Sep 2000

E-commerce is revolutionising the way that energy companies carry out procurement and trading activities. In some cases, the e-element is simply a case of replacing the telephone as the conduit for doing business, while in other cases, the New Economy is redrawing the energy industry landscape and creating partnerships and collaboration between competitors.

The refining business has seen an upturn in profitability this year, at a time when crude oil prices have been high. Various unusual factors are at work.

By using modern supply-chain management and e-business to move from an organisation structured as a series of separate silos to one dominated by demand-pull, the refining industry would be managed more effectively and be significantly more profitable, write Kirk Williams, managing director, EMEA, supply chain division and Paul Horrell, director, petroleum industry business unit, AspenTech UK

The old guard is being broken up and outsiders now dominate the board of directors. Expectations are high that sought-after reforms and restructuring will now be implemented.

Although a new deal has been worked out for oil from the Grand Banks, offshore Newfoundland, a row is brewing over the schedule for the natural gas developments and the type of production system that will be used.

On 1 October 1999, the new gas trading arrangements (NGTA) for the UK were introduced by the Office of Gas and Electricity Markets (Ofgem). On 21 July 2000, Ofgem published NGTA: a review of the new arrangements and further development of the regime. This is significant from two perspectives: firstly, the UK is at the vanguard of the liberalisation of gas trading in Europe and can provide some signposts as to how that trade may develop; and, new electricity trading arrangements (Neta) are scheduled to be introduced in the UK in November, based on a similar model to NGTA.

Advances in technology and rapid growth in the volume of stranded natural gas reserves have led to an upsurge in gas-to-liquids projects.

In Petroleum Economist’s Energy Finance Polls 2000, the Americas region polls were dominated by financial institutions, accountants and law firms based in the region. Few non-Americas firms in the three categories achieved high rankings.

Following the oil industry’s wave of mergers, the second-, third- and fourth-largest integrated oil firms are now European. Petroleum Economist’s analysis shows that the three Europeans lead the Americans in financial performance.

The future holds many possibilities for equipment re-use in the oil and gas industry. The US is already an area that capitalises heavily in handling the removal, marketing and re-use of offshore structures and modules, some of considerable magnitude. In contrast, the re-use of equipment in the North Sea has, to date, been limited. It is precisely this area, however, that is set to benefit from a great deal of used equipment availability over the next two to three decades as decommissioning of North Sea platforms takes off.

A recent study adds weight to a growing consensus in the industry that the increase in energy use is, at last, relinquishing its connection to economic growth. The data relating to world energy consumption during 1999 shows the evidence of a decoupling, which has become particularly strong in developed countries.

The Commission has asked the French and Belgian governments why they haven’t introduced secondary leglisation to comply fully with the gas directive.

Just as the fate of Hyder, the Welsh power and water utility, appeared to be sealed, bringing a particularly acrimonious chapter in European power sector consolidation to a close, another fight loomed on the horizon, threatening to scupper the deal at the eleventh hour. Western Power Distribution’s (WPD) bid of $840 million for Hyder appeared to have beaten a rival bid from Nomura, the Japanese investment bank, when Severn Trent, another UK water utility said it would begin immediate legal action challenging the break-up of the Hyder group.

Significant business opportunities for renewable energy technologies will emerge in the 21st century and the firms that invest first will be the big players of tomorrow

China’s government is to carry out a radical restructuring of the domestic power industry and to introduce competition in generation. Foreign investors face a period of uncertainty during which all but the brave will wait and watch.

The energy merchant business of converting fuel into electricity and then offering this product to wholesale markets has become a highly competitive business.

The UK energy markets are amongst the most contestable in Europe yet they remain subject to extensive regulation. In the light of this, what impact have tough competition enforcement powers had on the energy sector?

Deregulation is often cited as the catalyst to opening up myriad opportunities for growth in the market for distributed generation technologies. However, there are virtually no signs of a rush for these technologies. Why is this?

Rising demand, global warming and competition are all driving private R&D investment in a multitude of directions, but is an effective compromise possible?