Energy Risk Africa

Energy Risk Africa

Sunday, February 27, 2011

Oil prices soar to two-year high on worries over crisis in Libya

Oil prices soared to the highest level in more than two years as Libyan leader Moammar Gadhafi urged his supporters to attack protesters who are violently challenging his 42-year rule.
Only a small part of Libya's oil production appeared to be affected, though analysts fear that similar revolts will spread to OPEC heavyweights like Iran.
    1. Benchmark West Texas Intermediate for April delivery jumped $5.71, or 6.4 percent, to settle at $95.42 per barrel on the New York Mercantile Exchange. Oil hasn't been that high since it settled at $97.92 on Oct. 1, 2008.
Libya holds the most oil reserves in Africa and is the world's 15th-largest crude exporter at 1.2 million barrels per day, according to the Energy Information Administration. As the Libyan government cracked down on protesters, Western oil companies including Eni and Repsol-YPF temporarily suspended oil production in the country. BP has started evacuating workers.
Any production losses in Libya could be quickly absorbed by other countries like Saudi Arabia. The official Saudi Press Agency quoted Saudi Arabia's oil minister Ali Naimi as saying that Saudi's production capacity of 12.5 million barrels per day can help "compensate for any shortage in international supplies." Saudi Arabia currently produces around 8 million barrels per day.
The International Energy Agency said in a statement on its website that it is ready "to make oil available to the market in the event of a major supply disruption." The Wall Street Journal reports that the IEA plans to meet this week to discuss the possible release of strategic stockpiles, if necessary.
The main concern stalking markets is that revolts in the Middle East and North Africa will spread to other members of the Organization of Petroleum Exporting Countries, particularly Iran, the group's second-largest producer.
Energy consultant Jim Ritterbusch said a "fear premium" has added about $10 per barrel to the price of oil. That means prices could tumble once the region settles down. "But that doesn't look like it's going to happen anytime soon, he said."
Eni, Libya's biggest oil producer, idled operations that produce one-quarter of the country's output at 244,000 barrels of oil and gas per day. Spain's Repsol-YPF, which also suspended production Tuesday, produces about 34,777 barrels a day. Austrian oil company OMV, which produces about 33,000 barrels a day said it will reduce production because of the unrest.
BP evacuated 70 people from Libya, including 40 workers and their families. BP isn't producing oil in Libya, but it has been working on an exploration project. BP has 140 employees at its Libyan operation.
Other oil companies, including Royal Dutch Shell PLC, Marathon Oil Co. and Germany's Wintershall, also started pulling out employees. Meanwhile, key Libyan officials resigned and air force pilots defected amid a bloody crackdown on the protests.
At least 300 people have been killed in the uprising, according to New York-based Human Rights Watch. As units of Gadhafi's army defected, protesters said they were watching several oil fields and pipelines, hoping to protect them against damage or vandalism.
At least three ports that handle oil shipments have been closed, according to one resident, Ahmed al-Zawi.
In Iran, government opposition groups this week held their largest protests in more than a year, resulting in two deaths, though the demonstrations have failed to gain the momentum seen in North Africa.
Two Iranian naval vessels entered the Suez Canal on Tuesday en route to a training mission in Syria, officials said, the first time that Tehran has sent military ships through the strategic waterway since the 1979 Islamic Revolution.
Brent crude, which is delivered around the world and is seen as a better reflection of global demand than WTI, added 4 cents to settle at $105.78 per barrel on the ICE Futures exchange. Brent is considered to be more susceptible to disruptions in Middle East oil supplies, while large U.S. stockpiles of crude have helped keep WTI prices lower.
Looking ahead, there are also knock-on effects from high oil prices. A jump in energy costs could hurt consumer spending and stymie a fragile recovery in developed countries.
The crisis in the Middle East and North Africa — which has brought down governments in Tunisia and Egypt and sparked protests in Yemen, Bahrain, Iran, Morocco and Jordan — will put added pressure on weaker economies, especially those in Europe, according to Capital Economics.
In the U.S., a run-up in fuel costs could force businesses and consumers to spend less on other things, slowing both the economy and the pace of hiring.
The U.S. economy picked up momentum at the end of 2010 and is probably growing at about a 3.2 percent annual rate or more in the first three months of the year. A $10 increase in the price of oil shaves off roughly 0.4 percentage point from economic growth, according to economist Brian Bethune at IHS Global Insight. The economy could be pushed into a recession if oil prices were to skyrocket to $150 or $160 a barrel, Bethune and other economists say.
In other Nymex trading in March contracts, heating oil rose 7.75 cents to settle at $2.8035 a gallon and gasoline gained 5.63 cents to settle at $2.7464 a gallon. Natural gas futures lost about a penny to settle at $3.867 per 1,000 cubic feet.

Kenya's Shilling Weakens to More-Than Eight-Month Low as Oil Prices Surge

Kenya’s shilling depreciated to the weakest level in more than eight months against the dollar as oil rallied to a 30-month high and businesses sought to buy dollars to meet month-end obligations.
The currency of East Africa’s biggest economy slumped as much as 1 percent to 82.59 per dollar, the weakest intraday level since June 7, and traded 0.2 percent lower or 82 at 12:37 p.m. in Nairobi.
Brent oil futures rose as much as 7.7 percent to $119.79 a barrel on the London-based ICE Futures Europe exchange, the highest since Aug. 21, 2008, as Libya’s violent uprising reduced supplies from Africa’s third-biggest producer. Loyalists of Libyan leader Muammar Qaddafi sought to crush dissent in the capital of Tripoli as his opponents tightened control of eastern cities and President Barack Obama condemned the regime’s attacks.
“The shilling has weakened due to high demand for dollars by businesses to settle their month-end invoices and with the political crisis in the Arab world, the surge in oil prices will pile more pressure on the local unit in the coming days,” Steve Lagat, a dealer at Nairobi-based CFC Stanbic Bank Ltd., said in a phone interview today. The shilling may “breach the psychological 83 shillings to the dollar level as global oil prices surge,” Lagat said.

Wednesday, February 23, 2011

Energy prices set for roller-coaster ride as Russia weighs in

While he fell short of bluntly saying, "I told you so," Alexei Miller, arguably Russia's most powerful energy executive, warned the West that it may not be able to count on Mideast and North African energy supplies as it once did.
Coming from Miller, the chief of Russian energy giant Gazprom, it was a not-too-subtle nudge that global importers of energy, especially Europe, should invest more in Russian oil and gas capacity.
"The question about the reliability of gas deliveries from North Africa to Europe should be more critically examined than it is currently." said Miller in comments to NTV, a Gazprom-owned Russian broadcaster.
Gazprom told CNN its executives were not available to further clarify his comments. However, Gazprom has been one of many Russian energy companies trying to attract more foreign investment to further exploit its vast and proven oil and gas reserves.
"Perhaps Russia is trying to issue some friendly advice (to the West) that maybe it's time to diversify our sources of energy. It is good for Russia for it's certainly in a position to do more." said Liam Halligan, chief economist of Prosperity Capital in London.
The assumption that we can assume stability in, say, Saudi Arabia ... is now going to be doubted by the markets.
According to U.S. government statistics, Russia is the world's largest oil producer and second-largest exporter after Saudi Arabia.
But the timely, if opportunistic, warning darkened an already jittery mood among energy analysts as some now discussed the possibility of an oil "superspike" that could fuel a commodities crisis in the months to come.
How high could oil go? While industry insiders agree a spike of $200 a barrel is unlikely, many are now unwilling to rule out that kind of a price range. Oil cartel OPEC has tried to calm concerns, saying spare capacity exists to soften the blow and moderate price spikes. But some now doubt the organization has a handle on spare capacity.
"There is growing concern in the market that there isn't the spare capacity in Saudi Arabia that the markets have been told there is," said Charles Robertson, chief economist at Renaissance Capital.
"The second problem is that the markets can't be as relaxed about the Middle East and North African now as they were even a week or two ago," he said.
"What matters about Libya is that you've seen a regime which has been stable for the better part of 30 years and is in danger of being overthrown. The assumption that we can assume stability in, say Saudi Arabia, or other countries around the Gulf, that assumption is now going to be doubted by the markets," Robertson said.

Tuesday, February 8, 2011

DYNAMICS OF RISK MANAGEMENT CERTIFICATIONS

Professional certifications are important to both the individuals that obtain them as well as the organizations in which those individuals work. In the financial field, personnel involved in risk
Professional certifications are important to both the individuals that obtain them as well as the organizations in risk management can obtain several important certifications from two major international groups. In today’s uncertain financial environment, professional certifications can go a long way to calm investors and regulators, as well as restore faith in the financial system in general.

But before we look at the organizational and individual benefits of the most common risk management certifications, we should spend some time becoming generally familiar with the certifications and the groups that offer them. There are two major groups offering risk management certifications: the Professional Risk Managers’ International Association (PRMIA) and the Global Association of Risk Professionals (GARP). Both of these organizations show their certifications as widely recognized and accepted, although the organizations approach certifications differently
PRMIA offers the Professional Risk Manager certification, or PRM. PRMIA calls the PRM certification “The Higher Standard in Risk Management” and is very flexible on how professionals prepare for the certification exams. The PRM is essentially a validation of skills that are most likely picked up in every day work in the risk management arena. The certification does stress professional standards and integrity in addition to skills and knowledge. Also, the PRM tests an individual’s ability to not only know best practices but his or her ability to apply those best practices in the appropriate situations. The candidate must be a member of PRMIA in order to sit for the certification exams, and, as in many cases with professional certifications, the candidate with other industry certifications, such as the CFA (Chartered Financial Analyst) may have an easier time attaining the PRM. In the industry at large, hiring managers often use the PRM designation as a measurement for the most desirable risk management skills.
GARP offers two major risk management certifications, the FRM, or Financial Risk Manager, and the ERM, or Energy Risk Professional. The FRM, according to GARP, is one of the certifications that is currently desirable to recruiters who are looking to fill senior risk manager positions. There are only around 18,000 FRM’s in the world, which is a small number for a professional certification that is recognized around the world. In order to qualify for the FRM, a professional must have two years related experience and must also be a member of GARP.
The ERM certification is obviously for energy industry risk managers, who must also have at least two years experience in the field of energy risk management. These professionals must also be members of GARP. GARP is in the process of creating a continuing education program and requirements for the ERM certification, which will most likely become a requirement in 2010. In the field of risk management, the ERM is one of the only designations that has or is about to have a continuing education requirement.
It’s a good idea to have a general feeling of what professionals hold risk management certifications - as well as what industries look for these professionals. The top industries with certified risk managers, and whose recruiters look for certifications, are banking, academics, asset management, and government. There are many other sectors of the financial industry in which you will find certified risk managers. Professionals who hold these certifications also hold a wide variety of positions, from junior through executive levels. The most common jobs held by certified professionals in the field are risk managers, analysts, consultants, accountants, traders, portfolio managers, and even operations managers.
What exactly does the professional have to undertake in order to become certified as a risk manager? It depends on the program, but both the PRMIA and GARP certifications are either strictly structured or strictly unstructured in regard to preparation, and both organizations certify only after examination. To obtain a PRM certification, the candidate must take four examinations, either separately within two years or all at once. These exams cover financial theory, financial markets, risk management mathematics, best practices, ethics, conduct, and case studies. PRMIA will help a candidate prepare for the examination through a variety of preparation courses and seminars, but the candidate is not required to “officially” attend any courses. In fact, PRMIA encourages organizations to use the exams separately as ways to test potential job candidates or to test for promotional readiness. As we discussed, a PRM candidate can take the entire battery of tests at one time, or can spread the four out over two years.
The GARP FRM certification is broad based, covering market risk, credit risk, operational risk, and risk management in investments. There is only one exam in order to obtain the FRM certification. The ERP certification, on the other hand, requires about 250 hours of study to prepare and is also only one examination. The ERP core competencies include physical energy markets, risk management compliance, financial trading, and valuation of energy transactions

TOP 100 ENERGY COMPANIES


       
  1. ExxonMobil Corp 21. Enel SpA  
  2. BP 22. EDF  
  3. Gazprom Oao 23. Scottish & Southern  
  4. Petrobras Brasileiro 24. ConocoPhillips  
  5. Total SA 25. Gazprom Neft  
  6. E.On AG 26. Exelon Corp  
  7. Petrochina Co 27. Statoil Asa  
  8. China Petroleum 28. GDF Suez  
  9. Chevron Corp 29. CNOOC Ltd  
  10. Royal Dutch Shell 30. BG Group plc  
  11. LUKOIL 31. Constellation Energy Group  
  12. RWE AG 32. Iberdrola SA  
  13. Reliance Industries 33. Occidental Petroleum  
  14. Rosneft Oil 34. Ecopetrol SA  
  15. Endesa SA 35. PTT Plc  
  16. ENI SpA 36. AK Transneft OAO  
  17. TNK-BP 37. CEZ AS  
  18. Oil & Natural Gas 38. Sasol Ltd  
  19. China Shenhua Energy Co 39. National Grid plc  
  20. Surgutneftegas Oao 40. Repsol YPF SA  
 

 
 

 
 

 
  41. Imperial Oil Ltd 61. Fortum OYJ  
  42. Centrica plc 62. American Electric Power  
  43. Vattenfall AB 63. Chubu Electric Power  
  44. PSEG 64. Dominion Resources  
  45. Origin Energy Ltd 65. Husky Energy Inc  
  46. OAO Tatneft 66. Entergy Corp  
  47. NextEra 67. Veolia Environnement  
  48. EnBW 68. Enersis SA  
  49. Formosa Petrochemical 69. Suncor Energy Inc  
  50. Southern Company 70. Hess Corp  
  51. XTO Energy Inc 71. Murphy Oil Corp  
  52. NTPC 72. International Power plc  
  53. Marathon Oil 73. Sempra Energy  
  54. Tokyo Electric Power 74. Canadian Natural Resources  
  55. EnCana Corp 75. FirstEnergy Corp  
  56. Kansai Electric Power 76. OMV AG  
  57. EdP SA 77. YPF SA  
  58. Gas Natural Sdg SA 78. Indian Oil Corp  
  59. PG&E Corp 79. Duke Energy Corp  
  60. Enbridge Inc 80. Kinder Morgan Energy LP  
 

 
 

 
  81. Woodside Petroleum 91. Plains All American Pipeline  
  82. Consolidated Edison 92. NRG Energy Inc  
  83. SK Energy Co 93. China Coal Energy  
  84. Midamerican Energy 94. Bharat Petroleum  
  85. Edison International 95. AES Corp  
  86. Inpex Holdings Inc 96. Tupras  
  87. Public Power Corp Of Greece 97. Saudi Electricity  
  88. CEMIG 98. CLP Holdings  
  89. Endesa Chile 99. CEPSA  
  90. TransCanada Corp 100. Progress Energy Inc

Monday, February 7, 2011

Top 250 Global Energy Company Rankings


Platts Top 250 Global Energy Company Rankings™ measures financial performance by examining each company’s assets, revenue, profits and return on invested capital. All ranked companies have assets greater than (US) $3 billion. The underlying data comes from Capital IQ, a Standard & Poor’s business.



For some, 2009 was the hangover, for others it spelled readjustment and recovery. Platts Top 250 Global Energy Rankings for 2010 might be taken as a survivors’ guide to the financial crisis. Energy demand slumped in the OECD, while elsewhere the growth rates of the fastest developing economies were all but cut in half. The 2010 rankings, which are based on financial reports from 2009, thus provide a relative picture of which energy industry sectors proved most resilient to the cataclysmic events of the past two to three years.


Illustrating the scale of the shock, Platts physical crude benchmark Dated Brent averaged $97.26 a barrel in 2008, its highest ever annual average, only to slump 36.5% in 2009 to $61.67/b, below the average price level seen in 2006. This took its toll. Total profits for the top ten companies, which are dominated by integrated oil and gas companies, dropped precipitously from $214.042 billion in 2008 to $136.018 billion in 2009.


If oil prices suffered, natural gas suffered more. Globally, natural gas demand experienced what the International Energy Agency called an unprecedented drop in demand. Ex-change-traded natural gas prices, particularly in the United States, plummeted in 2009 in both absolute terms and relative to oil. Profits and prices were hit by the combined success of US unconventional gas production, expanding LNG supply worldwide and diminishing demand.


By contrast, gas sellers dependent primarily on oil indexation and take-or pay contracts for their long-term sales found a measure of protection that others facing gas-to-gas competition did not. The coexistence of these two ways of pricing gas created distinct pressures, impacting on selling and acquisition strategies. The 2009 financial year stood out because of the huge disparity between spot gas, which was cheap, and relatively expensive prices for oil-linked long-term gas sales.


But one person’s loss is another’s gain. As feedstock prices fell from second-half 2008, the power sector, expecting some much-deserved relief, was instead caught in a pincer movement between a near total lack of liquidity in the banking sector and a precipitous drop in demand. It has taken all of 2009 for these companies to find their feet.


Some did so more quickly and effectively than others. As energy feedstock prices have remained relatively low in 2009, oil and gas profits have fallen from 2008, but power sector returns have revived from often negative territory, bringing utilities in many regions of the world back up the Platts rankings.


Nevertheless, the last two years have forced a strategic rethink on the part of utilities and independent power producers. The demand and price outlook remains depressed, challenging previous expansion plans, while the environment regarding carbon pricing in key jurisdictions remains as uncertain as it ever was.


Top Ten


Reigning supreme at the top of the rankings for the sixth consecutive year is US major ExxonMobil. Despite being fifth in terms of asset value, ExxonMobil came second in terms of both revenues and profits. Platts rankings are based on a combination of assets, revenues, profits and return on capital invested for listed companies with over $2 billion in assets. While ExxonMobil’s European gas production declined, the coming on stream of its giant LNG production facilities in Qatar have helped it retain a strong grip on European markets.


Second in the running is the now troubled UK major BP, which improved its position from fourth in the rankings in 2008. This reflects a strong performance in 2009 relative to its peers.




BP’s revenues dropped by a third, but profits by only little more than a fifth. Contrast this with Chevron and Shell, which moved down from second and third respectively to ninth and tenth. Both saw profits more than halve.


However, BP will struggle to retain its position in 2010. Since the start of the Macondo oil spill in the Gulf of Mexico in April, the US’s largest ever oil disaster, BP has rarely left the headlines. The company faces huge liabilities for the damage wrought by the spill. It is expected to weather the storm and resultant financial pressures, but set asides, expenditures and asset sales of around $20 billion will directly impact the company’s resource base and its long-term growth prospects, suggesting a drop in its ranking.


Nevertheless, it is important not to overstate the impact to a company of BP’s size. BP’s shares have already bounced from an apparent floor price, beyond which investors see value in the company. A $20 billion asset write down would shift BP only from fourth to fifth for that indicator. There is also a large gap between BP at third in terms of revenue and the China Petroleum & Chemical Corp which is fourth for this individual indicator.


If BP or one of the other western majors were to fall out of the top ten, who might take its spot? India’s Reliance Industries Ltd, which this year rose to 13th in the rankings from 25th last year, may be a good candidate. It has substantially increased its asset base from $37,188 million to $55,939 million last year and increased revenues on the back of that by almost 50%.




Profitability, however, remains low in relation to its asset base and revenues. Regulated prices in the company’s domestic market may hold Reliance back.


While the top ten rankings remain the preserve of the integrated oil and gas companies, one intruder is evident: German electric utility E.ON AG moved from 45th in last year’s rankings to 6th this year, the only non-IOG company in the top ten, although it is a sizeable gas producer. The company’s revenues fell only modestly, from $120.806 billion in 2008 to $115.772 billion in 2009, but E.ON AG successfully squeezed out $12.045 billion in profit, more than 600% above the previous year.


This also made E.ON first among electric utilities, having been seventh the previous year. However, E.ON has seen a see-saw ride. Reporting profits of $9,991 million in 2007 on revenues of $100,651 million, profits slumped to just $1,929 million in 2008. Last year saw a remarkable recovery from an asset base that had shrunk to $187,476 million from $222,178 million in 2008. E.ON has seen extremes -- 2008’s performance was particularly poor relative to its peers, the rebound in 2009 unusually good.


The slump in profits in 2008 was largely the result of unexpected goodwill impairments relating to acquisitions and to losses from non-operating earnings. In its 2008 annual report, E.ON reported losses attributable to currency differences of €7,879 million ($10,037 million) and to derivative financial in-


Asia on the Ascendant


It is clear that Asia as a whole has substantially improved its position in the global energy firmament over the course of 2009. Of the top ten Asian companies regionally, nine improved their global ranking; of the top 20, 15 improved their global position; while if new entrants are included, out of the top 50 Asian companies, as many as 40 of the top 50 gained a higher global ranking this year to the detriment of other regions. There are now 68 Asian companies in the Platts top 250, compared with 55 last year.


The Asian top ten remains dominated by Chinese and Indian companies. PetroChina Co Ltd retains the top spot, while the China Petroleum & Chemical Corp comes in second, ousting CNOOC Ltd, which falls to sixth place. India’s Reliance Industries Ltd moved from fourth to third, while India’s Oil and Natural Gas Corp Ltd rises from fifth to fourth. Two companies have moved out of the Asian top ten: the India Oil Corp Ltd, which may reflect late financial reporting of its 2009 results, and Japan’s Tonen General Sekiyu Corp which fell from ninth in the regional Asian rankings to 57.


The latter saw a precipitous decline in revenues and profits in 2009, which might be taken as emblematic of the shift taking place within the downstream sector. In this sector -- refining and marketing -- many Asian companies saw their global ranking rise, but their position regionally against energy companies in other sectors declined.


Of the top Asian R&M companies, only three improved their rankings both globally and regionally: India’s Reliance Industries, Taiwan’s Formosa Petrochemical and South Korea’s GS Holdings. Four Asian R&M companies fell in both the regional and global rankings: India Oil Corp., South Korea’s SK Energy Co. Ltd and S-Oil Corp, and India’s Hindustan Petroleum Corp. Ltd. Nevertheless, Asia, and India in particular, continues to dominate the R&M sector with all five of the top R&M companies hailing from Asia, three of those from India.


The fastest rising company in Asia this year was Australia’s Origin Energy Ltd, which jumped from 201st last year to 45th in the global rankings, and from 47th to eighth regionally, owing to an extraordinary turnaround in profitability.


This was the result of one-off factors for a company that was the target of a hostile and unsuccessful takeover attempt by BG Group in 2008. Of the A$6,941 million ($6,422 million) recorded profits in the financial year ending June 1, 2009, A$6,700 million reflected a gain resulting from the dilution of Origin’s interest in Australia Pacific LNG following US major ConocoPhillips subscription for shares to form a 50:50 joint venture.


Nevertheless, Origin’s underlying profits were also up by 20% at $530 million and further gains have been posted for first-half 2010. Origin’s high place in the Asian and global Platts rankings is exaggerated this year by its asset sale related profits, but this is still a company on the rise, one with the cash, assets and partners to expand.


It may drop back in the rankings next year, but the company has laid the basis for long-term growth that is likely to put it on a steady improving trend.


Another strong riser was Taiwan’s Formosa PetroChemical, toughing it out in a sector experiencing fierce competition. Formosa PetroChemical improved its global ranking from 113th to 49th, and its regional ranking from 18th to 9th. Despite revenues dropping by about 27% in 2009, profits rose almost threefold. Revenues have also picked up in 2010 from the declines seen in 2008, although in its second-quarter 2010 results, operating profits in its key refining segment were down.


A significant trend has been the relative rise in the regional rankings of Japanese electric utilities, benefiting from the fall in feedstock prices last year. Tokyo Electric Power Co moved up from 20th in the regional rankings to eleventh, Kansai Electric Power Co from 25th to 12th and Chubu Electric Power Co from 27th to 13th. Power prices in the only partially deregulated Japanese electricity market tend to lag fuel source prices by between three to four months. Japan’s electric utilities were thus hammered in 2008 -- Tokyo, Kansai and Chubu all reported losses for the year -- but benefited in 2009.


New Asian Entrants


Of the new Asian entrants, five are from China, five from southeast Asia, one from India and one from Australia. China’s new entrants are without exception independent power producers -- Shenzhen Energy Group Co Ltd, Huadian Power International Group Ltd, GD Power Development Co and Shenergy Co Ltd. All have been listed on the Shanghai Stock Exchange for some years. In India, the new entrant was also a power company, Tata Power, the country’s largest integrated private power company. Both the Indian and Chinese power sectors are on rapidly expanding paths, suggesting strong growth prospects for the two countries’ electric utilities and IPPs.


In Japan, the Nippon Oil Corp and Nippon Mining Holdings were reorganized to become JX Holdings, while the Hokkaido Electric Power Co returned to the Global top 250. A new Japanese entrant to the top 250 came in the form of the Japan Petroleum Exploration Co, reflecting its increased size with the acquisition in 2009 of the oil product sales units of a Mitsubishi Materials subsidiary. The company has also taken on a 30% interest in the Garraf oil field in Iraq to be developed with Malaysia’s Petronas and a domestic Iraqi oil company, which should promise future growth in its production base.




The number of southeast Asian companies in the top 250 rose from four to nine, two being added in Thailand, one in Indonesia and one in Malaysia, while the Philippines gained its first company in the top rank -- the Manila Electric Co, the country’s largest distributor of electricity. For Thailand, Thai Oil made a reentry, while PTT Aromatics and Refining Plc was ranked 156th overall and 45th in Asia, reflecting the amalgamation of the Aromatics Public Company Ltd and Rayong Refinery Public Company Ltd.


For Malaysia, Diversified Utility YTL Corp Berhad rejoined the Platts 250 at 237, having last been included in 2007 when its ranking was 216. Indonesia also saw an addition -- the only one in the Coal and Combustible Fuels segment -- miner Adaro Energy Tbk entered the ratings at 158th. Adaro, Indonesia’s second largest coal miner, is also the ninth fastest growing company in the top 250 with a 3-year CGR of 40.3%. This year the company signed up to a joint-venture agreement with Australian mining major BHP Billiton to develop resources estimated at 774 million mt, suggesting further growth to come.


BRICs to the Fore


Within the global top 20, eleven companies are from the BRICs -- Brazil, Russia, India and China -- compared with just six the year before. Moreover, while BRICs still account for four of the top ten, all are rising; Russia’s Gazprom gained six places to come third in the top 250 rankings, Brazil’s Petrobras rose five places, PetroChina was up two places and the China Petroleum and Chemical Corp jumped from 23rd place last year to eighth in the global rankings this year.


What these BRIC companies have in common is that, despite all being listed, they are all ultimately state-controlled entities. They all benefit from varying degrees of protection in what are generally large and expanding domestic markets, the Chinese economy being particularly dynamic in terms of oil demand growth. The western majors, while global in reach, exist in more competitive environments, where oil demand declined in 2008 and 2009 and, in Europe and Japan at least, appears to be on a long-term downward trend.


However, the BRIC companies equally have distinct characteristics that make them unique. Gazprom is a gas company rather than an IOG. It can claim in 2009 to have been the world’s most profitable listed energy company. It is expanding the size of its oil subsidiary Gazprom Neft, but its oil arm is listed and reported separately. Petrobras sits on some of the largest oil discoveries in recent decades and has a state willing to strengthen its hold on its domestic upstream. The emergent Chinese companies also have strong state support, but more importantly lie at the heart of the world’s most dynamic economy in terms of car ownership and transportation demand growth.


Notably, if Gazprom and Gazprom Neft were listed as one entity, the combined company would come first in terms of both assets and profits and move from 13th to seventh in terms of revenues. Its ROIC would improve, but remain below that of ExxonMobil.




It might prove enough to come top of the global rankings, although ExxonMobil will in 2010 absorb unconventional gas producer XTO Energy, increasing its overall asset base and revenues. Just as oil major ExxonMobil expands its gas operations, gas major Gazprom is expanding its oil segment.


Otherwise, Russian oil companies did less well than their competitors. Rosneft and TNK-BP, the latter perhaps still suffering from the 2008 conflict between its Russian and its UK shareholders, slipped in the rankings, while Lukoil and Gazprom Neft were pretty much static. Surgutneftegaz rose, but late reporting meant the use of 2008 data, which would be likely to flatter any oil company, owing to higher oil prices in that financial year. This stands in stark contrast to the positive performance of Russian companies in the gas, power and transport sectors.


Speedy Growth


If oil and gas companies generally dominate the energy sector as a whole, their lack of presence among the top fastest growing companies is noticeable, although it is easier for small companies to show increases in growth measured in percentage terms. In Asia, eleven of the top 20 fastest growing companies are involved in the power sector, but only four in oil and gas, whether up or downstream. Five are in the coal and combustible fuels sector, reflecting the presence of the world’s first and third largest coal industries in China and India respectively and the coal export industries of Australia and Indonesia.


Of the five C&CF companies in the fastest growing Asian companies, three are Chinese and two Indonesian. Coal outside Asia figures little, only US company Patriot Coal Corp registering in the Americas. Patriot is growing fast through the development of assets in Appalachia and the Illinois basin, but it is involved in the controversial practice of mountain top removal mining. This is coming under greater environmental and regulatory scrutiny, which may threaten its future growth prospects.


Brazil’s Storage and Transfer company Ultrapar Participacoes SA tops the Americas fastest growing list with a 3-year CGR of 96.0%. Texan R&M company NuStar Energy LP takes up second place, while Canada’s oil sands-based Suncor is the only IOG in the top ten Americas list.


In Asia, the front runner is the Hong Kong-based IPP China Resources Power Holdings, with a 3-year CGR of 50.5%. Thailand’s PTT Aromatics & Refining Plc takes second place, and Indonesia’s Adaro Energy Tbk third. There are no IOG or E&P companies in the Asian top 20 fastest growing company rankings, which are dominated by power sector firms.


In Europe and the Middle East, power companies are again to the fore, making up seven of the top ten fastest growing companies. Russian companies are particularly prominent: of the top ten, RusHydro JSC comes first with a 3-yr CGR of 77.8%, despite a major accident in August 2009, which took offline the company’s 6.4 GW Sayano-Shushenskaya hydro plant and resulted in the deaths of 75 people. Despite this setback the company managed to increase its overall power output in 2009 by 1.7%.


Moscow United Electric Power came in third with 50.0%, E&P and gas specialist company Novatek Oao is sixth with 22.3% and S&T firm AK Transneft Oao is ninth with 20.1%.




This reflects opportunities arising from the deregulation of Russia’s power generating and distribution industries and the willingness of the state to allow the emergence of independent Russian companies in niche areas of markets still dominated by state-controlled giants.


Spain’s Iberdrola continued its strong growth performance. Iberdrola SA is ranked fifth with a 3-year CGR of 30.6%, while its separately listed Iberdrola Renewables SA came fourth with a 3-year CCR of 42.4%. The Abu Dhabi National Energy Co came second with 50.4%.


Sectoral Leaders


While scoring well in terms of fastest growing companies, the C&CF segment in fact declined relative to other segments in the rankings. The average ranking of C&CF companies registering in the top 250 fell from 128.4 last year to
140.6 this year, a lower number denoting a higher ranking. China Shenhua Energy Co Ltd kept its top spot in this segment, but US company Peabody dropped from second to fourth and was replaced by another Chinese company China, Coal Energy Co, in the second slot.


Canada’s Cameco rose from eighth to fifth, but US company Arch Coal dropped out of the top 250 and thus out of the sectoral rankings as well. Patriot Coal Corp and Indonesia’s Adaro Energy Tbk were both new entrants to the sectoral leader board.


Diversified Utilities appear to have weathered the financial crisis and ensuing recession relatively well. The top ten average ranking in this category strengthened from 60.6 last year to 51 this year. Within the sector, RWE of Germany and GDF Suez of France retained their first and second places respectively.


The UK’s Centrica Plc was a strong riser, moving from 145 to 42 in the global rankings, as it returned to profitability, taking fourth place in the top ten DUs. Veolia Environment was another new entrant, while MidAmerican Energy Holdings of Iowa and France’s Suez Environment dropped out of the leader board.


Electric Utilities also did well in 2009. The average ranking for the top ten companies improved from 37.8 to 27.2. This was clearly helped by the rise of UK utility Scottish and Southern from 127 in the global rankings to 23, which helped place it fifth in the EU segment, and E.ON, which moved from 45th to sixth, the only non-IOG to make it into the top ten globally, also putting it first in the EU segment.


IPPs, too, improved their overall position, with the average top ten ranking strengthening from 119.1 last year to 94.9 this year.


There was considerable movement within the group. Maryland-based Constellation Energy Group Inc can be particularly pleased with its exceptional rise from 185th last year to 31st, putting it in the number one slot sectorally for IPPs.


Having suffered a tough price and liquidity environment, along with the rest of the US power sector in 2008, Constellation’s restructuring appears to have brought quick benefits. Although revenue dropped from $19,818 million in 2008 to $15,599 million in 2009, profits turned from a loss of $1,301 million to a gain of $4,503 million.


A notable facet of this sector was the entry to the top ten of two Chinese companies, Huaneng Power International and Hong Kong-based China Resources Power Holdings. Last year, there were only two non-OECD IPPs in the top ten -- Chile’s Endesa and Brazil’s Tractebel Energia SA -- now there are four.


The Chinese companies saw a strong recovery in profits in 2009 as international feedstock prices dropped from the highs of 2008, returning a profit margin to regulated domestic power prices. Leaving the top tier were the UK’s Drax Group, Spain’s Iberdrola Renewables and US IPP Mirant Group.


By contrast, in all of the oil and gas segments -- IOGs, E&P, R&M and S&T -- the average ranking of the top ten companies weakened. This can largely be explained by the rise in oil and gas prices in 2008 delivering windfall profits, and then the subsequent fall in profits in 2009 as oil and gas prices dropped.


In the S&T segment there were no new entrants. Russia’s Transneft stayed on top. The most notable change was Enbridge’s elevation from fourth to second and Williams Companies’ journey in the opposite direction from second to ninth. US pipeline companies look certain to see increased costs arising from stricter safety regulation following Enbridge’s two oil spills in 2010 and Pacific Gas & Electric’s fatal gas line explosion in San Bruno, California.


For Gas Utilities, Eni’s takeover of Belgium’s Distrigas left a vacant spot in the top ten that was filled by the Netherlands’ Gasunie. Spain’s Gas Natural remained at the top, with India’s Gail (India) Ltd moving up from fifth to second.


More change was seen in the IOGs and E&P sectors. For IOGs, Russia’s Rosneft and Italy’s Eni were nudged out of the top ten, while Russia’s Lukoil moved up to come 10th in the sector. The China Petroleum and Chemical Corp also moved into the top ten group, taking seventh place.


The balance has shifted to five companies each for BRIC versus OECD IOGs in the top ten, but Gazprom, the world’s biggest gas producer and exporter, which has taken big strides out of its European comfort zone with LNG trade and supply in Asia and the US, now occupies third place and Brazil’s Petrobras fourth, as opposed to eighth and sixth last year, while BP’s second place is clearly under threat.