Cairn’s annus horribilis takes a fresh slide on Greenland news

cairn Energy has made a lot of money for its shareholders over the years but this one looks like being one to forget. First there was the troubled sale of a stake in its Indian business to Vedanta Resources followed by an environmental campaign against its planned exploration for oil in the waters off Greenland. Now it is trying to calm jittery investors after another well in the region failed to produce oil.

The Edinburgh company has so far drilled five wells with little return and says it will continue exploring, but this uncertainty over what exactly lies beneath the ocean in that part of the world is doing nothing for the share price, which is down by 30 per cent this year.

Cairn will continue its controversial Arctic exploration and is sticking to its aim of opening a multi-billion barrel basin, but after spending some $630m (£400m) so far on five wells in the area, the nervousness will begin to spread. Chevron, Exxonmobil, and Dong Energy are some of the big names with licences to prospect in the area and will be observing Cairn’s experiences with cautious interest.

The news from Greenland could not have come at a worse time, with analysts and investors in the sector still salivating over last week’s announcement that Tullow Oil had made the biggest oil discovery of the year off French Guiana.

There is growing anxiety that the Arctic region will not yield the oil bonanza that had been expected but Cairn insists its investors remain supportive. The results from three more wells are expected before the end of the year and those investors will hope their patience proves worthwhile.

Italian tycoon’s ‘voluntary’ tax plan winning support

could an Italian entrepreneur have found the answer to the Italian debt crisis? It seems improbable, but Alessandro Profumo, a former chief executive of UniCredit, has proposed a €400 billion (£350bn) wealth tax. It has won support from his fellow tycoons who are suffering a loss of income anyway due to the plummeting markets.

Italy’s bond yields are rising, even with the alleged promise of support from the Chinese, so a voluntary tax among the wealthy elite would have broad appeal if it could help solve the financial crisis in one quick manoeuvre.

If only the Greeks could produce a similar would-be saviour, though he or she may need a magic wand to keep the country out of the bankruptcy courts.

The government has announced a two-year property tax to raise €2bn to cover this year’s expected budget shortfall. The tax is to be collected along with monthly electricity bills and should ensure the release of the next tranche of bail-out funds. Elected officials are also being forced to sacrifice a month’s salary, but this is seen as a sop to public outrage at the austerity measures. Greece is struggling to keep its reforms on schedule and the Germans are clearly wondering how much longer they can continue to prop up the ailing economy. Angela Merkel, the chancellor, insists that Greece has to be supported or risk seeing the crisis spread.

Worries that Greece is about to default has pushed interest rates on the country’s ten-year government bonds to a new record of over 24 per cent and the Greek government must be thankful that Merkel continues to talk up its chances of pulling through the crisis.

Others are not so confident and US treasury secretary Tim Geithner will be in Poland this week for a rare meeting with eurozone finance ministers with a message from Washington that the European mess is adding to his troubles back home.

The future of the euro, no less, hangs in the balance and the markets will continue fretting while the search for an answer continues.

As Europe burns, the euro-sceptics may be wearing broad told-you-so smiles but the UK is not immune from the carnage. The Commons treasury select committee will today begin taking evidence on how the eurozone crisis may impact on the UK and it will prove instructive.

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