattheownerstermed the“certaintyofdemand”created by the mandating of E10 petrol, which must contain 10 per cent renewable fuel.
“Now that E10 has been mandated and the environment is more favourable, the plant will help cut transport CO2 emissions by up to 750,000 tonnes per year, the equivalent of taking 350,000 cars off the road,” said Dr Mark Carr, group chief executive ofabsugar,whichownsthe plant.
He added that the move would re-boot the UK’S £1 billion British bioethanol industry.
“With the government’s announcement to introduce E10 to UK vehicles and improved market conditions,wearere-openingthe plant and will start manufacturing bioethanol in early 2022.
Anderson Anderson & Brown Consulting, part of the Anderson Anderson & Brown accounting group, has bolstered its senior team.
Julie Arbuthnott has been with the consulting business for two years and has been promoted to managing consultant. She works with many clients on service design and digital projects and has taken a leading role in enabling client transformation programmes.
Glenn Hogg has joined the firm, also in the role of managing consultant. His appointment follows a “very successful career” in a global innovation and transformation consultancy, where he latterly supported the Cabinet Office with their EU exit plans.
Both Arbuthnott and Hogg will be based out of AAB’S Edinburgh office.
The firm said that both appointments follow a period of growth with an increase in client demand across the “change” and business growth services.
Macfarlane Group, the Glasgow-headquartered protective packaging specialist, said it is well placed to benefit when the UK economy begins to recover after booking a “resilient” full-year performance, sending its shares sharply higher.
During 2020, sales from existing custo ers benefited from underlying strength in the e-commerce, household essentials and medical sectors as a result of the pandemic, the firm noted.
This was partially offset by weaker demand from those sectors most affected by Covid-19 – automotive, aerospace, high street retail and hospitality.
Sales at the group’s core packaging distribution business lifted 2.6 per cent, yearon-year, to £201.7 million, as part of overall turnover of £230m, marking a rise of 2.1 per cent. Profit before tax rose 9.6 per cent to £13m.
Headquartered in Glasgow, Macfarlane employs more than 850 people at 31 sites, principally in the UK, but also in Ireland, Sweden and
Holland. That headcount is down by about 60 as a result of restructuring actions.
Sales have also benefited from the 2019 acquisitions of Ecopac and Leyland Packaging, as well as the January 2020 takeover of Armagrip.
Chief executive Peter Atkinson said discussions were “well developed and well advanced” regarding fresh bolt-on deals.
The latest results showed that sales at the group’s manufacturing operations dipped 0.9 per cent to £28.3m last year. Strong demand from the food, medical and household essentials sectors in the labels business was more than offset by weaker demand from the aerospace and automotive sectors in the packaging design and manufacture business.
The board is proposing a final dividend of 1.85p per share, amounting to a full-year payout of 2.55p, compared to the prior year dividend of just 0.69p which was impacted by the cancellation of the proposed final payment of 1.76p amid Covid cash conservation measures.
New finance director Ivor Gray, who has been with the group for more than two decades and recently replaced the long-standing John Love, said the dividend strategy was back on track.
BP and Total laid down markers this month signalling their intent to accelerate energy transition when consortia led by the oil giants secured more than half of the 8GW of offshore wind project leases auctioned under the Crown Estate’s Offshore Wind Leasing Round 4.
And just this week Exxon has agreed to sell a £700 million package of their UKCS assets to NEO Energy, which is not a surprise given the pressure Exxon have come under at a corporate level to embrace energy transition.
The US majors have probably been slightly slower than their European contemporaries on this front, but with Exxon also now is discussions to support the
Acorn Carbon Capture and Storage (CCS) project at Peterhead, this demonstrates the issue is very much a live one.
Total and Chevron have also been divesting portfolios of North Sea assets and this exit from non-core mature assets allows capital to be redeployed in geographies where they can meet their target investment criteria – or into energy transition assets, particularly offshore wind, solar, CCS and hydrogen.
This big push is driven by their institutional investors demanding a pivot which would have been unthinkable on this scale only a few years ago. North Sea assets coming on to the market are being acquired by smaller independents backed by Private Equity (PE) and commodity traders, (for example Viaro backed Rockrose and Hitec backed NEO Energy) and this will continue to be a theme.
PE funds who have invested in these assets would have a typical investment lifecycle of five to seven years and the time is coming for them to cash out. Traditionally, they would go to the listed markets, and while specialist energy funds are still interaccess
ested in oil and gas, the appetite of generalist funds to invest in the sector has cooled given their greater sensitivity to Environmental, Social and Governance investing.
There is some creativity being adopted as a result of this, a case in point being Chrysaor’s reverse takeover of Premier Oil, which ticked many boxes by addressing Premier's leverage issues, while providing to the markets desired by Chrysaor.
While the sources of capital for hydrocarbons has pivoted away from tradition in recent years, commodity traders are helping to fill that gap both on the equity and debt side and this is driving M&A – Viaro Energy acquiring Rockrose being one example, while Mercuria has a substantial interest in Tailwind Energy, who have been and will continue to be acquisitive.
M&A activity will also benefit from a more realistic approach by sellers who now take the view that valuation gaps can be met because there is greater consensus as to the longerterm price of oil. Using a variety of contingent and deferred consideration structures, often linked to particular milestones or oil and gas prices, deals which may have fallen over because price consensus could not be reached now have a greater chance of success.
The events of 2020 have accelerated the move to energy transition across all areas of the sector and it will be the key driver for M&A activity in 2021 and for many years to come.
Rosalie Chadwick, Partner and Global Head of Oil and Gas, Pinsent Masons