The latest EIC Monitor quarterly report tracking new project announcements shows that the global energy industry has seen encouraging signs of growth in the first quarter of 2012.
The Q1 (January – March 2012) report reveals the number of new projects (471) has increased across all sectors, and overall, is up 16% compared to Q4 2011. All sectors apart from the power generation and upstream sectors have seen an increase in their potential investment value, with the overall total of US$ 303 billion up 16% on Q4 2011 but down 21% on Q1 2011.
It should be noted that in nearly all cases newly proposed projects must first undergo various planning and consent approvals which may take several years. Also, early stage proposals do not necessarily have financing agreed and in place and so there will always be a proportion of projects that do not gain consent or finance.
Upstream, midstream and downstream sectors
The upstream sector has seen a slight decrease in the potential investment value of new projects, down from US$35 billion in Q4 2011 to US$ 32 billion in Q1 2012. New project numbers are up 37% from 51 to 70 this quarter. Key hotspots of activity this quarter can be found in Russia, Canada, the USA and Brazil, together representing 56% of the total potential investment value in the sector. The largest project is the proposed US$ 3.5 billion Hebron-Ben Nevis-West Ben Nevis Oil Fields, Phase II development located off the coast of St. John’s, Canada, in the Jeanne d’Arc Basin.
The midstream sector has 80 new projects and has seen an 86% increase in the potential investment value of new projects with a 10% increase in the number of new project announcements since Q4 2011, up from US$ 42 billion to US$ 79 billion this quarter. Activity in the LNG sector in the USA is one of the main reasons for this increase with the USA accounting for 62% of the potential investment value in this sector this quarter, with 26 projects totalling US$ 49.2 billion.
In the downstream sector, the number of new quarterly projects (58) has risen by 26% since Q4 2011 with a 33% increase in the total potential investment value from US$ 32 billion in Q4 2011 to US$43 billion in Q1 2012. The USA and China together represent 40% of the number of new projects announced this quarter, with 10 projects worth US$ 4.4 billion in the USA, and 13 projects worth US$ 2.6 billion in China.
Global power projects
In the renewables sector there have been 161 new projects (up 5% this quarter), with the potential investment value rising 13% from US$ 64 billion in Q4 2011 to US$ 72 billion in Q1 2012. Tunisia, Germany, the USA and the Democratic Republic of Congo (DRC) together account for over 50% of the total potential investment value of new projects in the renewables sector this quarter. The largest projects are in Tunisia with the proposed US$ 10.6 billion TuNur Solar Power Plant and in DRC with the proposed US$ 8 billion Inga Three Hydropower Project.
In the power sector, the number of new projects (102) has increased by 21%, while the total potential investment value of new projects has dropped 13% to US$77 billion in Q1 2012. The UK accounts for 21% of the total potential investment value of new projects primarily due to the US$ 14.3 billion decommissioning of the Sellafield nuclear plant which is the largest power related project this quarter.
In summary, overall this quarter the EIC Monitor shows some encouraging signs across the global energy industry. We have seen a positive start to the year with improvements on the previous quarter for most sectors. Power and renewables continue to be the primary sources of new project proposals but there are still plenty of opportunities for energy supply chain companies across all sectors.
Author: Ian Stokes, CEO of the EIC
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