Jun 2000

It is more than a year since United Nations sanctions were suspended and the authorities said they wanted to attract foreign investment, but high hopes for the development of a new, investment-welcoming Libya have yet to be realised.

The outstanding arranger of loans for the energy sector during the 1990s was, without doubt, Chase Manhattan. No other bank even came close to matching Chase in either the volume or number of loans for the sector. In the overall energy sector Bank of America came closest, but was still adrift of Chase by some $66.5bn over the decade, closely followed by Citigroup in third place.

As the November 2000 deadline approaches for the UK’s new electricity trading arrangements (Neta), introducing a new market-based method of trading electricity, competition to launch a successful online electricity exchange is hotting up.

New types of projects, the recovery of developing countries from economic crisis and environmental concerns have spawned a new type of energy deal.

Deregulation has highlighted the need for rapid expansion of generating assets.

At 125 years old, Conoco is ageing well – in fact, it’s looking better than ever. A fully-integrated oil company, based in Houston, its operations extend across five continents. A venerable mainstay of the US oil industry, it has regained its independence after 18 years as a subsidiary of DuPont. In the meantime, it has reinvented itself, achieving a dramatic improvement in performance that won it the 1998 top rating for exploration and production from Schroders, which had put it in 15th place – the bottom of the list – in 1992.

There are signs of a recovery in Latin American energy project financing, but the process is slow, as the region’s economies struggle back to their feet.

Alberta Energy Company’s (AEC) president, Gwyn Morgan, is on a single-minded mission to build a “global champion independent” and no one in the Canadian oilpatch is scoffing.

Since the recent recovery in oil prices, the prospects for Middle East oil producing economies have improved sharply. This has translated into a steady volume of energy financing, with several high-profile projects set to close major financing packages in 2000.

An El Dorado, Kansas-based independent energy company has turned the tables on Murphy’s Law: “What can go wrong, will.” In fact, everything seems to be going right for Murphy Oil Corporation.

Foreign banks stopped lending to Russian companies after the financial crash of August 1998 destroyed their trust in the creditworthiness of a country that had defaulted on $45bn-worth of treasury bills and devalued its currency at the same time. Now the European Bank for Reconstruction and Development (EBRD) is trying to persuade them to give Russia another chance.

While activity in most other operating arenas has ebbed and flowed with fluctuating energy prices, oil and gas operations in the deep-water Gulf of Mexico are charging full-speed ahead.

Embargo barriers and an oil famine have failed to bring the Castro economy to its knees.

THE FRENCH government’s politically motivated decision not to use the draft gas law to change the status of Gaz de France (GdF) and open its equity, as it had been tempted to do, will cause difficulties for the gas utility, already handicapped by the tardiness of the law which will not be enacted in time for the 10 August opening of the EU market.

The downstream oil industry’s traditional business model focuses on selling the output of refineries rather than on satisfying customer needs. Control over the early stages of the value chain has historically been key to long-term success and profitability for the vertically-integrated major oil companies. However, the commodity nature of many refined petroleum products, and the pressures of globalisation are forcing companies rapidly to shift their emphasis, writes Neil Thomas, manager, energy practice, Arthur D Little, London

Russia’s government under the new president, Vladimir Putin, was grappling with an energy sector close to collapse after news of falling oil prices and the worsening open conflict between Gazprom and UES. No-one was convinced when the government gave the preliminary approval for an ambitious building programme of up to 38 new nuclear reactors over the next 20 years. The Russian Federation’s powerful Atomic Energy Ministry raised the prospect of boosting the country’s nuclear power capacity from its present 14 per cent to 33 per cent by 2030, in a move that would considerably reduce the nation’s dependence on gas. But the plan was immediately labelled a “nuclear fantasy”. Russians have seen it all before.

Many countries in Europe have elected to set up their own power exchanges, in some cases electronic clearing houses using the internet to streamline futures and other dealing. But is there room in the market for them all?

Recent developments offer support for the development of a radical new way of thinking about network utilities, what they own and what they do. How will these new entities operate and what is the potential impact on other players in the market?

Entering new businesses is a desire driven by the need to grow and generate value for the shareholder. Diversification and globalisation are, however, complex strategic processes that require thought, deep analysis and nerve

Power reliability is the hot energy issue in the US, notably as it’s the heat that seems to bring the system down. How can utilities address this?