Oct 2000

While demand for gas in western Europe remains strong and is forecast to continue to grow, consumption in the eastern part of the continent is lagging. However, over the longer term, the predictions of a dash for gas in the region are expected to be fulfilled.

Expectations for the growth in consumption of natural gas around the world put the countries of western Europe at the head of the table of OECD consumers. To meet the burgeoning demand, European consumers will continue to rely heavily on imported gas, for, while European production continues to grow, forecasts show a widening gap between domestic supply and demand.

While there is some disparity between various member states on implementing the EU’s gas directive, the process is now firmly entrenched in the energy policies of most governments and the promise of a fully-liberalised energy market is now a reality.

It is unusual for Petroleum Economist to start any article with a disclaimer, but there is something about speaking to the Financial Services Authority (FSA) that induces paranoia.

While oil and natural gas prices have recovered and are near their combined highest level in history, exploration and development (E&P) spending has not recovered at the same rate. E&P company stock prices have lagged the price recovery even more. Share prices of major oil companies and independent E&P companies have not kept pace with share prices of companies in other industries, such as technology and telecommunications, or even the S&P 500. And the share prices of oil companies have not even kept pace with the increase in oil prices, the indicator they have tracked historically. As a consequence, many E&P companies find themselves struggling to convince investors they can create value during a time of strong product prices and cash flow, according to Arthur Andersen’s 21st annual Global E&P Trends, interpreted for Petroleum Economist by Victor Burk, managing director, energy industry, Arthur Andersen.

When four European Union member governments caved in to protestors, who were demonstrating against high fuel prices, by cutting taxes it brought only a mild rebuke from the European Commission and a request for the tax cuts to be explained. However, action is unlikely, or will take a long time.

Opec's September meeting saw the group announcing plans to boost supply by 800,000 barrels a day (b/d) from the start of this month. However, the market has, so far, failed to react to the increase, with prices continuing to rise and, reports David Townsend, it appears that the organisation may once again have acted too late.

President Vladimir Putin broke his journey to Japan in early September to attend a conference about production-sharing agreements (PSAs) that was taking place on Sakhalin Island in the Russian Far East. PSAs are one of the most important mechanisms for attracting outside investment, the president told delegates.

The discovery of big oil and gas fields in the deep-water Gulf of Mexico has consolidated this region’s position as one of the most promising energy provinces. But big isn’t always good enough. It takes huge deposits to justify the high costs of drilling and developing deep-water reserves, yet only about one-third of the discoveries so far have exceeded 200m barrels.

In response to last year’s downturn in the oil industry, Shell Expro Northern Business Unit Well Engineering, in partnership with key contractor companies, introduced the concept of “Delivering The Limit” (DTL). To date, DTL has achieved a reduction of 3.4 days for average well completion times, with all real-time operational data and lessons learnt captured using the EGIS SmarTrak database system. By Wouter Rensink, Shell Expro, and George Galloway and Mark Brinsden, EGIS

The EU’s proposal for a renewables directive is due for discussion during the next month. Whether the proposal qualifies as a directive, because of national price-support mechanisms, or that it may be in contravention of the Treaty of Rome, are issues for debate.

A STUDY* published last month by Trichem Consultants finds that new ethane-based ethylene capacity, to be constructed in the Arabian Gulf countries over the coming 10 years, will reduce the share of the ethylene derivatives market held by other producers by 5%. The new capacity will also impact on the market for propylene, which is produced as an ethylene co-product by naphtha crackers, creating opportunities for ventures outside the Gulf and also for refiners.

Like a patient receiving a shot of adrenalin, Canada’s oil and gas royalty trusts are enjoying a comeback, after two years of lacklustre performance, living in the shadows of high-flying financial and technology stocks.

Venezuela has taken another step towards opening up the natural gas sector to private investment. In September, the state-owned oil company, Petroleos de Venezuela, began the registration process for companies wanting to participate in a tender for gas concessions.

Britain’s National Grid (NG) raised the stakes in the UK’s pursuit of US power firms with news that it is to acquire the New York utility Niagara Mohawk for $3.0 billion in cash and stock, and $5.9 billion in debt. The move represents the NG’s third acquisition in the US where it has already spent $3.8 billion on the takeover of the New England Electric System (NEES) and Eastern Utilities Associates. It is the latest in a string of UK acquisitions in the US, including that by PowerGen (LG&E) and ScottishPower (PacifiCorp).

Everyone is well aware of its impact, but are electric utilities doing enough on e-business opportunities?

Surprising demand growth and incomplete, slow policy enactment have caused the deregulation of the globe’s largest power market to be accompanied by the highest price spikes in world power history

In 1945, the Trinidad and Tobago Electricity Commission (T&TEC) became the country's sole provider of electricity. Since 1963, the utility has used natural gas as its preferred source of energy

Ratings are essentially opinions on the ability and willingness of an issuer to make timely payment of its debt obligations and the expected recovery rate should a default occur

News that the introduction of New Electricity Trading Arrangements in England and Wales has been postponed will come as no surprise to its critics. Now due to go live early next year, what does NETA hold in store?