Poland says it received sharply lower than expected supplies of Russian natural gas this week via Belarus, which made it harder to send gas back to Ukraine. Russia cut supplies to Ukraine as part of its program to back separatists in the east of the country. Poland consumes about 16 billion cubic meters of gas each year, mostly in the winter.

Poland's state-owned PGNIG SA said deliveries from Gazprom were as much as 24% below contract levels early this week and as a result the Gaz System SA pipeline operator cut off all gasflows to Ukraine. Ukraine transport network firm Ukrtransgaz said yesterday the cut was a Russian move “to disrupt reverse deliveries from Poland.” PGNIG also said its storage tanks are full now and moreover it has the ability to import 7.5 bn cu m of gas from Czech or German supplies if needed.

Russia's Pres. Vladimir Putin says reverse gas shipments are “illegitimate” and it has a right to block them although countries like Poland and even Germany say their contracts don't give Russia a veto over how they use the gas they buy. Ukraine, which produces 20 bn cu m of natural gas/year, needs about 33 bn cu m to survive the winter.

This is the last time Putin can play his Siberian gas card as Poland will have built its own natural gas liquefaction port on the Baltic Sea by next autumn. This would open the markets in Poland and its neighbors to natural gas from other sources including the USA.

The ruble is weakening against the dollar while the Russian stock index, the Micex, is also weak. Tomorrow the European Union countries will either apply new tough sanctions against Russia—or not. The vote is today and depends on whether the military truce with Ukraine is being observed by Russia.

While Poland and the Baltic trio are firmly backing Ukraine (in part because they have Russian-speaking minorities like Ukraine) a weak link is Finland where the Social Democrats (in the ruling coalition) oppose sanctions.

*Emilio Botin died last night at age 79 of a heart attack. The Jesuit-educated provincial from Santander turned a small family-controlled regional bank ranked 7^th in Spain into the global financial powerhouse, Banco Santander, SAN. The share fell today.

Our main interest at SAN is who will become the head of the bank from the 5^thgeneration of the Botin family. Emilio Botin had 6 children and his brother's family also own shares in the family business. But while the family are in control, there are many different branches.

The board has named Ana Patricia Botin, Emilio's eldest daughter, who also was her father's choice, to succeed him as chairperson. She currently heads the key UK operations of SAN. This will have revolutionary impact in macho Spain and macho Latin America—and maybe even in the USA where SAN operates in retail and investment banking, consumer finance, global business banking, and wealth management.

Separately, Eduardo Garcia (in www.sentidocomun.co.mx) reports that SAN's Mexican sub,Grupo Financiero Santander, signed a breakthrough jv with American Express for credit cards which offers points to users and cross sells insurance to them. The AXP card will work globally.

While Eduardo is too polite to say this, it is a breakthrough exit from the Visa-Mastercard hold on bank card issuance, and not just Down Mexico Way.

*With sterling down on the Scotland scare, I'm looking for a UK share without great dependence on the celtic north to replace our just-sold Canadian pair. Diageo which bottles Scotch whiskey is out.

Here is our pick with full credit to Geroge Fisher who writes My Investment Navigator, a newsletter and suggests buying a mini-Chicago Bridge & Iron (CBI, sold) called AMEC. It trades as AMCBF or AMCBY and is at $17.75 for the F and $54.75 for the Y shares so I am buying the unsponsored rather thant he 3:1 ADRs. It is not cheap, with a p/e ratio of just over 18 according to The Financial Times, which alone among analysts counts a pending acquisition. And it pays a nifty 4% dividend. It is run from Knutsford, in Cheshire. Its CEO is Samir Brikho who is a very exotic Swedish-born Briton with a taste for renewable energy. This is a turnaround and acquisition play. It reports in sterling but Mr. Fisher has converted the numbers into US$. I have reversed this where I can.

In H1 it reported revenues up 4% to £1.858 bn and before tax income of £152 mn, down 7% and 4% respectively from H1 2013. It expects full year revenues of £250 mn and before tax earnings of £25 mn. It raised its dividend 10% in sterling, on which more below. The order backlog was £4.2 bn at midyear.

Over to Mr Fisher with my comments and adds in brackets:

“Amec PLC, much like larger CBI, designs and builds upstream projects (offshore prodction facilities), midstream (LNG export and import terminals), and downstream (oil refinerines, chemical plants). North and South America [generated] 56% of revenues and 66% of EBITDA [earnings before interest, taxes, depreciation, and amortization, or cash-flow]. About 30% of its revenues [came from] Europe. [The rest of the world generated the remainder. Clients were mainly major oil and gas companies.

“This year estimated consensus EPS [is] between $1.31 and $0.96. With 2013 comparables of $6.64 bn [in revenues] and EPS of $1.39, [it] paid $0.67/sh in annual dividend in 2013 and is anticipated to pay $0.73 this year.

[Amec's pretax profit fell to £83 mn from £118 mn in H1 2013. The H1 release blamed lower exploration in key North Sea markets was only partly offset by growth in clean energy and Middle Eastern markets. It also blamed the rise of sterling against the US$ and the euro, by 3.3% and 3.7% respectively for the drop in sales and profits.]

“Amec is in the process of buying Swiss-based Foster Wheeler (FWLT-Q) which should increase its business, to be completed by year-end. FWLT comes with its own $3.4 bn order backlog and the company believes that its tradition strengths in offshore oil and gas projects are complemented by FWLT's greater presence in refining. The merger should bolster Amec's position in FWLT strongholds: Latin America, Saudi Arabia, and China. Management expects the acquisition to be 'double-digit accretive in the 1^st 12 months (2015.) Most analysts offer revenue and earnings forecasts without including FWLT. [Amec is paying £1.9 bn for Foster Wheeler.}

“The combined company is moving away from fixed-price contracts. 'Cost-plus' contracts are much less risk [and now cover] 72% of current revenues and 77% of order backlog contracts. [These avoid the risk of cost overruns wiping out profits.]

“Amec currently pays a semiannual dividend. The most recent was $0.24/sh payable in Nov., a 10% increase in the iterim dividend over last year. It paid $0.67 last year and is expected to increase to $0.76 in 2015 and $0.86 in 2016. The Q2 dividend has been around 2x the Q4 divident. Unlike tradition US payments where each quarter is about the same, [it has] a more vaiable and less frequent dividend schedule. Amec has a 3-yr dividend growth of ~15%. CBI has a miniscule dividend. Amec is less volatile and has no current long-term debt. Amec has been improving its ROIC (return on invested capital.)

“It is important for Amec to successfully integrate Foster Wheeler. Revenues have been fairly stable over the [last] 3 years and Foster should be the diversifying boost Amec needs to return to growth. The underlying markets are expanding internationally.

“Investors looking to diversify from the typical larger cap [exploration & production area], high-risk small cap exploration, and oil services should review Amec. I expect Amec to receive better brokerage coverage in the US. Amec could surprise investors to the upside on a total return basis.”

Vivian agrees. Even if Scotland the brave bravely or stupidly decides to go it alone it will still need to spend on its offshore fields.

Amec is a historic firm put together by a merger in 1982 of Leonard Fairclough, est. 1883, with a UK group followed by another. In 1996-2003 it took a stake in Spie Batigngolles of France from Schneider which it eventially restructured to control the engineering side. In the current century it has been a serial acquirer in the US, Britain, Slovakia, Australia, and Canada, mainly in nuclear safety and environment, while it exited railway, construction, plant leasing and some other engineering businesses. It employs about 30,000 people in 40 countries around the world. There are 300 mn shares out equal to 100 of its sponsored Y ADRs.

*We now know why the stock of our Arab generics drug company Hikma Pharma have been trading down. It is the impact of the Dubai primary listing of the Jordanian company. Dubai saw a stock selloff earlier this week because a large Emirates building firm,Arabtec Holding, which has been in trouble since June, is losing the backing of the Sheikh of Abu Dhabi after its CEO refused to sell a part of his 28% stake. HKMPY.

*Teva is being sued by the US Federal Trade Commission on anti-trust grounds for collectively delaying a generic version of AbbVie's bestseller testosterone replacement drug Androgel. After AbbVie filed what the FTC calls “baseless” patent lawsuits against potential competitors, TEVA signed a settlement getting fees from AbbVie in return for not fighting the lawsuits along with a supply agreement for another unrelated generic of cholesterol med Trico.

*Novartis is suing Dr Reddy over its filing an ANDA with the US FDA for making a generic of NVS' Gleevac (imatinib mesylate). It treats myeloid leukemia. The lawsuit is in a Delaware court for patent infringement. We sold RDY so we can root for NVS, the innovator, and also a generics drug maker in its own right via its Sandoz sub. NVS closed sales of ovr $4 bn for the drug and said to the court that it would be “substantially and irreparably dmanaed and harmed” if the DRY “infringement is not enjoined.”

*Royal Bank of Canada has begun coverage of Liberty Global plc, LBTYA, with an outperform rating.

*Cosan whose shares have been falling issued a notice to fund shareowners of America Latina Logistica warning them against short selling as the two firms cement their merger. CZZ sub Rumo is the acquirer. Brazil is insider-trading heaven.

*Areva has been put on creditwatch negative by Standard & Poor's and risks being deemed non-investment grade. The nuclear power engineering group is a quango, state-controlled but with private shareholders. We sold over political interference in its management during the Sarkozy govt. Your editor likes nuclear but dislikes quangos after living through the looting of Elf Aquitaine during the Mitterrand presidency, also after a non-expert was parachuted in as CEO.

Fund notes:

*Nomura has cut its forecast for South Korean growth this year to 3.5% from 3.8% and also trimmed its inflation estimate to 1.5% from 1.8%. Nomura now expects the S. Korea CB to engage in monetary easing and cut the policyrate to 2% from 2.25% to stimulat growth. It already cut the rate from 2.5% last month. Thank to Michael Kurtz from Hong Kong for sending me this report in English.

Nomura thinks that an expansionary 2015 govt budget with fiscal stimulus and CB easing will produce growth of 4% next year, higher than consensus, and that inflation will hit 2.5% then. Nomura also expects the Korean Won to rise and in particular to outperform the Yen. It argues that Japanese should invest in Korea equities because of upside from foreign demand and enticing p/e ratios. Thanks to

We own Korea Fund although we are not in Japan. KF shares rose today but are still at a 9.6% discount from net asset value. It is managed by Allianz of Germany which also runs Pimco.