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Global energy industry remains buoyant

Oilfield Technology,

The latest EIC Monitor tracking new projects in the global energy industry shows a mixed bag of results for Q2 (April – June) 2010, with power and renewables leading the way although there is some slow down in the oil & gas sectors. While the number of new projects remains healthy, the total potential investment value across all sectors has fallen by around 6% since the same quarter last year.

In Q2 2010 there were 409 new projects across the global energy supply chain with an estimated total value of US$ 287 billion, compared to 426 in Q1 2010 totalling US$ 509 billion, and 336 new projects in Q2 2009 worth US$ 306 billion.

The power and renewables sectors continue to be the primary sources of new project proposals, accounting for over half of all new projects and investment potential this quarter. The upstream and downstream sectors have seen decreases in both new project numbers and values since the previous quarter, but there are still plenty of opportunities for energy supply chain companies across all sectors.

Here are the key highlights from the full report on what is happening at a sector level:

Global power projects

In the renewables sector the number of new projects (123) is much the same as the previous quarter. The value however has dropped from US$ 224 billion in Q1 2010 to US$ 68.4 billion this quarter. Q1 was dominated by the US$150 billion Round 3 UK offshore wind programme which pushed up last quarter’s growth by almost 200% on Q4 2009.

The most significant new projects this quarter are the 11,300 MW Asa Branca offshore wind project and a number of Round 2 offshore wind expansion projects in the UK totalling 1,522 MW with a value of US$ 7.2 billion.

In the power sector there has been a slight increase in the number of projects at 109 this quarter, although the potential total investment value is down by 14.5% to US$ 117 billion. This possibly reflects a slight move towards smaller decentralised power generation in some regions.

India features heavily in power, with 19 new projects totalling US$ 31 billion of investment potential. China announces three more nuclear plants. South America has seen nine new projects totalling just under 5,000 MW. Europe has seen a number of larger projects struggling with consenting and finance issues. Several new energy from waste schemes and biomass power projects are being proposed in the UK.

Upstream, midstream and downstream sectors

The upstream sector has seen a 30% drop in both the number of new projects and project value since the previous quarter, with 64 new projects totalling US$ 33.9 billion. Brazil has seen some significant new projects emerging including the construction of 28 drilling rigs destined for the sub-salt territories and also the Franco & Libra prospects which are expected to be the largest discoveries in the Santos basin after Tupi.

The midstream sector has seen a slight growth in the number of projects from 51 to 56 this quarter, although with a 26% decrease in project value since Q1 2010 to US$ 19 billion. New and emerging projects are well distributed. The largest of these are the US$ 3 billion Beyneu to Shymkent Gas Pipeline in Kazakhstan and the US$ 2 billion Newcastle LNG plant in Australia. China and the USA have the largest number of new projects.

In the downstream sector, there have been 57 new projects totalling US$ 48.2 billion which represents a drop in total investment value by a third since Q1 2010. Again new projects are widespread although Indonesia and China in particular have several large schemes emerging. Indonesia has three refinery projects at Masela, Cilegon and Tuban totalling US$ 17 billion. China has a number of petrochemical based projects and a US$ 3.8 billion synthetic natural gas project at Qitai.

This quarter’s figures clearly point to a buoyant global energy industry but with so many new projects on the horizon, there are positive signs of future growth across all sectors.

Author: Mike Major, CEO of the EIC

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