Category: Commodities

Onyx Renewable Partners Appoints New CFO

Onyx Renewable Partners Appoints New CFO

Onyx Renewable Partners, a leader in flexible, creative solutions for the development, finance, construction and operation of large-scale renewable energy projects, today announced the appointment of Leanne M. Bell as chief financial officer. Bell brings over 30 years of experience to Onyx, with expertise in deal analysis and negotiations, risk management policies and investor relationships.

“We are thrilled to welcome Leanne to our team,” said Matt Rosenblum, CEO of Onyx Renewable Partners. “Her extensive experience in energy financing will serve as a tremendous asset to Onyx’s proven ability to implement creative financial structuring in the development of successful renewable energy projects.”

Prior to joining Onyx, Bell served as chief financial officer and chief operating officer at Synergy Renewables, a global power development company. She previously served as managing director at both Tiger Infrastructure Partners and Lehman Brothers. Bell also led the Energy Financial Services Power Team as managing director at General Electric Co., where she originated $5 billion of equity volume from the utility and independent power sectors. As vice president at Prudential Power Funding Associates, Bell originated $1 billion of debt and lease volume.

“Onyx’s unique ability to find financing solutions to seemingly insurmountable barriers in the implementation of renewable energy projects is unmatched in the industry,” said Bell. “This reputation of Onyx’s leadership team made my acceptance of this position a natural choice, as I eagerly join a world-class team of renewable energy experts.”

Bell received her bachelor’s degree in economics from Smith College in Massachusetts.

Scotch Whisky Association Announces New Chairman

Scotch Whisky Association Announces New Chairman

Pierre Pringuet, chief executive and vice chairman of Pernod Ricard, owner of the Chivas Brothers Scotch Whisky company, has been appointed as the new chairman of The Scotch Whisky Association (SWA).

Mr Pringuet succeeds Ian Curle, Edrington chief executive, who was chair of the trade body for three years. Mr Curle will remain on the SWA’s governing council. Peter Gordon, director at William Grant & Sons, replaces Mr Pringuet as vice chairman of the SWA.

The SWA aims to sustain Scotch Whisky’s position as the leading high-quality spirit drink and to drive its long-term growth worldwide in an increasingly competitive environment.

The appointment of Mr Pringuet shows the “auld alliance” between Scotland and France remains strong and reflects the international nature of Scotch Whisky.

Mr Pringuet will work closely with SWA chief executive David Frost and the rest of the Association council to guide the Scotch Whisky industry to further success. The Association’s priorities will be to secure a competitive business environment, the industry’s social responsibility agenda, fair access to export markets, and the legal protection of Scotch Whisky world-wide.

With a UK Budget only three months away, there will also be an immediate focus on the high taxation of Scotch Whisky, where nearly 80% of the average price of a bottle goes straight to the UK government.

Mr Pringuet joined Pernod Ricard in 1987 as development director. In 2000 he became a joint CEO of the company. He was appointed sole CEO in 2008 and vice chairman of the board of directors in 2012.

Mr Curle said he is confident that Mr Pringuet will continue the good work of the Association, adding: “I have enjoyed my three years as chairman of such a well-respected organisation which does an excellent job in representing the interests of the Scotch Whisky industry globally.”

Pierre Pringuet, new SWA chairman, said: “I feel privileged to take over as chairman of the SWA and I’m committed to ensuring Scotch Whisky retains its position as an iconic product around the world. With its great brands and committed people, as well as the support of governments at home and abroad, the Scotch Whisky industry will go from strength to strength.”

In other senior appointments, Ivan Menezes, chief executive of Diageo, the largest producer of Scotch Whisky, and Richard Burn, global policy and public affairs director of Diageo, join the SWA council.

The SWA also announced that Julie Hesketh-Laird has been appointed as its new deputy chief executive. Ms Hesketh-Laird joined the SWA in 2005 as director of operational & technical affairs and she will continue in this role alongside her new position.

Finally, the Association also announced it intends to sell its Atholl Crescent office and move to modern premises in Edinburgh during 2015, and to open a small permanent office in London to strengthen its impact there.

David Frost, SWA chief executive, said: “I’m delighted to welcome Pierre Pringuet as chairman and to announce other changes at the Association which further strengthen our ability to represent the industry effectively.

“This is an exciting time for the SWA and the entire Scotch Whisky industry. The industry supports around 40,000 jobs across the UK and exports about £4 billion annually, but its success cannot be taken for granted. Economic headwinds and challenges, both domestically and in overseas markets, mean the work of the Association on behalf of the industry is of vital importance.”

Papa John's Takes a Slice of South India

Papa John’s Takes a Slice of South India

Papa John’s, Avan Projects and Global Franchise Architects (GFA) has announced the acquisition of Pizza Corner stores in South India. Papa John’s will convert the existing Pizza Corner stores to Papa John’s branded restaurants through Q1 2015. The announcement reinforces Papa John’s commitment to expand its presence in India, specifically in Bangalore, Chennai and Hyderabad.

Pizza Corner, part of the GFA brands, is the third largest pizza chain in Southern India. The city of Chennai has proven to be the most successful market for the Pizza Corner chain, a success that Papa John’s plans to replicate in all three major South Indian cities. Papa John’s currently has fifteen operating restaurants across India through its Master Franchisee for the region, Om Pizza and Eats. Through this merger, Papa John’s will significantly expand its presence by a minimum of 40 stores with conversions beginning in late 2014 and continuing into 2015.

The QSR segment in India is a $2.5 Billion industry, accounting for 43 percent of the overall Food Services business in India and growing at a rate of approximately 25 percent; it’s the fastest growing segment within the food industry. There is tremendous growth opportunity with the Pizza segment.

“We are energized about this accelerated International expansion for Papa John’s in Southern India,” said John Schnatter, Founder and CEO of Papa John’s. “The merger provides us the opportunity to penetrate the market at a much more rapid pace, and increase our scale in a shorter period.”

Joseph Cherian, CEO of GFA Global said “The Indian fast-food market is valued at $50 billion from Rs$35 billion last year according to a latest ASSOCHAM survey. This consolidation is a unique opportunity for Papa John’s to take a major pie in the market share in the Indian pizza segment. Owing to a majority of younger population under 30 with a liking for international food gives us the right opportunity to address the need gap for true international brands. Through this merger with a leading brand such as Papa John’s, we have a phenomenal opportunity to meet growing demands by combining Papa John’s world class pedigree with Pizza Corner’s local expertise. We are confident that both the brands can complement each other and implement their expertise.”

BP to Invest US$200m in US

BP to Invest US$200m in US, Belgium Petrochem Plants

BP has announced that it plans to invest over US$200m to upgrade its purified terephthalic acid (PTA) plants at Cooper River, South Carolina and Geel, Belgium. The investments will position these assets amongst the most efficient PTA manufacturing facilities in the world.

“This allows us to apply our latest proprietary technology and process know-how to existing assets, significantly improving their cost competitiveness and reducing their environmental footprint,” said Luis Sierra, President BP Aromatics – Americas, Europe and Middle East. “It enables Cooper River and Geel to remain the leading PTA manufacturing complexes in the Americas and Europe respectively.”

By applying the latest PTA technology to these world-scale production facilities, BP expects to greatly improve feedstock and energy efficiency thus reducing both variable and fixed cost and greenhouse gas emissions.

PTA is the raw material used to make polyester which is found in a wide range of consumer goods ranging from fabrics to food and beverage containers. The BP Cooper River site is the largest PTA producer in the Americas and BP Geel is the largest in Europe.

Cooper River’s PTA1 unit, one of two units at the facility, is expected to be upgraded by mid 2016. The project expects to create around 200 construction jobs at its peak and indirectly support many more jobs in the region. When the project is completed, the reduction in annual greenhouse gas reductions should equate to eliminating the electricity and heating emissions of about 2,000 typical US households.

The Geel upgrade is expected to create around 100 construction jobs at its peak and will also indirectly benefit other businesses in the area. Geel’s PTA3 unit is expected to be upgraded by the end of 2015 with PTA2 following in 2016. The annual greenhouse gas reductions should equate to eliminating the electricity and heating emissions of 1,500 typical Belgium households.

Oil & Gas UK:

Oil & Gas UK: “Time to Act on Fiscal Reform”

Following evidence submitted to the Treasury for its recent consultation on the North Sea tax regime, Oil & Gas UK has this week made a further representation, repeating calls for urgent reform in light of escalating industry costs and the falling oil price, which yesterday hit a four year low.

In a letter to the Chancellor of the Exchequer, Oil & Gas UK chief executive Malcolm Webb points to the deteriorating economics of the mature UK Continental Shelf (UKCS), a situation which has become even more acute since the trade body submitted its evidence at the beginning of October. The Brent oil price has fallen $30 since its peak in mid-summer and shows no sign of recovery, while industry unit costs rose by 26 per cent last year.

“Profitability on the UKCS is insufficient to maintain the uncompetitive high tax rates of 62 – 81 per cent paid by production companies,” says Malcolm Webb.

The Office for National Statistics shows pre-tax returns for the UKCS have fallen to levels last seen in 2005, when the oil price was less than $50 per barrel and tax rates were 22 percentage points lower.

Far from gaining additional tax receipts from the UKCS, revenues have fallen by almost two thirds in three years and the OBR has predicted further decline, even before the recent price adjustment.

Mr Webb added: “Last year total UKCS expenditure exceeded post-tax revenues; this year it is heading in the same direction. This is not a sustainable situation. Without swift action, capital investment is set to halve by 2017. Urgent tax reform is now needed for the North Sea to remain globally competitive and attractive for investors.”

In the response sent to the Treasury in October, Oil & Gas UK called for the following key fiscal reforms:

• Immediate removal of the increase in supplementary charge introduced in 2011 to reflect the lower profitability across the UKCS

• Introduction of a single, uniform capital investment allowance to embrace all capital expenditure including exploration and infrastructure

• Tax incentives to make exploration on the UKCS more attractive, both by improving the potential returns, and by encouraging new entrants

• Removal of the timing restrictions for the Ring Fence Expenditure Supplement

• The reduction to zero, over time, of the rate of Petroleum Revenue Tax

Mr Webb said: “Since the beginning of October when we made our initial submission, pressures on the basin have become even greater. The industry is now taking urgent steps to address its significant cost challenge, promoting efficiencies through innovation and simplifying work practices and processes. But the Treasury too has a critical role to play in the implementation of the Wood Review’s recommendations as one of the three crucial parties (alongside industry and the new Oil and Gas Authority) with the remit to rebuild confidence in Britain’s offshore industry and maximise recovery of oil and gas from the UKCS.”

Management Changes at British Gas

Management Changes at British Gas

British Gas has today confirmed that Chris Weston, Managing Director, will leave the company on 31 December 2014, following his resignation in May.

Ian Peters, currently Managing Director, British Gas Residential Energy, will assume the role of Managing Director of British Gas on 1 December. He will hold the post on an interim basis while a permanent replacement is sought under the leadership of the incoming Centrica Chief Executive, Iain Conn, who joins the company on 1 January 2015.

Centrica Chairman Rick Haythornthwaite thanked Chris Weston for his significant contribution to the company over the last 11 years, leading a number of its businesses in North America and the UK.

Rick Haythornthwaite commented on Ian Peters’appointment: “Ian has deep industry knowledge and experience, and is well placed to assume this role on a transitional basis, as weseek a permanent replacement under Iain Conn’s new leadership.”

Ian Peters said: “It will be a privilege to lead the company through this transitional period. Customers are at the heart of our business, and we will continue our strategy of investing in service and innovation, to help our customers understand and control their energy use, and keep their bills down. I look forward to working with the leadership team overthe coming months at a time of intense competition in our sector.”

Further internal management changes, following Ian’s appointment, are:
– Stephen Beynon, currently Managing Director, British Gas Business, is appointed to the role of Managing Director, British Gas Residential Energy.
– Stuart Rolland, currently Chief Operations Officer, steps into the role of Managing Director, British Gas Business.
– Matthew Bateman, currently Managing Director of British Gas Service & Repair, will lead British Gas Residential Services.

Rio Tinto Extends the Tenure of Senior Executive Team

Rio Tinto Extends the Tenure of Senior Executive Team

The Rio Tinto board has extended the tenure of chief executive Sam Walsh and chief financial officer Chris Lynch, providing a strong endorsement of their leadership, the Group’s strategy and its focus on driving shareholder value.

Rio Tinto chairman Jan du Plessis said “For quite some time, Sam has made no secret of the fact that he loves his job and would like to continue well beyond next year. Given his performance and his enthusiasm to continue in the role, the decision to extend his tenure has been an easy one for the board. In addition, over the past 18 months, Chris has played a crucial role working with Sam and I am therefore pleased that we have agreed with both of them to replace their fixed term retirement dates with long-term, open-ended commitments to the company.

“Since their appointments early last year, Sam and Chris have led a transformation of the business and established a track record of delivering on their promises. Rio Tinto has increased cash flows from operations, achieved significant operating cash cost improvements, reduced net debt and refocused capital expenditure on projects with the most compelling returns.

“In September, the board met for our annual strategy review session and it is clear we are on a path to generate significant long-term value for shareholders. The board believes Sam and Chris are the best team to lead us into the next phase of the delivery of our strategy.”

Sam Walsh said “I am very pleased to continue as chief executive of this great business with our world-class people and assets. I will be ensuring my executive team and our 60,000-plus employees around the world all remain focussed on continuing to deliver outstanding performance for all of our shareholders, driven by improved safety and productivity, value-enhancing growth and disciplined capital allocation.”

Chris Lynch said “There is no doubt we have made some great progress but we all appreciate the job is far from complete. There will be no complacency as we pursue value and I am looking forward to continuing to work with Sam and the team to further enhance the performance of the business.”


EU Introduces New Russia Sanctions

Including measures taken against state-controlled Russian oil firms operating within key European markets, the measures will be introduced over the course of the week. They will not be introduced all at once today, Tuesday 9 September, as many had been predicting.

The staggered timeline for the ‘reversible’ sanctions is thought, in part at least, to give the peace process more time to be agreed.

Constant Denials

The measures have been introduced to tackle what the EU Council President Herman van Rompuy has said is:

“promoting a change of course in Russia’s actions destabilising eastern Ukraine”.

However, Putin’s Russia is still denying it is sponsoring the rebel actions. Despite accusations by the west, Russia is standing fire on its stance that it has not sent troops or equipment to the Ukraine border.

The sanctions are deliberately being kept vague to allow ceasefire talks to reach a conclusion, while van Rompuy explained that they can be reviewed and amended at any time, saying:

“Depending on the situation on the ground,

the EU stands ready to review the agreed sanctions in whole or in part,” 

Russian Retaliation

Though the sanctions will have an impact on the oil sector, the gas sector is not affected.

However, the latest round of measures has seen Russia responded by saying it is considering retaliation. The country has warned that it could prevent international flights from operating within Russian airspace for example.

The Russian Prime Minister Dmitry Medvedev has also warned that there would be an ‘asymmetric’ response to further EU sanctions.

The latest sanctions are likely to have most of an effect on Rosneft. It last month asked the Kremlin for a £25.2bn ($42bn) loan. It also raises the majority of its finances on European markets.

However, with 90% of the EU’s supply of crude oil coming via Russia, the basis of the relationship is not affected by the latest measures.

Roadmap to Peace

According to the OSCE, there is a 12-point roadmap for peace. Of these points, there are a number which the organisation says are ‘essential’, including:

> An immediate bilateral ceasefire
> Freeing all hostages and illegal prisoners
> Monitoring the Ukrainian-Russian border
> Removal of illegal military materials from Ukrainian territory

At the moment the ceasefire does seem to be holding, but the brokering agent, the Organization for Security and Cooperation in Europe (OSCE), has said the situation remains ‘shaky’.

Rosneft Partners with Statoil in Arctic Exploration

Rosneft Partners with Statoil in Arctic Exploration

The move, which comes in spite of sanctions imposed by the West against Russia, will see initial exploration taking place in the Norwegian Barents Sea.

The Russian state firm confirmed that operations had started, releasing a statement saying:

“the start of these exploration operations marks an important milestone in developing the cooperation between Rosneft and Statoil,”

Norway has joined the action against Moscow by introducing economic restrictions in light of the perceived action by Russia over the Ukraine crisis. The head of Rosneft, Igor Sechin, has also been subject to tough sanctions.

Russia has hit back with an embargo on European food imports.

This saw Rosneft see its access to international funding restricted – with it having to go to the Kremlin for a $42bn loan last week. The firm has also been hit by the sanctions imposing a ban on deep water exploration equipment and technology.

However, the move by Statoil, and British firm BP’s insistence that it will not drop its 20% stake in Rosneft, shows that international cooperation is still in place at some levels.

The latest deal also comes weeks after Rosneft announced another cross-border partnership – this time a tie-up with US oil giant ExxonMobil. The partnership will see the exploration of potential oil fields located along the Siberian northern coast.

Drop in North Sea Deals and Drilling

Drop in North Sea Deals and Drilling

Oil and gas firms may be adopting a “wait and see” approach before making further investment decisions in the North Sea, according to a new report from Deloitte.

The report, which details drilling, licensing and deal activity across North West Europe over the second quarter of 2014 and was compiled by Deloitte’s Petroleum Services Group (PSG), found a total of seven exploration and appraisal (E&A) wells were drilled on the UKCS. This is significantly lower than the 12 wells drilled in the previous quarter and the 17 drilled in Q2 2013.

This drop may be down to companies controlling high costs and awaiting potential changes to the industry resulting from the Wood Review and the ongoing review of the North Sea fiscal regime.

There were also fewer deals completed this quarter compared with the previous three months. Five deals in total were announced on the UKCS in Q2 2014, down from the 10 transactions reported in Q1. This is also seven deals fewer than the 12 registered during the equivalent period in 2013. There were no farm-ins reported at all in the last three months – which are generally a popular type of deal.

Derek Henderson, senior partner in Deloitte’s Aberdeen office, said that the North Sea industry has been grappling with rising operating costs, which was having an impact on activity and investment decisions, particularly given the maturity of the region.

He said: “It’s no secret that the costs facing oil and gas firms on the UKCS have been a significant issue for some time now. Understandably, it tends to be more expensive to operate in mature fields where oil is much more difficult to recover. Research suggests it’s now almost five times more expensive to extract a barrel of oil from the North Sea than it was in 2001.

“What’s more, the drop we’ve seen in the number of farm-ins could indicate that companies are holding off before committing to longer term exploration investments. Asset transactions, involving producing fields, remain at more consistent levels, which suggests companies are more confident in these types of deals, which can offer a quicker and less risky return.”

“Notwithstanding this, there are a large number of assets on sale. However, vendors tend to be larger players, and as buyers are often smaller operators, with limited budget, this is creating an expectation gap in prices. Until there is movement on that front, deal activity is likely to remain muted.”

Meanwhile, the UK’s oil and gas industry awaits the implementation of recommendations made in Sir Ian Wood’s ‘UKCS Maximising Recovery Review’, which included among its propositions the introduction of a new regulator – the Oil and Gas Authority.

Combined with the review of the North Sea’s fiscal regime, which was announced in last March’s UK Budget, Derek Henderson went on to say that oil and gas firms may well be adopting a “wait and see” approach until there was a better understanding of all the these changes and their impact.

He said: “There were many recommendations made in Sir Ian Wood’s final report, and it’s likely that the industry could be pausing until it has a better understanding of the impact of these, and the effect on the long term future of the North Sea, before making any big investment decisions.

“In addition, with the fiscal regime under review, it’s quite likely that the industry will be waiting until there is a bit more clarity over how this will take shape. The tax environment is a factor that bears heavily on the decisions of all oil and gas companies, especially with corporate tax rates that vary and can reach 81%.

Echoing this sentiment, a recent Deloitte poll of the industry, which looked at the issues facing the UKCS and how the fiscal regime could be used to address these, indicated that oil and gas firms felt the overall level of tax most needed to be addressed (46%).

This was followed by a more predictable and internationally competitive tax regime, which scored 27% and 15% respectively. In addition, only 23% of respondents said they thought the current regime encouraged new entrants into the basin.

Rio Tinto Hosts Two Prime Ministers at Western Australia Mine

Rio Tinto Hosts Two Prime Ministers at Western Australia Mine

Image © 2014 Rio Tinto

Japanese Prime Minister Shinzo Abe and Australian Prime Minister Tony Abbott highlighted the strong relationship between the two nations during a visit to Rio Tinto’s world-class iron ore operations in Western Australia.

Rio Tinto chief executive Sam Walsh and Iron Ore chief executive Andrew Harding hosted the prime ministerial delegation, showcasing the operations and employees of the West Angelas mine in the Pilbara. Roy Tommy, a respected elder from the local indigenous Yinhawangka people and a Rio Tinto employee, led a Welcome to Country for the delegation.

The two prime ministers inspected Rio Tinto’s next-generation technology mining equipment, including an autonomous haul truck and drill which form part of the company’s Mine of the Future programme.

The Pilbara tour formed part of Abe’s four-day bilateral visit to Australia – the first by a Japanese Prime Minister since 2002 – and follows an invitation from Walsh to visit Rio Tinto’s iron ore operations after a discussion in Tokyo last year about the long-standing ties between Rio Tinto and Japan.

Walsh said: “It is a great honour to have Prime Minister Abe and Prime Minister Abbott visit our operations in the Pilbara and to see first-hand the very best mining technology and our talented people, who are the backbone of our iron ore operations.

“Our iron ore business was born on the back of Japanese investment and we will never, ever forget this support. Japan is now one of Rio Tinto’s most important trading partners and our enduring relationship for almost half a century symbolises the strengthening economic and trade ties between Australia and Japan.

“Under our Mine of the Future programme we operate the most sophisticated mining technology in the world, with state-of-the-art equipment from Japan at the core.”

Harding said “This visit builds on nearly 50 years of successful and long standing partnerships between Rio Tinto and our Japanese joint venture partners, suppliers, customers and friends. We are intent on continuing to build these relationships through our technology partnerships to deliver mutual benefits.

“We were pleased to show some of the equipment to Mr Abe and Mr Abbott and demonstrate why we are world leaders in mining technology and show how our highly skilled employees keep us at the forefront of production, technology and safety.”

US Oil Success

US Oil Success “Will Expand Globally”

The unconventional supply revolution that has redrawn the global oil map will likely expand beyond North America before the end of the decade, the International Energy Agency (IEA) has said in its annual five-year oil market outlook. The report also sees global oil demand growth slowing, OPEC capacity growth facing headwinds and growing regional imbalances in gasoline and diesel markets.

The IEA’s Medium-Term Oil Market Report 2014 says that while no single country outside the United States offers the unique mix of above- and below-ground attributes that made the shale and light, tight oil (LTO) boom possible, several countries will seek to replicate the US success story. The report projects that by 2019, tight oil supply outside the United States could reach 650 000 barrels per day (650 kb/d), including 390 kb/d from Canada, 100 kb/d from Russia and 90 kb/d from Argentina. US LTO output is forecast to roughly double from 2013 levels to 5.0 million barrels per day (mb/d) by 2019.

“We are continuing to see unprecedented production growth from North America, and the United States in particular. By the end of the decade, North America will have the capacity to become a net exporter of oil liquids,” IEA Executive Director Maria van der Hoeven said as she launched the report in Paris. “At the same time, while OPEC remains a vital supplier to the market, it faces significant headwinds in expanding capacity.”

Ageing fields are an issue for almost all OPEC producers, but above-ground woes have escalated: security concerns are a growing issue in several producers and investment risks have deterred some international oil companies. The report notes that as much as three-fifths of OPEC’s expected growth in capacity by 2019 is set to come from Iraq. The projected addition of 1.28 mb/d to Iraqi production by 2019, a conservative forecast made before the launch last week of a military campaign by insurgents that subsequently claimed several key cities in northern and central Iraq, faces considerable downside risk.

“Golden Age” of Gas Coming to China

“Golden Age” of Gas Coming to China

Driven by booming demand, the “Golden Age” of natural gas that is now firmly established in North America will expand to China over the next five years, the International Energy Agency (IEA) says in its 2014 Medium-Term Gas Market Report. The projected near-doubling of Chinese gas demand through 2019 compensates for a slight slowdown in growth in many other areas of the world, the report said.

The annual report, which gives a detailed analysis and five-year projections of natural gas demand, supply and trade developments, sees global demand rising by 2.2% per year by the end of the forecast period, compared with the 2.4% rate projected in last year’s outlook.

Liquefied natural gas (LNG) will meet much of this demand, with new pipelines also playing a role. In a shift away from the traditional dominance of state-owned suppliers, private-sector operators in Australia, Canada and the United States are taking the lead in the expansion of the LNG trade, which is expected to grow by 40% to reach 450 bcm by 2019. Half of all new LNG exports will originate from Australia, while North America will account for around 8% of the global LNG trade by 2019.

“We are entering the age of much more efficient natural gas markets, with additional benefits for energy security,” IEA Executive Director Maria van der Hoeven said as she presented the report at the Conference of Montreal. “While demand growth is driven by the Asia-Pacific region – and especially China – supply growth for the international gas trade is dominated by private investments in LNG in Australia and North America.”

Despite the projected growth in gas demand and production, the IEA Executive Director said warning lights were flashing.

“High LNG prices are threatening to crimp demand as many countries are increasingly unwilling, or unable, to afford these supplies – and that could open the door to coal,” she continued. “Looking ahead, unless we see timely investment in new production and LNG facilities and the reversal of the recent cost inflation of LNG, only a very strong climate policy commitment could redirect Asia’s coal investment wave to gas.”

In China, where air quality concerns are prompting the government to adopt tough plans to reduce pollution, gas is emerging as a major part of the solution. The power, industrial and transport sectors will drive overall Chinese gas demand to 315 bcm in 2019, an increase of 90% over the forecast period, the report said. While China will remain a significant importer, half of its new gas demand will be met by domestic resources, most of them unconventional: Chinese production is set to grow by 65%, from 117 bcm in 2013 to 193 bcm in 2019.

In contrast to the dynamic growth projected in Asia, the report paints a starkly different picture in Europe. Due to low power demand growth and robust policy support for renewable energy, European gas consumption will not recover to its 2010 peak over the next five years. Moreover, there will be no meaningful diversification of European gas supplies through the end of the decade, according to the report.

The report said that despite abundant geological resources, the Middle East will struggle to achieve its full production potential – with some countries even experiencing gas shortages. The main reason for this is unrealistically low regulated gas prices that hinder upstream investment and encourage wasteful consumption.

UK Renewables Investor Appeal Still Falling

UK Renewables Investor Appeal Still Falling

The attractiveness of the UK renewables market in the eyes of investors and developers has decreased dramatically – falling back to levels last seen in November 2012, according to EY’s latest Renewable Energy Country Attractiveness Index (RECAI).

The quarterly report, which ranks the investment potential of forty countries’ renewables markets, has ranked the UK in 6th place behind the US, China, Germany, Japan and Canada.

According to the report, the UK has slipped a place for the second consecutive quarter. This is mainly due to conflicting signals over the future of support for renewables beyond the 2015 election, as well as the proposed cap on solar power projects eligible for Renewables Obligation support being introduced two years earlier than planned.

At the same time, a new auction program for utility-scale renewable energy supports Canada’s move up into fifth place. And in Asia, China, Japan and India continue to strengthen their positions and close the gap on their Western counterparts in the top 10.

Ben Warren, EY’s Environmental Finance leader, said on the UK’s position in the index: “The UK has slipped to sixth place for the first time in more than a year. Policy tinkering and conflicting signals once again become too much for investors and developers to handle.

“The recent carbon tax freeze, an energy market competition probe and Conservative Party plans to scrap onshore wind subsidies post 2015 are weighing heavily on the sector’s ability to assess the long-term outlook. In addition, the launch of a Government consultation on future financial support for solar has taken the shine off the UK’s otherwise booming solar market.

“As ever with the renewables sector, more damaging than the outcome of any review itself is the uncertainty it creates and the trust it erodes. This last quarter has been no exception, with little done to foster sympathy from the renewable energy sector, which appears to be continuously caught in the firing line.”

Tullow Oil Appoints Non-Executive Director

Tullow Oil Appoints Non-Executive Director

Tullow Oil plc has announced the appointment of Dr Michael Daly as a non-executive Director with effect from 1st June 2014.

Daly joins Tullow with extensive oil & gas experience following a successful 28-year career at BP. Most recently, he was Executive Vice President Exploration, and a member of BP’s Group Executive team until January 2014. During his time at BP he held a variety of senior business management and exploration positions including Group Vice President, Exploration & New Ventures, and Regional President Middle East & South Asia. Daly is a member of the World Economic Forum’s Global Agenda Council on the Arctic, an Advisory Board Member of the British Geological Survey and a visiting professor at the University of Oxford.

Major New Hire at Rio Tinto

Major New Hire at Rio Tinto

Rio Tinto has appointed Alfredo Barrios as chief executive of its aluminium business. He will succeed Jacynthe Cote who will leave the business for personal reasons to pursue other interests.

Barrios will assume the role on 1st June and join the executive committee on this date. He will be based in Montreal, subject to obtaining all necessary immigration approvals from the Canadian authorities. Cote will continue in an advisory role until 1st September this year.

Barrios’ most recent role was executive director and executive vice president downstream at the joint venture TNK-BP, one of Russia’s biggest vertically integrated oil and gas companies, where he was responsible for the refining, trading, supply, logistics and marketing businesses. He joined BP in 1992 and has enjoyed a varied and distinguished career including senior leadership roles in the United Kingdom, United States, Russia and continental Europe. He has a strong track record of successfully delivering sustained safety and business performance, large capital intensive projects and international government relations.

Rio Tinto chief executive Sam Walsh said: “Jacynthe has long been a key member of Rio Tinto’s leadership team and has enjoyed a successful career with Rio Tinto and Alcan spanning more than 25 years. The ongoing improvement in the performance of the aluminium business is testimony to her commitment to the business throughout her career. I would like to offer her my personal thanks and best wishes for the future.

“We are delighted to welcome Alfredo to Rio Tinto who will undoubtedly bring renewed vigour and experience to our Aluminium business. I am confident he will build on the foundations Jacynthe and her team have put in place and drive further improvement in delivering increased value from the business. I also look forward to the new insight he can bring as a member of my executive team”.

All other group executive roles remain unchanged.

Strong Performance by UK Oil & Gas Well Services

Strong Performance by UK Oil & Gas Well Services

Well services contractors operating in UK waters reported strong demand for their services according to figures in the 2014 Oil & Gas UK Well Services Contractors Report. Supporting the UK offshore oil and gas industry across the full cycle of well operations, the sector reported gross revenue of £2.06bn, the highest level of capital investment since 2008 and provided employment for 15,000 people.

Oonagh Werngren, Oil & Gas UK’s operations director, said: “The report reveals that despite declining exploration activity, well services contractors continue to provide significant levels of investment, revenue and jobs to the UK offshore oil and gas industry. The sector has increased gross revenue by 45.5 per cent since 2010 despite a marginal decrease in 2013, and comprises an important proportion of the £35bn supply chain outlined in the UK upstream oil and gas supply chain reports published by Oil & Gas UK and EY earlier this year.

“It is clear that well services contractors are committed to addressing both the challenges and opportunities of the UK Continental Shelf (UKCS) with total capital investment in equipment and technology to develop future capacity rising by 9.7 % to £136m in 2013. The resilience of the sector in the face of declining exploration has much to do with the breadth of services it provides across the life cycle of well operations including drilling, completion, testing and maintenance. Respondents to the survey reported strong demand for remediation, redevelopment and intervention support for existing wells.”

Employment levels have remained consistently high with more than 15,300 people employed by the sector in 2013 despite the sector citing a shortage of skilled personnel and high attrition (staff turnover). A particularly encouraging statistic is the continued increase in the recruitment of apprentices, which demonstrates the sector’s commitment to developing new employees.

Increase in UK Oil and Gas Offshore Workforce

Increase in UK Oil and Gas Offshore Workforce

Statistics in the 2014 UK Offshore Workforce Demographics Report published by Oil & Gas UK reveal the total number of people travelling offshore has increased by 8.6% compared to 2012, with offshore workers in the 24-29 age group recording the highest percentage growth at almost 14.7%. There has also been a slight drop in the average age for an offshore worker which is consistent with Oil & Gas UK’s findings in previous years.

Dr Alix Thom, Oil & Gas UK’s employment and skills issues manager, said: “The data in this year’s report confirms that in 2006-2013 the largest increase in the offshore population was in the18-29 age group. Their presence, and the fact that the average age of the total offshore workforce has dropped from 41.1 in 2012 to 40.8 in 2013, is helping to dispel the common misconception that the offshore population is ageing.

“However, this good news must be considered against the 8% reduction in production seen in 2013 and the fact that there has been a slight drop in the proportion of female employees relative to the total offshore population. Women now comprise 3.6% of the total offshore population representing a decrease of almost 0.2% since 2012. Given the current level of demand for skilled employees, and the high level of activity on the UK Continental Shelf, it is in the industry’s interest to increase its focus on tackling this lack of gender diversity as it represents a significant, but not fully utilised, pool of talent.”

Weir and MTU to Develop Fracking Power Systems

Weir and MTU to Develop Fracking Power Systems

Weir Oil & Gas and the Rolls-Royce Power Systems company MTU announced they have signed an agreement to develop power systems specifically engineered for hydraulic fracturing. Weir is the leading manufacturer of hydraulic fracturing pumps, and MTU is a market leader in heavy-duty industrial diesel engines.

The system will be used for hydraulic fracking operations during the well completion stage of shale oil and gas projects.

The agreement outlines the companies’ plans to work together to address the market need for more reliable and continuous duty equipment. A team of engineers is concentrating on optimizing the interface of the three most critical components – the engine, transmission and fracturing pump – to truly work as one system. Further, the complete packaged power system will utilize smart controls that provide conditioned monitoring and optimized performance for the operator.

The Weir-MTU announcement builds on Weir’s innovative SPM® pumping technology and the performance of the new MTU Frac Pack, which integrates the MTU Series 4000 T95 diesel engine and the ZF 8 TX transmission.
Steve Noon, Weir Oil & Gas Divisional Managing Director, said the new relationship will utilize the best technology and service capabilities in the market to provide a total integrated offering.

“Our teams are working to develop fully integrated purpose-built power systems for fracking,” said Noon. “This innovative approach will introduce a complete package, with all components built specifically for fracking applications, integrated and optimized to work together, have longer run times and provide greater efficiencies for our customers. It is something the industry has asked for and we are determined to deliver”.

Noon added that the agreement also provides for full service and preventive maintenance of the entire power system. This will be achieved by using Weir’s market-leading service network combined with MTU’s service capability, ensuring close proximity to customers.

Dr. Michael Haidinger, Chief Sales Officer of Rolls-Royce Power Systems, said both companies have a long history of producing and supporting highly reliable and safe products specifically for use in harsh fracturing environments.

“Together we are taking a completely integrated approach to designing a pumping power system that addresses the challenges faced by frack site operators. We’ve brought our best engineering minds together to design a solution that enhances run times for the engine, transmission and pump, creating a robust system that will enhance operations. It is a new approach that offers customers one efficient supplier for such a critical system.”

UK and Japanese Firms Sign Nuclear Clean-up Deal

UK and Japanese Firms Sign Nuclear Clean-up Deal

Japanese company TEPCO, who are charged with decontaminating the Fukushima plant which was devastated by a tsunami in 2011, has signed an historic co-operation statement with UK nuclear operator Sellafield Ltd.

The agreement is the first step in enabling formal arrangements for the transfer of knowledge and experience between TEPCO and Sellafield Ltd, the company responsible for cleaning up the Europe’s most complex nuclear site, in Cumbria. It will give TEPCO access to the skills available from SMEs engaged in the Sellafield Ltd supply chain and provide access for the UK to advancements made at Fukushima over the coming years.

It is due to be signed at the Imperial College at a ceremony attended by Ed Davey, Secretary of State for the Department of Energy and Climate Change (DECC) and the Japanese Prime Minister, Shinzo Abe, who is in London this week on a state visit.

The co-operation statement was brokered by the Nuclear Decommissioning Authority (NDA), the government agency responsible for the clean-up of the UK’s civil nuclear legacy, and owner of the Sellafield site. The NDA lead the UK’s response to theFukushima incident, facilitating the availability of equipment and expertise from Sellafield and other UK nuclear operators.

The co-operation statement builds on that foundation by beginning to formalise a working relationship between Sellafield and the Japanese.

Sellafield Ltd Managing Director, Tony Price, heralded the agreement as a major step forward for the company and the wider UK nuclear industry.

He said: “We have much that we can help the Japanese with initially, as they move their focus from power generationto cleaning up and decommissioning.

“But the technical expertise of the Japanese is renowned the world over, they are experts in design and manufacturing and, judging by their past performance on everything from motorcycles to nuclear reprocessing –once they start decommissioning in earnest there will be much that they can teach us.

“What this co-operation statement will do is formalise a working relationship which has existed for 60 years, between the UK nuclear industry and the Japanese, and it opens up channels for us to work more closely together now and in the future.”

Optimism in Oil and Gas Capital Increasing

Optimism in Oil and Gas Capital Increasing

According to EY’s 10th bi-annual Oil and Gas Capital confidence barometer—a survey of 1,600 senior executives in more than 70 countries including 169 oil and gas executives—just over half (54%) of the oil and gas respondents view the global economy as improving, down sharply from 71% in October 2013. Economic caution is reflected in job creation prospects too, with the portion of oil and gas respondents expecting to grow jobs declining from 57% in October 2013 to 37% in April 2014.

Andy Brogan, EY’s Global Leader Oil and Gas Transaction Advisory Services said: “The barometer shows a new consensus in oil and gas prices and relentless pressure on capital efficiency is driving a greater emphasis on optimization vs. growth. A conservative view on oil and gas pricing, combined with pressure to deliver capital returns has led to the industry adopting a slightly more cautious approach.”

In a flat oil and gas price environment and amidst rising shareholder activism, cost-cutting and operational efficiency are no longer just operational issues but have become a strategic imperative. The survey shows that 40% of respondents are focused on cost reduction and operating efficiency, up from 28% in October 2013. The focus on growth has slowed with only 39% of respondents seeing growth as their primary focus, down from 66% in October 2013.

The impact of shareholder activism has been felt with over 90% of respondents indicating that issues raised by shareholders have shaped boardroom agendas. Attention to costs has topped the shareholder demands and boards are responding accordingly.

“Growth agendas have shifted to a new path, featuring more innovative and high-risk organic growth. More emphasis is being placed on fast tracking current portfolio opportunities than before,” said Brogan.

Thirty percent of respondents expected to pursue acquisitions in the next 12 months, which is a decrease from 39% in October 2013. Despite the relatively low levels of M&A activity, the oil and gas sector remains broadly optimistic that deal activity will increase. The reduction in activity has been more of a deal value than deal volume issue. A big contributor, aside from general caution on the economic environment, has been valuation gaps which now appear to be closing.

“The deal market in oil and gas is traditionally very resilient but we are in more of a buyers’ market now than we have been for some time,” said Brogan. “We expect the general note of caution to continue to deter some of the bigger deals but expect that deal volumes will remain reasonably robust. The continuing focus on emerging market activity appears to be here to stay.”

Tullow Sells UK Gas Assets

Tullow Sells UK Gas Assets

Tullow Oil plc has announced that its subsidiary Tullow Oil SK Limited has entered into an agreement to sell 53.1% of its Schooner unit interest (currently 93.1%) and 60% of its Ketch asset (currently owned 100%) in the UK Southern North Sea to Faroe Petroleum (UK) Limited.

The total consideration is the equivalent of US$75.6 million plus a royalty on future Schooner developments, subject to the terms of the sale and purchase agreement. Of the US$75.6 million total consideration, US$58.8 million will be paid on completion of the sale with the balance payable on the achievement of cumulative production milestones. The purchase has an effective date of 1 January 2014 and is expected to complete by the end of the year at which point operatorship of Schooner and Ketch will transfer to Faroe.

The Group continues to market its remaining Southern North Sea gas assets in the UK and in the Netherlands with value being increased in the latter following the gas discovery at the Vincent well announced earlier in the year. This transaction follows the sale of Tullow’s gas assets in Bangladesh and the agreement to sell the Pakistan business in 2013, and is in line with the Company’s strategy of active portfolio management and monetisation of assets.
Tullow’s production guidance for 2014 remains unchanged at 79,000-85,000 barrels of oil equivalent per day with a pro rata adjustment to be made after the sale of these assets completes.

Aidan Heavey, Chief Executive of Tullow Oil plc, said: “Schooner and Ketch have been critical to Tullow’s success and growth since they were acquired in 2005. During a transformational period of growth for Tullow, they provided important, stable, cash flows which have helped to fund the Group’s successful frontier exploration campaigns.

“However, we have a clear strategy of constant and active portfolio management and have focused our business on conventional light oil. Sales and farm-down processes continue across Tullow and, although transactions are taking longer than initially expected, we are making good progress in tough but improving market conditions.”

UK Energy Big 6

UK Energy Big 6 “to Lose Dominance in 2019”

The UK’s “Big 6” energy companies are losing customers to their smaller rivals at such a rate that they will control less than 50% of the residential market in 2019, according to energy price comparison site

The site claims that three quarters (74%) of switchers now choose a cheaper tariff from a smaller company – such as Ovo Energy or First Utility – rather than paying a premium to one of the more-established brands (British Gas, Scottish Power, Npower, E.on, SSE & EDF Energy). As illustrated in this table of switches taking place through the website since 2011, the percentage of people opting for a smaller independent supplier has risen sharply from just 1% in just three years.

According to Energy UK, the trade association for the UK energy industry, over 250,000 people now switch their energy company or tariff every month, with the market share held by the major suppliers subsequently having dropped below 95% for the first time in January 2014.

Scott Byrom, energy expert at, said: “Even with the current switching volume, the balance of power is shifting away from the Big 6 at an alarming rate. It’s about time they ditched meaningless claims about having the cheapest ‘standard’ tariffs and actually offered something competitive. Customers are clearly fed-up about being overcharged and are voting with their feet.”

At the time of writing, one of the “Big 6” companies appeared in the Top 10 Best Buy table for one year fixed tariffs: a hotly-contested battleground for customer acquisition with First Utility joining Ovo Energy in the past week to offer sub-£1,000 energy deals. This compares to an average annual bill of £1,198 – or £200+ a year more – for customers on a standard variable tariff from the “Big 6” suppliers.

“Switching sites are a pivotal platform for any smarter supplier outside of the ‘Big 6,’ enabling new entrants to get their brands off the ground with no upfront marketing costs,” said Byrom. “Meanwhile bigger suppliers are encountering very little engagement from consumers actively looking for a better deal, of which there is a rapidly growing number.”

UK Must Adapt to Tap into Overseas Procurement Market

UK Must Adapt to Tap into Overseas Procurement Market

Public procurement of goods and services in 12 key emerging markets will almost triple to £452bn by 2030, according to new CBI research. But the UK will only capture £11bn of this growth, if its market share stays
the same.

Procurement from overseas by developing countries has historically focused on sectors with no domestic equivalent, while other contracts have tended to go to domestic companies or public bodies. But research suggests that public sector organisations in these countries will rapidly increase their purchase of goods and services, driven by the needs of ageing populations and a growing middle class.

China will lead the growth in public procurement with its market increasing by 7.4% each year. Indonesia and Turkey will also rapidly increase their spending by 6.2% and 6% respectively.

The demand for services will grow at the fastest rate, by 6.1% each year, and will be worth £110bn in 2030.

Construction will grow by 5.9% each year and will be worth £97bn in 2030.

Manufacturing will remain by far the largest component of demand in absolute terms, at £242bn in 2030, growing at 5% each year.

The three fastest growing areas of overseas procurement spend will be: health infrastructure (predicted to increase by 351% by 2030), transport services (254%) and recycling equipment (250%).

Among the measures the CBI is recommending to tap into this growth are the establishment of UK Government contracting agencies. The CBI also calls on the Government to support UK public services firms, including through overseas trade missions, and to stop using rhetoric which could damage the sector’s reputation.

Katja Hall, CBI Chief Policy Director, said: “The size of the exports prize for public services firms in emerging markets is growing at a rate of knots, driven by a ballooning middle class and an ageing population.

“This is a huge opportunity for UK businesses, which have an established track record in many key growth areas like health, transport and recycling. But winning public contracts in these countries is often an uphill battle, so firms need a leg up.

“To boost opportunities for our exporters, we want the UK Government to set up contracting agencies with priority markets, to help them navigate the procurement maze. We also want the EU-US trade talks to prioritise public procurement.

“Politicians must guard against using rhetoric which could damage the reputation of the UK public services industry overseas. I want to see Ministers championing this important economic sector and to get to a point where CEOs of public services firms are just as readily invited on trade missions as manufacturers.”

The CBI research shows that the UK has a strong track record in many of these growth areas but without Government and EU support it will miss out on market share.

Global AUM to Exceed $100tn

Global AUM to Exceed $100tn

Research from PwC predicts that global assets under management (AuM) will rise to around $101.7 trillion by 2020, from a 2012 total of $63.9 trillion. This represents a compound annual growth rate (CAGR) of nearly 6 per cent.

The report, Asset Management 2020: A Brave New World, also finds that assets under management in South America, Asia, Africa and Middle East economies are set to grow faster than in the developed world in the years leading up to 2020, creating new pools of assets that can potentially be tapped by the asset management (AM) industry. However, the majority of assets will still be concentrated in the US and Europe.

PwC predicts that assets under management (AuM) in Europe will rise to $27.9 trillion by 2020, from a 2012 total of $19.7 trillion. This represents a CAGR of 4.4 per cent.

Global AuM growth will be driven by pension funds, high-net-worth individuals (HNWIs) and sovereign wealth funds. At the client level, the global growth in assets will be driven by three key trends:

• The increase of mass affluent and high-net-worth-individuals in the South America, Asia, Africa and Middle East region.

• The expansion and emergence of new sovereign wealth funds (SWF) with diverse agendas and investment goals.

• The increasing defined contribution (DC) schemes partly, driven by government-incentivised or government-mandated shift to individual retirement plans.

In 2012, the AM industry managed 36.5 per cent of assets held by pension funds, sovereign wealth funds, insurance companies, mass affluent and high-net-worth-individuals. If the AM industry is successful in penetrating these clients assets further, PwC believes that the AM industry would be able to increase their share of managed assets by 10 per cent to a level of 46.5 per cent, which would in turn represent $130 trillion in Global AuM.

Rob Mellor, Asset Management 2020 leader at PwC, said: “Amid unprecedented economic turmoil and regulatory change, most asset managers have not had time to bring the future into focus. But the industry stands on the precipice of a number of fundamental shifts that will shape the future of the asset management industry.

“Strong branding and investor trust in 2020 will only be achieved by those firms that avoid making mistakes that attract the ire of investors, regulators and policymakers. Asset managers must deliver the clear message that they deliver a positive social impact to investors and policymakers. The efforts required to satisfy investors and policymakers cannot be left to others.

“The coming years will bring the industry higher volumes of assets than ever before which places more responsibility on firms to manage these assets to the best of their collective ability. Asset managers must clearly outline the value they bring to customers while being fully transparent over fees and costs.”