Apr 2000

German energy markets have undergone a profound transformation since the adoption of the new energy law in April 1998. Until then, real competition existed only in the petroleum and products sector. Now, it is being felt throughout the energy economy, although not with equal intensity. The EU guidelines for electricity gave a liberating push to the power market, while in the gas industry developments seem to be much slower, awaiting the EU Gas Directive, which comes into force in August.

Alberta’s multi-billion dollar natural gas and petrochemicals industries face a pivotal showdown as the provincial government edges closer to implementing a distinct royalty on ethane.

The pain of the oil price collapse of 1998 still lingers, and operators remain reluctant to take on new field developments. Survey by Martin Quinlan

A recovery in the global economy, the mass of consolidation and asset-swapping in the US power industry and European Union liberalisation all contributed to a surge in energy project financing deals in 1999, with many institutions seeing record volumes, and most appear confident that trend will continue through 2000.

In an industry facing deregulation, intense merger and acquisition activity, a pressing need to reduce costs and the challenges of e-commerce in the much-heralded “new economy”, it is, perhaps, not surprising that management consultants are currently much favoured by energy companies.

In an effort to revitalise its flagging upstream oil sector, which now produces about a quarter of the output of 20 years ago, Chile’s state-owned oil company, Enap, has just introduced a programme to invite foreign oil companies into its tightly held Magallanes Basin fields. The region’s gas industry also appears poised for growth, writes Paul F Hueper, from Tierra del Fuego

In January, the board of the New York Mercantile Exchange (Nymex) approved a demutualisation plan, which will separate trading privileges from equity ownership. Members are due to vote on the plan this spring. David Townsend recently spoke to the exchange’s chairman, Daniel Rappaport

Although wholesale electricity sales were deregulated in 1996, retail market deregulation is moving much more slowly, but it is moving ahead.

US utilities are not only facing major upheaval from the current wave of deregulation, but are having to evolve in a new market where sector convergence suggests the multi-energy business will be the dominant force of the future; and all this has to embrace the new era of e-commerce.

While the US can rightly claim to be leading the trend to energy sector convergence, the European industry is facing similar challenges. Germany’s RWE has ambitious plans for the future.

The race is on to find new technologies to increase natural gas output and cut production costs to ensure the fuel remains competitive.

Offtake and fuel-supply contracts have always been an important component of electricity sector M&A transactions. However, with the liberalisation of electricity markets across Europe and the rapid commoditisation of the wholesale marketplace, there has been a fundamental shift in the contract structures that are being used. Long-term, asset-focused contracts have given way to standardised commodity contracts as markets have become deeper and more liquid, writes David Warren, Allen & Overy.

Derivatives transactions are useful tools in managing risk, but managements still have to be vigilant.

Just when it looks like Turkmenistan is about to make the breakthrough into Western gas markets, the Russians make them an offer that they will have difficulty in refusing, reports Isabel Gorst from Ashkabad

Oil production poised to climb

In the competitive utility markets, downsizing and outsourcing are often extolled as quick and easy panacea to cut costs at a stroke. But does the process of slimming down necessarily bolster shareholder value?

Many people thought that powerline telecommunications (PLT) was dead, the final nail in the coffin being the withdrawal of NOR.WEB from the PLT arena. That couldn’t be further from the truth

The Polish government has announced an intensive programme aimed at the introduction of full electricity competition by the end of 2005. But exactly what structure will the market take and how will this transition to the free market be achieved?

Today’s energy supplier is just as likely to sell insurance, credit cards and car repair and recovery services as it is gas and electricity. But how, in the drive to diversify in search of shareholder value and “multi-service” status, do you avoid a corporate identity crisis?

Energy efficiency has a place in a responsible industrialised society. But don’t expect it to solve the global warming problem on its own. Save energy, yes; but use the proceeds to finance the transition to a sustainable future

The world's use of energy will continue its rapid growth at least to the year 2020, particularly in the developing nations, according to the US Energy Information Administration's (EIA) “International Energy Outlook 2000" released last month. Under current policies, EIA estimates overall energy consumption will rise 60 per cent from 1997 to 2020. Faster than average growth is expected for the developing nations (121 per cent), natural gas use (104 per cent), and net electricity consumption (76 per cent).