MarketLine Blog

Posts about Energy

Toshiba $6.3bn write-down


Originally the board of Toshiba wanted to sell just 19.9% of the semiconductor making business, which was expected to raise $2bn, maybe more. In hanging on to the majority of the business Toshiba would be able to maintain control over the business from which 80% of operating profit is derived. Yet the banks saw the matter differently. Whilst the sale of the majority of the business solves many problems, it creates a fresh set. The more the ‘crown jewels’ of Toshiba are sold off, the harder making a profit becomes…. Read more

OPEC: Supply restriction amid global oil glut


OPEC, consisting of 13 oil-rich governments, is the only true cartel allowed, albeit grudgingly, to operate in today’s global economy and it wields considerable power. In 1973 Arab members imposed an oil embargo on the US during the Arab-Israeli war which tripled prices in a matter of months. Three times in recent history OPEC has stepped in to shore up the oil market, and each time prices rallied within days of action being taken. It is fair to say, therefore, that OPEC is a force to be reckoned with. Or… Read more

Brexit – the meaning of a messy divorce for the Euro area.


The lending channel between many industries and banks in the Euro area has been far from normal since 2008. This factor puts Britain in a better position to negotiate Brexit next year. The Euro area will embark on a period of further unprecedented slowdown by detaching itself from the world’s fourth largest economy. Credit to industries coming from the banking sector is key for the region to grow as the single currency area has a bank-based model as opposed to a capital market model. Debt financing to companies is largely… Read more

Donald Trump: Incoming president likely to create bigger mess than his hair


Donald Trump’s policy detail is rather thin, but based on multiple and contradictory things he has said on the campaign trail, shrinking of the state via both reduced tax income and federal spending while promising to build a border wall and renovate infrastructure, protectionist stances on international trade agreements while promising a Brexit Britain a comprehensive deal, an expansion of dirty industries at the expense of environmental regulation, and undermined central bank independence. Donald Trump’s election to the Oval Office was considered one of the most divisive and bitter elections… Read more

Trump’s win is good news for US economy


Donald Trump’s whole mantra during his campaign (as evidenced by his rather natty headwear) has been to ‘Make America Great Again.’ In order to do this, he knows he must make the US competitive on the global stage. He has pledged to reduce taxes heavily for low and middle income Americans and also to make sure that the wealthy (including corporations) do not pay too much as that undermines jobs. This should help boost the currently questionable level of job creation and to increase spending power, which should in turn… Read more

IKEA use solar offering to reinforce green credentials


IKEA have made a headline grabbing return to the domestic solar panel market, only months after ending the relationship with their original partner, the Hong Kong firm Hanergy Thin Film Power Group. This time round, they have teamed up with one of the most established names in the market, Solar Century, to offer an affordable solar energy package. This will initially be available in three stores and online, with this being extending to all of their UK stores by the end of the summer. While IKEA takes pride in its… Read more

Fracking approval: In spite of public opinion


The decision to approve Third Energy’s application to begin exploratory drilling for shale gas outside of Kirby Misperton in North Yorkshire has been hailed as a landmark decision for the UK fracking industry. Many believe that it will open the door to a swathe of further approvals, while setting a precedent which could help rival firm Cuadrilla in their appeal against the decision not to allow them to frack up on the Fylde coast. However, industry chiefs would do well to keep their champagne on ice, as public opposition is… Read more

Denmark is a renewables leader, but its ambitious policy has caused problems


Denmark is one of the most progressive countries in the world when it comes to energy, and is aiming to be fossil free by 2050, in both electricity production and transportation. The optimistic strategy was announced in 2011. By 2020, the government aims to generate half of electricity from wind power. This ambitious policy is well on its way – the country generated 39% of its electricity by wind power in 2014, dropping slightly from the 41.2% generated in the first six months of the year. Former Climate Minister Rasmus… Read more

Shell to Acquire BG


Royal Dutch Shell is to buy BG Group in one of the largest energy company acquisitions seen in a decade. The deal is worth £47 billion ($77 billion), representing a 50% premium on BG’s share price as of 7 April 2015, and the combined entity will be the largest company in the FTSE 100. Shell is a vertically-integrated company, whose operations range from exploration and production of oil and natural gas, refining, petrochemical production, and marketing of fuels and other products. BG Group is more focused on upstream activities. In… Read more

The US is poised to become a net exporter of fracked gas in 2015


The US has now moved to a position where it can export fracked natural gas. Cheniere Energy, a company which initially spent $2bn building a natural gas import terminal is now building an export terminal, expected to be finished this year, allowing it to sell liquefied natural gas to other countries. The company’s Sabine Pass facility got the first approval from the Department of Energy to export to any country in the world. CEO Charif Souki said, “It’s a revolutionary thing, absolutely astonishing, that America will be an exporter of… Read more

BP expected to announce job cuts on its North Sea oil rigs, despite new field development


BP is expected to announce job cuts on the UK North Sea Oil rigs that it operates, despite having completed development of new wells only in December last year in the Kinnoull reservoir. The company controls the most important infrastructure in the North Sea oil fields and coupled with the recent downsizing of other operators in the area, such as Shell and Chevron, this move does not bode well for the future of North Sea oil and more broadly tight oil sources in general. BP recently completed a major development… Read more

Epic Shale: Investor exodus from Poland leaves wider questions for fracking


One of Europe’s largest shale gas markets by drilled wells has seen many companies wind up their exploratory operations, leaving Poland’s shale gas ambitions floundering. The companies cite a mix of bureaucratic entanglement and difficult geology as their reasons for exiting the market, with only state owned enterprises (such as PKN Orlen, Lotos and PGNiG) and a few well-funded global companies left prospecting. It is a far cry from former foreign minister Radek Sikorski’s vision of Poland becoming a “second Norway” in 2010. Emboldened by the US’s shale boom and… Read more

Forest products industry sees growth as construction experiences a resurgence


Globally, the forest products industry has seen a remarkable performance across the last five years, fuelled primarily by the Asia-Pacific region. The global resurgence in construction output, with the West finally starting to see a return to growth, has had a significant impact on forest products as industrial roundwood, sawnwood and wood-based panels are all important in construction. The global forest products industry grew by 11.4% in 2013, to reach a value of $817.8 billion, representing a compound annual growth rate (CAGR) of 11% for the period spanning 2009-2013. Growth… Read more

Increasingly stringent government regulations will change the face of the energy consumption sector


The energy consumption sector accounts for total energy consumption over a range of different end uses, such as industrial, transport, residential, and commercial. The issue of energy consumption is a contentious one, due to its inextricable links to contentious issues such as pollution and emissions, climate change, and the environment, as well as issues related to usage of nuclear power and fossil fuels. An ongoing debate about nuclear power as a source of energy remains. Proponents argue that nuclear power is safe and sustainable, and one which reduces carbon emissions,… Read more

Fracking in the UK- Some political players rally behind the technology


The hydraulic fracturing (fracking) process has allowed the use of horizontal drilling in shale rock to open up new gas reserves previously presumed to be technically unrecoverable. The process involves blasting fracking fluid into the drill well which splits the shale into fissures. The process requires a large amount of water, sand, and chemicals. Both shale and coal methane beds have become accessible through this technique. Whilst countries such as the USA, Australia and Poland have been pushing ahead with the technology, the UK has been slow and careful in… Read more

Will Europe price itself out of the chemicals industry?


Jim Ratcliffe, Chairman of Ineos, is a worried man. In an open letter to the President of the EU Commission José Barroso, published on 7 March 2014, he expressed his concerns for the future of the very industry in which Ineos is a major player: chemicals. Central to Mr Ratcliffe’s argument is the high prices of energy and feedstocks in Europe, which decrease competitiveness. Statistics from the Energy Information Agency and Eurostat bear out his premises. In the first semester 2013, for example, natural gas prices paid by industrial users… Read more

Ukraine reduces reliance on the Russian gas and imports more from Europe


Ukrainian state energy company, Naftogaz, has reduced gas imports from Russia by 30% so far in 2013 and will cut them further in 2014. At the same time imports from Europe will double, according to Ukraine’s Energy Minister Eduard Stavytsky. Imports from Europe are expected to reach 2-2.5 billion cubic meters this year, and no less than 5 billion cubic meters in 2014. The reason behind this move is the high price of Russian gas. While the sample average price of gas supplied from Europe by German firm RWE (RWEG.DE)… Read more

Fukushima incident keeps the Global Nuclear Energy Industry subdued


Introduction: Political constraints have contributed to nuclear energy declining in 2012 in both output and volumes. Industry Figures: The global industry contracted by -7.4% in 2012, to reach a value of $137bn, indicating a compound annual rate of change (CARC) of 3.9% in the period 2008-2012. Asia-Pacific and Americas were primarily responsible for the decline.  Japan’s continued reactor shutdowns contributing to the catastrophic decline. Elsewhere, in the US, the largest nuclear energy market, companies are feeling cautious about any further investment in the current macroeconomic environment. In Europe, Germany has ordered the… Read more

Greek government privatizing infrastructure and energy


Following a contraction in Greek domestic product worth at least 15%, the country has, since 2009, been hobbled by market reaction to negotiations with creditors culminating in an (overall) bailout worth $310bn. Greek debt now stands at 171% of GDP.  In part a reaction to this, the Greek government, led by prime minister Atonis Samaras, has put up domestic industry for tender or sale to the private sector. Depa, Greece’s natural gas corporation, is the subject of a bid by Gazprom: the Russian company, which already supplies 90% of Greek… Read more

Hydrogen-Powered Cars Seem to Be the Future of the Motoring World.


Honda Motor is one of the leading manufacturers of automobiles and the largest manufacturer of motorcycles in the world. The company also provides a range of financial services to its customers and dealers. The company has 390 subsidiaries and 102 affiliates all over the world. Since 1999 Honda has worked on fuel cell vehicle prototypes, with FCX-V1 becoming the first mass produced hydrogen-powered car. The future of cars powered by hydrogen is an exciting prospect. First of all, hydrogen as a fuel produces zero CO2 emissions. In addition, the development… Read more

Tough Competition by Chinese Solar Panel Manufacturers


Plunging prices in the photovoltaic (PV) solar panels market has caused a number of bankruptcies, mergers and acquisitions. Additionally, many governments are reducing feed-in-tariff subsidies as part of their austerity measures, affecting the affordability of solar panels for homeowners. With China now manufacturing around 60% of the world’s solar panels, Chinese manufacturers are at the forefront of the solar panel market. As the market consolidates, only those companies best positioned are likely to survive until solar panel prices recover. Suntech Power Holdings is a vertically integrated multi-national solar panel manufacturing… Read more

Siemens’ move from nuclear energy to renewable energy


Following the Fukushima earthquake and tsunami on the 11th March 2011, and the ensuing nuclear disaster, Siemens AG announced on September 19th 2011 its exit from the nuclear power industry. Siemens announced its withdrawal from the nuclear power industry with immediate effect as a result of the March 2011 Fukushima nuclear disaster and due to the position of German society and politics, however the company stressed it was not pressured by the German government. Although there is growing public and governmental distrust of nuclear power production volumes are forecast to… Read more

Impacts of Deepwater Horizon Oil Spill on BP Plc.


The Deepwater Horizon Oil spill took place in the Gulf of Mexico in 2010. The spill emanated from a seafloor oil gusher caused by an explosion of the Deepwater Horizon semi-submersible Mobile Offshore Drilling Unit, which was owned and operated by US company Transocean. Transocean was drilling for BP in the Macondo Prospect oil field about 40 miles (60km) southeast of the Louisiana coast. The explosion took place on 20th April 2010 and resulted in the Deepwater Horizon oilrig sinking two days later. An average of over 50,000 barrels of… Read more

Alcoa Case Study: Benefiting from Saudi Economic Planning


In 2009, the multinational aluminum producer Alcoa announced a joint venture with the Saudi mining company Ma’aden. Together, they are constructing an integrated bauxite mine and aluminum smelter in Saudi Arabia, pioneering production of this metal in the Kingdom. The project sheds light not only on Alcoa’s commercial strategy, but also on the economic strategy of the government of Saudi Arabia, a country with the mixed blessing of abundant natural resources. Alcoa is a large multinational aluminum player. Like many of its peers, it is vertically integrated, with interests in… Read more

Growth in the Nuclear Energy Industry Will Continue To Be Driven by Developing Countries

  The global Nuclear energy industry saw a slight decline in 2011 following the response to the Fukushima disaster which has seen several nations, including Japan, move away from investment in nuclear technology. Despite the ongoing financial difficulties that persist across many nations around the world nuclear energy still forms a prominent part of the energy plans of many nations, meaning that the industry will experience major rates of growth in terms of revenue as a result of increasing prices. The global Nuclear Energy industry declined by -1.1% in 2011… Read more

The America’s Region Continues to Dominate the Biofuels Market

  The global biofuels market grew at a strong rate in 2011. This is evidence that the market is continuing to play an increasingly important role in both helping countries to meet international green energy targets and providing a new source of energy to help dissipate the reliance on traditional fuels. Due to high biofuel production costs, the market is affected strongly by local government subsidies and can become unprofitable when a government reduces or pulls out from a biofuel subsidy program in any given country. The global biofuels industry… Read more

US holds the major share of the utilities industry

The Group of Eight (G8) comprises eight of the fastest growing industrial nations in the world: the US, Canada, Germany, France, the UK, Italy, Russia and Japan. MarketLine’s ‘Utilities – Global Group of Eight (G8) Industry Guide’ reveals that the G8 countries contributed $1,786.7 billion in 2010 to the global utilities industry, with a compound annual growth rate (CAGR) of 2.6% between 2006 and 2010. The G8 countries are expected to reach a value of $2,358 billion in 2015, with a CAGR of 5.7% over the 2010–15 period. Electricity is… Read more