10 insight dec[1]

www.platts.com December 2010

Shale: the Great American Gas Revolution page 9

China: Driving the Oil Price

page 19

Mexican Standoff: What Can Come of Cancun?

page 53

www.platts.com December 2010

2011Global Energy Outlook

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insight

December 2010 insight 1

Publisher’s Note

Guest Editor’s Note

Ross McCracken

Patsy Wurster

The 2011 Global Energy Outlook issue of Platts Insight—a key resource for short- and long-term planning—draws on the fi rst-hand knowledge and expertise of just a few of the 250 Platts editorial thought leaders. They will identify key issues from 2010 and uncover potential pitfalls and opportunities for 2011. For example, John Kingston, Platts Global Director of News, tackles the #1 energy story of 2010, ex-amining the impact of the Macondo oil rig explosion and spill, and the impact it may have on aternative energy sources like shale gas.

The Platts Global Energy Outlook Forum—Clean Energy: Fact or Fiction?—was held in conjunction with this publication and the 12th annual Platts Global En-ergy Awards. John Hofmeister, former president of Shell Oil Company, author and founder and CEO of Citizens for Affordable Energy Inc, was the keynote speaker.

The 2010 Platts Top 250 Global Energy Company RankingsTM are also featured in this issue, providing a breakdown of the Top 250 by industry and region, offering commen-tary on trends and movement within the list. And read the inside story, as our judges go beyond evaluating fi nancial metrics, considering customer focus, community in-volvement, integrity and leadership before granting one of these prestigious awards.

This year’s Global Leader’s Section showcases companies and executives who are making major advances in their local communities and across the world through exceptional leadership and innovation.

To view our upcoming publications and other events, visit our web site at www.events.platts.com.

Patsy Wurster Publisher, Platts Insight

Cheap Gas for Dirty CoalIf the Macondo oil spill in the Gulf of Mexico hardened the resolve of the envi-

ronmental movement, it has not resulted in any tangible progress toward cap-and-trade in the United States. Rather the opposite, mid-term elections in the US saw support grow for the right wing of the Republican Party, a section not known for its enthusiasm for regulation, environmental or otherwise.

However, the US has the capacity to reduce its carbon emissions substantially without cap-and-trade, other forms of environmental regulation, or indeed renew-ables. It will replace, just as Europe did, coal with gas in power generation. And it will do so, again as Europe did, not primarily to the tune of a green agenda, but for good commercial reasons.

Aging coal plant forms the backbone of the US generation system, but it faces environmental opposition that can delay and obstruct new plant construction for years, as well as increasing penalties for all of its emissions, not just carbon dioxide. Moreover, it lacks the operational fl exibility of a gas-fi red power plant in a future where fl exibility will become more and more valuable.

In short, building a new coal plant in the US faces a mountain of risk. “Clean coal” cannot come to the rescue. It’s simply too expensive. Natural gas in the US is cheap, making projects where the economics are already challenging—Carbon Capture and Storage, Integrated Gasifi cation Combined Cycle and so on—look deathly. And that goes for new nuclear too.

The result, depending on the incentives provided at federal and state level for re-newables, is likely to be an emerging gas/wind duopoly. And if those shale gas wells do have the rapid decline rates some analysts suggest, never fear, the US already has a whole heap of currently redundant LNG regasifi cation terminals on standby.

Ross McCracken Editor, Platts Energy Economist

2 insight December 2010

Inside

Authors

1 Publisher’s Note Patsy Wurster

1 Guest Editor’s Note Ross McCracken

5 Creative Destruction and Sustainability John Kingston

9 Shale: the Great American Gas Revolution Bill Holland

14 Gas Prices Test Oil Link William Powell

19 China: Driving the Oil Price Ross McCracken

26 OPEC at 50 Kate Dourian

30 Russia Grapples With Modernity Nadia Rodova

34 Thermal Plants to Play Cameo Role in EU Green Dream Henry Edwardes-Evans

39 Premium for US Nuclear Newbuild Aneesh Prabhu and Swami Venketaraman

43 Winds of Change for Renewable Energy David R. Jones

48 Adventures Abroad for Coal James O’Connell

53 Mexican Standoff: What Can Come of Cancun? Frank Watson

57 Petrochemicals: Consolidation and Recovery Shahrin Ismaiyatim

62 Power Sector Revival (Platts Top 250 Global Energy Company Rankings™) Ross McCracken

104 A Refl ection and Dedication Patsy Wurster

Kate Dourian heads Platts Middle East offi ce in Dubai covering energy news and developments in the Persian Gulf states, including Iran, Iraq and other Arabic-speaking countries. Also a member of the OPEC reporting team, she is a fl uent Arabic and French speaker. She received a degree in English literature and mass communication from the American University of Beirut. Her job experience includes three years with the Associated Press in Beirut (1980-83) and then Reuters in Lebanon, Egypt, Morocco, Cyprus and London (1984-2000).

Henry Edwardes-Evans has a bachelor of arts degree from Oxford University, where he studied English Literature. As a trainee journalist at Financial Times Business, he worked on a number of energy-related publications before be-ing appointed editor of EC Energy Monthly in 1996. Henry launched and edited the FT newsletter Power in East Europe, which subsequently became Platts Energy in East Europe. In 2000, he took over editorship of FT’s fl agship energy newsletter, Power in Europe, now Platts Power in Europe, developing power plant trackers and managing three other highly-regarded Platts newsletter titles – Energy in East Europe, Power UK and Power in Asia.

Kate Dourian HenryEdwardes-Evans

Bill Holland ShahrinIsmaiyatim

David R.Jones John Kingston

Ross McCracken James O’Connell William Powell Aneesh Prabhu Nadia Rodova SwamiVenkataraman

Frank Watson


Bill Holland has been covering shale for six years as an associate editor for Platts’ Gas Daily. In addition to shale developments, Bill also covers corporate fi nance, bankruptcies and mergers & acquisitions in the oil and gas industries. A graduate of St. Joseph’s University in Philadelphia with degrees in English and Philosophy, Holland has also done MBA studies at Hood College in Frederick, Maryland. Prior to becoming a reporter and editor at newspapers, television stations and online news services in Florida, he served 15 years in the US Navy as an aviator and deck offi cer.

Shahrin Ismaiyatim, global editorial director of Platts Petrochemicals, joined Platts in 2001. Starting off as a frontline reporter in the Singapore bureau, Shah covered the Asian aromatics, polymers and olefi ns markets. In January 2003, he was posted to London to head Platts’ European petrochemicals division, before assum-ing the responsibility of leading the global team at the start of 2009. Before Platts, Shah was a currency futures and interest rates broker, starting in 1991. He dealt primarily in US dollar and UK Sterling pound interest rates swaps and derivatives.

David R. Jones is Platts’ global renewable energy editor, based in London. An environmental journalist with 20 years’ experience, David edited newsletters on US state and local government, medical waste management, oil pollution, and solid waste before joining Platts in 2001 to cover coal and energy policy.

John Kingston, Platts’ global director of oil, manages a staff of almost 80 editors covering the world’s oil industry. He has been with Platts for 22 years, including stints as managing editor of Platts Oilgram Price Report and editor-in-chief of Platts Oilgram News. Prior to joining Platts, John worked for American Metal Market and for newspapers in New Jersey and Virginia. He is a graduate of Washington & Lee University.

Ross McCracken, editor of Energy Economist, joined Platts in 1999 to run the European and West African crude desk. He was previously an editor with an Oxford University-based political and economic consultancy, and has taught in Poland and China. He holds a master’s degree in European studies from the London School of Economics and his undergraduate degree is from the University of East Anglia.

James O’Connell, international coal managing editor, joined Platts Metals in 2001, covering global precious metals trading. He joined the coal team in early 2007, leading reporters in Europe and Asia producing news for the global coal, electrical and steel industries. He previously worked for Irish

broadcaster RTE. He holds a BA in English and History and a Higher Diploma in Applied Communications from the National University of Ireland.

William Powell is the editor of Platts International Gas Report, a fortnightly with a strong focus on markets and politics. He has worked for Platts since 2001, where he has managed the real-time European news and markets team, and has been writing about gas markets since the mid-1990s. Before Platts he held senior positions at Financial Times Energy, Argus Media and Heren Energy. He is a Russian speaker and a graduate of London University.

Aneesh Prabhu is a director in Corporate and Government Ratings at Standard & Poor’s. He is also a credit analyst for a number of large electric companies in the PJM interconnect and Mid-Atlantic regions. Aneesh is a Charterholder of the CFA Institute and holds the Financial Risk Manager (FRM) certifi cation of the Global Association of Risk Professionals (GARP). Aneesh has an MBA from the University of Wisconsin, Madison, and holds a BE in electronics and communications engineering from the Indian Institute of Technology, Roorkee.

Nadia Rodova, managing editor of Platts Moscow offi ce, joined Platts in 2004 to cover energy markets in Russia and the post-Soviet area. She previously worked for the Australian Broadcasting Corporation and a number of economy-focused publications in Russia. She holds a Higher Diploma in Finance from Rus-sia’s Financial Academy and in Journalism from the Moscow State University.

Swami Venkataraman is a director in Corporate and Government Ratings with Standard & Poor’s, and a member of the Utilities, Energy, and Project Finance Ratings Group. He joined S&P Indian affi liate CRISIL in 1997 and has worked since 1999 in both the New York and San Francisco S&P offi ces. He is a Chartered Financial Analyst, holds a B.Tech from the Indian Institute of Technology and an MBA from the Indian Institute of Management.

Frank Watson, managing editor of Platts Emissions Daily, is a fi nancial jour-nalist and editor specializing in energy markets. He has headed up the global emissions team at Platts since May 2008, having held the position of Europe Editor on emissions markets since August 2005. Frank developed Platts’ cov-erage of the emerging EU Emissions Trading Scheme, UN Clean Development Mechanism and Joint Implementation schemes, covering regulatory policy under the EU ETS and Kyoto Protocol, producing independent over-the-counter price assessments, market commentary and analysis.

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781-430-2114, [email protected]

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CUSTOMER SERVICE Circulation Manager: Ann Forte 720-548-5479, [email protected] Article reprints and permissions: The YGS Group +1 717-505-9701, ext 105, [email protected]

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PLATTS NEWS & PRICING SERVICES VP, News & Pricing: Dan Tanz Global Director, News: John Kingston Global Director, Oil: Dave Ernsberger Global Director, Power: Larry Foster Global Director, Petrochemicals: Shahrin Ismaiyatim Global Director, Metals: Karen McBeth Global Director, Markets: Jorge Montepeque

Get a free subscription at: http://marketing.platts.com/forms/SMSInsightSubscribeor send e-mail to :[email protected]

ISSN 2153-1528 (print)ISSN 2153-1536 (online)


The Macondo oil spill in the Gulf of Mexico made it very clear: the US needs to get off foreign oil. The US needs to start using more solar, wind, biomass and conservation. We’re run-ning out of oil, don’t you see, and even if we do have it, it does nasty things like this. In the weeks after the tragic April 20 explosion and subse-quent spill this was a constant refrain. And, of course, the word sustainable was heard many, many times.

The problem is that advocates of swapping a petroleum-based econo-my for one reliant on renewables are missing the mark. While biofuels can displace oil as a transportation fuel, and have to a degree done so, solar and wind power in the United States have to compete with the growing 800-pound gorilla of natural gas, pri-marily from shale plays. And that’s even before shale gas technology has made its way to other countries.

The legendary Austrian economist Joseph Schumpeter referred to “cre-ative destruction,” a free economy’s irresistible force where changes in customer demand and the supply of market-altering goods and services

fundamentally alter the landscape of a market. While economists, peak oil disciples and those intractably opposed to oil thought they were

creative destruction

Creative Destruction and SustainabilityJohn Kingston, Global Director, Platts News

The Macondo oil spill in the Gulf of Mexico has prompted calls for a new and sustainable energy future based on home grown renewables. But all over the US, the forces of creative destruction have already been busy forging a new energy era, one based on natural gas.

Illustration by Nelson Sprinkle


2011 global energy outlook - creative destruction

having their “ah-ha” moment when Macondo blew out, this creative de-struction was occurring in the city of Fort Worth, in Pennsylvania, in south Texas, and in every other area of the US with a shale gas resource. It was being driven by drill bits slic-

ing through shale rock, followed by a rush of high-pressure water and oth-er fl uids, freeing massive volumes of once unreachable natural gas.

Gas Keeps FlowingIt’s diffi cult to overstate the impact

that shale gas has had in the years since George Mitchell fi rst successfully com-bined hydraulic fracturing and hori-zontal drilling. And the game is only just beginning, possibly redefi ning the boundaries of what is considered “sus-tainable.” Consider the following:

◆ In mid-2009, T. Boone Pickens cancelled his giant wind farm in the Texas Panhandle. While much news coverage at the time cited transmission problems as a key reason for the deferral, Pick-ens told Newsweek in an interview, when asked the reasons behind his decision: “The price of natural gas dropped. When it goes below $7 (per Mcf), it’s hard to fi nance those lines. We’re now at $4.”

◆ Constellation Energy canceled plans in October to build a new nuclear plant in Maryland. One of the reasons cited: low natural gas prices.

◆ There is now an unprecedented spread between oil and gas prices in the US. As a result, gas drilling has taken an strange turn. The liq-uids that come up with the gas are priced against crude. The value of the liquids are so robust that they support gas prices of . . . well, no-body has an exact number, but the

fact that some people are saying “zero” should give an indication of what’s going on. The normal swings in the natural gas market, where oversupply leads to low prices and then production shut-ins, allow the market to rebalance supply and demand. But that isn’t happening anymore, primarily be-cause the spread between gas and oil keeps these wells profi table, and the gas keeps fl owing.

Multiple ImpactsExcept in competitions won by very

smart college students, solar cells can-not power a car. Wind turbines on the top of an automobile would be silly and make it tough to get through an underpass. Fuel for electricity genera-tion on the one hand, and liquid fuels for transportation on the other, have long occupied separate universes.

The natural gas boom, which has still to be exported outside the US, has the potential to link markets in ways that LNG mildly threatened to, but never really did. If the most ebullient and optimistic forecasts are accurate, the impact is immense:

◆ The US petrochemical and fertiliz-er industries will receive an enor-mous shot in the arm by being able to use natural gas as a feed-stock at prices far cheaper than the gas prices of other countries. This will be aided by the fact that outside the US, gas pricing is pre-dominantly linked to oil.

◆ The long list of potential LNG facilities to be built in the US is dwindling. With gas from shale so abundant, why spend billions of dollars building receiving ter-minals that already face heavy lo-cal opposition and for which there may simply be no market?

◆ LNG liquefaction plants from Ni-geria to Qatar to Trinidad face a much smaller US market than originally envisioned. That means more LNG for the rest of the world. The shrinkage of the US LNG mar-ket is, in essence, the US exporting

. . .solar and wind power in the United States have to compete with the growing 800-pound

gorilla of natural gas.


2011 global energy outlook - creative destruction

its gas surplus to other countries.◆ The Honda Civic GX NGV is the

only Natural Gas Vehicle current-ly sold in the US. Will low-priced natural gas prompt the develop-ment of new cars and new distri-bution systems to power them?

The possibilities are endless. Is the future of automobile propulsion a plug-in hybrid, charged overnight off a grid supplied by a natural gas-fi red power plant, taking market share from coal? Or is it a hydrogen fuel cell, with the hydrogen provided through the process known as reforming, fueled by natural gas? Or is it just straight NGVs, running compressed natural gas straight out of any one of the US’ many shale plays?

Whatever creative destruction path gets followed, it is clear that no matter how beloved they may be, solar and wind are going to have an extremely diffi cult time competing against this gas bonanza. Generation costs for one kilowatt hour of electricity vary wide-ly, but an estimate by research compa-ny SolarBuzz recently put the cost of a combined cycle gas turbine at 3-5 cts; biomass gasifi cation at 7-9 cts; wind at 4-7 cts; and solar photovoltaics at any-where from 20 to 50 cts. SolarBuzz, as the name implies, is relentlessly up-beat about solar’s future.

Wind has become more competi-tive, but its lower carbon footprint is starting to run up against its rather large visual and land-eating foot-print. In a classic half empty/half full debate, the US Interior depart-ment in April approved the Cape Wind project, a 130-turbine 420 MW facility that will power the Cape Cod area of Massachusetts. Good news for wind! However, its construction drew heavy, well-funded opposi-tion from local residents who didn’t want to see those turbines from their beachfront properties. That contro-versy went on for close to 10 years, and opponents are still vowing to take Cape Wind to court following the Interior department approval. A decade, for one project.

Shale Gas OppositionThe gas-fueled future does have its

critics. They are not so much against the use of gas, but there is a serious school of analysts that believes the projections of gas as far as the eye can see are fl awed. It’s not that they don’t believe the reserves exist. It’s because they don’t see shale gas’ production levels as sustainable.

One of the most outspoken and best-known shale skeptics is Art Ber-man, an independent geophysicist who has written and spoken exten-sively about his views on long-term shale gas viability. In a speech last year before the Association for the Study of Peak Oil, he laid out the crux of his argument. Companies produc-ing shale gas are promoting two con-current trends: that producing shale gas can simultaneously be low risk/high reward, and that an exploration venture can have high capital costs and low gas prices at the same time, and still make money.

He describes the balance sheets of major shale gas players as having huge debt load. He says they engage in activity that involves frequent writedowns of assets, producing lots of gas to generate quick cash, and then selling more assets to generate cash to drill more wells to produce more gas to . . . and so on. Berman’s criticism, expressed by others, is that the current glut of natural gas, sup-plied by shale plays, cannot be sus-tained because depletion rates from shale wells are so enormous. The plays will not be providing an end-less supply of gas 30 years from now, according to this argument.

But for now, that surplus does exist. Futuristic dreamers looking over that hideous orange-like slick that cov-ered the Gulf of Mexico after the Ma-condo spill, and thinking they were seeing the key to a radically-changed energy future, might want to check the benchmark Henry Hub natural gas price before getting too excited. That price—which as you read this probably starts with a four—may be a dream-killer. ■


Chattanooga

Eagle Ford

Rio GrandeEmbayment

Texas-Louisiana-

Mississippi Salt Basin

Uinta Basin

Devonian (Ohio)

MarcellusUtica

Appalachian

BasinAntrim

Barnett

Bend

New Albany

Woodford

Barnett-Woodford

Lewis

Hilliard- Baxter-

Mancos

Excello-Mulky

Fayetteville

Floyd-Neal

GammonCody

Haynesville-Bossier

Hermosa

Mancos

Pierre

Conasauga

Pearsall-Eagle Ford

MichiganBasin

Ft. Worth Basin

Palo DuroBasin

PermianBasin

IllinoisBasin

AnadarkoBasin

Greater Green

River Basin

Cherokee Platform

San JuanBasin

WillistonBasin

Black WarriorBasin

Ardmore Basin

Paradox Basin

RatonBasin

Maverick Sub-Basin

Montana Thrust

Belt

Marfa Basin

Valley and Ridge Province

Arkoma Basin

Forest City Basin

PiceanceBasin

Shale Gas Plays, Lower 48 States

0 200 400100 300

Miles

±Stacked Plays

Shale Gas Plays Basins

Deepest / Oldest

Shallowest / Youngest

June 2008: The NYMEX natural gas futures contract rolls off the board at its highest closing price ever, $12.753/MMBtu. Summer heat coupled with the annual hurricane threat to Gulf of Mexico production spooks a North American market where gas demand has outstripped gas supplies for more than a decade. Applications for dozens of LNG terminals crowd the US regulatory dock-ets at the state and federal levels. The state of Alaska renews its push to build a $40 billion pipeline to carry gas from the North Slope to the Lower-48 states, alleviating a shortage in the world’s larg-est gas-burning market. Despite stiffer royalty taxes, drillers in the Canadian province of Alberta punch ever more holes in the ground to satisfy the gas behemoth to the south willing to pay more than $10/MMBtu for the supply.

June 2010: The NYMEX contract rolls off the board at $4.804/MMBtu, a 62% drop in two years. The gas futures contract will fall below $4/MMBtu as the summer progresses without a ma-jor storm, while the rig count falls as US gas drillers further reduce activity in reaction to low prices. Gas produc-

tion grows anyway, reaching an all-time high of 26.2 Tcf for the year. The list of canceled LNG terminals grows almost monthly. New terminals along the Gulf Coast fi le for permits to export gas rather than import it. International engineering giant Fluor says that with US gas prices forecast to be low for the

natural gas

Shale: the Great American Gas RevolutionBill Holland, Associate Editor, Platts Gas Daily

Built on advances in drilling and information technology, shale gas has transformed the United States from a growing importer of LNG to a potential exporter. The country’s recoverable gas resource estimates have ballooned, and despite growing environmental concerns, shale gas technology is going global.

Source: US Energy Information Administration, based on data from various published studies, updated March 10, 2010


2011 global energy outlook - natural gas

next ten years, nuclear power plant proj-ects will start to be canceled, unable to compete with gas on price. Questions re-surface as to whether the Alaska pipeline is economically viable, or even needed.

What Happened? In a Word, Shale “Simply the most signifi cant energy

innovation so far this century,” IHS Cambridge Energy Research Associates Chairman and author of the oil history, The Prize, Daniel Yergin told audiences at a conference in March. A sedimentary rock, shale was formed 300 to 400 mil-lion years ago as oceans withdrew from low plains throughout the world, leav-ing behind a mixture of sand and plant material that under pressure and heat became thick layers of impermeable rock one to two miles below the earth. Indus-try thinking for a long time was that gas from shales was unrecoverable. The rock was too deep and too hard. While plank-ton and the accumulated organic matter remaining after oceans receded millions of years ago left the rock rich in gas, it remained impervious to extraction.

Solving that problem required three el-ements that would turn a US gas indus-try away from chasing declining conven-tional fi elds into a gas factory that, for the fi rst time in 40 years, produces more gas than can be consumed. Two of those techniques—horizontal drilling and hy-draulic fracturing—came from a 20-year quest by a stubborn Texas oilman, who, watching oil output on his leases near

Fort Worth decline, wanted to get more hydrocarbons out of the ground.

Horizontal drilling and hydraulic frac-turing have drillers sinking a well ver-tically more than a mile underground, then, using motors, turning the drill bit 90 degrees along the horizontal plane and drilling another mile through the shale rock. Horizontal drilling was the fi rst of Mitchell’s tools. The horizontal well bore exposed far more rock to the well than a simple vertical shaft.

The second technique was hydraulic fracturing, better known as “fracking”: pumping fl uids down the well under ex-tremely high pressures to crack the rock, creating fi ssures in the previously imper-meable formation. To hold those fi ssures open and allow gas to fl ow continuous-ly, proppants—sand and silicas—were added to the mix. Through 30 wells and nearly ten years, Mitchell pumped fl uids and gases (and, some said, dollars) in various combinations down the well to crack the rock and hold it open: water, nitrogen, carbon dioxide, various gels, silica, even propane.

The third development came from information technology. The geologi-cal structure of the Barnett Shale was relatively well-known from decades of oil and gas activity in the area, but how could producers map the extent and thickness of shale layers in areas that weren’t well-defi ned? Three-dimension-al seismic surveys, initially developed by ExxonMobil, use seismic data to cre-

Slant-hole well Horizontal well

Lenticularreservoir

Blanketreservoir

1. Slant and horizontal drilling.

Source: US Geological Survey



ate a three-dimensional map of tight reservoirs such as shale. Processing and manipulating the huge amounts of data collected from seismic surveyors didn’t become economical until computer pro-cessing speeds increased exponentially during the high-tech revolution of the 1990s. Armed with cheaper, heavy-duty microprocessors, gas producers of all siz-es were able to map the earth.

Developing ReservesIndependent producers such as Oklaho-

ma City-based rivals Chesapeake Energy and Devon Energy (the latter purchased Mitchell Energy in 2002 for $3.5 billion), took up the tools, trained in the Barnett and then found shales across the US. In 2008, Chesapeake announced it had as-sembled acreage in the “next” big shale play—the Haynesville around Shreveport, Louisiana. Chesapeake now rivals BP as the US’ biggest gas producer on the strength of new hydrocarbons coming from shale plays it operates across the country.

But the Haynesville was only the “next” play if you were Chesapeake. Smaller inde-pendents were already developing profi t-able shale plays across the country: South-western Energy in Arkansas’ Fayetteville Shale, Devon in Oklahoma’s Woodford, Range Resources in the Marcellus Shale that stretches from New York south through Pennsylvania into West Virginia and Ohio, and Petrohawk Energy in the Eagle Ford Shale south of San Antonio, Texas.

Although it was the pioneer in the Haynesville, Chesapeake has assembled the leading land position in the Marcel-lus and holds lots of acreage in all the major shale plays. Chesapeake was also the fi rst to establish joint ventures with international oil companies including BP, Statoil and, most recently, the China Na-tional Offshore Oil Corp. Typically, Chesa-peake sells a minority share of its acreage in a play and the international fi rm pays most of the drilling expenses for a year or two. In return, the internationals get their share of the gas sales revenue and admis-sion to Chesapeake’s “Shale Academy” in Oklahoma City, where they learn how to locate and exploit shale.

In every case, geologists and engineers have had to change their estimates of the gas that could be recovered as drillers got more effi cient and the size of the shales became clearer from drilling. The Barnett Shale, the “granddaddy,” is now estimated to contain 26 Tcf of gas and has already produced more than the 5 Tcf originally forecast. The biggest revision to date came at a Platts conference in Pittsburgh in 2008. The Penn State University geologist who spent his career researching the Mar-cellus Shale, Dr. Terry Engelder, revised his original 15 Tcf of gas in place in the Marcellus to nearly 500 Tcf after seeing the fi rst results of drilling by Chesapeake, Atlas and Range Resources.

The end result of all this activity had the Potential Gas Committee, a group

200

400

600

800

1000

1200

1400

1600

1800

Tcf

2000

2002 2004 2006 2008

shale other

39% increase;85% of that shale

19% increase;65% of that shale

2. Technically recoverable US natural gas reserves.

Source: Potential Gas Committee, Colorado School of Mines



of geologists, academics and industry representatives that meets every other year at the Colorado School of Mines, reporting in 2009 that potential gas in the US, which for years had hovered around 1,000 Tcf, had nearly doubled to 1,836 Tcf.

Fracking ConcernsHowever, as gas drilling moves out of

the lightly populated areas of Texas and Oklahoma, where it has operated for years, into the more densely populated areas of the Northeast US, the industry’s common practices are getting a skeptical look. Fracking requires millions of gal-lons of water for each well, and roughly half that water comes back to the surface, polluted and requiring treatment.

Where the fresh water for fracking will come from and where it will be disposed of after it is used have become hot-button issues as the industry moves closer to the political and media centers of the North-east US. Although water use and disposal is regulated in the US by each individual state, the federal Environmental Protec-tion Agency was ordered by Congress this year to investigate the effects of the practice on drinking water.

The industry’s image has also been hurt by the inevitable accidents that oc-cur among the thousands of wells drilled annually: gas migration into the water

table from poorly cased well bores, well blowouts and chemical spill on the sur-face. Each accident creates a headline, and the headlines add up in the more densely populated Marcellus Shale, now thought to be the world’s second largest gas fi eld (behind Iran’s South Pars).

Going GlobalDespite the diffi culties, exploration for

shale gas is poised to expand worldwide in the coming year. Already, Hallibur-ton has spudded two shale wells 75 miles south of Warsaw, Poland. India plans to hold its fi rst auction of shale leases in three states in August, 2011. China and India are signing agreements that will have the US Geological Survey examine their geologic data for signs of shale.

A US State Department global shale conference held in Washington, DC, in August drew representatives from 20 countries, their interest spurred by two factors: independence from outside sup-pliers of gas, and meeting greenhouse gas emission goals by fueling coal and oil-fi red power sources with cleaner burn-ing natural gas. Already, the techniques used by George Mitchell, now 91, are be-ing exported around the globe through joint ventures in US shale plays between independents and global majors such as BP, Norway’s Statoil, France’s Total, In-dia’s Reliance and China’s CNOOC. ■

3. Hydraulic fracturing.

Source: Chesapeake Energy

Where will Americans find the

energy we need to power our future? The answer is right here in the United States. We have large

deposits of natural gas that are ready now to help power our lives. In fact, the U.S. has more natural gas than Saudi Arabia has oil,

giving us generations of this clean, made-in-America energy source.

Natural gas will help keep our air cleaner and help our country achieve energy independence. As we consider our energy future,

let’s make sure natural gas is a big part of the resource mix.

Visit www.anga.us to learn more about the benefits of clean, American natural gas.


Gas markets went through the mangle in 2010, as growing competition global-ly pointed up the fl aws in the European system. The old assumptions of peak scarcity managed by storage and ration-ing through prices went by the board, as cheap shale gas in the US and abundant spot-market supplies of LNG hammered incumbent pipeline importers tied to oil indexed take-or-pay contracts.

With the US out of the market for imports, owing to the simultaneous fall in demand and massive ramp up of domestic shale production, LNG sellers had to choose between the markets of Asia and Europe. However, competition from buyers was mild. Prices in Asia largely refl ected the cost of freight from the Atlantic Basin with a varying but seldom sizeable premium on top.

As a result, the dominant players in an over-supplied European gas market had to embark on a massive damage limita-tion exercise. They have achieved partial success on volumes, but there is still a lot of pain to come on the pricing front.

European Supply GlutEuropean gas importers, who have

long been unwilling or unable to change their practices, continue to

sign up to long-term gas contracts in-dexed to oil products with standard take-or-pay terms. Among the latest of these contracts is for the supply of fi rst gas through the yet-to-be-completed 55 Bcm a year Nord Stream pipeline, which runs from Russia to Germany via the Baltic Sea.

These contracts left importers hold-ing more gas than they could expect to sell—the result of both a recession-induced downturn in demand and the surge in uncontracted LNG production. The incumbents might have been able to cope with one of these two events separately, but there was no chance if they coincided.

Upstream, Qatar brought more LNG trains on-stream, and is expected to hit its 77 million ton per annum ceiling this fi scal year. Peru and Yemen also joined the ranks of exporting coun-tries. Downstream, a string of gas ma-jors brought on-line brand new import capacity, particularly in the UK, which is linked by pipeline to continental Eu-ropean markets.

This infrastructure was tested to the full in the coldest winter for de-cades. The prompt UK price in Janu-ary went below the price of spot gas

gas markets

Gas Prices Test Oil LinkWilliam Powell, Editor, Platts International Gas Report

Too much supply and too little demand has been the natural gas market story of 2010. The abundance of gas threw into sharp relief the difference between spot and long-term contract prices indexed to oil, particularly in continental Europe. The parallels with the United Kingdom in the 1990s are striking; incumbents dominating supply in their own markets have been left with more gas than they can possibly sell.


2011 global energy outlook - gas markets

for the following summer as the engi-neers tested out their new equipment. There were no problems at the UK’s National Balancing Point, despite re-cord demand, and prices were gener-ally stable.

That combination—too much sup-ply, too little demand and improved transmission between markets—drove a wedge between oil-indexation, which prevails on the European continent, and spot prices, the norm in the UK. Usually, winter demand pushes spot prices above the oil indexation level, resulting in fl ows from the continent to the UK, while oil indexation tends to result in higher prices in summer, at-tracting spot gas to the continent. How-ever, this year, oil prices remained con-sistently more expensive than spot gas, both winter and summer, and there is little sign of an imminent change in this relationship.

Too Much GasAs a consequence, producers have

been slow to take fi nal investment de-cisions on future upstream projects, and have been generally relaxed about the duration of their maintenance programs at existing ones, idling plant as long as possible. With much of Qatar’s latest LNG trains’ output go-ing to meet spot demand, and prices

languishing, there was a marked slow-down in Fujairah loadings in the sum-mer months.

Among the risks on the supply side is environmental permitting for coalbed methane-LNG projects in Queensland, Australia. While partners such as BG remain optimistic, the federal govern-ment has repeatedly pushed back an approval decision, which is a precon-dition for investment decisions. Some consolidation is expected, given the number of projects that will otherwise be chasing the same markets—not to mention the same small band of con-tractors and suppliers able to carry out the work.

Downstream, panicked gas majors such as E.ON Ruhrgas in Germany, GDF Suez in France and Italy’s Eni have been doing what they can to offl oad surpluses and slash the price they have to pay for gas they cannot avoid tak-ing. Some gas pricing has been trans-ferred from oil to gas hub prices, but Gazprom has stuck to its guns more fi rmly than Norway’s Statoil. The latter extracted better terms for its own sales and marketing operations in continen-tal Europe, in exchange for granting buyers’ price relief.

As an indication of the extent of the problem, E.ON Ruhrgas this autumn held an auction for gas delivery within

10

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40

50

60

70

7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 7/10 8/10 9/10 10/10

p/th

US HH UK NBP NWE GCI

1. Gas prices for UK spot, oil-linked Europe and Henry Hub.

Source: Platts



Germany, only to dispose of less than a quarter of the volume. Apparently ig-noring all the signals, it set a price lev-el based on oil prices. Shippers calcu-lated that the spot market would have delivered savings of about 5%. Its joint venture in Slovakia also tried to auc-tion off no longer needed gas, but sold none at all. E.ON Ruhrgas has restruc-tured, and someone else is in charge of gas procurement.

Competition IssuesGDF Suez and Eni have more subtle

problems to tackle: both must reduce their rights to transmission capacity to encourage more competition and satisfy the European Commission, as part of deals done to avoid formal competition charges. GDF Suez must lose some of its pipeline and LNG im-port rights, which might explain why it has disposed of some of its short-term LNG contracts—to Gazprom, to Korea and to China.

Eni has to sell its stakes in major im-port pipelines to Italy. The high price of the Italian spot market, not to men-tion its lack of liquidity, refl ects in part a lack of competition in that market. This high price should attract LNG, but unused berthing slots offered to the market at the Adriatic LNG terminal have not been sold. Regasifi cation and

system entry costs appear to offset any advantage that LNG sellers might gain from the apparent arbitrage.

Deja VuThe parallels between the most lib-

eral market in Europe—the UK—in the 1990s and the incumbents of continen-tal European markets today are strik-ing. In both cases, a legal or virtual mo-nopoly had bought up gas to forestall competition in supply in its own mar-ket; in both cases, a wall of abundant gas exposed the market price as traders went to work, parceling out the sur-plus; and in both cases the buyers are left having to negotiate their way out of hefty payments for unwanted gas, and to sell gas at a loss.

In both cases, too, there was and is no certainty that in a few years’ time, the supply-demand picture will not look completely different, and then the incumbents will be scrabbling for gas on the same terms as their competitors. But it is reasonably certain that linking the gas price to fuels that barely com-pete nowadays will continue to hinder the smooth operation of the market, by perpetuating additional risks—oil pric-es and currency to name but two.

This will deter new entrants, who can see the spot price but not the whole pic-ture. In turn, this might affect growth

1 2 3 4 5 6 7 8 9 10

Jan 2011

Feb

Q2

Q3

Q4

Winter 2011

Summer 2012

Winter 2012

Summer 2013

NBP Henry Hub

2. Gas forwards for UK NBP vs Henry Hub, October 20, in $/MMBtu.

Source: Platts

in the supply of gas, at a time when gas for coal replacement in the power sector is the one certain way to reduce the EU’s carbon dioxide emissions and cope with the intermittency of growing wind capacity.

Asia RisingDespite the surplus of gas, spot pric-

es for LNG in Asian markets have im-proved. Platts’ assessments show they have doubled, compared with last year’s depressed levels, and they are now higher than some of the very cheap LNG term cargoes, such as those from Yemen and Sakhalin in Russia.

Several Japanese utilities have had to buy in spot LNG to cover nuclear out-ages, raising questions about the reli-ability of the country’s nuclear fl eet. LNG output has also been lower than actual capacity implies, while other factors such as hot summer weather, offshore problems in India and a re-turn to stronger growth in Asia’s still fast developing economies has prompt-ed stronger prices in Asia. Taiwan, in particular, has added a new LNG termi-nal, new gas-fi red power plant, while construction of its latest nuclear reac-tor is delayed.

Asia has been seen as a key area of future demand growth for LNG, but India and China have for the moment only limited capacity to take advan-tage of its availability. Both countries are developing indigenous sources of gas production, including shale gas, while China is making the most of its geographical position to widen its sup-ply portfolio.

Chinese companies have in the last year signed up for future deliveries of LNG from Australia and Papua New Guinea, for example—the latter being the fi rst instance where Chinese, rather than Japanese or Korean companies, have signed enough off take agreements to underpin the fi nancing of an Asian LNG project. However, they have also contracted with Myanmar for pipeline gas, to join the already-fl owing pipeline gas from Turkmenistan.

In addition, Russia and Uzbekistan are on stand-by as new suppliers for China.

Russia is talking up the prospects of a long-term contract, but there is, after years of talks, still no agreement on the price. With so many alternatives lined up, China—which is also continuing to develop its own gas production cen-ters—can afford to start thinking more about the price of its gas and worry less about its security of supply.

The US, by contrast, remained a mar-ginal player on the global stage. Con-cerned with its own production from shale, its surplus and export limitations

effectively disconnected it from the rest of the world. Some LNG cargoes were delivered for practical reasons, if not commercial ones, as the US market re-mained so much cheaper than markets elsewhere.

Even if plans to convert import ter-minals into liquefaction facilities do materialize, it is hard to imagine that the quantities of domestically-pro-duced LNG will be enough to infl uence the domestic gas price, even if sellers are able to lock in a sizeable margin. In fact, disconnected from oil as well as other competing fuels, Henry Hub price movements for prompt months appear to refl ect most closely changes in storage volumes.

Despite the low prices, companies are continuing to pile into acreage there: European companies are gener-ally negative about the prospects for the shale gas “revolution” on their own patch, at least in the short to medium term, given very different conditions in Europe from North America. How-ever, they still see the US as offering value for money—especially in plays where there are natural gas liquids ac-cumulations, which compensate for the relatively low price that an MMBtu of gas commands. ■



In both cases, a legal or virtual monopoly had bought up gas to forestall competition in supply in its own market . . . and in both cases the buyers are left having to negotiate their way out of hefty payments for unwanted gas, and to sell gas at a loss.

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If fundamentals are the primary deter-minant of a commodity’s price, then the current stock situation would clearly im-ply lower price levels for crude oil. Com-mercial oil stockpiles in OECD countries rose by 15.8 million barrels in August to end the month at 2.790 billion barrels, according to the International Energy Agency’s October oil report. This is just a whisker off the record level of 2.797 bil-lion barrels seen in August 1998.

The last time stocks were this high the price of crude was at one of its low-est ever points, hovering around $12 per barrel. By December 10, 1998, the physical benchmark Dated Brent had dropped to a record low of $9.13/b, a level as unimaginable now as $100/b was then. Of course, one of the major differences between now and 1998 is the size of inventories relative to de-mand. In 1998, world consumption of crude oil was 74.053 million b/d, more than 10 million b/d less than the 85.950 million b/d expected in 2010.

However, OECD oil consumption in 1998 was, in fact, larger than it is now

by some 1.5 million b/d. Moreover, the OECD has increased its level of strate-gic stockpiles in addition to commer-cial stocks. According to US Energy Information Administration data, to-tal OECD stocks surpassed the level of 1998 in 2005, reaching 4.272 billion barrels in April of this year, or about 94 days of forward cover, compared with about 85.4 in 1998.

Another major difference is that Chi-nese demand for oil is far greater now than it was in 1998, but China too has made great strides in increasing its level of both commercial and strategic stocks. At end-July, China’s commer-cial crude inventory stood at 29.2 mil-lion tons, or about 213 million barrels. Strategic stocks are estimated to be in excess of 100 million barrels, togeth-er representing more than 60 days of import cover. Until early 2006, com-mercial oil reserves held by China’s two largest oil companies, the China National Petroleum Corporation and Sinopec, could meet demand for only about two weeks.

oil

China: Driving the Oil PriceRoss McCracken, Editor, Platts Energy Economist

The supply side of the oil market has for the moment been substantially de-risked; inventories are high and surplus capacity is plentiful. The one support amid an indifferent economic recovery is China, and notably a Chinese industrial success that is based on domestic rather than external demand—car manufacturing. This suggests that if China sneezes, the oil market will catch more than just a cold.


2011 global energy outlook - oil

Surplus CapacityStock levels, while an important in-

dicator of the state of the market, are not a major determinant of price. High inventories will bear down on senti-ment, while low inventories are bullish, but the stock level is largely a symptom of the pre-existing supply/demand bal-ance. If it came to the crunch, for an industry that takes two to three years at least to bring a major fi eld on-stream, one day more or less of stocks makes little material difference.

It is the more immediate relationship between supply and demand that infl u-ences prices. This fi nds representation in the amount of surplus capacity in the market, i.e. how much more oil could be produced should there be demand for it, and should the holders of that capacity (OPEC) prove willing to produce it.

Surplus capacity in 1999, when crude prices were still in the doldrums, was 4.98 million barrels a day. The large drop to 3.05 million b/d in 2000 was accompanied by a correspondingly large rise in the price of crude, which averaged $17.97/b in 1999 but $28.50/b in 2000. The price rise was terminated in 2001-2002 as surplus capacity grew again, but the drop from 5.54 million b/d in 2002 to 1 million b/d in 2005

saw the average crude price more than double to $54.52 million b/d.

Surplus capacity increased in 2006 and 2007, but not enough to take the market out of the danger zone. It was also apparent that there was a lack of refi nery capacity capable of taking low-er-value crude grades that were heavy and high in sulfur. Only in 2009, when surplus crude capacity jumped from 1.49 million b/d to 4.33 million b/d, did the crude price react, falling from $97.26/b to $61.67/b. 2010 appears so far to be an exception. For the year to October 26, the crude price averaged $77.605/b, signifi cantly higher than 2009, but surplus capacity has risen further to 5.09 million b/d.

Surplus capacity is a good measure of the supply-demand balance because it encapsulates shocks on both sides of the equation. The shrinking of surplus capacity after 2002 refl ects the dramatic increase in world oil demand, most par-ticularly Chinese demand, and the lack of investment caused by low prices in the period from 1998. The huge rise in surplus capacity in 2009 refl ects both the drop in demand as a result of the af-termath of the fi nancial crisis and the oil industry investment cycle responding to the rising prices of the preceding period.

Total OECD Total non-OECD

10000

20000

30000

40000

50000

60000

70000

80000

90000

100000

‘80 ‘81 ‘82 ‘83 ‘84 ‘85 ‘86 ‘87 ‘88 ‘89 ‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11

1. World oil consumption (million b/d).

Source: US Energy Information Administration



Taking a step back from the events that impact oil prices on a day-to-day basis, there appears to be a strong correlation between surplus capacity and crude prices that largely explains the latter’s rise and fall since 1998.

Financials and SpeculationFundamentals, of course, are not the

only game in town. Much has been made of the fi nancialisation of com-modity markets and investment in the commodity super cycle. There is little doubt that the nature of commodity markets has changed over the last ten years as new investors have fl ooded into the market for a multitude of reasons.

The rise of long-only commodity in-vestment indices, heavily weighted to-wards energy commodities and crude oil in particular, put pressure on the market to fi nd sellers to take the other side of the contracts. More buyers than sellers, the general uninformative explanation

given for a rising market, is, of course, facetious, but nonetheless true.

Those who downplay the idea that “speculation” has been behind the long-term rise in crude prices since 1998 argue that it cannot be the weight of new money, because in futures markets every seller needs a buyer. However, the argument misses the point that sellers will be found for all the new buyers, but only if the price rises.

The broader argument that energy commodities have become “fi nan-cialised” means that forces less imme-diately related to supply and demand in the oil market help determine prices. It is the attractiveness of an investment in energy commodities relative to other types of investment that affects money fl ows. Even if oil inventories are high and surplus capacity plentiful, suggest-ing a bearish oil market, if the outlook for other investments looks worse, then energy markets will still attract funds.

mill

ion

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-1.00

0.00

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3.00

4.00

1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 7/10

2. Chinese total crude oil stock changes.

Source: Derived from Bureau of Statistics and Customs data

mill

ion

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25.50

26.00

26.50

27.00

27.50

28.00

28.50

29.00

29.50

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10

3. China petroleum stockpile statistics (commercial stocks).

Source: Xinhua, OGP



There is also the question of time hori-zons. Arguments based on fundamentals tend to take a very short-term outlook. Inventories are rising, surplus capacity is high and that means that prices should be falling—now. This treats the oil price as a market clearing price. A level is achieved at which all producers and consumers net out their positions and meet their physical requirements on a daily basis. Surplus oil means prices fall, shortage means they rise.

However, fi nancial investors want to buy and hold. They are looking at the capacity of a price to change. If the market is going to tighten in the future, then they will buy now on the expecta-tion that prices will rise. The oil price is no longer a clearing price but an in-vestment vehicle. It should be no sur-prise that as investment grew in energy commodities and the fi nancial side of the market expanded in relation to the physical side that futures prices also grew in importance.

Oil prices are currently “seeking di-rection,” which essentially means no-one is sure whether they are going to go up or down. They have stayed pret-ty much within a $70-$80 per barrel band for the last 12 months, breaking out towards $85/b in May and again in October. However, as there are no real

supply concerns attention is focused on demand. Good economic news pushes prices up, bad news pushes them down. This has upset the idea that commodi-ties might represent a hedge against in-fl ation or a safe haven against an ailing economy as equities are behaving in the same way. The inverse correlation, if it existed, appears to have gone.

This does not have to be bad news. It indicates that the recovery is ongo-ing, just unspectacular. For every spate of poor economic data there is a raft of good data. It isn’t a double dip recession, but nor is it a return to robust health. In this context, oil demand in the OECD will remain weak, with further falls in OECD Europe and Asia cancelling out any growth in North America. As a re-sult, the only place that really matters is China, whether one takes a view of the market based on near-term fundamen-tals or treat oil as an investment com-modity with a longer time horizon.

Single SupportWith attention focused on the de-

mand side of the market, China’s al-ready important position in the oil market becomes hard to overstate. The overall contraction in world oil demand of 1.3 million b/d in 2009 (Internation-al Energy Agency data) masks the stark division between the OECD and non-OECD and between Asia and the rest of the world bar the Middle East.

In 2009, amid the worst of the global slowdown, Chinese oil demand grew by 700,000 b/d, according to the IEA. The only other growth areas were the rest of non-OECD Asia (+0.3 million b/d) and the Middle East (+0.3 million b/d). By contrast, even without the emergence of the electric car, OECD oil demand is broadly seen as having peaked.

China became the world’s largest car market in November 2009, surpassing the United States. It had previously ex-ceeded Japan as the world’s largest mak-er of automobiles. Three notable aspects of this industry are, fi rst, that while there are a number of large foreign joint-ventures in the car manufacturing sector, auto production is predominant-ly indigenous. Second, very few cars are

Year (million b/d) Average price of Dated Brent ($/b)

1999 4.98 17.97

2000 3.05 28.50

2001 4.07 24.44

2002 5.54 25.02

2003 1.92 28.83

2004 1.27 38.27

2005 1.00 54.52

2006 1.42 65.14

2007 2.07 72.39

2008 1.49 97.26

2009 4.33 61.67

2010 5.09 67.92*

2011 5.19

4. Surplus capacity in the oil market.

Source: US Energy Information Administration, Platts*To September 9



made for export, almost all are absorbed by the domestic market. And, third, there is still huge potential for growth, owing to the current low per capita level of car ownership and China’s pattern of social and economic development.

When the fi nancial crisis turned into a global slowdown, analysts keen to re-main optimistic argued that the BRICs, and China in particular, had an inter-nal growth dynamic that would allow them to avoid recession. These dynamic growth regions would help pull the rest of the world back from the brink. The argument downplayed the extent of export-led growth in the BRICs and to a large extent contradicted the whole no-tion of globalization. The idea appeared plain wrong as China’s previous double digit GDP growth rates stalled and the southern coastal areas of the country—its export-orientated manufacturing cen-ter and the locus of the country’s job cre-ation—saw a severe slowdown in growth.

However, in retrospect, China’s fan-tastically successful not-for-export car industry is indeed evidence of a more powerful internal growth engine. In the auto sector, China is absorbing raw materials, but instead of processing them and exporting manufactured and semi-manufactured goods, it is captur-ing the whole value chain and selling increasingly sophisticated goods inter-nally, and in ever larger volumes.

This puts the auto sector in an impor-tant position within the Chinese econ-omy. If domestic demand needs to be stimulated, it is a prime target for ben-efi ts, whether direct or, as is currently the case, in terms of incentives for new vehicle sales. As the car industry in-creases in importance within the econ-omy, it runs the risk of becoming too big to fail, just as it has in other coun-tries. It represents an important facet of the country’s growing structural addic-tion to petroleum.

Expansion FearsThe tensions this creates are already

evident. In September, China’s automak-ers rejected an offi cial warning that un-checked growth in the industry was lead-ing to excess capacity and could harm

the wider economy. Chen Bin, an offi cial with the National Development and Re-form Commission, China’s top economic planner, said excess auto capacity threat-ened sustainable economic development and must be “resolutely” stopped.

However, industry representatives and the China Association of Automo-bile Manufacturers see it differently, arguing that car makers were only try-ing to meet demand in the world’s larg-est auto market. Fan Zhong, a senior

5. OECD stocks position.


YearTotal OECD stocks (million barrels)

OECD forward cover, including strategic stockpiles (days)

1980 3587 85.9

1981 3531 89.4

1982 3376 89.4

1983 3255 88.2

1984 3494 92.7

1985 3408 90.9

1986 3543 91.8

1987 3643 92.6

1988 3588 88.3

1989 3634 87.9

1990 3706 89.0

1991 3713 88.4

1992 3718 86.5

1993 3791 87.5

1994 3875 87.1

1995 3758 83.6

1996 3762 81.7

1997 3875 82.8

1998 4006 85.4

1999 3733 78.0

2000 3796 79.2

2001 3912 81.5

2002 3811 79.5

2003 3914 80.4

2004 3980 80.5

2005 4068 82.2

2006 4161 84.7

2007 4090 83.8

2008 4214 88.6

2009 4217 92.8

2010 4272 94.2



manager with Dongfeng Automobile, a major Chinese manufacturer, said “our problem is not having enough capac-ity.” Most entrepreneurs at the Interna-tional Forum on Chinese Automobile Industry Development in Tianjin in September expressed similar views.

The overall capacity of China’s auto industry might seem excessive, but the market has huge potential for restructur-ing and growth, said Hu Xinmin, honor-ary chairman of CAAM. China’s auto in-dustry has been operating at 120% of its nameplate capacity, and most manufac-turers were operating more than 20 hours a day, said Xu Changming, head of infor-mation resource development at the State Information Center. Sales were expected to grow by more than 15% annually in the next few years, Xu said. “There is no need to worry about excessive output.”

However, Chen Bin warned that lo-cal governments have been making “blind” efforts to open new factories and expand capacity, encouraged by the industry’s healthy profi ts and ancil-lary economic benefi ts. Twenty-seven of the Chinese mainland’s 31 prov-inces, autonomous regions and mu-nicipalities have plants that are able to produce fi nished vehicles. This appears to be an all-too-familiar pattern of Chi-nese investment, in which each tier of government mobilizes resources to en-ter a profi table sector quickly, resulting

eventually in over capacity and a large amount of ineffi cient plant.

Nevertheless, there is confi dence that China’s car market can continue to grow. Despite average incomes remain-ing relatively low, the proportion of the population that can afford cars is grow-ing and China has a huge billion plus population. Car ownership levels tend to rise much faster than income once middle income levels are achieved. In addition, China’s urban population is increasing far quicker than its overall population. Rapid urbanization tends to increase income growth and with it car ownership. Suburbanization increases the demand for transit further, either for cars or for mass transit systems.

These long-term underlying trends suggest that any over expansion of the Chinese car market in the near term might prove short-lived. But a wider slowdown in the rate of Chinese oil demand growth could pull from the oil market what has become its central support. Without Chinese growth in oil demand and expectations that this growth will be sustained and replicated in other developing countries such as India, the fall in the price of oil from its 2008 peak would have been deeper.

China has always been concerned about its exposure to international mar-kets, and particularly to raw materials on which its manufacturing and pro-cessing industries depend. It has been keen to gain control of resources abroad to mitigate the security implications of dependence on imported commodities and the price impact of being depen-dent on industries where the supply side is heavily concentrated amongst a few large players.

The de-risking of the supply side in the oil market has for the moment passed a modicum of price control to China as the main center of demand growth. Unfortunately for Beijing, Chi-na’s demand for oil is part of a dynamic that is not easy to control, even for a state-dominated economy. It represents a deepening of the country’s addiction to oil and a strengthening of the rela-tionship between Chinese economic health and the oil price. ■

Economy 1980 2002 2020 1980-2002 (%) 2002-2020 (%)

PRC 2 19 65 10.8 7.1

Beijing 9 80 177 10.4 4.5

Shanghai 5 47 100 10.7 4.3

Hong Kong, China 41 59 70 1.7 1.0

Indonesia 5 16 26 5.4 2.7

Jakarta 34 143 161 6.7 0.7

Japan 203 428 522 3.4 1.1

Tokyo 159 266 271 2.4 0.1

Korea, Republic of 7 204 284 16.6 1.9

Seoul 15 205 288 12.6 1.9

Thailand – 100 158 – 2.6

Bangkok – 324 389 – 1.0

6. Passenger vehicle ownership per 1,000 population (1980, 2002 and 2020).

Source: APERC (2006)PRC = People’s Republic of China, - = no data available

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Given the tumultuous history of Mid-dle Eastern politics, it’s a wonder that Arab-dominated OPEC, the cartel born in Baghdad a half century ago, is still standing. It has survived, and in recent years even fl ourished, but there are still challenges ahead. The largest of which could soon be posed by Iraq, which is rising from the ashes of war and sanc-tions and rebuilding its oil industry. It’s aim is no less than to surpass Saudi Ara-bia as the region’s biggest oil producer.

“I hope the Iraqis are not about to re-vive the quota parity game,” said one regional oil offi cial when told that Iraq had raised its estimate of proven re-serves by 25% to 143 billion barrels af-ter reviewing data from two of its giant oilfi elds. “I thought that issue was dead and buried,” he added. The revision is, in fact, quite conservative given other estimates of Iraq’s potential.

However, the response was swift. Iran, refusing to be trumped by Iraq, an-nounced its own crude oil reserve hike, fi nding an additional 12.31 billion bar-rels in proven reserves, and adding that further hikes could be forthcoming. Giv-en that the two countries fought a bitter eight-year war from 1980-1988, a dispute over who gets a larger market share could

shatter the thaw in relations that followed the fall of Saddam Hussein in March 2003. Iraq’s current expansion plans, and Iran’s sanction-induced stagnation, suggest the latter stands to lose its position as OPEC’s second largest producer, whatever level of reserves it claims.

Trouble Behind, Trouble AheadWhen Iraq invaded Kuwait in August

1990, the world lost some 5 million b/d of crude oil—the combined production of both OPEC countries at that time.

Saudi Arabia stepped in and partially made up for the loss by ramping up its pro-duction to 8 million b/d almost overnight from 5 million b/d. Riyadh had a chance to put to good use the spare capacity it had invested in and it jealously guarded this level of production for several years.

OPEC somehow survived this turmoil, although there have been times over the past decade when ministers have been cloistered in their hotel suites for days and even weeks arguing over quotas. Presidents and kings have on occasion had to intervene to resolve whatever cri-sis delayed a fi nal agreement.

Today’s OPEC is a different animal. The organization has become more streamlined and more proactive in re-

OPEC

OPEC at 50Kate Dourian, Senior Correspondent

OPEC has turned 50, Saudi Arabia has celebrated 80 years as a nation and Kuwait marked the 10th anniversary of its liberation from Iraqi occupation. It has been a big year, but new challenges lie ahead. Iraq’s oil expansion plans will test OPEC’s cohesion, while the organization’s customers continue to demand it invest in spare capacity just as they do everything they can to reduce their own demand.


2011 global energy outlook - OPEC

sponse to market movements. Meetings last a day and members have managed to keep politics out of their deliberations and focus instead on the group’s char-ter, which is to secure the best value for a commodity that provides the bulk of OPEC members’ state revenues.

The results have not been bad. Exclud-ing the wild gyrations of oil prices in mid-2008, when they rose above $147/barrel only to plummet by $100/b months later, prices have generally held within a $70-$80/barrel range for much of the year, a price level Saudi Arabia’s King Abdullah has publicly endorsed. Yet even the Sau-dis fi nd it hard to explain why prices are at current levels given continued weak demand in the OECD and ample sup-ply, padded with a signifi cant cushion of spare capacity, most of it in Saudi Arabia.

Supply Crunch ForecastThe reason is that built into these prices

is the perception that at some point the world will need more hydrocarbons. To deliver these requires continual invest-ment, but that process—which resulted in the current level of spare capacity—has stalled. Most Middle East producers have shifted their exploration focus to gas.

Saudi Arabia is burning an estimated 800,000 b/d of crude oil to feed its power plants as it diverts gas to a growing pet-rochemicals sector. Iran is struggling to expand both its crude oil and natural gas production as sanctions bite. Kuwait is now importing LNG from as far afi eld as Australia, while Dubai was due to get its fi rst LNG cargo from Qatar in October. The Middle East is increasingly hungry for all sources of energy, not as a produc-er, but as a consumer. Domestic supply is gaining in importance relative to exports.

Moreover, the only signifi cant oil ca-pacity expansion will come from Iraq. Iran is virtually closed to foreign invest-ment, owing to a wave of US, EU and UN sanctions. Having boosted its pro-duction capacity in recent years, Saudi Arabia is content to wait for signs of a signifi cant pickup in demand that would justify further costly investment. Kuwait remains mired in political wran-gling that has hampered plans to boost its own output. The UAE is proceeding

quietly with its own production capac-ity expansion plans, but appears to be in no rush to bring new oil on-line for now without what its minister, Mohammed bin Dhaen al-Hamli, often refers to as a “road map” for future demand.

This worries people. Jochen Weise, a member of the board of Germany’s E.ON Ruhrgas, writing in Abu Dhabi newspa-per The National said that if global de-mand continued to increase by between 1-1.5 million b/d annually, OPEC would have to increase its production to around 35 million b/d by 2020 and possibly to 38 million b/d by 2025, from 28.5 million b/d now. This would require the group to add 7.5 million b/d every fi ve years “just to stay in the same place,” as well as meet-ing decline rates from existing fi elds.

Weise said that a “comfortable cush-ion” of spare capacity beyond 2015 would require OPEC to undertake a “contin-ued program of signifi cant investment by core Middle Eastern members of the organization.” He added, “If this is not forthcoming, we will see tighter markets and higher prices going forward.”

Weise warned that the drop in energy demand in 2009 resulted in a slowdown in investment in oil and gas. In addition, tightened borrowing requirements post-

Output Target

Algeria 1.26 1.2

Angola 1.65 1.506

Ecuador 0.47 0.429

Iran 3.68 3.334

Kuwait 2.3 2.221

Libya 1.57 1.472

Nigeria 2.12 1.704

Qatar 0.81 0.73

Saudi Arabia 8.28 8.014

UAE 2.26 2.226

Venezuela 2.23 2.01

OPEC-11 26.63 24.845

Iraq 2.4

Total 29.03

1. OPEC output and targets, in million b/d, September 2010.

Source: Platts

OPEC has not published individual allocations under the 24.845 million b/d target total which came into effect on January 1, 2009. The above fi gures are calculated by Platts.


2011 global energy outlook - OPEC

fi nancial crisis has also become a “ma-jor issue” for investors, especially for up-stream projects. “The capital restrictions in the post credit crunch world may have a signifi cant impact on investments in en-ergy projects in the next decade,” he said.

Capacity GuardiansMost of the world’s spare oil production

capacity, estimated currently at about 6 million b/d is held by Saudi Arabia. At current production of just over 8 million b/d and capacity of 12.5 million b/d, the kingdom has around 4.5 million b/d of spare capacity. But maintaining this idle capacity is costly and state oil company Saudi Aramco has indicated several times that there is a limit to its largesse.

Nor does Riyadh like to hear its erst-while leading crude oil customer, the US, repeatedly call for less dependence on for-eign oil, which they read as Arab oil. Sau-di Aramco CEO Khalid al-Falih, speaking at the World Energy Congress in Mon-treal in September, referred to what he called a discriminatory attitude toward fossil fuels in the pursuit of energy secu-rity by some consuming nations. “Per-ceived energy security concerns seem to be driving some nations to discriminate against select energy sources, as we have seen in the case of oil,” he said.

Falih has a different plan when it comes to investment than Weise. Rather than ex-pand current capacity, the Aramco chief expects Saudi Arabia’s crude oil reserves of 260 billion barrels to grow by 40% “over time” and recovery rates from its major oil fi elds to climb to 70%, twice the global average, as part of the kingdom’s efforts to meet future energy demand.

“The short answer is that the world will continue to rely on traditional fossil fuels for most of its energy needs for the coming decades,” he said. “In fact, these energy sources—namely coal, oil and natural gas—are expected to account for about four out of every fi ve units of en-ergy that mankind will consume for the foreseeable future.” That is why Saudi Aramco maintains large spare capacity “at considerable cost to us” as part of its efforts to keep markets supplied, he said.

“It’s costly to have that kind of capacity idle and it was costly to build it,” he said. “But we don’t build it for the short term. This capacity, we build it for the next de-cades and generations. So we’re not rush-ing to put the projects in full utilization. We will respond to the markets when the markets develop,” he added. “This surplus capacity, which currently approaches four million barrels per day, has helped assure market stability, providing additional sup-plies whenever unforeseen events such as natural disasters or man-made strife and confl icts have struck,” he said.

While renewable energy will help to meet part of this rise in energy demand, the pace of its growth will be slower and the percentage of its contribution will remain relatively small in the global en-ergy mix, Falih said. “My argument is not with the concept . . . but the pace at which we can expect to meet a por-tion of energy demand,” he argued. “It is going to take a long time . . . during which time we need to invest in fossil fu-els, including clean coal to mitigate the environmental impact of fossil fuels . . . but we have to be realistic and allow the transition to take place,” he added. ■

1.00

2.00

3.00

4.00

5.00

6.00

mill

ion

b/d

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2. OPEC surplus crude oil production capacity.


ISSUE DATE: February 28, 2011 (on sale: February 14, 2010)DEADLINE: January 6, 2011MATERIALS DUE: January 24, 2011

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The global economic downturn was a serious test for Russia. Of the largest 25 economies in the world, Russia saw the deepest recession. GDP dropped 7.9% in 2009, following growth of 5.6% in 2008. This year, Russia’s GDP is expect-ed to rise by about 4%, with the level sustained for the next three years. Ac-cording to Prime Minister Vladimir Pu-tin, the economy has “relatively rapidly returned to growth.”

However, less optimistic members of the government note that the country’s dependence on oil and gas revenues has risen, leaving the economy increasing-ly vulnerable to developments in exter-nal markets. If oil and gas prices were to fall, economic growth could be as little as 2% per annum over the next three years, according to deputy economy minister Andrei Klepach. A $10/barrel change in the oil price results in a 0.5% change in the country’s GDP, he said.

Russia’s economic recovery has been driven primarily by rising oil prices. Its lack of competitiveness in other sec-tors has led analysts to suggest that the

economy outside of the energy sector will effectively stagnate. The authorities recognize the problem and want to mod-ernize. “Today Russia has a new agenda, one that incorporates sustainable devel-opment and the modernization of key economic sectors. I believe we stand a good chance of seeing these plans mate-rialize,” Putin told investors recently.

Capital RequirementsThe government needs economic di-

versifi cation because oil and gas earn-ings are forecast to fall from 47% now to 44% of the federal budget in com-ing years. There are two major factors behind the poor outlook for Russia’s petrodollars. First, crude production is expected to rise at a lower rate than the country’s GDP, leading to a cut in the sector’s share in the budget. Second, all new oil and gas fi elds in Russia have been given tax breaks and more favor-able investment terms. This is stimu-lating investment, and is designed to bring on new capacity to replace the country’s older declining oil and gas as-

Russia

Russia Grapples With ModernityNadia Rodova, Managing Editor, Platts Moscow

Russia faces a catch-22 situation. It wants to diversify its economy and reduce its dependence on the energy sector, but cannot afford to do so without fi nancing the transition with revenues from oil and gas. At the same time, the oil and gas sector itself requires heavy investments to maintain production from ever harder to access resources. Both targets require tax incentives.


2011 global energy outlook - Russia

sets, but improved terms for investors mean less for the federal budget.

Before the fi nancial crisis, a package of tax incentives, worth about $4 billion a year for the oil industry, was agreed by the government. The main incentives were a cut in the oil extraction tax for green fi eld developments and temporary exemptions from export duty for crude pumped in the country’s new oil prov-ince, East Siberia. In addition, low levels of taxation were to remain in the gas sector. However, with the country’s Oil Fund depleted and the government seek-ing funds for modernization, the empha-sis has swung back in favor of tax rises.

But the government does not want this to stifl e investment. Russia has consoli-dated its position as the world’s biggest oil producer. Output saw steady increas-es in 2010, repeatedly hitting post Sovi-et-era records. Crude output is expected to see a 1.5% to 2% gain from 2009 to over 10 million b/d in 2010 before stay-ing at roughly the same level over the next three years. Under a less optimistic scenario, crude production from older fi elds could become less economic from 2012 when the mineral extraction tax on oil is expected to rise. This tax rise could also delay new projects, leading to reduced oil output in the medium term.

Russia, which has the world’s largest natural gas reserves, also wants to main-tain its position as the largest exporter of gas to Europe, as well as winning over new markets in the Asia-Pacifi c re-gion. The authorities announced in Oc-tober an ambitious plan to increase gas production by 50% from the current level to a huge 1 Tcm a day by 2030, at a total cost of $412 to $492 billion. Gas exports would reach 455-520 Bcm/year in 2030, up from 226 Bcm/year now,

according to the recently approved na-tional gas industry development plan. Gas output in 2010 is expected to grow 11% to 653 Bcm, largely reversing the 12% drop the previous year.

The upstream plans, both for oil and gas, require producers to develop new, hard-to-access reserves to compensate for the decline in the country’s existing fi elds. The green fi eld sites are mainly located in remote and undeveloped re-gions, such as East Siberia or the Yamal Peninsula in the Arctic, and require mas-sive investment. Oil and gas companies are turning to the government for new incentives to develop those capital-inten-sive projects. This has forced the govern-ment to consider a wide range of changes to the tax system to balance the interests of both the federal budget and industry.

And against this is the risk of a fall in the oil price, to which the country re-mains heavily exposed. As Finance Min-ister Alexei Kudrin put it in October: “We don’t know what the oil price will be. We think the price is unlikely to stay at around $75-80/barrel as the current [price] growth is supported by invest-ment resources rather than demand in the commodity. We cannot rule out that the price will drop from $80/b to $60/b within the next three years.” Most fore-casts in fact suggest oil prices will remain fi rm over the next few years, backed by fast growing demand from Asia-Pacifi c, but in a market as volatile as the oil mar-ket, nothing can be taken for granted.

Looking EastwardWith the locus of demand growth

having shifted fi rmly to Asia, Russia has advanced signifi cantly its efforts to add eastern markets to its exports portfolio, with the key focus on energy-hungry

Forecast scenario 2009 2010 2011 2012 2013

2009-2013 % change

Crude oil (million mt) a 494.3 501 501 498 495 0.1

b 494.3 501 502 498 502 1.6

Natural gas (Bcm) a 585.2 653.3 671 679 700 19.6

b 585.2 653.3 679 691 719 22.9

1. Russian near-term oil and gas output forecasts.

Source: Ministry for Economic DevelopmentNatural gas fi gures predate recent plan to expand output to 1 Tcm a year by 2030


2011 global energy outlook - Russia

China. First, Russia launched the new East Siberia-Pacifi c Ocean pipeline to export crude via the Far Eastern port of Kozmino to Asian markets. South Korea has become the biggest buyer of ESPO, accounting for 37% of the blend’s total sales in the fi rst nine months of 2010. Japan, the United States, China, Thai-land, Singapore, Taiwan and the Phil-ippines have all bought ESPO cargoes. ESPO crude supplies via Kozmino have averaged about 300,000 b/d in 2010.

From January 2011, a further 300,000 b/d will be channeled to China via a new offshoot from ESPO. The deliveries are to be carried out under a contract signed between Russia’s state-run Rosneft and China’s National Petroleum Corp that envisages 300,000 b/d supplies over 20 years. Eventually, ESPO throughput should rise to 1 million b/d, following an expansion scheduled for comple-tion in late 2012 or early 2013. Capacity could later be raised to 1.6 million b/d.

Second, state-owned oil company Rosneft, in partnership with CNPC, has inaugurated the construction of a joint 260,000 b/d refi nery near Tianjin. The project will help Rosneft enter China’s retail market as it envisages mutual construction of at least 500 fi lling sta-tions in the region.

Third, the two countries appear to have made some advances on the supply of pipeline gas to China, as well as 15 mil-lion mt/year of Russian coal. Gazprom and CNPC in September signed a legally-binding document for deliveries of 30 Bcm a year of gas to China over 30 years. The document includes key commercial parameters, but the toughest issue—that of prices—has not yet been resolved. Pric-es have been the key stumbling block in the negotiations, which started in 2004.

Gazprom and CNPC hope to settle the remaining issues by July 2011. If a fi nal contract is signed then, Gazprom has said it will start work immediately on the construction of the Altai pipe-line system from West Siberia to China and start actual supplies in 2015. Un-der a framework agreement signed by Gazprom and CNPC in October 2009, Russia could supply up to 30 Bcm/yr via the western route and up to 38 Bcm/yr via an eastern route, from East Siberia.

Export volumes are unlikely to reach quite these levels, however. China, like any other country, will be reluctant to become too reliant on any one source of supply, while Russia will take time to de-velop the upstream resources to fi ll the pipelines to capacity. Developing such remote resources will also require a lot of capital. “In order to attract the massive investments needed for the development of new reserves, Russia needs to become the sort of place where you know that you get a decent return on your invest-ment. That doesn’t really exist now,” the chief analyst with Moscow-based Renais-sance Capital investment bank, Ronald Nash, said. The government needs to change the legal framework and build greater trust with investors, but it has a long way to go, he added.

The government thus fi nds itself in a catch-22 situation. Modernizing the economy and attracting huge amounts of investment capital into the oil and gas sector requires change to the fi s-cal regime, but not necessarily com-plimentary ones. Moreover, constant changes to the investment environ-ment means uncertainty, which erodes the trust that the government needs to build in order to attract the large sums of capital required. ■

Forecast scenario 2009 2010 2011 2012 2013

2009-2013 % change

Crude oil (million mt) a 247.4 247.6 249 245 241 -2.6

b 247.4 247.6 249 247 245 -1

Natural gas (Bcm) a 168.4 185.2 205.1 214.7 229.6 36.3

b 168.4 185.2 210.1 220.7 240.6 42.9

2. Russian near-term oil and gas export forecasts.

Source: Ministry for Economic DevelopmentNatural gas fi gures predate recent plan to expand output to 1 Tcm a year by 2030

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The unprecedented decline in Europe-an grid-delivered electricity demand in 2009 has hit thermal generation hard. The recession-induced slump in con-sumption is only slowly being restored, with demand in the UK and Italy barely matching last year’s nadir. This has put pressure on power prices, margins and new investment. The fi rst signs of fi nan-cial strain are beginning to show.

An example was provided by Alstom on October 5. The French power engi-neering fi rm is to cut 4,000 jobs over the next 18 months from its thermal power generation equipment business. The cuts are to fall in Europe and North America, “where the new equipment markets for coal and gas power plants are most affected by the economic cri-sis,” Alstom said. The company’s servic-ing, wind and hydro businesses were untouched by the cuts.

The problem is that Europe is al-ready awash with power as the last wave of thermal plant investment reaches maturity. Large amounts of gas-fi red capacity are coming to mar-ket in the UK, while in Germany the last pre-carbon capture coal plants are reaching completion. At the same time, there has been no let-up in the development of subsidized, priority-dispatch renewables.

Priority RenewablesRenewables’ growth through the

recession has created a new dynamic in the power market. Green power is immune to demand patterns and profi ts even when over-production re-sults in negative pricing. This dynam-ic is already reducing thermal plants’ leading role to one of a walk-on, walk-off cameo.

power

Thermal Plants to Play Cameo Role in EU Green DreamHenry Edwardes-Evans, Editor, Power in Europe

Europe’s recession-induced slump in power demand is only slowly being restored. Renewable energy sources, protected by policy, have proven almost immune to the economic signals, leaving thermal plant to take the full impact. As a result, European utilities may be drifting away from both coal and CCS, while thermal power plant overall is becoming increasingly ancillary.


2011 global energy outlook - power

It should be no surprise, then, that utilities are tightening their belts. In September, Swedish utility Vatten-fall cut its budget to focus on its core markets of Sweden, Germany and the Netherlands. Presenting a new strategy, chief executive Oystein Loseth made the rather shocking prediction that demand for electricity in the Nordic markets would not recover until 2020. In continental Europe he thought de-mand “would pick up earlier,” but was unwilling to suggest a date.

Pressure on margins was strong and the way forward to a sustainable sys-tem expensive, he said. “We’ll be a leader in this transition, but that puts extra pressure on Vattenfall. We want to increase profi ts and value, strength-en our balance sheet and reduce CO2 exposure—that is going to be expen-sive in the future.”

In tune with a downbeat set of half-year statements from Europe’s util-ity majors, Loseth warned of a much weaker market outlook, with “a lot of new production coming online” to meet the EU’s 20%-by-2020 renew-ables target. “The year 2008 was the top in terms of power demand,” he said. “We are facing two-to-three years of really hard work, then we’ll be ready for growth.”

In his presentation, Loseth did not refer to the company’s hitherto fl ag-ship Carbon Capture and Storage pro-gram. But when questioned, he said, the program would continue: “but there will be no CCS before 2020, so Vattenfall has to reduce CO2 by other means.” The company has a target of reducing its emissions to 65 million mt/yr from today’s 90 million mt/yr. Further, Loseth said that phase two of the company’s ambitious Magnum gasifi cation/CCS project in the Neth-erlands would only proceed when the technologies were viable.

CCS DoubtsThis suggests that as European utili-

ties drift away from coal, they may also be drifting away from testing CCS. This possibility may seem premature given the sums already invested, but the

question is worth posing. While CCS may be needed in the fast-growing, coal-heavy economies of Asia, Europe is by no means an ideal test bed for CCS as its power systems move to low-carbon status via alternative means.

Continuation of the current trend would in fact see prices for carbon un-der the EU Emissions Trading Scheme stagnate, stalling development of CCS. This was the conclusion of a European Commission report, EU Trends to 2030, published in September. The report contains a baseline scenario, indicating

what would happen if current trends in the energy sector were to continue, and a reference scenario, which includes the effects of policies adopted between April and December 2009.

The reference scenario assumes achievement of the EU’s binding tar-gets for 2020 on renewables and green-house gas reductions (a 20% cut). Along with energy effi ciency measures, the scenario would “cause a reduction in the use of fossil fuels that allows the ETS cap to be reached through lower carbon prices,” the study says.

The reference scenario forecasts that EU emissions allowance (EUA) prices would not be much different from current prices at around €16.50/mt ($23.08) in 2020, rising to €18.70/mt in 2030, both at a constant 2008 euro level—not enough to bring CCS invest-ment forward.

Meanwhile, under the baseline sce-nario, EUA prices are projected to reach €25/mt in 2020 and €39/mt by 2030, which the study says would drive CCS capacity from 5.4 GW in-

. . . as European utilities drift away from coal, they may also be drifting away from testing carbon capture and storage. . . . While CCS may be needed in the fast-growing, coal-heavy economies of Asia, Europe is by no means an ideal test bed for CCS as its power systems move to low-carbon status via alternative means.



stalled in demonstration plants by 2020 to 35 GW by 2030. CCS equipped generation would account for 8.7% of all power capacity.

Ancillary PlantThe European Commission’s refer-

ence scenario forecasts “a major in-crease in generation from renewables, which continues up to 2030, and has a crowding out effect on other technolo-gies.” Under this projection, renewable capacity is set to account for 64% of

all new generation additions between 2009 and 2020, with 17% for gas, 12% for coal, 4% for nuclear and 3% for oil.

Wind alone would account for 41% of generation under this scenario, with a total of 136 GW installed. Even under the baseline scenario, renewable capac-ity would account for 26% of total gen-eration capacity by 2020 and around a third by 2030.

This wind boom is forcing a re-think on compensation for thermal plants in Spain, Germany and the UK. As the

2005 2010 2015 2020 2025 2030

Tidal, etc. 0 0 1 3 6 9

Geothermal 5 6 6 7 11 19

Biomass/waste 84 127 164 191 218 241

Solar 1 17 32 46 60 75

Wind offshore 2 14 72 146 204 276

Wind onshore 68 147 197 253 316 368

Hydro 307 323 332 339 349 355

2005 2010 2015 2020 2025 2030

Tidal, etc. 0 0 1 7 10 14

Geothermal 5 7 8 12 17 22

Biomass/waste 84 120 171 261 275 286

Solar 1 17 32 62 77 94

Wind offshore 2 14 81 177 224 287

Wind onshore 68 147 243 348 381 407

Hydro 307 323 333 341 350 358

2005 2010 2020 2030

Nuclear 30.5 28 24.5 25.9

Solids 30 26.9 24.9 22.2

Gas 21.2 23.9 22.8 18.7

RES 14.3 19.2 26 32.1

2005 2010 2020 2030

Nuclear 30.5 28 23.9 24.1

Solids 30 27.6 22.8 21.1

Gas 21.2 23.2 19.5 17.8

RES 14.3 19.0 32.6 36.1

1. EU trends to 2030.

Source: European Commission

Baseline scenario 2009: Gross Power Generation by RES (TWh)

Reference scenario: Gross Power Generation by RES (TWh)

Baseline scenario 2009: main power generation shares (%)

Reference scenario: main power generation shares (%)



role of the thermal plant moves away from baseload dispatch towards the provision of ancillary services, fuel ef-fi ciency drops while costs rise. Without some form of capacity fee, maintain-ing this thermal plant is uneconomic, utilities say.

There is also a warning from opera-tors that long-term intermittent op-eration has environmental implica-tions. “Spain and Denmark are good indicators showing that, by putting a lot of wind on the system, you don’t necessarily cut down on fossil fuel use,” according to one gas plant op-erator. “Depending on the demand profile in Denmark, they actually burn more fossil fuels because the thermal machines are ramping up and down so frequently. It is a lot less efficient than keeping a unit ticking over at close to full output. Car driv-ers complain of speed bumps increas-ing emissions because of slowing down and speeding up. It is exactly the same for combined cycle gas tur-bine plants.”

Wear and tear is another issue. Ev-ery 45-minute ramp up is equivalent to around 10 hours of operation for a combined cycle gas unit. Main-tenance costs will rise and lifetime expectancy fall if, as consultancy Poyry has forecast in its UK stud-

ies, gas-fi red plants are performing a minimum of two start-ups a day by 2020. This could knock fi ve years off a CCGT’s 25-year life span.

Compensation for this needs care-ful thought. The relevance of the day-ahead price to gas plant will fade as its real-time and ancillary service value increases, Spanish market ex-

perts believe. “Spain’s power demand profi le fl uctuates a lot between winter and summer,” an operator told Platts. “In spring, demand is quite low—you don’t need your heating and you don’t need air conditioning. There were peri-ods this year when wind was supplying over 48% of Spanish demand needs. While the day-ahead price in the rest of Europe was around €50/MWh in April it went down to €18/MWh in Spain. I think that is a sign of things to come. Instead of dispatching plant according to predicted demand and maintenance schedules, we’re going to become weather predictors.” ■

15

25

35

45

55

65

TWh

Sep-10Apr-10Nov-09Jun-09Jan-09Aug-08Mar-08

France UKGermany Italy Spain

2. West European electricity demand, monthly view.

Source: Germany—BDEW, France—RTE, Italy—Terna, Spain—REE, UK—National Grid

For Germany, provisional fi gues of public supply. For France, gross consumption on the French mainland. For Spain, electricity demand on the Spanish mainland. For the UK, total generation volume excluding station transfer, pumping and interconnector export demand.

As the role of thermal plant moves away from baseload dispatch towards the provision of ancillary services, fuel effi ciency drops while costs rise.

7th Annual

Nuclear EnergyOpportunities for Growth and Investment

February 16–18, 2011 • Marriott Bethesda North • Bethesda, Maryland

The Platts 7th Annual Nuclear Energy conference is the leading forum for a strategic view of nuclear energy, featuring the major players and experienced voices in the nuclear industry. Join over 500 attendees, and explore the opportunities and challenges for the growth of nuclear power, both in North America and internationally.

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• Pete Lyons, Acting Assistant Secretary for Nuclear Energy, U.S. Department of Energy

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• Bill Johnson, Chairman, President, and CEO, Progress Energy

• Jack Bailey, Vice President, Nuclear Generation Development, TVA Nuclear

• Jacques Besnainou, President, AREVA NP Inc.

• Kiyoshi Yamauchi, President and CEO, Mitsubishi Nuclear Energy Systems, Inc.

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Nuclear power plant construction in the US has been at a standstill for the past 14 years, owing to safety concerns following the accidents at Three Mile Island in 1979 and Chernobyl in 1986, and more recently because of the favor-able economics for carbon-based energy production. Yet nuclear remains a key part of the country’s energy mix. The US produces more power via nuclear production than any other nuclear-pro-ducing country. About 20% of US elec-tricity production is from nuclear.

According to the US Energy Informa-tion Administration’s International En-ergy Outlook 2010 Test Case, between now and 2035, global energy consump-tion will rise by 49%, much of which is expected from China and India, but some from the US and other OECD nations. Given international concern about climate change and a realization that every form of power generation has its costs and benefi ts, the US and many other nations are eyeing nuclear energy as a low carbon means of satis-fying these energy needs.

To stimulate interest in new nuclear construction, the US government, in 2007, instituted a loan-guarantee pro-

gram, which along with the high gas prices and momentum towards carbon legislation then prevalent, encouraged a fl urry of newbuild projects. However, that enthusiasm has slowed signifi cant-ly since 2007 although at least some of the projects with loan guarantees ap-pear to be moving forward.

Uncertain EconomicsThe fall in natural gas prices, the

ongoing credit crunch and the lack of momentum for carbon legislation have all dampened the viability of nuclear economics signifi cantly. It is highly likely that unregulated opera-tions that do not receive loan guaran-tees will defer or abandon their nucle-ar projects.

The volatility of gas prices over the long-term and expectations for even-tual carbon regulation will keep nucle-ar power as an integral part of many utilities’ resource planning. As the fi rst nuclear units are not expected until 2017, depressed gas prices in the me-dium term should not hinder nuclear expansion. However, claims that the potential supply of shale gas can sup-port demand for the next 75 to 90 years

nuclear

Premium for US Nuclear NewbuildAneesh Prabhu and Swaminathan Venketaraman, Standard & Poor’s

Low gas prices, little progress on carbon legislation and tighter borrowing requirements post-fi nancial crisis, have all dampened the momentum behind the so-called US nuclear renaissance. S&P’s Swaminathan Venketaraman and Aneesh Prabhu assess the newbuild outlook from a credit perspective.


2011 global energy outlook - nuclear

could lower natural gas prices for the long term, as forward gas price curves are currently indicating.

A levelized cost of energy comparison between new nuclear and combined-cycle gas turbine plants, currently the only realistic base-load alternative, across three scenarios, shows that a utility rate-base structure requires gas prices of $6.50 to $10/MMBtu for nu-clear capital costs of between $5,000 per kW to $8,000 per kW to be com-

petitive ($8.20/MMBtu for $6,500/kW). This indicates the need for subsi-dies at current gas prices and without carbon costs.

With a loan guarantee, a merchant plant with $6,500 per kW in capital costs requires gas prices at about $6/MMBtu; carbon costs lower the break-even level by $1/MMBtu for every $15 charged per ton of carbon. Models that add other subsidies (production or in-vestment tax credits) can make the $6,500 per kW nuclear option com-petitive at $5/MMBtu without carbon emission costs.

US Cost PremiumNew nuclear plants in the US will

cost much more to become operation-al on a dollar per kilowatt basis than in other countries that continued nuclear development. Lack of recent regulatory and nuclear construction experience, higher contingency costs, and a lack of economies of scale and a smaller pool of skilled labor all con-tribute to this expectation.

Economies of scale are more diffi cult to generate owing to the smaller num-ber of projects and the fragmentation of construction among small, private companies that do not necessarily share expertise. Even in Japan, where private companies lead the way in nuclear plant construction, governmental law

encourages private partnership consor-tia. In most other countries with nucle-ar capability, the government runs the energy program.

Time uncertainty (a result of both the regulatory process and financing issues) increases the risk of construc-tion cost escalation between project conception and groundbreaking, ow-ing to commodity price increases, and both are factors in the inability of bidders to offer fixed-price engi-neering-procurement-construction (EPC) contracts. Steel, cement, and copper, all necessary for nuclear plant construction, have doubled, and, in some cases, almost tripled their pric-es, since 2001.

Fixed-price EPC contracts offer Ja-pan and China a lower cost because of contractors’ confi dence in quantities, costs, performance history and ability to meet schedules, obtained through the respective countries’ continued development programs. The US’ lack of recent experience precludes such certainty and thus raises the costs of construction. Even if EPC contracts were offered in the US, labor costs for nuclear island construction would likely remain outside the bounds of any EPC contract. Another key is-sue for the EPC contract sponsor is which costs will be fi xed and which cost overrun risks will remain, even after fi nancing approval and start-up of construction.

Another hurdle for the US is that the market price must be able to bear all of the costs of production and construc-tion. That is not necessarily the case in other countries with government own-ership. And if the US utility is regulat-ed, regulations may require it to recap-ture costs only after operations have begun or require the lowest-cost type of power to be used at any particular time, thus leaving expensive produc-tion capacity unused.

In addition, safety concerns will re-main the industry’s Achilles heel and are paramount no matter whether the government runs the enterprise or functions mainly as a safety regula-tor, as is the case in the US. The type

New nuclear plants in the US will cost much more to become operational on a dollar per

kilowatt basis than in other countries that continued nuclear development.


2011 global energy outlook - nuclear

of cooling unit, the dependence and synergy of the units working within the reactor, and the amount of manu-al versus automatic control are all de-sign factors that regulators from each country scrutinize.

Licensing entails signifi cant risks, even for technologies further along the Nuclear Regulatory Commission’s review process. Regulators can require amendments to design even after they issue certifi cations, such as with the NRC’s new rule dealing with “consider-ation of aircraft impacts for new nuclear power reactors,” which can, of course, lengthen the project completion time.

Construction Track RecordThe nuclear power industry’s aggres-

sive expansion globally holds impor-tant lessons for the US. Based on the experiences in China, South Korea, Japan, France, Canada and Russia, the following factors are vital for successful nuclear power construction:

◆ strong government support and partnership among technology vendors;

◆ a focus on development aimed at standardizing only a few reactor designs;

◆ the incorporation of lessons learned from incremental changes to locally made reactors, coupled with contin-ual adaptation of imported reactors to shorten construction schedules;

◆ the employment of large modular construction at low-cost locations worldwide; and

◆ expanding the domestic supply base for labor and equipment.

New nuclear construction experi-ence around the world has been mixed. Only the ABWR has a reasonable track record of meeting cost and schedule estimates. The AP1000 has had a good start in China, but construction is still in its early days, and the projects have not reached major critical path items. Westinghouse’s and the Shaw Group’s ability to deliver completed units on schedule and within budget is unclear. The fi rst two European Pressurized Re-

actors have run into substantial sched-ule delays and cost overruns although costs are still lower than proposed US EPR projects. It will be important to the credit quality of US sponsors to learn from the international experience.

Ultimately, new construction of nu-clear power in the US remains in a state of fl ux, and further government sup-port—in the guise of loan guarantees or a price on carbon—will likely be neces-sary to see new construction of nuclear power plants. Safety issues and high costs are foremost, but when it comes to credit, the key additional concerns are regulatory risk, construction contract terms and government support. ■

Coal30.5%337,300

Oil5.8%63,655

Total: 1,104,487 MW

Natural gas41.2%454,611

Nuclear9.6%106,147

Hydro7.0% 77,731

Other renewables3.7% 41,384 Other

2.1% 23,659

1. US electricity capacity, nameplate capacity, in MW.

Source: EIA, 2008

Coal44.6%1,764,486

Oil0.7% 25,792

Total: 3,953,112 GWh

Natural gas23.3%920,378

Nuclear20.2%798,745

Hydro6.9%272,131

Other renewables3.6% 141,115 Other

0.8% 30,465

2. US electricity production, in GWh.

Source: EIA, 2009

Eight out of ten North American utility executives are not satisfi ed with President Obama’s fi rst-year performance on energy issues.

Findings also reveal that executives believe the industry’s greatest challenges are uncertain legislation, the environ-ment, incorporating new technology, fi nance and variable consumer demand.

After surveying over 100 senior executives within the electric and natural gas industries in the U.S. and Canada, this year’s study revealed that the most critical issues facing the energy industry include:

• Regulatory uncertainty • Addressing environmental concerns such as building new generation and transmission for renewables • Incorporation of technology as a priority • Addressing fi nancial concerns such as cost recovery, access to capital and maintaining liquidity • Providing satisfactory service and education about cost of ‘green’ energy to end users

The study was conducted in two phases. Phase I was qualitative and consisted of in-depth telephone interviews. Data for the quantitative Phase II was collected via online survey. To download the full study results go to: www.us.capgemini.com/PlattsStudy

Platts/Capgemini Utilities Executive Study

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Download your complimentary copy of the Platts/Capgemini Utilities Executive Study at www.us.capgemini.com/PlattsStudy


Heading into 2011, the renewable energy industry is in some ways enjoying the best of times. The wind power industry contin-ues a rapid expansion that began less than a decade ago. About 40 GW of new wind capacity will be added this year, according to the Global Wind Energy Council, bring-ing the world’s wind energy capacity close to 200 GW. GWEC expects global wind power to double by 2014, reaching more than 400 GW.

Part of this expansion is fueled by Euro-pean offshore wind farms that, after years of planning and construction, have begun generating power. These include the 300 MW Thanet plant off the UK coast and the 207 MW Rødsand II project in the Danish North Sea. “We do expect the US market to be down this year as the low level of or-ders we saw during the fi nancial crisis work their way through the system. On the other hand, stronger growth in China will make up for this, and the European market is very stable,” said GWEC Secretary General Steve Sawyer. “Overall, wind energy continues to be a growth market, weathering the eco-nomic crisis much better than some ana-lysts had predicted.”

The solar industry, too, is thriving, de-spite an increasingly competitive market.

Quarterly manufacturing capacity for solar photovoltaics added during third-quarter 2010 broke the gigawatt barrier for the fi rst time, driving PV equipment spending to a new quarterly high, market analysis fi rm Solarbuzz reported. The so-lar PV market is caught in an odd warp: falling equipment prices have made PV more economically competitive, while also shrinking technology manufactur-ers’ profi t margins.

In a further twist, the drop in equip-ment prices has spurred policy-makers in such countries as Germany and Spain to slash PV feed-in tariffs—arguing that fall-ing prices mean the industry needs less support. This has galvanized short-term investments by those looking to secure lu-crative tariffs before they are cut, while po-tentially dampening long-term PV growth. Germany’s solar PV association expects up to 8 GW of new capacity to be installed in 2010, up from 3.8 GW the previous year, ahead of tariff reductions.

Other renewables technologies are also undergoing transitions. Geothermal ex-ploration is expanding to countries like Ireland and the UK, thanks to technology improvements that have made previously marginal resources economically viable.

renewables

Winds of Change for Renewable EnergyDavid R. Jones, Editor, Platts Renewable Energy Report

As the renewable energy industry continues to grow, it is broadening its horizons beyond Europe and the United States to new markets in Asia. At the same time, serious challenges to renewables are emerging, from declining feed-in tariffs to mounting trade disputes.


2011 global energy outlook - renewables

Still, the geothermal market was “quite weak this year” as permitting delays held up projects, according to Lee Clements, in-vestment manager at Impax Asset Manage-ment. However, new plants could enter the market in 2011, and geothermal energy this coming year “could be a surprise,” he said.

As with geothermal, technology ad-vances have spurred growth in biomass markets, as biogas, which previously was too fouled with contaminants to combine with natural gas, can now be refi ned to be fed directly into natural gas pipelines. The fi rst two UK projects to funnel biogas into the gas grid began in October, joining a host of biogas feed-in plants in Germany.

New InvestorsYet despite this relative prosperity in the

midst of tough economic times, renew-able energy companies are being buffeted by political and economic forces. Much of the wind industry’s growth, for instance, is occurring not in traditional strongholds like Germany and the United States, but in developing countries, particularly in Asia. Many companies in mature wind markets, meanwhile, have struggled in recent years to secure fi nancing for large-scale projects as the global fi nancial crisis squeezed credit sources. In industrialized nations, the wind industry “is defi nitely in the doldrums,” Clements said. “It will defi nitely be a weak year for US and European wind, impacted by low demand for power.”

Onshore wind has endured diffi cult times in Europe, according to Ernst &

Young partner Andrew Perkins, with problems in planning approval and grid expansion creating major obstacles to wind power expansion in countries like Italy and the UK. Still, many wind energy companies are doing well, he said, and the fi nancing problems plaguing the in-dustry might begin to ease in 2011. “The debt markets have been shut the last few years, but it’s getting a little easier,” he said. “But the capital markets aren’t par-ticipating, and we haven’t seen direct debt involvement.”

Perkins noted, though, that alternative fi nancing sources are fi lling some gaps, such as direct participation by deep-pocket investors, such as Masdar’s decision to as-sume a stake in the London Array offshore wind farm, with a planned 1 GW capacity. Pension funds also are jumping into re-newables fi nance: Denmark’s PensionDan-mark in September purchased a 30% stake in the 165 MW Nysted offshore wind farm off the Danish coast from DONG Energy, following the $400 million investment in Hudson Clean Energy a year earlier by an-other Danish pension fund, ATP.

New MarketsErnst & Young’s latest Renewable En-

ergy Country Attractiveness Indices, pub-lished in August, ranked China as the world’s most attractive target for renew-ables investors.

The United States, previously atop Ernst & Young’s leader board, fell to No. 2 as doubts persisted about whether the US

2500

2000

1500

1000

500

GW

2007 2008 2009 2010 2015 2020 2030

Reference Moderate Advanced

1. Global cumulative wind power capacity.

Source: Global Wind Energy Council



Congress would adopt a national renew-able energy standard and as a federal re-newables tax break was set to expire.

At the same time, former leading renew-ables markets in Europe have slashed the generous feed-in tariffs that made their countries such magnets for investment. Both Germany and Spain lost a point in the Ernst & Young rankings because they cut support for PV generation.

By contrast, Asia’s two renewable ener-gy leaders, China—which four years ago failed to rank even in the Top 10—and India, which placed fourth in the latest Ernst & Young index, are strengthening their renewables support programs and setting national targets for clean energy production. China last year added 37 GW of renewable power capacity—more than any other country. The nation’s wind power capacity has exploded as onshore wind farm construction has grown 40-fold over the last decade.

Much of the wind power industry’s growth now comes from outside mature markets in Europe and America. Around half the growth in wind power capacity “is now happening in emerging econo-mies and developing countries,” GWEC’s Sawyer said. “We are seeing very encour-aging signs from countries in Latin Amer-ica, including Brazil, Mexico and Chile, as well as Northern and Sub-Saharan Africa.”

Other analyses echo Ernst & Young’s fi ndings on Asia’s ascendancy. “The Asia Pacifi c region is an increasingly impor-tant market for renewable energy. Over the next decade, the manufacturing of products and equipment for the industry will increasingly shift to Asia,” according to a study, Renewable energy in Asia Pacifi c, published in July by law fi rm Norton Rose. “Asia Pacifi c’s renewable energy markets will also become an important region for investment . . . Much of the future growth in renewable energy will ultimately come from Asia Pacifi c.”

Many Asian countries see renewable energy “as an opportunity to create local champions that will manufacture prod-ucts required in a carbon-constrained world,” it said.

The rise of Asian renewables generation, some analysts said, does not force a zero-sum contest with Europe. “It’s not nec-

essarily about the demise of more estab-lished markets. It’s more complimentary,” Ernst & Young’s Perkins said.

At the same time, new types of busi-nesses—some of which have never been involved in energy production—are looking to dive into the renewables mar-ket. For instance, the Minera Escondida copper mine in Chile, majority owned by BHP Billiton, is following the lead of Chilean mining companies Codelco and Antofagasta Minerals in searching for geothermal resources.

Other companies are prospecting previ-ously ignored resources for a renewables bounty. A striking example can be found in Guatemala, where Canadian gold explo-ration company Radius Gold is pursuing licenses to explore 500,000 acres in which, over the years, it has found hot springs—potential hydrothermal activity linked to gold deposits as well as to geothermal pools. Similarly, Hungarian oil company MOL entered the geothermal sector in 2006 to explore the dozen hot-water wells it discov-ered while drilling for oil.

Still others are supply-chain and service companies that are diversifying into re-newables. The process is well underway in the offshore energy industry, where ports and companies providing services to the oil and gas sector are branching out into pro-viding vessels and other equipment to off-shore-wind and marine-energy developers.

In the renewables supply chain, Dan-ish wind turbine maker Vestas recently contracted with automobile compo-

Top trends in renewable energy for 2011

◆ Broadening industry focus beyond Europe and United States to Asia

◆ Slow re-entry of traditional fi nancial institutions into renewables markets as alternative funding sources emerge for large-scale projects

◆ Non-energy companies enter renewables markets

◆ Growing international trade disputes



nent manufacturer ZF Friedrichshaven for wind-turbine gearboxes—a deal that could inspire participants in America’s beleaguered auto industry. This mirrors diversifi cation among silicon technology companies, which broadened their busi-ness horizons from making processors for computer manufacturers in the 1980s and 1990s to manufacturing silicon chips for solar PV producers.

Areas to WatchOn a larger scale, the renewables indus-

try is confronting challenges unknown just fi ve years ago in the arena of inter-national trade. As renewable energy has grown into a worldwide enterprise, contro-versies over globalization have emerged. The United Steelworkers, a US trade union, charged in a petition this year that many of Beijing’s government support policies for renewables violate international trade rules. The USW called on the Obama ad-

ministration to fi le a complaint with the World Trade Organization about China’s green-technology practices.

Similarly, Japan has fi led a WTO com-plaint accusing the Canadian province of Ontario of breaking international trade pacts with its renewables law, which re-quires developers to purchase renewable energy equipment with 50% provincial content. “It’s exactly the same as the car industry was,” Perkins noted. As the re-newables industry expands globally and new markets like offshore wind take off, the World Trade Organization is set to take center stage in handling the growing number of international disputes regard-ing renewable energy policies.

Perkins, Clements and RBC Capital Markets analyst Nick Hyslop agree that Brazil, which already generates substan-tial amounts of electricity from large hydropower and sugar cane bagasse, is poised to assume a major role in world wind power markets. The government contracted for just over 2 GW of electric-ity from 70 Brazilian wind farms in Au-gust as part of a renewable energy auc-tion, and Brazil’s wind energy association has called for further auctions dedicated solely to wind energy, such as the govern-ment’s wind-power auction conducted in December 2009.

Other markets to watch, analysts said, include Sweden, Abu Dhabi, Nepal and the Baltic countries. Some countries with promising renewables sectors, though, have stalled: Turkey, for example, has yet to enact long-promised national re-newables legislation. All told, the renew-able energy industry is undergoing fun-damental changes as it grows beyond a business centered largely in Europe and the United States.

Countries worldwide are now setting ambitious renewables production targets as they struggle to shift to low-carbon economies. “The fi nancing requirement is very large. There are legal requirements, but legislation won’t get us there,” said Hyslop. “The downturn focused countries on immediate concerns, not long-term goals.” He noted that national govern-ments face growing debt while “political pressures to stick to timetables remain . . . It’s an interesting conundrum.” ■

Emerging markets for renewable energy

◆ Brazil: This longtime biomass and large hydropower generator is rapidly expanding wind energy sector

◆ Sweden: Biomass now largest component of total energy mix, surpassing oil; wind energy fi nally taking hold

◆ United Arab Emirates: OPEC titan looking to diversify into solar photovoltaics, wants to generate 7% of its electricity from renewables in 10 years

◆ Nepal: Looking to export power from large hydroelectric plants to India while developing small hydropower to supply isolated communities

◆ Baltic countries: Estonia, Latvia and Lithuania are working to meet EU 2020 renewables targets while integrating their power markets by 2013

As one of the largest and cleanest electric power companies in the world, NextEra Energy continues

to invest in the future. We thank Platts for recognizing, as finalists in the 2010 Global Energy Awards

competition, our Texas Clean Energy Express (pictured), a private transmission line that is alleviating

congestion in wind-rich Texas, and our new West County Energy Center, the most efficient fossil-fired

power plant in the industry.

www.NextEraEnergy.com


Coal may be in retreat in the OECD, but the development of coal-fi red power gen-eration plant in Asia remains rapid. At one stage China was adding roughly 80 GW of coal plant a year, equivalent to the total power generating capacity of the United Kingdom. This has slowed to 40-45 GW of new coal capacity on average in recent years. India comes some way behind, but is still adding 10-12 GW of coal capacity per annum. It has an ambitious target to develop 50 GW over the next two years. Such targets are rarely met, but substan-tial additions to India’s 170 GW of exist-ing coal plant are likely.

This expansion has put pressure on both countries’ domestic resources, both below ground and in terms of internal transportation systems. It has already radically altered trade fl ows in thermal coal around the world. The most notable shifts have been the diversion of thermal coal normally destined for Atlantic mar-kets to the Pacifi c. India has become an important buyer of South African coal, while in 2010, Colombian coal started to move westward to Asia, rather than east-wards to Europe, a process likely to gain

momentum with the eventual expan-sion of the Panama canal.

China has been more successful than India at expanding its domestic coal in-dustry, which is by some measure the largest in the world. As a result, it has not become quite the net coal importer than many had expected. India imports of ther-mal coal, by contrast, are expected to grow much more rapidly. Coal plants are also being built near to power demand centers, often in coastal areas, in both countries, improving the economics of imported coal over domestic, and promoting an in-crease in coal trade if not net imports.

The growing need for imported coal has had another effect. It is forcing In-dian and Chinese companies abroad to secure energy assets to underpin their domestic expansion and increasingly in-ternational supply chains. This is chang-ing the face of mergers and acquisitions in the competition for energy resources.

It is also creating a new type of interna-tional, vertically-integrated company op-erating in the coal, power and transport logistics arenas. In Asia-Pacifi c, almost every major power-related asset sale or

coal

Adventures Abroad for CoalJames O’Connell, Managing Editor, Platts International Coal Report

The contrast could not be starker: in Europe and the US an industry in retreat, in Asia a market on fi re with M&A activity. Chinese and Asian demand for thermal coal has already produced marked changes in global trade patterns. Now, to secure their supply chains, Indian and Chinese coal companies are spreading their wings, creating vertically-integrated conglomerates in the fi elds of coal, power and transport.


2011 global energy outlook - coal

development appears to have either Chi-na or India behind it, frequently both. Indian and Chinese companies have par-ticularly targeted major coal exporters Indonesia and Australia, looking for both transportation and coal assets.

India Overseas India’s state-owned coal industry ini-

tially tackled overseas acquisitions with-out independent or private assistance. Its success was hindered by an inability, typical of large, state-owned companies, to move swiftly once a desirable asset was identifi ed.

With little or nothing to show for its efforts, the state knew a change of di-rection was required. In January 2008, a team of fi ve government companies formed a special purpose vehicle called Coal Ventures International Ltd (CVIL) to spearhead the hunt for both thermal and coking coal assets.

The team comprises one of the largest coal producers in the world, Coal India Limited, one of India’s biggest steel man-ufacturers, Steel Authority of India Ltd, India’s largest power provider NTPC Ltd, India’s top iron ore producer NMDC Ltd, with Rashtriya Ispat Nigam Ltd (RINL), an important domestic steel manufac-turer, completing the venture. CVIL was granted a modest initial war chest of $2.7 billion comprising $1.8 billion in debt and $900 million in equity. However, even this juggernaut has been slow to notch up any real successes. CVIL is con-tinuing to evaluate thermal coal mines in Indonesia and coking coal mines in Aus-tralia. “CVIL will buy a coal asset by 2012 and efforts are on to zero in on a thermal coal mine in Indonesia,” a CIL offi cial said, confi rming that it is also scouting for mines in Australia and South Africa.

Private Indian power companies in-volved in the country’s Ultra Mega Pow-er Programs have been more successful. The UMPPs require the construction of huge new coal plants and developers have been keen to secure international supply chains, given the shortage and unreliability of domestic coal deliver-ies. Among the fi rst to move was Tata Power, which bought a 30% equity stake in Bumi Resources, Indonesia’s largest

coal producer. An outlay of $1.3 billion saw Tata gain a 30% stake in PT Kaltim Prima Coal and PT Arutmin Indonesia, bringing Tata members onto their re-spective boards. The signifi cant part of the deal for Tata was a coal supply agree-ment for the sale of 10.8 million mt/year of thermal coal at index-linked prices for 12 years starting in 2009.

However, both state and private com-panies have run into the problem of as-set infl ation as both India and Chinese companies simultaneously sought the same resources. Private Indian company Jindal Steel & Power has been caught up in a competitive bidding war with China’s Bhushan Steel (Australia) Pty for a stake in Bowen Energy, an Austra-lian mining exploration company. By May 2010, ambitions appeared to have cooled. A senior executive at Indian inte-grated steel maker Ispat said: “To us, get-ting some good coal and iron ore mines abroad was one of our top priorities. We have followed quite an aggressive stance but today it’s a little different. Gone is that life-and-death involvement.”

An analyst commented: “The result is overvaluation. Even after we got a feel-ing that [the asset was too expensive], we wouldn’t stop and kept going. There has been at least one instance where two In-dian companies were locked in a bidding war for a coal property.” He added, “the bottom line is clear: the resource sector has become overheated, and it would be better if Indian and Chinese buyers kept away from the market for some time.”

Backing up the claims of asset infl a-tion, investors chased after Riversdale Mining shares in September when Indi-an state-owned iron ore producer NDMC was reported to be an interested buyer for 10% of the Australian company, which has a large coal export coal project in Mozambique. Despite NDMC chairman and managing director Rana Som dis-owning the reports, Riversdale’s share price rose almost 3.5% to A$9.77/share (US$9.75) on the day and, by October 20, stood even higher at A$10.77/share.

However, higher asset prices do noth-ing to resolve the problem of supply se-curity. After its slow start, India has re-cently made the international M&A fi eld



sit up and take notice with a fl urry of deals. Indian conglomerate Adani Group swooped on assets owned by Australia’s Linc Energy to gain access to a 7.8 bil-lion mt coal resource in the Galilee ten-ement in Queensland, capable of sup-porting a 60 million mt/year coal mine. The deal comprises an initial outlay of US$457 million in cash plus a 20-year infl ation-linked coal production roy-alty. Linc Energy chief executive Peter Bond estimated the deal would generate A$3 billion ($2.7 billion) in revenue for Linc over the 20-year life of the royalty which is payable at a rate of A$2/mt and indexed for infl ation.

In late August, Adani also signed an agreement with Indonesian coal pro-ducer PT Tambang Batubara Bukit to de-velop a 270 kilometer railway and coal terminal project in South Sumatra, In-donesia. Adani will invest over $1.6 bil-lion in the project, a senior offi cial said. Development is expected to start in 2011 and take about two years to complete, according to the head of Indonesia’s Investment Coordinating Board, Gita Wirjawan. The railway will link Tanjung Enim to Tanjung Api-Api, which has a transport capacity of 30-35 million mt/year. The coal terminal, on which con-struction will start next year, will have a capacity of 50 million mt/year. One of Adani’s Indonesian partners, PT Bukit Asam will supply 34 million mt of that capacity. Construction is expected to take 36 to 48 months, Wirjawan said.

Adani Power, Reliance Power and GMR, three Indian power utilities, were all also reported to be in the running to buy debt-laden West Australian miner

Griffi n Coal and its power station assets in the third quarter of this year. Aus-tralia’s Wesfarmers, which operates the Premier thermal coal mine next to Grif-fi n Coal’s operations, was also tipped as a potential buyer, but the company walked away from the sale process in early September after carrying out due diligence on Griffi n’s mines, leaving the way open for others. Griffi n Coal produces 3.5 million mt/year of mostly low sulfur and low ash thermal coal, some of which has been exported to China and India in recent years.

Confi rming its liking for transport as-sets, in mid-October, the Adani Group confi rmed its interest in leasing Austra-lia’s Brisbane port. It said it is in talks with the Queensland government about taking over as the new private sector op-erator of Brisbane port in Queensland, Australia on a 99-year lease. Several companies are understood to have ex-pressed an interest in acquiring the lease which is due to be auctioned by competitive tender before end-2010. Adani Group has also secured the right to build and operate an export terminal at Dudgeon port near Hay Point port on Queensland’s central coast.

Chinese Adventures AbroadIn January, Yanzhou Coal’s A$3.5

billion ($3 billion) acquisition of Aus-tralian coal producer Felix Resources was endorsed by Australia’s resources and energy minister Martin Ferguson. According to the minister’s estimates, Chinese imports of thermal and cok-ing coal increased 115% and 385% re-spectively in 2009, compared with im-

Export tons by destination YTD September 2010Australia’s Port Waratah Coal Services

Export tons by destination 2007

China 8.43%Europe 0.3%

Mexico 1.88%

Taiwan 12.09%

South Korea 15.7%Japan 58.09%

Other Asia 3.52%

Japan 65%

Taiwan 13%

South Korea 11%

Mexico 4%Malaysia 2% Other 5%

1. Top export destinations for Australian coal.

Source: PWCS



port levels for the 2008 calendar year, Australian exporters capturing much of that increase. The Chinese producer also said in September that its venture with the Australia-based Felix Resourc-es should add about 15 million mt to its projected total 2010 output of 60 mil-lion mt. It also aims to increase its an-nual coal output to over 75 million mt in 2012 and 100 million mt in 2015.

Chinese coal producer Shenhua Group has formed a comprehensive business alliance with Japan’s Mitsui & Co. The alliance includes an expansion of coal trading to Japan and China, joint development of overseas coal mines, collaboration of coal chemical busi-ness and development of environmen-tal and effi cient energy-use businesses, Mitsui said. Mitsui named Mongolia as one country where it could work with Shenhua, but it didn’t disclose any spe-cifi c mines for joint development.

An analyst with Beijing-based China Securities Research told Platts that Mit-sui and Shenhua may jointly bid for the Tavan Tolgoi coal fi eld in Mongolia, one of the world’s largest undeveloped coal deposits. A Shenhua Group subsidiary also recently confi rmed plans to com-plete a 10 million mt/year coal mining project in the Watermark area of Aus-tralia’s New South Wales by end-2015, according to Huang Qing, board secre-tary of Shenhua Energy.

In addition, Beijing and Moscow have agreed on supplies of at least 15 million mt/year of Russian coal for China over the next 25 years, with Beijing to pro-vide Moscow with a $6 billion loan to fi nance development of coal projects, according to Russia’s energy ministry,

following a meeting of a bilateral sub-commission on energy cooperation in September. Russia’s energy ministry said that a working group would study ways to increase railroad transportation capacity. The planned loan of around $6 billion will be secured by the coal exports and used for the development of coal deposits in Russia and construc-tion of transportation infrastructure as well as imports of mining equipment from China, according to the ministry.

Russia exported 12.09 million mt of coal to China in 2009, up from just 760,000 mt the previous year. In fi rst-half 2010, Russian coal exports to China amounted to 6 million mt, making it the fourth largest coal exporter to Chi-na. The agreements also provided for the establishment of a joint venture to develop the Ogodzhinskoye coal deposit in the Amur region in Russia’s Far East.

Chinese companies have been more visible in recent years in trying to secure oil assets, particularly in Africa, where access to resources has been closely as-sociated with deals and loans in other sectors. The country’s relatively small net amount of coal imports in compari-son with its rapidly growing dependence on imported oil has meant a greater fo-cus on oil asset deals. It is India’s grow-ing import imbalance that has driven its companies abroad. According to govern-ment estimates, Indian demand for im-ported coal will be 51 million mt in 2012. Other estimates suggest the gap could be considerably higher. For the coal export-ers on the rim of the Pacifi c and Indian Oceans, Chinese and Indian demand centers present both a growing market and a source of investment capital. ■

2008 2009

EuropeIndia

Other Asia

Other

Europe

India

Other Asia

Other

1. Continental export shifts—South Africa’s RBCT.

Source: RBCT

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The 2009 UN negotiations in Copen-hagen were widely fl agged as a major opportunity to deliver a new post-Kyo-to deal on climate change, only to see the talks narrowly avoid total failure. By contrast, the prospects for the 2010 Cancun meeting have been played down by almost all concerned. Climate change may be a far bigger threat to the global economy than the fi nancial meltdown experienced in 2008-2009, but it is still perceived as a relatively distant one. Hobbled by the world fi -nancial crisis, governments are instead struggling with the diffi cult task of simultaneously reducing defi cits and boosting jobs.

As a result, many observers are ques-tioning how much money and politi-cal will can be brought to bear on the issue of climate change, particularly given the unspectacular nature of the recovery. Some climate change doubt-ers argue that it is simply too expensive to switch the world’s energy systems on

to a sustainable path. Scientists, green groups, and increasingly politicians and voters, argue that the world cannot afford not to. And each year the world’s carbon meter ticks on.

Sino-US Agreement RequiredChina and the United States hold

the keys to a deal because without the world’s two largest emitting nations on board any global emissions reduction deal is unlikely to be enough to bring the atmospheric concentration of CO2down to limits scientists regard as safe. However, there has been little progress on the seemingly intractable divisions between these two countries.

Chinese leaders point out that global warming has been caused primarily by 200 years of coal-driven industrializa-tion by developed countries. On the question of binding emissions reduc-tions, China’s position remains: “you fi rst, perhaps we follow later.” This is all very well, but by China’s own esti-

emissions

Mexican Standoff: What Can Come of Cancun?Frank Watson, Managing Editor, Platts Emissions

The world’s best attempt to combat climate change—the 1997 Kyoto Protocol—expires in 2012. Time is running out to put a new treaty in place before the world slips into a post-Kyoto global climate policy vacuum. This year’s talks at Cancun in Mexico were never expected to deliver a new global deal, but, at best, to provide progress in key areas that might allow a post-Kyoto agreement in 2011.


2011 global energy outlook - emissions

mates, it has already eclipsed the US as the world’s number one emitter of greenhouse gases and it continues to build coal-fi red power plants at a rate suffi cient to keep pace with GDP growth of about 10%.

For its part, the US, fearing econom-ic disadvantage, has always voiced the strongest possible opposition to the

notion of committing to any binding emissions reductions without similar commitments from China and other major developing nations. This posi-tion was essentially Washington’s ra-tionale for not ratifying Kyoto in the fi rst place.

So as the atmospheric concentration of CO2 rises year-on-year, Beijing and Washington continue to stare each other down, each hoping the other blinks fi rst. This Mexican standoff is nothing new: the deadlock at the heart of the global climate negotiations has largely remained unchanged since the UNFCCC was agreed in 1992. The dif-fi culty lies in fi nding ways to break it. Some hope shoveling large amounts of cash in the direction of developing countries will encourage more ambi-tious climate commitments, and per-haps it will, but climate adaptation funding in the short term will do little to curb global warming, only help to remedy its worst effects.

Cancun RealityA new binding global deal to cut

greenhouse gas emissions is almost certainly not going to be agreed in Mexico. The UN’s top climate offi cial, Christiana Figueres, said in Septem-ber that a “heavy burden” rests on the Cancun negotiations and urged world leaders to make “the right choice” on climate change. “Cancun has to keep

the world walking in the right direc-tion. It has to be the next essential and signifi cant step on the long journey to respond to the climate challenge,” she said.

Figueres said promises and pledges have been made by many nations, but these still need to be “captured in an international agreement, and only governments can mandate the full set of ways and means to launch a new wave of global climate action.” Figueres added that a series of weath-er-related disasters during 2010 have highlighted the world’s vulnerability to extreme climate events, and that such events “are a mild taste of what science says will come if we do not continuously raise our ambitions for environmental protection as each year passes.”

She said the world is now “acutely aware” of the danger it is in and re-quires governments to “take the next signifi cant step . . . Governments un-der the Convention and its associated agreements, have the power and the responsibility to set free the forces of human ingenuity, innovation and en-trepreneurial action that will take us to a new era of clean, green develop-ment,” she said.

Other high level offi cials agree that the Cancun summit won’t deliver a new post-2012 agreement. When asked about the prospects for progress at a parliamentary hearing on Septem-ber 15, UK secretary of state for energy and climate change Chris Huhne said: “It’s certainly going to be very diffi cult to get a fi nal deal . . . I hope that we can demonstrate real progress in some of the dossiers that will make up a fi nal deal. I hope that we’ll see progress on forestry, and on monitoring, report-ing and verifi cation [of emissions]. It’s absolutely crucial that everybody is re-porting in a fair way,” he said.

Huhne also pointed to the impor-tance of fi nance and the role it could play in unlocking the climate stale-mate. He said developing countries “make a valid point that the green-house gases in the atmosphere doing the global warming were emitted by

Even as the atmospheric concentration of CO2 increases each year, China and the US

continue to stare each other down, each hoping the other blinks fi rst. This Mexican

standoff is nothing new . . .


2011 global energy outlook - emissions

developed countries. So there is a mor-al obligation on the developed coun-tries to reduce emissions.” He added, “the Americans have not delivered on clean energy legislation in Congress and that gives major developing coun-tries like China a reason to say ‘why should we do more?’ So I think we have a role to play in convincing US Congressmen and women that this is in their interests and that a low car-bon economy is good for business and not about grinding the economy to a standstill.”

According to the US climate action group, the Natural Resources Defense Council, the Cancun meeting must serve three critical functions to ensure continued progress on international climate protection efforts and to re-build some of the trust lost during the 2009 Copenhagen gathering. NRDC’s international climate policy director Jake Schmidt said that, fi rst, the inter-national community needs to prove to countries and the world public that it can work together to address climate change. “This is paramount, as a per-ceived failure will make it even more diffi cult to build political momentum within the UN system and may lead the public and countries to disen-gage,” he said.

Second, Cancun needs to produce an agreement on aspects of the key implementing activities to be deliv-ered by the international agreement, for example clean energy technology deployment, deforestation reductions and improving the resilience of coun-tries to the impacts of climate change. “While it is unlikely that every aspect

of these issues will be resolved in Can-cun, it is possible to make signifi cant progress on each of these issues . . . The notion of ‘nothing is agreed, until everything is agreed’ must be set aside in favor of re-establishing confi dence by progressively building the agree-ment component by component,” said Schmidt. And, third, he said, Cancun

needs to produce suffi cient momen-tum for the UN negotiations in South Africa in 2011 and the Rio 2012 Earth Summit to fi nalize additional commit-ments and implementation steps.

More concrete commitments of cli-mate funding for developing coun-tries by industrialized nations could win greater cooperation in allowing full monitoring, reporting and veri-fi cation of emissions among the big emerging economies. Mechanisms to facilitate technology transfer to de-veloping countries could see progress, and fi nancial measures to reduce de-forestation could also move forward. So while a binding deal is not in the cards in Mexico, progress can still be made on core issues that might make the signing of a binding agreement possible in 2011 or 2012. ■

CO2 concentration in ppm (pre-industrial levels at 278 ppm; current levels at 380 ppm)

Global mean temperature increase in C above pre-industrial levels Peaking year of CO2

350 - 400 2.0 -2.4 2000 - 2015

400 - 440 2.4 - 2.8 2000 - 2020

440 - 485 2.8 - 3.2 2010 - 2030

485 - 570 3.2 - 40 2020 - 2060

570 - 660 4.0 - 4.9 2050 - 2080

1. Overview of CO2 concentration level, corresponding temperature increases and year that concentrations would need to peak to maintain specifi c concentration levels.

Source: UNFCCC Fact Sheet: Climate Change Science

“The notion of ‘nothing is agreed, until everything is agreed’ must be set aside in favor of re-establishing confi dence by progressively building the agreement component by component,” – Jake Schmidt, US NRDC

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The petrochemicals industry has struggled hard to recover from the slump of late 2008 and early 2009, when it saw the worst fall in demand and prices in the last ten years, if not in its history. Then, the Platts Global Petrochemical Index, a proxy measuring the collec-tive price of petrochemicals, dropped to $491/mt on December 5, 2008, a huge fall from the $1,679/mt recorded on July 14 of the same year.

However, the market has seen a mod-est recovery over the course of 2009 and 2010. Heading into the fourth-quarter this year, the PGPI had recovered over 50% of the value lost since its death de-fying plunge and there are encouraging signs that it will maintain these price levels through year’s end. Despite a dif-fi cult two years that has prompted rap-id consolidation, the petrochemicals industry has shown resilience.

Oil Price LinkThe bullish price outlook for petro-

chemicals is closely linked to that for crude oil. Analysts in this market, were, by fourth-quarter 2010, increasingly arguing that oil prices could reach $85 to $95 a barrel by end-2010. In Septem-ber, Goldman Sachs argued that strong Chinese oil demand, slowing inventory builds in the US and falling levels of fl oating storage suggested that “world oil market conditions are far more con-structive than conditions in the US oil market suggest.”

Like oil, prices in the petrochemicals sector have remained stubbornly fi rm in comparison with a relatively mod-est recovery in the balance between supply and demand. One reason why is that petrochemicals were a primary benefi ciary of the concerted effort by the governments of the major devel-

petrochemicals

Petrochemicals: Consolidation and RecoveryShahrin Ismaiyatim, Global Editorial Director, Platts Petrochemicals

The petrochemicals sector, often cited as an economic bellwether, has slowly recovered from the fi nancial crisis. The latter prompted necessary consolidation and caused the delay and suspension of new projects that would have added to overcapacity. Rather than succumb to recession, industry observers believe the petrochemicals sector has weathered the storm.


2011 global energy outlook - petrochemicals

oped and developing economies in 2008 and 2009 either to offer direct bailouts to struggling companies or to pump money into the economy by other means, many of which targeted the auto sector. This was accompanied by “quantitative easing”—a highly ac-commodative monetary policy stance designed to inject liquidity into the fi nancial system and eventually stimu-late the real economy.

These efforts seemed to work. Con-sumers went shopping for big ticket consumer items like refrigerators, tele-vision sets, washing machines and cars (in China) or traded in their old cars for new ones (in the US and Europe). Both are important areas for petrochemicals demand. By the start of second-quarter 2010, many economists were declaring that the recession was offi cially over.

However, once these measures ran their course, the global economy start-ed to sputter. Fears of the dreaded dou-ble dip—a second recession following quickly on the heels of the fi rst—resur-faced. In July, the S&P 500 stock index fell to its lowest level this year as inves-tors pulled money out of the system to park in “safe havens” like gold and oil. The index registered 1,022 July 2, down from the year-high of 1,217 points April 27. Equities markets took another dip in August.

Moreover, countries like Japan, South Korea, Taiwan and Brazil have seen their currencies rising versus the US dollar. This has made their exports more expensive compared with their competitors and hence less attractive. However, China’s currency is tied to the dollar at a level which many argue

900

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40011/08 1/09 3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10

1000

1100

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1300

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900

700

500

300

1300

1500

1700

$/mt$/

mt

PGPI (left) Global Ethylene (right) Global PE (right)

1. Petrochemical prices recover over 50% since 2008 crash.

Source: Platts

60

65

70

75

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90

9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 7/10 8/10 9/10 10/10

500

550

600

650

700

$/mt$/

bbl

750

800

Dated Brent (left)Naphtha CIF NWE (right)

2. High crude pressures napththa-petchems crack.

Source: Platts



undervalues it, ensuring the competi-tiveness of Chinese exports.

“It was the Bank of Japan which effec-tively poked the hornets’ nest with its unilateral intervention to stem the rise of the yen,” according to David Mor-rison, an analyst at Global Forex Trad-ing. On October 7, the dollar traded at an eight-month low against the euro, at one point the euro reached $1.4029, the highest level since January. Against the Yen, the dollar slumped to Yen 82.25, the weakest level since May 1995. Mean-while, London gold prices closed at a re-cord high of $1346.50 per ounce, an in-dication of the metal’s safe haven status.

This concern over a drop back into re-cession prompted QE2—a second round of quantitative easing. However, it is by no means clear that QE2 will produce the same effect as QE1. In effect, inter-est rates are being kept low to encourage borrowing and keep currencies weak and exports competitive. At the same time, liquidity is still being pumped into the international fi nancial system. The problem is that it is not fi nding a productive use and is being directed to-wards commodity investments that are seen as safe havens against the infl ation that such monetary stimulus is likely to provoke. Commodity prices thus ap-pear to be a benefi ciary of government policy in two ways: fi rst, through stim-ulating the real economy, and second, as a means of fi nancial investment.

High Feed CostAlthough expansionary economic

policies have helped support petro-chemical prices, the rise in crude oil prices has also fuelled a rise in the price of the petrochemical feedstock naph-tha, causing concern over production margins. Throughout this year, the Platts Petrochemicals Cracker Margin index (PCM Spot) has only hit nega-tive territory in two out of ten months. First, in January, when it fell to minus $111/mt, and then in March, when it dropped to minus $42/mt.

The PCM Spot is a measure of profi t-ability for steam cracker operators using naphtha as a feedstock. The PCM cur-rently refl ects operators of typical Eu-ropean assets, where the critical break-even point is between $150-200/mt. For most of the second and third quarters, steam cracker operators have had fairly good margins, in particular from June through September. This has been at-tributed to a resurgence in underly-ing demand for petrochemicals driven largely by China and not merely a re-plenishment of inventories.

“There is no question that Asia has been the main driver of this recovery, showing strong growth all the way through 2009 and into 2010,” accord-ing to Ineos group director Tom Crotty. Chinese demand has kept Middle East-ern petrochemical products moving east. Crotty, who is also the president

9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 7/10 8/10 9/10 10/10

$/oz

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1300

1350

1400

1

1.1

1.2

1.3

1.4

1.5

1.6London Gold (left) Eur/$ (right)

3. Weak dollar pushes funds into commodity sectors.

Source: Platts



of the European Petrochemical Associa-tion, said most players in Europe that are in the base chemicals markets, and indeed players in other regions, have mostly brushed aside talks of the dou-ble-dip recession. “It certainly did not feel like that,” Crotty said, adding “we see strong chemical demand across all the developed economies.”

However, the recent march upwards in both crude oil and naphtha prices have begun to eat into petrochemical cracking margins. In early October, the naphtha cargo market was assessed at $771/mt CIF Northwest Europe, the highest level in two years.

The feedstock cost increases have be-gun to put a squeeze on steam cracker margins as demand for downstream petrochemicals has begun to slide into its seasonal year-end lull. Although some ethylene producers have put on a brave face hoping the entire value chain would continue to consume products, others were more realistic.

“Cracker margins will be squeezed now,” one producer said, as if resigned to lose more margin in the fourth quarter. Platts PCM Spot in October reached its lowest levels since May. Ethylene is the main petrochemical product that comes out of a steam cracker. It feeds into many downstream products like polyethylene and PVC, two polyolefi ns that serve the packaging and construction sectors.

In effect, before the credit crunch, many petrochemical analysts antici-pated that the industry would go into a down-cycle in 2011-2012, owing to capacity additions in the Middle East. A recovery would then be seen in 2014-2015. The fi nancial crisis has brought forward this down-cycle by two years. It caused companies to close uncompet-itive plants and to stop or delay some new projects in the Middle East. Indus-try sources now anticipate that the re-covery in the petrochemicals industry will come in 2011-2012, reaching the top of the cycle in 2013-2014. ■

9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 7/10 8/10 9/10 10/10

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$/m

t$/

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-100

0

100

200

300

400

500Platts Petrochemical Cracker Margin Spot

500

550

600

650

700

750

800

850

900Naphtha CIF NWE

4. Steam cracker margin tightens as naphtha value spikes.

Source: Platts

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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 fi nancial 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 fi nancial reports from 2009, thus provide a relative pic-ture 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 profi ts 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 In-ternational Energy Agency called an unprecedented drop in demand. Ex-change-traded natural gas prices, par-ticularly in the United States, plummet-ed in 2009 in both absolute terms and relative to oil. Profi ts and prices were hit by the combined success of US un-conventional gas production, expand-ing LNG supply worldwide and dimin-ishing demand.

By contrast, gas sellers dependent pri-marily on oil indexation and take-or-pay contracts for their long-term sales found a measure of protection that oth-ers facing gas-to-gas competition did not. The coexistence of these two ways of pricing gas created distinct pres-sures, impacting on selling and acquisi-tion strategies. The 2009 fi nancial year stood out because of the huge dispar-ity between spot gas, which was cheap, and relatively expensive prices for oil-linked long-term gas sales.

top 250 global energy companies

Power Sector RevivalRoss McCracken, Editor, Platts Energy Economist

Platts Top 250 Global EnergyCompany Rankings™ reviewed.

Platts Top 250 Global Energy Company Rankings™ measures fi nancial performance by ex-amining each company’s as-sets, revenue, profi ts and return on invested capital. All ranked companies have assets greater than (US) $3 billion. The un-derlying data comes from Capi-tal IQ, a Standard & Poor’s busi-ness (like Platts, a division of The McGraw-Hill Companies).



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 fi nd their feet.

Some did so more quickly and ef-fectively than others. As energy feed-stock prices have remained relatively low in 2009, oil and gas profi ts have fallen from 2008, but power sector re-turns have revived from often nega-tive 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 pro-ducers. The demand and price outlook remains depressed, challenging previ-ous expansion plans, while the envi-ronment regarding carbon pricing in key jurisdictions remains as uncertain as it ever was.

Top TenReigning supreme at the top of the

rankings for the sixth consecutive year is US major ExxonMobil. Despite be-ing fi fth in terms of asset value, Exx-onMobil came second in terms of both revenues and profi ts. Platts rankings are based on a combination of assets, revenues, profi ts and return on capi-tal invested for listed companies with over $2 billion in assets. While Exxon-Mobil’s European gas production de-clined, the coming on stream of its gi-ant 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 rank-ings in 2008. This refl ects a strong per-formance in 2009 relative to its peers. BP’s revenues dropped by a third, but profi ts by only little more than a fi fth. Contrast this with Chevron and Shell, which moved down from second and third respectively to ninth and tenth. Both saw profi ts more than halve.

3-year CGR %

Platts RankRank Company Country Industry

1 China Resources Power Holdings Hong Kong IPP 50.5 121

2 PTT Aromatics & Refi ning Plc Thailand R&M 44.4 165

3 Adaro Energy Tbk Indonesia C&CF 40.3 158

4 Tata Power Co Ltd India EU 39.7 159

5 Huadian Power Intl Corp Ltd China IPP 34.3 227

6 Reliance Infrastructure Ltd India EU 28.4 198

7 Datang Int’l Power Generation Co China IPP 24.5 185

8 PowerGrid Corp Of India India EU 24.2 205

9 China Shenhua Energy Co Ltd China C&CF 23.6 19

10 Huaneng Power International China IPP 21.6 102

11 Reliance Industries Ltd India R&M 21.4 13

12 China Coal Energy Co China C&CF 21.1 93

13 PT Bumi Resources Tbk Indonesia C&CF 20.2 242

14 Shenergy Co Ltd China IPP 20.2 235

15 YTL Corp Berhad Malaysia DU 19.0 237

16 Shenzhen Energy Group Co Ltd China IPP 17.9 204

17 Gail (India) Ltd India GU 17.8 107

18 Yanzhou Coal Mining Co Ltd China C&CF 17.6 142

19 Indian Oil Corp Ltd India R&M 17.0 78

20 China Yangtze Power Co China IPP 16.8 163

1. Fastest growing Asia companies.

Source: Capital IQ/Platts

Fastest Growing is based on a three year compound growth rate (CGR) for revenues. The compound growth rate (CGR) is based on the companies revenue numbers for the past four years (current year included). If only three years of data was available then it is a two year CGR. All rankings are computed from data assessed on June 1, 2010.



Platts Rank 2010

Assets Revenues Profi tsReturn on

invested capital 3-year CGR%

Industry codeCompany State or country Region $ million Rank $ million Rank $ million Rank ROIC % Rank

1 Exxon Mobil Corp Texas Americas 233,323 5 275,564 2 19,280 2 15.7 14 -6.3 IOG

2 BP Plc United Kingdom EMEA 235,968 4 239,272 3 16,578 3 13.0 25 -3.5 IOG

3 Gazprom Oao Russian Federation EMEA 270,501 3 98,135 13 25,578 1 11.4 37 11.6 IOG

4 Petrobras Brazil Americas 190,411 9 100,880 12 16,002 4 11.8 31 4.9 IOG

5 Total France EMEA 156,913 12 157,673 6 11,875 8 11.6 33 -5.5 IOG

6 E.ON AG Germany EMEA 187,476 10 115,772 10 12,045 7 11.5 35 8.7 EU

7 Petrochina Co Ltd China Asia/Pacifi c Rim 212,305 6 149,213 7 15,135 5 10.4 49 13.9 IOG

8 China Petroleum & Chemical Corp China Asia/Pacifi c Rim 128,505 16 192,638 4 9,041 10 11.3 38 8.0 IOG

9 Chevron Corp California Americas 164,621 11 159,293 5 10,483 9 10.2 52 -6.6 IOG

10 Royal Dutch Shell Plc United Kingdom EMEA 292,181 2 278,188 1 12,518 6 7.4 85 -4.4 IOG

11 LUKOIL Oil Company Russian Federation EMEA 79,019 21 81,083 16 7,011 12 10.7 47 8.1 IOG

12 RWE AG Germany EMEA 114,765 17 65,234 21 4,892 20 11.3 39 2.7 DU

13 Reliance Industries Ltd India Asia/Pacifi c Rim 55,939 33 43,636 27 5,248 18 12.4 27 21.4 R&M

14 Rosneft Oil Company Russian Federation EMEA 83,232 20 39,431 28 6,514 13 10.6 48 6.4 IOG

15 Endesa SA Spain EMEA 73,935 25 34,350 33 4,822 22 8.9 64 7.6 EU

16 ENI SpA Italy EMEA 144,355 15 117,006 9 6,139 15 6.4 107 -1.1 IOG

17 TNK-BP Holdings Russian Federation EMEA 28,041 81 25,696 44 5,175 19 23.2 3 5.0 IOG

18 Oil & Natural Gas Corp Ltd India Asia/Pacifi c Rim 33,377 67 22,400 52 4,240 27 20.9 5 14.0 E&P

19 China Shenhua Energy Co Ltd China Asia/Pacifi c Rim 45,455 43 17,759 66 4,432 25 12.1 28 23.6 C&CF

20 Surgutneftegas Oao Russian Federation EMEA 37,463 58 18,918 60 4,806 23 13.4 21 10.4 IOG

21 Enel SpA Italy EMEA 197,082 8 87,404 15 7,807 11 5.5 131 18.4 EU

22 EDF France EMEA 297,131 1 93,260 14 5,490 17 5.1 141 4.0 EU

23 Scottish & Southern Energy United Kingdom EMEA 26,338 88 34,375 32 1,970 40 14.9 16 22.0 EU

24 ConocoPhillips Texas Americas 152,588 13 136,016 8 4,858 21 5.1 138 -6.7 IOG

25 Gazprom Neft Russian Federation EMEA 29,912 71 22,236 54 3,013 32 13.2 23 3.7 IOG

26 Exelon Corp Illinois Americas 49,180 38 17,318 67 2,706 35 11.2 41 3.4 EU

27 Statoil Asa Norway EMEA 86,990 19 77,642 18 3,076 31 6.2 114 3.0 IOG

28 GDF Suez France EMEA 210,553 7 112,341 11 6,294 14 4.6 154 21.7 DU

29 CNOOC Ltd Hong Kong Asia/Pacifi c Rim 35,465 62 15,322 83 4,316 26 15.3 15 5.6 E&P

30 BG Group Plc United Kingdom EMEA 38,185 57 16,291 74 3,458 30 12.4 26 12.7 IOG

31 Constellation Energy Group Inc Maryland Americas 23,544 104 15,599 78 4,503 24 32.3 2 -6.8 IPP

32 Iberdrola SA Spain EMEA 107,309 18 34,527 31 3,971 28 5.1 143 30.6 EU

33 Occidental Petroleum Corp California Americas 44,229 47 15,403 80 2,927 33 9.2 62 -4.5 IOG

34 Ecopetrol SA Colombia Americas 28,166 80 15,345 82 2,590 36 13.1 24 18.2 IOG

35 PTT Plc Thailand Asia/Pacifi c Rim 34,006 64 47,681 26 1,790 45 7.3 89 9.3 IOG

36 AK Transneft Oao Russian Federation EMEA 45,921 42 11,518 105 3,951 29 9.8 54 20.1 S&T

37 CEZ AS Czech Republic EMEA 25,511 92 10,318 113 2,807 34 15.8 13 5.9 EU

38 Sasol Ltd South Africa EMEA 19,020 124 18,098 64 1,792 44 13.7 20 18.7 IOG

39 National Grid United Kingdom EMEA 63,278 29 22,312 53 2,211 37 5.2 134 17.2 DU

40 Repsol YPF SA Spain EMEA 71,341 27 66,465 20 2,175 38 4.0 172 1.8 IOG

41 Imperial Oil Ltd Canada Americas 16,686 132 18,860 62 1,487 55 14.5 17 -4.8 IOG

42 Centrica Plc United Kingdom EMEA 28,247 78 35,033 30 1,018 82 7.2 91 10.1 DU

43 Vattenfall Sweden EMEA 76,996 24 28,331 41 1,779 47 3.9 174 12.1 EU

44 Public Service Enterprise Group Inc New Jersey Americas 28,730 75 12,406 99 1,592 52 9.6 60 0.7 DU

45 Origin Energy Ltd Australia Asia/Pacifi c Rim 18,601 126 7,062 146 6,095 16 47.4 1 11.0 IOG

46 Tatneft Oao Russian Federation EMEA 16,034 136 12,478 97 1,784 46 16.3 12 6.2 E&P

47 NextEra Energy Inc Florida Americas 48,458 39 15,643 77 1,615 50 5.5 132 -0.1 EU

48 EnBW AG Germany EMEA 42,618 51 21,979 56 1,080 76 5.8 120 5.6 EU

49 Formosa Petrochemical Taiwan Asia/Pacifi c Rim 14,019 148 19,645 59 1,214 69 11.9 30 7.9 R&M

50 Southern Co Georgia Americas 52,046 35 15,743 75 1,708 48 4.8 149 3.1 EU

Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversifi ed utility, E&P = exploration and production, EU = electric utility, GU = gas utility, IOG = integrated oil and gas, IPP = independent power producer and energy trader, R&M = refi ning and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.



Platts Rank 2010




51 XTO Energy Inc Texas Americas 36,255 60 9,052 123 2,019 39 7.3 88 25.5 E&P

52 NTPC Ltd India Asia/Pacifi c Rim 26,276 90 10,335 112 1,893 41 8.3 71 12.5 IPP

53 Marathon Oil Corp Texas Americas 47,052 41 48,546 25 1,184 71 3.9 179 -6.8 IOG

54 Tokyo Electric Power Co Inc Japan Asia/Pacifi c Rim 144,895 14 54,532 22 1,454 57 1.5 225 -1.7 EU

55 Encana Corp Canada Americas 33,793 66 10,951 110 1,803 43 6.6 103 -15.3 E&P

56 Kansai Electric Power Co Japan Asia/Pacifi c Rim 78,095 22 28,336 40 1,382 60 2.8 202 0.1 EU

57 EDP Portugal EMEA 49,451 37 17,149 69 1,439 58 4.3 160 6.2 EU

58 Gas Natural Sdg SA Spain EMEA 55,704 34 20,918 57 1,625 49 3.7 186 12.9 GU

59 PG&E Corp California Americas 42,945 50 13,399 93 1,234 68 5.6 129 2.2 DU

60 Enbridge Inc Canada Americas 26,901 85 11,742 103 1,471 56 6.7 99 5.4 S&T

61 Fortum OYJ Finland EMEA 24,370 99 7,641 141 1,845 42 9.1 63 6.6 EU

62 American Electric Power Co Inc Ohio Americas 48,348 40 13,489 92 1,365 61 4.7 153 2.2 EU

63 Chubu Electric Power Co Inc Japan Asia/Pacifi c Rim 58,160 31 24,335 49 1,180 72 3.1 198 0.4 EU

64 Dominion Resources Inc Virginia Americas 42,554 52 15,131 84 1,304 63 4.8 151 -2.8 DU

65 Husky Energy Inc Canada Americas 25,111 96 14,198 87 1,334 62 6.6 105 6.0 IOG

66 Entergy Corp Louisiana Americas 37,365 59 10,746 111 1,251 66 6.2 115 -0.6 EU

67 Veolia Environnement France EMEA 61,187 30 48,574 24 881 91 2.3 212 6.5 DU

68 Enersis SA Chile Americas 24,959 98 11,488 106 1,248 67 6.8 98 16.0 EU

69 Suncor Energy Inc Canada Americas 66,606 28 24,710 47 1,079 77 2.0 219 20.9 IOG

70 Hess Corp New York Americas 29,465 73 29,614 35 740 101 4.1 167 1.8 IOG

71 Murphy Oil Corp Arkansas Americas 12,756 156 18,886 61 741 100 8.5 68 9.8 IOG

72 International Power Plc United Kingdom EMEA 20,608 113 5,848 162 1,589 53 9.7 59 12.4 IPP

73 Sempra Energy California Americas 28,512 76 8,106 135 1,129 75 6.7 102 -11.7 DU

74 Canadian Natural Resources Canada Americas 39,177 56 9,473 118 1,488 54 4.3 161 -0.4 E&P

75 FirstEnergy Corp Ohio Americas 34,304 63 12,712 96 1,006 84 4.9 146 3.4 EU

76 OMV AG Austria EMEA 26,303 89 25,189 46 804 97 4.3 162 -1.9 IOG

77 YPF Argentina Americas 10,294 173 8,954 124 910 88 16.6 10 10.2 IOG

78 Indian Oil Corp Ltd India Asia/Pacifi c Rim 29,380 74 52,287 23 557 126 3.9 175 17.0 R&M

79 Duke Energy Corp North Carolina Americas 57,040 32 12,731 95 1,063 78 2.8 201 -5.7 EU

80 Kinder Morgan Energy Partners LP Texas Americas 20,262 116 7,003 148 1,268 65 7.6 79 -7.9 S&T

81 Woodside Petroleum Ltd Australia Asia/Pacifi c Rim 16,726 131 3,822 191 1,602 51 11.5 36 4.5 E&P

82 Consolidated Edison Inc New York Americas 33,873 65 13,032 94 879 92 4.3 164 2.4 DU

83 SK Energy Co Ltd Korea Asia/Pacifi c Rim 20,518 115 37,162 29 567 123 4.8 148 n/a R&M

84 Midamerican Energy Holdings Iowa Americas 44,684 44 11,204 108 1,157 74 3.6 190 2.8 DU

85 Edison International California Americas 41,444 54 12,361 100 907 89 4.0 173 -0.7 EU

86 Inpex Corp Japan Asia/Pacifi c Rim 22,098 109 9,136 122 1,165 73 6.2 112 -4.7 E&P

87 Public Power Corp of Greece Greece EMEA 19,387 121 8,478 128 975 85 7.4 83 10.7 EU

88 CEMIG Brazil Americas 15,904 137 6,463 155 1,028 81 10.8 45 6.5 EU

89 Endesa Chile Americas 11,656 166 4,553 176 1,186 70 13.2 22 21.7 IPP

90 TransCanada Corp Canada Americas 41,867 53 8,445 130 1,300 64 3.6 189 6.0 S&T

91 Plains All American Pipeline LP Texas Americas 12,358 160 18,520 63 579 121 7.0 94 -6.2 S&T

92 NRG Energy Inc New Jersey Americas 23,378 105 8,952 125 942 87 5.8 122 16.8 IPP

93 China Coal Energy Co China Asia/Pacifi c Rim 16,056 135 7,866 139 969 86 7.4 84 21.1 C&CF

94 Bharat Petroleum Co Ltd India Asia/Pacifi c Rim 11,659 165 26,518 42 350 165 8.1 72 8.0 R&M

95 AES Corp Virginia Americas 39,535 55 14,119 88 729 102 2.7 203 6.9 IPP

96 Tupras Turkey EMEA 6,498 220 13,529 91 538 130 18.9 8 0.5 R&M

97 Saudi Electricity Co Saudi Arabia EMEA 44,350 46 6,368 156 312 173 7.8 75 6.6 EU

98 CLP Holdings Hong Kong Asia/Pacifi c Rim 20,103 119 6,531 153 1,056 79 6.6 104 3.5 EU

99 CEPSA Spain EMEA 12,709 157 25,898 43 527 132 5.7 125 -3.8 IOG

100 Progress Energy Inc North Carolina Americas 31,236 68 9,885 115 836 96 3.8 181 1.1 EU




Platts Rank 2010




101 KazMunaiGas Exploration Kazakhstan EMEA 8,812 190 3,258 204 1,408 59 19.2 7 5.6 E&P

102 Huaneng Power International China Asia/Pacifi c Rim 28,399 77 11,674 104 744 99 3.8 184 21.6 IPP

103 Galp Energia SGPS SA Portugal EMEA 8,896 189 16,882 70 488 138 8.4 70 -0.6 IOG

104 Xcel Energy Inc Minnesota Americas 25,488 93 9,644 116 686 106 4.5 156 -0.7 DU

105 Mol Hungarian Oil Hungary EMEA 18,924 125 16,721 71 618 117 4.4 158 3.7 IOG

106 Alpiq Holding AG Switzerland EMEA 17,399 130 14,086 89 630 115 5.1 140 9.5 EU

107 Gail (India) Ltd India Asia/Pacifi c Rim 7,739 199 5,790 163 713 104 14.2 18 17.8 GU

108 Tokyo Gas Co Ltd Japan Asia/Pacifi c Rim 20,202 118 15,390 81 585 120 4.1 169 0.9 GU

109 Verbund Austria EMEA 12,707 158 4,897 174 906 90 8.5 67 6.6 EU

110 Kyushu Electric Power Co Inc Japan Asia/Pacifi c Rim 44,489 45 15,708 76 455 144 1.5 227 0.9 EU

111 GS Holdings Corp Korea Asia/Pacifi c Rim 21,228 112 29,257 36 414 153 3.2 196 12.2 R&M

112 CPFL Energia SA Brazil Americas 9,294 182 5,263 170 710 105 11.2 42 2.3 EU

113 RusHydro JSC Russian Federation EMEA 15,630 139 3,793 192 1,006 83 7.3 90 77.8 EU

114 CONSOL Energy Inc Pennsylvania Americas 7,725 200 4,538 178 540 129 22.1 4 8.2 C&CF

115 Snam Rete Gas SpA Italy EMEA 23,299 106 3,428 198 1,029 80 5.6 130 11.6 GU

116 Energy Transfer Partners LP Texas Americas 11,735 164 5,417 167 792 98 7.3 87 -11.7 S&T

117 Spectra Energy Corp Texas Americas 24,079 101 4,552 177 843 95 5.0 145 0.1 S&T

118 PKN ORLEN Poland EMEA 14,803 145 23,164 50 446 145 3.9 178 8.7 R&M

119 Tohoku Electric Power Co Inc Japan Asia/Pacifi c Rim 43,001 49 18,083 65 281 179 1.0 231 -1.3 EU

120 Eletropaulo Brazil Americas 6,532 219 4,445 181 587 119 20.5 6 -1.2 EU

121 China Resources Power Holdings Hong Kong Asia/Pacifi c Rim 15,273 141 4,281 183 685 107 6.8 97 50.5 IPP

122 PTT Exploration & Production Thailand Asia/Pacifi c Rim 9,266 183 3,586 195 666 111 10.9 43 10.2 E&P

123 KEPCO Inc Korea Asia/Pacifi c Rim 77,530 23 28,798 38 -82 238 -0.1 238 7.4 EU

124 Osaka Gas Co Ltd Japan Asia/Pacifi c Rim 16,284 134 11,922 102 526 133 4.1 168 -2.3 GU

125 AGL Energy Australia Asia/Pacifi c Rim 7,603 203 5,190 171 631 114 10.3 51 11.7 DU

126 Novatek Oao Russian Federation EMEA 6,263 223 2,913 213 854 94 16.6 11 22.3 E&P

127 Ameren Corp Missouri Americas 23,790 102 7,090 144 612 118 3.8 182 1.0 DU

128 DTE Energy Co Michigan Americas 24,195 100 8,014 138 532 131 3.9 180 -3.9 DU

129 JX Holdings Inc Japan Asia/Pacifi c Rim 43,562 48 80,329 17 -2,735 248 -13.9 248 6.5 R&M

130 Hongkong Electric Holdings Ltd Hong Kong Asia/Pacifi c Rim 9,626 175 1,340 246 863 93 10.4 50 -5.1 EU

131 Valero Energy Corp Texas Americas 35,629 61 67,271 19 -352 244 -1.6 242 -9.6 R&M

132 United Utilities Group Plc United Kingdom EMEA 13,980 149 3,891 188 644 112 5.9 118 1.6 DU

133 Caltex Australia Ltd Australia Asia/Pacifi c Rim 4,167 246 15,578 79 276 181 9.6 61 -1.3 R&M

134 Chugoku Electric Power Co Japan Asia/Pacifi c Rim 30,528 69 11,289 107 337 167 1.5 226 -1.2 EU

135 Enterprise GP Holdings LP Texas Americas 27,686 83 25,511 45 204 209 0.9 233 22.2 S&T

136 Peabody Energy Corp Missouri Americas 9,955 174 6,012 159 443 146 6.8 96 4.6 C&CF

137 Thai Oil Pcl Thailand Asia/Pacifi c Rim 4,245 243 8,541 127 363 162 10.8 44 0.6 R&M

138 Williams Companies Inc Oklahoma Americas 25,280 94 8,255 132 438 147 2.5 206 -11.3 S&T

139 ONEOK Partners LP Oklahoma Americas 7,953 197 6,474 154 434 149 7.4 82 11.2 S&T

140 PPL Corp Pennsylvania Americas 22,165 108 7,556 142 465 140 3.5 193 3.1 EU

141 Cameco Corp Canada Americas 7,012 214 2,180 229 675 109 11.8 32 8.1 C&CF

142 Yanzhou Coal Mining Co Ltd China Asia/Pacifi c Rim 9,113 184 3,147 206 568 122 7.9 74 17.6 C&CF

143 Eletrobras Brazil Americas 73,726 26 13,670 90 94 234 0.2 237 8.0 EU

144 Idemitsu Kosan Co Ltd Japan Asia/Pacifi c Rim 27,172 84 33,834 34 65 236 0.5 235 -2.9 R&M

145 Tractebel Energia SA Brazil Americas 5,319 232 1,901 234 626 116 16.8 9 8.4 IPP

146 OMV Petrom Romania EMEA 7,826 198 4,373 182 458 143 8.4 69 -0.1 IOG

147 COPEL Brazil Americas 7,622 201 3,021 211 567 124 9.7 58 0.5 EU

148 Ultrapar Participacoes SA Brazil Americas 6,110 224 19,941 58 258 188 5.7 124 96.0 S&T

149 Hong Kong & China Gas Co Ltd Hong Kong Asia/Pacifi c Rim 8,490 192 1,592 241 667 110 9.9 53 -2.8 GU

150 Edison SpA Italy EMEA 20,213 117 12,466 98 337 166 2.1 217 1.3 IPP




Platts Rank 2010




151 EOG Resources Inc Texas Americas 18,119 127 4,238 184 547 128 4.3 163 2.8 E&P

152 Cheung Kong Infrastructure Bermuda Asia/Pacifi c Rim 6,650 217 282 250 718 103 11.5 34 6.2 EU

153 CenterPoint Energy Inc Texas Americas 19,773 120 8,281 131 372 161 3.2 197 -3.9 DU

154 Neste Oil Oyj Finland EMEA 7,001 215 11,964 101 311 174 5.8 121 -10.2 R&M

155 Nexen Inc Canada Americas 21,869 110 5,340 169 505 135 3.0 199 2.5 E&P

156 Polish Oil And Gas Co Poland EMEA 9,359 180 6,578 151 410 154 5.6 128 8.3 IOG

157 ONEOK Inc Oklahoma Americas 12,828 155 11,112 109 305 175 3.9 176 -2.2 GU

158 Adaro Energy Tbk Indonesia Asia/Pacifi c Rim 4,628 238 2,828 216 459 142 14.1 19 40.3 C&CF

159 Tata Power Co Ltd India Asia/Pacifi c Rim 6,866 216 3,781 193 423 150 8.8 66 39.7 EU

160 Korea Gas Corp Korea Asia/Pacifi c Rim 19,144 123 16,554 73 203 210 1.5 224 14.4 GU

161 Mirant Corp Georgia Americas 9,567 177 2,309 226 494 137 7.2 92 -9.4 IPP

162 S-Oil Corp Korea Asia/Pacifi c Rim 7,563 204 14,869 85 195 213 5.2 136 5.9 R&M

163 China Yangtze Power Co China Asia/Pacifi c Rim 23,694 103 1,613 240 676 108 3.5 192 16.8 IPP

164 Tenaga Nasional Bhd Malaysia Asia/Pacifi c Rim 21,826 111 8,460 129 270 183 1.9 220 12.2 EU

165 PTT Aromatics & Refi ning Plc Thailand Asia/Pacifi c Rim 4,764 236 6,773 149 275 182 7.7 76 44.4 R&M

166 Iberdrola Renewables SA Spain EMEA 26,453 87 2,825 217 522 134 2.5 207 42.4 IPP

167 Cosmo Oil Co Ltd Japan Asia/Pacifi c Rim 18,052 128 28,397 39 -117 239 -1.3 240 -5.2 R&M

168 Hellenic Petroleum SA Greece EMEA 7,079 210 9,499 117 246 193 5.6 127 -5.9 R&M

169 Anadarko Petroleum Corp Texas Americas 50,123 36 8,210 134 -135 240 -0.4 239 -6.9 E&P

170 Wisconsin Energy Corp Wisconsin Americas 12,698 159 4,128 186 377 160 5.0 144 1.1 DU

171 Questar Corp Utah Americas 8,898 188 3,038 210 393 156 6.9 95 2.3 GU

172 Moscow United Electric Power Russian Federation EMEA 7,077 211 2,816 218 353 164 9.8 56 50.0 EU

173 Light SA Brazil Americas 5,157 233 2,669 219 334 169 12.0 29 1.5 EU

174 Hindustan Petroleum Corp Ltd India Asia/Pacifi c Rim 10,643 171 24,347 48 162 225 2.3 211 16.2 R&M

175 Acciona SA Spain EMEA 25,219 95 9,155 121 203 211 1.1 229 1.3 EU

176 Enbridge Energy Partners LP Texas Americas 8,988 187 5,732 165 382 158 4.9 147 -4.2 S&T

177 Electric Power Development Co Japan Asia/Pacifi c Rim 22,211 107 6,354 157 317 172 1.7 222 0.6 IPP

178 Pepco Holdings Inc District of Columbia Americas 15,779 138 9,259 120 235 197 2.6 205 3.5 EU

179 Red Electrica Corp SA Spain EMEA 7,617 202 1,710 237 465 141 7.6 80 8.6 EU

180 Allegheny Energy Inc Pennsylvania Americas 11,589 168 3,427 199 393 157 5.2 137 3.2 EU

181 EWE AG Germany EMEA 12,840 154 8,243 133 279 180 3.2 195 -12.7 EU

182 Petrol Ofi si As Turkey EMEA 4,406 242 9,352 119 191 215 7.4 86 1.0 R&M

183 Northeast Utilities Massachusetts Americas 14,058 147 5,439 166 336 168 3.8 183 -7.6 EU

184 SCANA Corp South Carolina Americas 12,094 162 4,237 185 357 163 4.4 157 -2.4 DU

185 Datang Int’l Power Generation Co China Asia/Pacifi c Rim 26,652 86 7,018 147 217 205 1.0 230 24.5 IPP

186 Grupa Lotos SA Poland EMEA 4,527 239 4,883 175 301 176 7.6 78 3.8 R&M

187 Gasunie Netherlands EMEA 12,202 161 2,213 228 554 127 4.5 155 6.0 GU

188 Canadian Utilities Canada Americas 8,675 191 2,434 224 478 139 6.0 117 2.1 DU

189 Terna SpA Italy EMEA 11,447 169 1,852 235 498 136 5.3 133 1.0 EU

190 UGI Corp Pennsylvania Americas 6,043 225 5,738 164 259 186 6.7 100 3.2 GU

191 CESP Brazil Americas 8,989 186 1,463 244 421 151 6.7 101 8.7 IPP

192 BKW Energie AG Switzerland EMEA 5,643 229 3,338 202 282 178 7.9 73 14.9 EU

193 Esso SAF France EMEA 4,195 245 14,280 86 126 231 5.6 126 -6.1 R&M

194 Apache Corp Texas Americas 28,186 79 8,574 126 -284 243 -1.4 241 2.0 E&P

195 NiSource Inc Indiana Americas 19,272 122 6,649 150 231 201 2.1 216 -3.9 DU

196 Sunoco Inc Pennsylvania Americas 11,895 163 28,804 37 -370 245 -7.1 244 -7.2 R&M

197 Canadian Oil Sands Trust Canada Americas 6,640 218 2,463 223 407 155 7.0 93 2.4 E&P

198 Reliance Infrastructure Ltd India Asia/Pacifi c Rim 7,446 205 3,105 208 325 171 6.4 109 28.4 EU

199 Showa Shell Sekiyu KK Japan Asia/Pacifi c Rim 12,869 153 21,987 55 -626 246 -17.2 249 -11.5 R&M

200 Devon Energy Corp Oklahoma Americas 29,686 72 8,015 137 -2,753 249 -12.9 247 -8.8 E&P




Platts Rank 2010




201 NSTAR Massachusetts Americas 8,145 194 3,050 209 246 192 6.3 110 -5.2 DU

202 Chesapeake Energy Corp Oklahoma Americas 29,914 70 7,702 140 -5,830 250 -23.8 250 1.7 E&P

203 Shikoku Electric Power Co Japan Asia/Pacifi c Rim 15,179 143 5,929 161 240 196 2.3 210 -2.0 EU

204 Shenzhen Energy Group Co Ltd China Asia/Pacifi c Rim 4,428 241 1,667 238 292 177 9.8 55 17.9 IPP

205 PowerGrid Corp Of India India Asia/Pacifi c Rim 13,706 151 1,527 243 437 148 4.1 170 24.2 EU

206 TonenGeneral Sekiyu Corp Japan Asia/Pacifi c Rim 9,604 176 22,957 51 -236 242 -9.3 246 -11.8 R&M

207 Enagas SA Spain EMEA 7,099 209 1,238 247 419 152 6.4 108 -21.9 GU

208 OGE Energy Corp Oklahoma Americas 7,267 207 2,870 214 258 187 6.2 111 -10.5 DU

209 CMS Energy Corp Michigan Americas 15,256 142 6,205 158 209 208 2.2 213 -3.1 DU

210 AES Gener SA Chile Americas 5,424 231 1,653 239 328 170 7.6 81 22.2 IPP

211 Santos Ltd Australia Asia/Pacifi c Rim 9,561 178 1,915 233 381 159 4.7 152 -7.0 E&P

212 Energen Corp Alabama Americas 3,803 247 1,436 245 256 189 10.7 46 2.4 GU

213 Eskom South Africa EMEA 25,993 91 7,067 145 -1,210 247 -7.9 245 13.7 EU

214 Calpine Corp Texas Americas 16,650 133 6,564 152 149 226 1.1 228 -0.7 IPP

215 Manila Electric Co Philippines Asia/Pacifi c Rim 3,723 248 3,959 187 129 229 7.7 77 -0.2 EU

216 A2A SpA Italy EMEA 14,985 144 8,101 136 112 232 0.9 232 -4.1 DU

217 Petrobras Energia SA Argentina Americas 5,899 226 3,124 207 241 195 6.1 116 0.6 IOG

218 Abu Dhabi National Energy Co United Arab Emirates EMEA 25,003 97 4,481 180 50 237 0.3 236 50.4 DU

219 DPL Inc Ohio Americas 3,642 249 1,589 242 229 202 9.8 57 4.5 EU

220 Patriot Coal Corp Missouri Americas 3,618 250 2,045 231 127 230 11.2 40 21.2 C&CF

221 Tesoro Corp Texas Americas 8,070 196 16,589 72 -140 241 -2.8 243 -2.7 R&M

222 Nicor Inc Illinois Americas 4,436 240 2,652 220 136 227 8.8 65 -3.6 GU

223 Hokuriku Electric Power Co Japan Asia/Pacifi c Rim 15,493 140 5,125 172 184 218 1.5 223 -1.0 EU

224 AES Elpa SA Brazil Americas 7,072 213 4,494 179 170 224 5.1 139 -1.1 EU

225 Fortis Inc Canada Americas 11,613 167 3,426 200 264 185 2.7 204 35.5 EU

226 Hokkaido Electric Power Co Japan Asia/Pacifi c Rim 17,635 129 5,972 160 83 235 0.7 234 -0.6 EU

227 Huadian Power Intl Corp Ltd China Asia/Pacifi c Rim 14,709 146 5,367 168 170 223 1.8 221 34.3 IPP

228 GD Power Development Co Ltd China Asia/Pacifi c Rim 13,143 152 2,847 215 233 200 3.5 191 13.7 IPP

229 AGL Resources Inc Georgia Americas 7,074 212 2,317 225 222 204 5.9 119 -4.0 GU

230 EVN Austria EMEA 8,224 193 3,857 189 250 191 3.6 188 9.6 EU

231 NuStar Energy LP Texas Americas 4,775 235 3,856 190 225 203 5.2 135 50.3 R&M

232 EGL AG Switzerland EMEA 5,876 227 3,751 194 177 221 5.7 123 -14.7 EU

233 Atmos Energy Corp Texas Americas 6,344 222 4,969 173 191 214 4.4 159 -6.9 GU

234 Atco Ltd Canada Americas 9,506 179 2,928 212 267 184 3.4 194 2.8 DU

235 Shenergy Co Ltd China Asia/Pacifi c Rim 4,636 237 2,254 227 234 199 6.6 106 20.2 IPP

236 Saras Raffi nerie Sarde SpA Italy EMEA 4,208 244 7,352 143 102 233 4.8 150 -4.4 R&M

237 YTL Corp Berhad Malaysia Asia/Pacifi c Rim 13,890 150 2,613 221 245 194 2.4 209 19.0 DU

238 Qatar Electricity & Water Qatar EMEA 4,962 234 728 249 253 190 6.2 113 15.6 DU

239 Teco Energy Inc Florida Americas 7,220 208 3,311 203 214 206 4.0 171 -1.3 DU

240 CGE Chile Americas 6,440 221 3,426 201 214 207 4.2 166 24.3 EU

241 NV Energy Inc Nevada Americas 11,413 170 3,586 196 183 219 2.1 214 2.2 EU

242 PT Bumi Resources Tbk Indonesia Asia/Pacifi c Rim 7,411 206 3,219 205 190 216 3.9 177 20.2 C&CF

243 Colbun SA Chile Americas 5,440 230 1,159 248 234 198 5.1 142 15.4 IPP

244 Alliant Energy Corp Wisconsin Americas 9,036 185 3,433 197 129 228 2.0 218 0.7 DU

245 Japan Petroleum Exploration Co Japan Asia/Pacifi c Rim 5,717 228 1,954 232 195 212 4.2 165 1.9 E&P

246 Transalta Corp Canada Americas 9,322 181 2,609 222 170 222 2.1 215 -0.3 IPP

247 Southern Union Co Texas Americas 8,075 195 2,179 230 180 220 2.9 200 -2.4 S&T

248 Talisman Energy Inc Canada Americas 22,554 107 6,002 166 -666 341 -3.7 329 -6.6 E&P

249 Integrys Energy Group Inc Illinois Americas 11,847 171 7,499 147 -70 311 -1.3 314 2.8 DU

250 Toho Gas Co Ltd Japan Asia/Pacifi c Rim 5,560 272 4,473 190 119 262 3.1 224 -0.01 GU




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 disas-ter, BP has rarely left the headlines. The company faces huge liabilities for the damage wrought by the spill. It is ex-pected to weather the storm and resul-tant fi nancial 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 fl oor price, beyond which investors see value in the company. A $20 billion asset write down would shift BP only from fourth to fi fth 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 ma-jors 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 mil-lion last year and increased revenues on the back of that by almost 50%. Profi tability, however, remains low in

relation to its asset base and revenues. Regulated prices in the company’s do-mestic 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 bil-lion in 2008 to $115.772 billion in 2009, but E.ON AG successfully squeezed out $12.045 billion in profi t, more than 600% above the previous year.

This also made E.ON fi rst among elec-tric utilities, having been seventh the previous year. However, E.ON has seen a see-saw ride. Reporting profi ts of $9,991 million in 2007 on revenues of $100,651 million, profi ts slumped to just $1,929 million in 2008. Last year saw a remark-able 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 profi ts in 2008 was large-ly the result of unexpected goodwill impairments relating to acquisitions and to losses from non-operating earn-ings. In its 2008 annual report, E.ON reported losses attributable to currency differences of €7,879 million ($10,037 million) and to derivative fi nancial in-

3-year CGR %

Platts RankRank Company State or country Industry

1 Ultrapar Participacoes SA Brazil S&T 96.0 148

2 NuStar Energy LP Texas R&M 50.3 231

3 Fortis Inc Canada EU 35.5 225

4 XTO Energy Inc Texas E&P 25.5 51

5 CGE Chile EU 24.3 240

6 AES Gener SA Chile IPP 22.2 210

7 Enterprise GP Holdings LP Texas S&T 22.2 135

8 Endesa Chile IPP 21.7 89

9 Patriot Coal Corp Missouri C&CF 21.2 220

10 Suncor Energy Inc Canada IOG 20.9 69

2. Fastest growing Americas companies.


Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. The compound growth rate (CGR) is based on the companies revenue numbers for the past four years (current year included). If only three years of data was available then it is a two year CGR. All rankings are computed from data assessed on June 1, 2010.



Top Asia

Platts Rank 2010


invested capital Industry codeCompany State or country $ million Rank $ million Rank $ million Rank ROIC % Rank

1 7 Petrochina Co Ltd China 212,305 6 149,213 7 15,135 5 10.4 49 IOG

2 8 China Petroleum & Chemical Corp China 128,505 16 192,638 4 9,041 10 11.3 38 IOG

3 13 Reliance Industries Ltd India 55,939 33 43,636 27 5,248 18 12.4 27 R&M

4 18 Oil & Natural Gas Corp Ltd India 33,377 67 22,400 52 4,240 27 20.9 5 E&P

5 19 China Shenhua Energy Co Ltd China 45,455 43 17,759 66 4,432 25 12.1 28 C&CF

6 29 CNOOC Ltd Hong Kong 35,465 62 15,322 83 4,316 26 15.3 15 E&P

7 35 PTT Plc Thailand 34,006 64 47,681 26 1,790 45 7.3 89 IOG

8 45 Origin Energy Ltd Australia 18,601 126 7,062 146 6,095 16 47.4 1 IOG

9 49 Formosa Petrochemical Taiwan 14,019 148 19,645 59 1,214 69 11.9 30 R&M

10 52 NTPC Ltd India 26,276 90 10,335 112 1,893 41 8.3 71 IPP

11 54 Tokyo Electric Power Co Inc Japan 144,895 14 54,532 22 1,454 57 1.5 225 EU

12 56 Kansai Electric Power Co Japan 78,095 22 28,336 40 1,382 60 2.8 202 EU

13 63 Chubu Electric Power Co Inc Japan 58,160 31 24,335 49 1,180 72 3.1 198 EU

14 78 Indian Oil Corp Ltd India 29,380 74 52,287 23 557 126 3.9 175 R&M

15 81 Woodside Petroleum Ltd Australia 16,726 131 3,822 191 1,602 51 11.5 36 E&P

16 83 SK Energy Co Ltd Korea 20,518 115 37,162 29 567 123 4.8 148 R&M

17 86 Inpex Corp Japan 22,098 109 9,136 122 1,165 73 6.2 112 E&P

18 93 China Coal Energy Co China 16,056 135 7,866 139 969 86 7.4 84 C&CF

19 94 Bharat Petroleum Co Ltd India 11,659 165 26,518 42 350 165 8.1 72 R&M

20 98 CLP Holdings Hong Kong 20,103 119 6,531 153 1,056 79 6.6 104 EU

21 102 Huaneng Power International China 28,399 77 11,674 104 744 99 3.8 184 IPP

22 107 Gail (India) Ltd India 7,739 199 5,790 163 713 104 14.2 18 GU

23 108 Tokyo Gas Co Ltd Japan 20,202 118 15,390 81 585 120 4.1 169 GU

24 110 Kyushu Electric Power Co Inc Japan 44,489 45 15,708 76 455 144 1.5 227 EU

25 111 GS Holdings Corp Korea 21,228 112 29,257 36 414 153 3.2 196 R&M

26 119 Tohoku Electric Power Co Inc Japan 43,001 49 18,083 65 281 179 1.0 231 EU

27 121 China Resources Power Holdings Hong Kong 15,273 141 4,281 183 685 107 6.8 97 IPP

28 122 PTT Exploration & Production Thailand 9,266 183 3,586 195 666 111 10.9 43 E&P

29 123 KEPCO Inc Korea 77,530 23 28,798 38 -82 238 -0.1 238 EU

30 124 Osaka Gas Co Ltd Japan 16,284 134 11,922 102 526 133 4.1 168 GU

31 125 AGL Energy Australia 7,603 203 5,190 171 631 114 10.3 51 DU

32 129 JX Holdings Inc Japan 43,562 48 80,329 17 -2,735 248 -13.9 248 R&M

33 130 Hongkong Electric Holdings Ltd Hong Kong 9,626 175 1,340 246 863 93 10.4 50 EU

34 133 Caltex Australia Ltd Australia 4,167 246 15,578 79 276 181 9.6 61 R&M


struments of €6,552 million. In 2009, the rebound came predominantly from energy trading activities fi rst and sales in its new markets segment second. E.ON’s fi nancial patterns look more like a trading fi rm than a utility, suggesting future volatility ahead.

Asia on the AscendantIt is clear that Asia as a whole has

substantially improved its position in the global energy fi rmament 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, com-pared with 55 last year.

The Asian top ten remains domi-nated by Chinese and Indian compa-nies. PetroChina Co Ltd retains the

Asian companies in 2010 Top 250



Top Asia

Platts Rank 2010


invested capital Industry codeCompany State or country $ million Rank $ million Rank $ million Rank ROIC % Rank

35 134 Chugoku Electric Power Co Japan 30,528 69 11,289 107 337 167 1.5 226 EU

36 137 Thai Oil Pcl Thailand 4,245 243 8,541 127 363 162 10.8 44 R&M

37 142 Yanzhou Coal Mining Co Ltd China 9,113 184 3,147 206 568 122 7.9 74 C&CF

38 144 Idemitsu Kosan Co Ltd Japan 27,172 84 33,834 34 65 236 0.5 235 R&M

39 149 Hong Kong & China Gas Co Ltd Hong Kong 8,490 192 1,592 241 667 110 9.9 53 GU

40 152 Cheung Kong Infrastructure China 6,650 217 282 250 718 103 11.5 34 EU

41 158 Adaro Energy Tbk Indonesia 4,628 238 2,828 216 459 142 14.1 19 C&CF

42 159 Tata Power Co Ltd India 6,866 216 3,781 193 423 150 8.8 66 EU

43 160 Korea Gas Corp Korea 19,144 123 16,554 73 203 210 1.5 224 GU

44 162 S-Oil Corp Korea 7,563 204 14,869 85 195 213 5.2 136 R&M

45 163 China Yangtze Power Co China 23,694 103 1,613 240 676 108 3.5 192 IPP

46 164 Tenaga Nasional Bhd Malaysia 21,826 111 8,460 129 270 183 1.9 220 EU

47 165 PTT Aromatics & Refi ning Plc Thailand 4,764 236 6,773 149 275 182 7.7 76 R&M

48 167 Cosmo Oil Co Ltd Japan 18,052 128 28,397 39 -117 239 -1.3 240 R&M

49 174 Hindustan Petroleum Corp Ltd India 10,643 171 24,347 48 162 225 2.3 211 R&M

50 177 Electric Power Development Co Japan 22,211 107 6,354 157 317 172 1.7 222 IPP

51 185 Datang Int’l Power Generation Co China 26,652 86 7,018 147 217 205 1.0 230 IPP

52 198 Reliance Infrastructure Ltd India 7,446 205 3,105 208 325 171 6.4 109 EU

53 199 Showa Shell Sekiyu KK Japan 12,869 153 21,987 55 -626 246 -17.2 249 R&M

54 203 Shikoku Electric Power Co Japan 15,179 143 5,929 161 240 196 2.3 210 EU

55 204 Shenzhen Energy Group Co Ltd China 4,428 241 1,667 238 292 177 9.8 55 IPP

56 205 PowerGrid Corp Of India India 13,706 151 1,527 243 437 148 4.1 170 EU

57 206 TonenGeneral Sekiyu Corp Japan 9,604 176 22,957 51 -236 242 -9.3 246 R&M

58 211 Santos Ltd Australia 9,561 178 1,915 233 381 159 4.7 152 E&P

59 215 Manila Electric Co Philippines 3,723 248 3,959 187 129 229 7.7 77 EU

60 223 Hokuriku Electric Power Co Japan 15,493 140 5,125 172 184 218 1.5 223 EU

61 226 Hokkaido Electric Power Co Japan 17,635 129 5,972 160 83 235 0.7 234 EU

62 227 Huadian Power Intl Corp Ltd China 14,709 146 5,367 168 170 223 1.8 221 IPP

63 228 GD Power Development Co Ltd China 13,143 152 2,847 215 233 200 3.5 191 IPP

64 235 Shenergy Co Ltd China 4,636 237 2,254 227 234 199 6.6 106 IPP

65 237 YTL Corp Berhad Malaysia 13,890 150 2,613 221 245 194 2.4 209 DU

66 242 PT Bumi Resources Tbk Indonesia 7,411 206 3,219 205 190 216 3.9 177 C&CF

67 245 Japan Petroleum Exploration Co Ltd Japan 5,717 228 1,954 232 195 212 4.2 165 E&P

68 250 Toho Gas Co Ltd Japan 5,560 272 4,473 190 119 262 3.1 224 GU


top spot, while the China Petroleum & Chemical Corp comes in second, oust-ing CNOOC Ltd, which falls to sixth place. India’s Reliance Industries Ltd moved from fourth to third, while In-dia’s Oil and Natural Gas Corp Ltd rises from fi fth to fourth. Two companies have moved out of the Asian top ten: the India Oil Corp Ltd, which may re-fl ect late fi nancial reporting of its 2009 results, and Japan’s Tonen General Se-kiyu Corp which fell from ninth in the regional Asian rankings to 57.

The latter saw a precipitous decline in revenues and profi ts in 2009, which might be taken as emblematic of the shift taking place within the down-stream sector. In this sector—refi ning and marketing—many Asian companies saw their global ranking rise, but their position regionally against energy com-panies in other sectors declined. Of the top Asian R&M companies, only three improved their rankings both globally and regionally: India’s Reliance Indus-tries, Taiwan’s Formosa Petrochemical

Asian companies in 2010 Top 250 (continued)


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 fi ve 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, ow-ing to an extraordinary turnaround in profi tability. This was the result of one-off factors for a company that was the target of a hostile and unsuccess-ful takeover attempt by BG Group in 2008. Of the A$6,941 million ($6,422 million) recorded profi ts in the fi nan-cial year ending June 1, 2009, A$6,700 million refl ected a gain resulting from the dilution of Origin’s interest in Aus-tralia Pacifi c LNG following US major ConocoPhillips subscription for shares to form a 50:50 joint venture.

Nevertheless, Origin’s underlying profi ts were also up by 20% at $530 million and further gains have been posted for fi rst-half 2010. Origin’s high place in the Asian and global Platts rankings is exaggerated this year by its asset sale related profi ts, 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 ba-

sis for long-term growth that is likely to put it on a steady improving trend.

Another strong riser was Taiwan’s For-mosa PetroChemical, toughing it out in a sector experiencing fi erce competi-tion. 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, profi ts rose almost threefold. Revenues have also picked up in 2010 from the declines seen in 2008, although in its second-quarter 2010 re-sults, operating profi ts in its key refi n-ing segment were down.

A signifi cant trend has been the rela-tive rise in the regional rankings of Japanese electric utilities, benefi ting 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 benefi ted in 2009.

New Asian EntrantsOf the new Asian entrants, fi ve are

from China, fi ve from southeast Asia, one from India and one from Australia. China’s new entrants are without excep-tion independent power producers—Shenzhen Energy Group Co Ltd, Hua-dian 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 com-pany, Tata Power, the country’s largest integrated private power company. Both the Indian and Chinese power sectors are on rapidly expanding paths, suggest-ing strong growth prospects for the two countries’ electric utilities and IPPs.

In Japan, the Nippon Oil Corp and Nippon Mining Holdings were reorga-nized to become JX Holdings, while the Hokkaido Electric Power Co returned to the Global top 250. A new Japanese en-


Industry Company Country Platts Rank 2010

IOG Petrochina Co Ltd China 7

R&M Reliance Industries Ltd India 13

E&P Oil & Natural Gas Corp Ltd India 18

C&CF China Shenhua Energy Co Ltd China 19

IPP NTPC Ltd India 52

EU Tokyo Electric Power Co Inc Japan 54

GU Gail (India) Ltd India 107

DU AGL Energy Australia 125

3. #1 in Asia by industry.

Source: Capital IQ/PlattsAll rankings are computed from data assessed on June 1, 2010.



trant to the top 250 came in the form of the Japan Petroleum Exploration Co, refl ecting 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 fi eld in Iraq to be developed with Malay-sia’s Petronas and a domestic Iraqi oil company, which should promise future growth in its production base.

The number of southeast Asian com-panies 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 fi rst company in the top rank—the Manila Electric Co, the country’s largest distributor of elec-tricity. For Thailand, Thai Oil made a re-entry, while PTT Aromatics and Refi ning Plc was ranked 156th overall and 45th in Asia, refl ecting the amalgamation of the Aromatics Public Company Ltd and Ray-ong Refi nery Public Company Ltd.

For Malaysia, Diversifi ed 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 seg-ment—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 Austra-lian mining major BHP Billiton to de-velop resources estimated at 774 million mt, suggesting further growth to come.

BRICs to the ForeWithin 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 Gaz-prom gained six places to come third in the top 250 rankings, Brazil’s Petro-bras rose fi ve 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 benefi t from varying degrees of protection in what are gener-ally large and expanding domestic mar-kets, the Chinese economy being partic-ularly dynamic in terms of oil demand growth. The western majors, while global in reach, exist in more competi-tive environments, where oil demand declined in 2008 and 2009 and, in Eu-rope 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 com-pany rather than an IOG. It can claim in 2009 to have been the world’s most profi table 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 com-panies 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 transporta-tion demand growth.

Notably, if Gazprom and Gazprom Neft were listed as one entity, the com-bined company would come fi rst in terms of both assets and profi ts and move from 13th to seventh in terms of revenues. Its ROIC would improve, but remain below that of ExxonMobil. It

Industry Company Country 3-year CGR % Platts Rank 2010

IPP China Resources Power Holdings Hong Kong 50.5 121

R&M PTT Aromatics & Refi ning Plc Thailand 44.4 165

C&CF Adaro Energy Tbk Indonesia 40.3 158

EU Tata Power Co Ltd India 39.7 159

GU Gail (India) Ltd India 17.8 107

E&P Oil & Natural Gas Corp Ltd India 14.0 18

IOG Petrochina Co Ltd China 13.9 7

DU YTL Corp Berhad Malaysia 19.0 237

4. Fastest growing Asian companies by industry.


Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. All rankings are computed from data assessed on June 1, 2010.



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 ex-panding 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 confl ict between its Russian and its UK share-holders, 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 fl atter any oil company, owing to higher oil prices in that fi nancial year. This stands in stark contrast to the positive perfor-mance 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, refl ecting the

presence of the world’s fi rst and third largest coal industries in China and In-dia respectively and the coal export in-dustries of Australia and Indonesia.

Of the fi ve C&CF companies in the fastest growing Asian companies, three are Chinese and two Indonesian. Coal outside Asia fi gures little, only US com-pany 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 environmen-tal and regulatory scrutiny, which may threaten its future growth prospects.

Brazil’s Storage and Transfer compa-ny Ultrapar Participacoes SA tops the Americas fastest growing list with a 3-year CGR of 96.0%. Texan R&M com-pany 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 & Refi ning Plc takes second place, and Indonesia’s Ada-ro Energy Tbk third. There are no IOG or E&P companies in the Asian top 20 fast-est growing company rankings, which are dominated by power sector fi rms.

In Europe and the Middle East, power companies are again to the fore, mak-ing up seven of the top ten fastest grow-

3-year CGR %

Platts RankRank Company Country Industry

1 RusHydro JSC Russian Federation EU 77.8 113

2 Abu Dhabi National Energy Co United Arab Emirates DU 50.4 218

3 Moscow United Electric Power Russian Federation EU 50.0 172

4 Iberdrola Renewables SA Spain IPP 42.4 166

5 Iberdrola SA Spain EU 30.6 32

6 Novatek Oao Russian Federation E&P 22.3 126

7 Scottish & Southern Energy United Kingdom EU 22.0 23

8 GDF Suez France DU 21.7 28

9 AK Transneft Oao Russian Federation S&T 20.1 36

10 Sasol Ltd South Africa IOG 18.7 38

5. Fastest growing EMEA companies.


Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. The compound growth rate (CGR) is based on the companies revenue numbers for the past four years (current year included). If only three years of data was available then it is a two year CGR. All rankings are computed from data assessed on June 1, 2010.



ing companies. Russian companies are particularly prominent: of the top ten, RusHydro JSC comes fi rst with a 3-yr CGR of 77.8%, despite a major accident in August 2009, which took offl ine the company’s 6.4 GW Sayano-Shushen-skaya 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 spe-cialist company Novatek Oao is sixth with 22.3% and S&T fi rm AK Transneft Oao is ninth with 20.1%. This refl ects opportunities arising from the deregu-lation of Russia’s power generating and distribution industries and the willing-ness 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 fi fth with a 3-year CGR of 30.6%, while its separately listed Iberdrola Re-newables SA came fourth with a 3-year CCR of 42.4%. The Abu Dhabi National Energy Co came second with 50.4%.

Sectoral LeadersWhile scoring well in terms of fast-

est growing companies, the C&CF seg-ment 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

3-year CGR %

Platts RankCompany

1 Ultrapar Participacoes SA 96.0 148

2 RusHydro JSC 77.8 113

3 China Resources Power Holdings 50.5 121

4 Abu Dhabi National Energy Co 50.4 218

5 NuStar Energy LP 50.3 231

6 Moscow United Electric Power 50.0 172

7 PTT Aromatics & Refi ning Plc 44.4 165

8 Iberdrola Renewables SA 42.4 166

9 Adaro Energy Tbk 40.3 158

10 Tata Power Co Ltd 39.7 159

11 Fortis Inc 35.5 225

12 Huadian Power Intl Corp Ltd 34.3 227

13 Iberdrola SA 30.6 32

14 Reliance Infrastructure Ltd 28.4 198

15 XTO Energy Inc 25.5 51

16 Datang Int’l Power Generation Co 24.5 185

17 CGE 24.3 240

18 PowerGrid Corp Of India 24.2 205

19 China Shenhua Energy Co Ltd 23.6 19

20 Novatek Oao 22.3 126

21 AES Gener SA 22.2 210

22 Enterprise GP Holdings LP 22.2 135

23 Scottish & Southern Energy 22.0 23

24 GDF Suez 21.7 28

25 Endesa 21.7 89

3-year CGR %

Platts RankCompany

26 Huaneng Power International 21.6 102

27 Reliance Industries Ltd 21.4 13

28 Patriot Coal Corp 21.2 220

29 China Coal Energy Co 21.1 93

30 Suncor Energy Inc 20.9 69

31 PT Bumi Resources Tbk 20.2 242

32 Shenergy Co Ltd 20.2 235

33 AK Transneft Oao 20.1 36

34 YTL Corp Berhad 19.0 237

35 Sasol Ltd 18.7 38

36 Enel SpA 18.4 21

37 Ecopetrol SA 18.2 34

38 Shenzhen Energy Group Co Ltd 17.9 204

39 Gail (India) Ltd 17.8 107

40 Yanzhou Coal Mining Co Ltd 17.6 142

41 National Grid 17.2 39

42 Indian Oil Corp Ltd 17.0 78

43 China Yangtze Power Co 16.8 163

44 NRG Energy Inc 16.8 92

45 Hindustan Petroleum Corp Ltd 16.2 174

46 Enersis SA 16.0 68

47 Qatar Electricity & Water 15.6 238

48 Colbun SA 15.4 243

49 BKW Energie AG 14.9 192

50 Korea Gas Corp 14.4 160

6. Top 50 fastest growing companies.

Source: Capital IQ/PlattsFastest Growing is based on a 3 year compound growth rate (CGR) for revenues. All rankings are computed from data assessed on June 1, 2010.



Cameco rose from eighth to fi fth, 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.

Diversifi ed Utilities appear to have weathered the fi nancial crisis and ensu-ing recession relatively well. The top ten average ranking in this category strength-ened from 60.6 last year to 51 this year. Within the sector, RWE of Germany and GDF Suez of France retained their fi rst 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 profi tability, taking fourth place in the top ten DUs. Veolia Environ-ment 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 fi fth 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 fi rst in the EU segment.

IPPs, too, improved their overall posi-tion, with the average top ten ranking strengthening from 119.1 last year to 94.9 this year. There was considerable move-ment 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, Con-stellation’s restructuring appears to have brought quick benefi ts. Although rev-enue dropped from $19,818 million in 2008 to $15,599 million in 2009, profi ts 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 com-panies, 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 compa-nies saw a strong recovery in profi ts in 2009 as international feedstock prices dropped from the highs of 2008, return-ing a profi t 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 com-panies weakened. This can largely be explained by the rise in oil and gas pric-es in 2008 delivering windfall profi ts, and then the subsequent fall in profi ts 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 sec-ond 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 follow-ing Enbridge’s two oil spills in 2010 and Pacifi c Gas & Electric’s fatal gas line ex-plosion in San Bruno, California.

For Gas Utilities, Eni’s takeover of Bel-gium’s Distrigas left a vacant spot in the top ten that was fi lled by the Nether-lands’ Gasunie. Spain’s Gas Natural re-mained at the top, with India’s Gail (In-dia) Ltd moving up from fi fth 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 Pe-troleum and Chemical Corp also moved into the top ten group, taking seventh place. The balance has shifted to fi ve companies each for BRIC versus OECD IOGs in the top ten, but Gazprom, the world’s biggest gas producer and export-er, which has taken big strides out of its European comfort zone with LNG trade and supply in Asia and the US, now oc-cupies third place and Brazil’s Petrobras fourth, as opposed to eighth and sixth last year, while BP’s second place is clear-ly under threat. ■



Platts rank 2010

Platts rank 2009 Company State or country

1 1 Exxon Mobil Corp Texas

2 4 BP Plc United Kingdom

3 8 Gazprom Oao Russian Federation

4 6 Petrobras Brazil

5 5 Total France

6 45 E.ON AG Germany

7 9 Petrochina Co Ltd China

8 23 China Petroleum & Chemical Corp China

9 2 Chevron Corp California

10 3 Royal Dutch Shell Plc United Kingdom

11 12 LUKOIL Oil Company Russian Federation

12 14 RWE AG Germany

13 25 Reliance Industries Ltd India

14 7 Rosneft Oil Company Russian Federation

15 38 Endesa SA Spain

16 10 ENI SpA Italy

17 13 TNK-BP Holdings Russian Federation

18 26 Oil & Natural Gas Corp Ltd India

19 40 China Shenhua Energy Co Ltd China

20 29 Surgutneftegas Oao Russian Federation

21 19 Enel SpA Italy

22 18 EDF France

23 127 Scottish & Southern Energy United Kingdom

24 117 ConocoPhillips Texas

25 24 Gazprom Neft Russian Federation

7. Top 50: Who’s Up, Who’s Down.


Platts rank 2010

Platts rank 2009 Company State or country

26 34 Exelon Corp Illinois

27 11 Statoil Asa Norway

28 27 GDF Suez France

29 21 CNOOC Ltd Hong Kong

30 17 BG Group Plc United Kingdom

31 185 Constellation Energy Group Inc Maryland

32 36 Iberdrola SA Spain

33 15 Occidental Petroleum Corp California

34 30 Ecopetrol SA Colombia

35 46 PTT Plc Thailand

36 64 AK Transneft Oao Russian Federation

37 49 CEZ AS Czech Republic

38 43 Sasol Ltd South Africa

39 58 National Grid United Kingdom

40 22 Repsol YPF SA Spain

41 31 Imperial Oil Ltd Canada

42 145 Centrica Plc United Kingdom

43 41 Vattenfall Sweden

44 78 Public Service Enterprise Group Inc New Jersey

45 201 Origin Energy Ltd Australia

46 172 Tatneft Oao Russian Federation

47 51 Nextera Energy Inc Florida

48 47 EnBW AG Germany

49 113 Formosa Petrochemical Taiwan

50 57 Southern Co Georgia

OVERALL Platts rank 2010Rank Company State or country

1 China Shenhua Energy Co Ltd China 19

2 China Coal Energy Co China 93

3 CONSOL Energy Inc Pennsylvania 114

4 Peabody Energy Corp Missouri 136

5 Cameco Corp Canada 141

6 Yanzhou Coal Mining Co Ltd China 142

7 Adaro Energy Tbk Indonesia 158

8 Patriot Coal Corp Missouri 220

9 Bumi Resources Tbk Pt Indonesia 242

8. Leaders in coal and combustible fuels.


REGIONAL Industry rank 2010

State or country

Platts rank 2010Region Company

Americas 3 CONSOL Energy Inc Pennsylvania 114

Asia/Pacifi c Rim 1 China Shenhua Energy Co Ltd China 19


State or country


Americas 5 Public Service Enterprise Group Inc New Jersey 44

Asia/Pacifi c Rim 14 AGL Energy Australia 125

EMEA 1 RWE AG Germany 12


1 RWE AG Germany 12

2 GDF Suez France 28

3 National Grid United Kingdom 39

4 Centrica Plc United Kingdom 42

5 Public Service Enterprise Group Inc New Jersey 44

6 PG&E Corp California 59

7 Dominion Resources Inc Virginia 64

8 Veolia Environnement France 67

9 Sempra Energy California 73

10 Consolidated Edison Inc New York 82

9. Leaders in diversifi ed utilities.





State or country


Americas 6 Exelon Corp Illinois 26

Asia/Pacifi c Rim 13 Tokyo Electric Power Co Inc Japan 54

EMEA 1 E.ON AG Germany 6


1 E.ON AG Germany 6

2 Endesa SA Spain 15

3 Enel SpA Italy 21

4 EDF France 22

5 Scottish & Southern Energy United Kingdom 23

6 Exelon Corp Illinois 26

7 Iberdrola SA Spain 32

8 CEZ AS Czech Republic 37

9 Vattenfall Sweden 43

10 NextEra Energy Inc Florida 47

10. Leaders in electric utilities.



State or country


Americas 7 ONEOK Inc Oklahoma 157

Asia/Pacifi c Rim 2 Gail (India) Ltd India 107

EMEA 1 Gas Natural Sdg SA Spain 58


1 Gas Natural Sdg SA Spain 58

2 Gail (India) Ltd India 107

3 Tokyo Gas Co Ltd Japan 108

4 Snam Rete Gas SpA Italy 115

5 Osaka Gas Co Ltd Japan 124

6 Hong Kong & China Gas Co Ltd Hong Kong 149

7 ONEOK Inc Oklahoma 157

8 Korea Gas Corp Korea 160

9 Questar Corp Utah 171

10 Gasunie Netherlands 187

12. Leaders in gas utilities.



State or country


Americas 1 Constellation Energy Group Inc Maryland 31

Asia/Pacifi c Rim 2 NTPC Ltd India 52

EMEA 3 International Power Plc United Kingdom 72


1 Constellation Energy Group Inc Maryland 31

2 NTPC Ltd India 52

3 International Power Plc United Kingdom 72

4 Endesa Chile 89

5 NRG Energy Inc New Jersey 92

6 AES Corp Virginia 95

7 Huaneng Power International China 102

8 China Resources Power Holdings Hong Kong 121

9 Tractebel Energia SA Brazil 145

10 Edison SpA Italy 150

13. Leaders in independent power producers.


REGIONAL Industry rank 2010 State or country


Americas 4 XTO Energy Inc Texas 51

Asia/Pacifi c Rim 1 Oil & Natural Gas Corp Ltd India 18

EMEA 3 Tatneft Oao Russian Federation 46


1 Oil & Natural Gas Corp Ltd India 18

2 CNOOC Ltd Hong Kong 29

3 Tatneft Oao Russian Federation 46

4 XTO Energy Inc Texas 51

5 Encana Corp Canada 55

6 Canadian Natural Resources Canada 74

7 Woodside Petroleum Ltd Australia 81

8 Inpex Corp Japan 86

9 KazMunaiGas Exploration Kazakhstan 101

10 PTT Exploration & Production Thailand 122

11. Leaders in exploration and production.






Americas 1 Exxon Mobil Corp Texas 1

Asia/Pacifi c Rim 6 Petrochina Co Ltd China 7

EMEA 2 BP Plc United Kingdom 2


1 Exxon Mobil Corp Texas 1

2 BP Plc United Kingdom 2

3 Gazprom Oao Russian Federation 3

4 Petrobras Brazil 4

5 Total France 5

6 Petrochina Co Ltd China 7

7 China Petroleum & Chemical Corp China 8

8 Chevron Corp California 9

9 Royal Dutch Shell Plc United Kingdom 10

10 LUKOIL Oil Company Russian Federation 11

14. Leaders in integrated oil and gas.




Americas 10 Valero Energy Corp Texas 131

Asia/Pacifi c Rim 1 Reliance Industries Ltd India 13

EMEA 6 Tupras Turkey 96


1 Reliance Industries Ltd India 13

2 Formosa Petrochemical Taiwan 49

3 Indian Oil Corp Ltd India 78

4 SK Energy Co Ltd Korea 83

5 Bharat Petroleum Co Ltd India 94

6 Tupras Turkey 96

7 GS Holdings Corp Korea 11

8 PKN ORLEN Poland 118

9 JX Holdings Inc Japan 129

10 Valero Energy Corp Texas 131

15. Leaders in refi ning and marketing.




Americas 2 Enbridge Inc Canada 60

EMEA 1 AK Transneft Oao Russian Federation 36


1 AK Transneft Oao Russian Federation 36

2 Enbridge Inc Canada 60

3 Kinder Morgan Energy Partners LP Texas 80

4 TransCanada Corp Canada 90

5 Plains All American Pipeline LP Texas 91

6 Energy Transfer Partners LP Texas 116

7 Spectra Energy Corp Texas 117

8 Enterprise GP Holdings LP Texas 135

9 Williams Companies Inc Oklahoma 138

10 ONEOK Partners LP Oklahoma 139

16. Leaders in storage and transfer.


Where the Numbers Came FromThis 9th annual survey of global energy companies by Platts

Energy Insight magazine measures companies’ fi nancial per-formance using four metrics: asset worth, revenues, profi ts, and return on invested capital (ROIC). All companies on the list have assets greater than US$3 billion. The underlying data comes from the Capital IQ, a Standard & Poor’s business, which is, like Platts, a division of The McGraw-Hill Compa-nies. This year, in addition to recognizing the best fi nancial performances of the year, we also include the list of Fastest Growing Companies in the Top 250 list based on the three year compound growth rate (CGR) for revenues. The CGR was calculated by using the Capital IQ data over the past four years (current year included).

Because the survey is global, and because all countries do not share a standard fi nancial reporting standard, the data used is from the full year of 2009. Since then, material changes in a company’s fi nancial health may have occurred, and any evaluation should take that into account. Data for US companies in the tables came from SEC Form 10K.

The company rankings are derived by adding each compa-ny’s numerical ranking for asset worth, revenues, profi ts, and ROIC. The overall rank of 1 is assigned to the company with the lowest total, 2 to the next lowest and so on.

ROIC fi gures—widely regarded as a driver of cash fl ow and value—were calculated using the following equation:

ROIC = [(Income before extraordinary items) – (Avail-able for common stock)] ÷ (Total invested capital) x 100

“Income before extraordinary items” is net income less preferred dividends and “Total invested capital” is the sum of total long-term debt, preferred stock (value), minority interest, and total common equity.



ASSETS Platts rank 2010Rank Company Assets, $ million

1 EDF 297,131 22

2 Royal Dutch Shell Plc 292,181 10

3 Gazprom Oao 270,501 3

4 BP Plc 235,968 2

5 Exxon Mobil Corp 233,323 1

6 Petrochina Co Ltd 212,305 7

7 GDF Suez 210,553 28

8 Enel Spa 197,082 21

9 Petrobras 190,411 4

10 E.ON AG 187,476 6

17. Leaders by fi nancial indicator.


REVENUES Platts rank 2010Rank Company Revenues, $ million



3 BP Plc 239,272 2

4 China Petroleum & Chemical Corp 192,638 8

5 Chevron Corp 159,293 9

6 Total 157,673 5


8 Conocophillips 136,016 24

9 Eni Spa 117,006 16

10 E.On Ag 115,772 6

PROFITS Platts rank 2010Rank Company Profi ts, $ million

1 Gazprom Oao 25,578 3


3 BP Plc 16,578 2

4 Petrobras 16,002 4



7 E.ON AG 12,045 6

8 Total 11,875 5

9 Chevron Corp 10,483 9

10 China Petroleum & Chemical Corp 9,041 8

RETURN ON INVESTED CAPITAL Platts rank 2010Rank Company ROIC, %

1 Origin Energy Ltd 47.418 45

2 Constellation Energy Group Inc 32.254 31

3 TNK-BP Holdings 23.154 17

4 CONSOL Energy Inc 22.053 115

5 Oil & Natural Gas Corp Ltd 20.937 18

6 Eletropaulo 20.536 120

7 KazMunaiGas Exploration 19.192 101

8 Tupras 18.867 96

9 Tractebel Energia SA 16.810 145

10 YPF 16.583 77

THE AMERICASIndustry

code

Platts rank 2010Rank Company State or country

1 Exxon Mobil Corp Texas IOG 1

2 Petrobras Brazil IOG 4

3 Chevron Corp California IOG 9

4 ConocoPhillips Texas IOG 24

5 Exelon Corp Illinois EU 26

6 Constellation Energy Group Inc Maryland IPP 31

7 Occidental Petroleum Corp California IOG 33

8 Ecopetrol SA Colombia IOG 34

9 Imperial Oil Ltd Canada IOG 41

10 Public Service Enterprise Group Inc New Jersey DU 44

18. Leaders by region.


ASIA / PACIFIC RIMIndustry

code


1 Petrochina Co Ltd China IOG 7

2 China Petroleum & Chemical Corp China IOG 8

3 Reliance Industries Ltd India R&M 13

4 Oil & Natural Gas Corp Ltd India E&P 18

5 China Shenhua Energy Co Ltd China C&CF 19

6 CNOOC Ltd Hong Kong E&P 29

7 PTT Plc Thailand IOG 35

8 Origin Energy Ltd Australia IOG 45

9 Formosa Petrochemical Taiwan R&M 49

10 NTPC Ltd India IPP 52

EUROPE, MIDDLE EAST, AFRICAIndustry

code


1 BP Plc United Kingdom IOG 2

2 Gazprom Oao Russian Federation IOG 3

3 Total France IOG 5

4 E.ON AG Germany EU 6

5 Royal Dutch Shell Plc United Kingdom IOG 10

6 LUKOIL Oil Company Russian Federation IOG 11

7 RWE AG Germany DU 12

8 Rosneft Oil Company Russian Federation IOG 14

9 Endesa SA Spain EU 15

10 ENI SpA Italy IOG 16

Note: C&CF = coal and combustible fuels, DU = diversifi ed utility, E&P = exploration and production,EU = electric utility, GU = gas utility, IOG = integrated oil and gas, IPP = independent power producer and energy trader, R&M = refi ning and marketing, S&T = storage and transfer

More on the WebFind each company’s profi le and view all the data on our web site:

www.platts.com/Top250Home.aspx

Find cogen power plants in South India, list new coal-fired projects in Germany, track hydroelectric projects in Brazil, and more ...

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Global Sector Leader, Energy, Utilities and ChemicalsCapgemini


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AES Dominicana, located and operating in the Dominican Republic since 1997, encompasses three electrical generating companies, AES Andres, B.V. and Dominican Power Partners (DPP), 100% owned by AES Corporation; and Itabo, S.A., with 50% ownership by AES Corporation, and 49.97% by the Dominican Government, through the Fund of Reformed State-Owned Enterprises (FONPER).

AES Dominicana, through its AES Dominicana Foundation, which has been operating since July 2007, has been developing projects in crucial areas of society such as culture, sports, education, the environ-ment and health. These projects focus specially on the localities near the sites of the AES Dominicana energy production plants and the communities it serves.

With an elevated sense of commitment to social responsibility, cutting edge technology, modern port facilities and diversi⇒ ed fuel offering, AES Domini-cana has positioned itself as the principal player in the energy sector, with US$800 million in investments.

AES Dominicana has 815 MW installed capacity. AES Andres energy complex, a natural gas ⇒ red com-bined cycle with 319 MW capacity, is the main power plant satisfying the demand of the country; with an international port, LNG re-gasi⇒ cation installations, a 160,000 M3 Lique⇒ ed Natural Gas (LNG) storage tank and a 34-KM gas pipeline that connects with AES owned DPP, which has two natural gas open-cycle units with 236 MW capacity.

Itabo, S.A. has two coal ⇒ red units with 260MW capacity. Itabo, like Andres, is a base plant, since they both operate under the scheme of marginal costs. An-dres and Itabo make up part of the most economical units, along with hydro generators.

To consolidate its leadership, AES Dominicana is the only group with two deep-water port infrastructures.

AES Dominicana uses the synergy between all of its businesses to create the strength that consolidates it as a young and ef⇒ cient Dominican group committed to national development, adding value for its clients, and always promoting the values of AES Corporation.

As a business group, it combines a global perspec-tive with deep local knowledge, an untiring commit-ment to operational excellence, helping communities grow through a safe and reliable supply of energy.

AES Dominicana InfrastructureDominican Power Partners (DPP, LOS MINA 1997)■ First AES investment in the Dominican Republic.■ Two natural gas turbines 118 MW, each in open

cycle located in Santo Domingo Este.■ Base load dispatch.■ 100% AES ownership.

ITABO S.A., (EGE-ITABO, 1999)■ Two coal-based power plants, 130 MW each.■ Coal port of 580 meters in length, and capacity for

1,300 tons per hour.■ Ownership: 50% AES and the remaining owned by

the Dominican Government (FONPER) and minor-ity shareholders (former employees).

AES Andres (2000)■ 319 MW combined-cycle generation.■ Port for receiving liqui⇒ ed natural gas (LNG).■ LNG storage capacity of 160,000 m3.■ 34 kilometer gas pipeline to DPP.■ Commercial operation day, December 1, 2003.■ 100% AES ownership.

Truck LNG Loading Terminal■ Capacity for 2 simultaneous trucks (one hour process).■ Loading rate of 68 m3/h.■ Possibility to expand two additional loading bays.■ Capacity to dispatch 18 TBtu/year.■ Located within the AES Andres complex.

Over the last two years the company has achieved extraordinary operational and ⇒ nancial results. AES Dominicana personnel, at all levels in the company, are the driving force behind these improvements. In each one of the businesses, the people are motivated to ⇒ nd ways to achieve results in four key areas: optimiz-ing the assignment of capital, increasing the ef⇒ ciency of the work processes, collecting and protecting in-come, and mitigating high-impact operational risks.

AES Dominicana

Marco De la RosaCEOAES Dominicana

Statistics■ Employees: 296

■ Investment: US$800 million

■ Installed Capacity: 815 MW

■ Fuel Matrix: Natural Gas and Coal

■ Energy sold in 2009: 619.9 US$MM

■ Market Share: 37%


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In El Salvador we serve 80% of the national electri-city market through our four distribution companies. At AES El Salvador, we are convinced that electric energy is a critical element for economic growth in a country and the progress of its people, as it enables the continuity and quality of production activities for industry and commerce.

We consider electricity the core of our company. It is doubtlessly at the heart of great global challenges. Electricity use grows, and at the same time electric en-ergy brings crucial value to a society and its economic development, in addition to having a direct impact upon the environment.

Therefore it is essential to ensure a sustainable electricity sector committed to implementing projects that facilitate access to electric energy for the neediest, to inform and educate people for the rational and safe use of electricity, as well as to generate actions ori-ented toward conserving the environment.

Focusing Our CSR EffortsOur concrete actions provide sustainability to

these initiatives when we make them also part of our entrepreneurial objectives. Thus, we focus our social responsibility in the community on three main pillars:

■ AES Rural Power: Currently more than 26 thou-sand families have bene⇒ tted from rural electri⇒ ca-tion projects carried out jointly with the national government, municipal of⇒ ces and local commu-nities, aimed at having El Salvador 100% electri⇒ ed. Thanks to the agreement signed with the Millen-nium Challenge Corporation, from 2009 to 2012 we will be bringing electric energy to 25 thousand households in 94 municipalities, thus contributing to poverty reduction in the Northern zone of the country.

■ AES Education: With our “Magic Energy” educa-tional program, since 2007 we have provided educa-tion to more than 110 thousand children and adults throughout the country on the safe and ef⇒ cient use of electric energy and environmental protec-tion. We have been able to do this in part thanks to

the establishment of strategic alliances with inter-national organizations focused on children, youth development and education, as well as with import-ant universities and internal volunteers from AES El Salvador companies.

■ AES Environment: Through our “Recycle!” pro-gram we make available in a practical and access-ible way to all citizens the possibility of contributing to environmental protection by turning our cus-tomer service of⇒ ces into paper recycling centers. We also joined efforts with Salvanatura, a recog-nized environmental NGO in the country, to protect the El Imposible and Los Volcanes National Parks, channeling the results of our “Recycle!” program to bene⇒ t these unique forest reserves in El Salvador.

Actions Based on ValuesOur corporate values—Put Safety First, Act with

Integrity, Honor Commitments, Strive for Excellence and Have Fun through Work—are promoted within the organization and expressed through our actions toward our colleagues, clients, contractors, providers, shareholders and with the communities whom we serve. Through practicing our values we direct our actions, understand the challenges that lie ahead and orient our decision-making.

As global companies, our corporate values are a fun-damental axis for all of our actions, and the foundation upon which we make all of our business decisions in the countries in which we operate around the world.

AES El SalvadorThrough our distribution companies CAESS,

CLESA, EEO and DEUSEM, we serve 80% of the national electricity market, delivering power to over a million customers.

www.aeselsalvador.com

The AES Corporation■ A Fortune 500 company, 29 years experience, 27

thousand employees, operations in 29 countries on ⇒ ve continents, 14 energy distribution companies, installed capacity to generate 40,330 MW, 120 power plants. Generation sources: natural gas, biomass, water, mineral coal, diesel, wind and other sources.www.aes.com

AES El Salvador

Abraham A. Bichara HandalCEOAES El Salvador


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American Municipal Power, Inc (AMP) is the nonpro⇒ t wholesale power supplier and services provider for 128 member municipal electric systems in six states; Ohio, Pennsylvania, Michigan, Virginia, Kentucky and West Virginia. AMP is headquar-tered in Columbus and its members serve more than 570,000 customers.

Marc S. Gerken, P.E., has led the organization as President/CEO since 2000. Gerken has worked extensively on public sector infrastructure projects, and he is a former city manager of Napoleon, Ohio. In that capacity he served as a member of the AMP Board of Trustees, chairing the committee overseeing construction of the 42 MW Belleville Hydroelectric Plant. Nationally, he is a long-time executive commit-tee member of the American Public Power Association Board of Directors and is the past board chair.

The AMP Board of Trustees, comprised of munici-pal of⇒ cials from member communities, is actively engaged in policy-making and provides strong leader-ship to the organization.

AMP’s Mission ■ Develop, manage and supply diverse, competitively

priced, reliable wholesale energy to members■ Provide other services to members, including ⇒ nan-

cial, technical, regulatory compliance, generation, le-gal, mutual aid coordination, training, environmen-tal stewardship, public affairs and energy ef⇒ ciency

Organizational Growth■ Since 2000, membership grew from 83 communities

in three states to 128 communities in six states■ System peak increased from approximately 2,100

MW to more than 3,000 MW■ Energy sales increased from 5.8 million MWh to

10.7 million MWh■ Energy sales revenue increased from $231 million to

$740 million

Financial Strength■ Since 2000, all AMP project ⇒ nancing and entity rat-

ings have been in the “A” category

■ AMP works to maintain these ratings through its member credit scoring program, sound ⇒ nancial practices and relationship management

■ AMP’s ⇒ nancial strength and strong management have been consistently recognized by rating agencies.

Project Development■ Aggressive generation asset development effort

designed to diversify power supply portfolio and reduce market exposure underway

■ Proven track record, including the Belleville Hydro-electric Plant, the AMP Wind Farm (the ⇒ rst utility-scale wind farm in Ohio) and distributed generation

■ Generation asset development effort underway will add more than 1,400 MW of generation capacity

■ AMP’s portfolio of owned/controlled generation will be approximately 18% renewable by 2015

■ Largest deployment of new run-of-the-river hydro-electric generation in the country today◆ Six projects at existing dams on the Ohio River

will add more than 400 MW of renewable energy generation

◆ Three projects are under construction with the remaining projects in the licensing and permitting phases

■ Largest equity-owner of the 1,600 MW Prairie State Energy Campus, a coal generation facility under construction in Illinois incorporating state-of-the-art emissions control technologies

■ Proposed 600 MW natural gas combined-cycle plant under development in Ohio

■ Additional wind solar and land⇒ ll gas being pur-sued including up to 300 MW of distributed solar

Project Financing■ AMP has been awarded Clean Renewable Energy

Bonds (CREBs) in each year the bonding authority has been available, receiving a total of $172.9 mil-lion since 2006◆ Includes a 2009 allocation of $143.7 million, the larg-

est allocation of CREBs to a single entity that year◆ Allocations validate AMP’s position of providing

a range of energy options to members and being leaders in the deployment of renewable generation

■ Public power leader in the use of Build America Bonds, to date issuing nearly $1.2 billion to fund project construction

American Municipal Power, Inc

Marc S. Gerken, P.E.President and CEOAmerican Municipal Power, Inc


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ARMZ is one of the largest uranium producers in the world. The company is wholly owned by Rosatom—the Russian State Corporation controlling the nation’s nuclear activities—and is the mining arm of the Russian nuclear industry operating all of the country’s uranium

mining assets. It is currently ranked as the world’s second largest uranium mining corporation by resource base. In 2009, ARMZ increased uranium output by 25% to 4624 tons at its mines in Russia and abroad.

Despite its success, ARMZ was born from signi⇒ -cant restructuring only a few years ago. In 2005, the company was signi⇒ cantly restructured and adopted a new strategy of securing uranium mines abroad. At the outset, the company realized that in order to compete it needed to adopt a transparent management system and a reporting style that conformed to best international practices.

With growth of operations, ARMZ has also experi-enced a meteoric rise in its pro⇒ le worldwide. In 2009, it made its biggest foreign acquisition—securing 20% stake in publically listed Uranium One. In 2010, the company moved further by acquiring a controlling stake in Uranium One. These two transactions ⇒ rmly established ARMZ as the most dynamic uranium miner in the world and have propelled the company in numerous rankings.

ARMZ’s objective is to become the leading uranium miner globally.

ARMZ Uranium Holding Co

Statistics■ Uranium output in 2009—4,624 tons

■ Uranium output growth in 2009—25%

■ Uranium resource base—632,000 tons by January 1, 2010

■ Employees—10,000

■ Revenue in 2009—$967 million

Panoramic view of JSC Khiagda.


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Cairn India is one of the largest independent oil and gas exploration and production companies in India. It is headquartered in Gurgaon near Delhi and has material exploration and production positions in ten blocks in In-dia and one in Sri Lanka. Cairn produces oil and gas from three blocks in India: Ravva in Andhra Pradesh, CB/OS-2 in the Cambay Basin in Gujarat and RJ-ON-90/1 in Rajasthan. In 2007, Cairn India was listed on the National and Bombay Stock Exchanges and to date has a market capitalization of more than USD 14 billion.

Cairn has been operating in India for 15 years and has played an active role in developing the oil and gas resources in the country. The Mangala ⇒ eld discovered in January 2004 near Barmer, Rajasthan, is the largest onshore oil discovery in India in more than 20 years. The Mangala, Bhagyam and Aishwariya ⇒ elds have re-coverable oil reserves and resources of approximately 1 billion barrels, which includes proven plus probable (2P) gross reserves and resources of 685 million barrels of oil equivalent (mmboe) with a further 300 mmboe or more of enhanced oil recovery (EOR) potential.

In total, there have been 25 discoveries on the Rajast-han block and the company is focused on exploiting the full potential. Cairn India will account for more than 20% of India’s domestic crude oil production when the Rajasthan ⇒ elds reach the current approved plateau production rate of 175,000 barrels of oil per day in 2011.

Cairn India has developed a strong pool of skilled manpower over a decade of its operations in India. The people that Cairn employs represent the founda-tion of this multicultural organization. Over the years, Cairn has employed some of the brightest minds in the industry and the skills of these people are critical to the success of the organization.

Health, safety and the environment are integral to Cairn India’s business management and the company is committed to working with all stakeholders to de-liver material growth.

Working with the government of India, state govern-ments and joint venture partners, Cairn has developed an in-depth understanding of the regulatory environ-ment and, more importantly, has laid the foundations for the strong relationships that are needed to help provide some of the energy needs of the country.

Cairn also has an extremely positive approach to

working with local communities. This has enabled them to make substantial progress with their project while minimizing the negative impact on local people. Working with IFC, Cairn has set up an Enterprise Centre that provides skills training schemes to enhance local employment as well as medical, social and micro-⇒ nance programs. As an acknowledgement of our commitment to society, Cairn India received the TERI Corporate Award for Social Responsibility 2008 for the Micro-Vendor Development Programme at Ravva.

Rahul Dhir, Managing Director & CEOMr. Rahul Dhir, 44, joined Cairn India in May 2006 as

the chief executive of⇒ cer and was appointed the man-aging director on August 22, 2006. He completed his bachelor of technology degree from the Indian Institute of Technology, Delhi. He went on to complete his M.Sc from the University of Texas at Austin and MBA from the Wharton Business School in Pennsylvania.

Rahul started his career as an oil and gas reservoir engineer before moving into investment banking. He has worked at SBC Warburg, Morgan Stanley and Merrill Lynch. Before joining Cairn India, he was the managing director and co-head of energy and power investment banking at Merrill Lynch.

Rahul’s commitment has contributed to making the company a USD 14 billion enterprise and his vision to further explore the different hydrocarbon basins has put Cairn India on a strong growth trajectory.

Cairn India Limited

Rahul DhirManaging Director and CEOCairn India Limited

StatisticsProject Completed

■ Ravva and Cambay Development

■ Commissioning of the Mangala Processing Terminal

■ Commissioning of the Mangala to Salaya crude pipe-line—longest continuously heated and insulated pipeline in the world

Employees — ǔ1,300

Sales — >165,000 barrels of oil equivalent per day

Crude Processing Capacity

■ Rajasthan—205,000 barrels of oil per day (bopd) with scope for further expansion

■ Ravva—Oil, 70,000 bopd, and natural gas, 95 million standard cubic feet per day (mmscfd)

■ Suvali—Oil, 10,000 bopd, and natural gas, 150 mmscfd

Certi⇒ cations — ISO 14001 and OSHAS 18001


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In 1935, Cleco Corp began as an ice company in a small south Louisiana town. Seventy-⇒ ve years later, the company’s regulated subsidiary, Cleco Power (Cleco), is a focused integrated electric utility, prov-ing through skill and determination a smaller com-pany can produce big results for its customers and shareholders.

Cleco serves nearly 300,000 customers throughout Louisiana and operates four power generators with 3,800 megawatts of nameplate capacity. Cleco owns 2,539 megawatts of this capacity.

Operational PerformanceCleco recently completed the foundation of its

long-term growth strategy by putting into service the largest unit in its generation ⇓ eet, Madison 3. This facility is a net 600-megawatt multi-fuel generator that has the capability of using biomass fuels to produce electricity. The unit is among the largest using circu-lating ⇓ uidized-bed technology and is currently using petroleum coke, a waste product of the oil re⇒ ning industry, for fuel. In addition, Cleco recently acquired one of the most ef⇒ cient generating units in the state, a combined-cycle unit named the Acadia Power Station. This 580-megawatt unit’s low heat rate makes using natural gas an effective way to provide cost-ef⇒ cient reliable power.

To ensure the company has adequate transmis-sion to deliver power, Cleco is investing in the larg-est transmission project in its history. The growth in south Louisiana has made it dif⇒ cult for power to ⇓ ow through the existing transmission system during times of peak demand. By building new transmission infra-structure and upgrading existing equipment, Cleco

and two other area utilities are helping to alleviate power constraints and allowing for greater ⇓ exibility in energy supply.

Financial PerformanceAdding Madison 3 and the Acadia Power Station to

its existing generation ⇓ eet has more than doubled the utility’s rate base and increased its generation capacity by more than 85%. At the time of Madison 3’s ground-breaking, Cleco’s net property, plant and equipment assets were approximately $1.3 billion and this project alone had a cost of $1 billion. Knowing that funding the plant would be a challenge, the company started early and signi⇒ cantly completed project ⇒ nancing prior to the 2008 economic downturn.

Cleco’s growth strategy is proving to have a posi-tive impact on stock price as the corporation’s stock has repeatedly achieved lifetime highs during 2010. In addition, Cleco Corporation increased its dividend payment by 11% effective May 2010.

Cleco Corporation also has been recognized by the Edison Electric Institute for exceptional shareholder return. The company claimed the 2009 Index Award in the small market capitalization category for earning a 76.3% total shareholder return for ⇒ ve years ending September 30, 2009.

Cleco Corporation

Michael H. MadisonPresident and CEOCleco Corporation

Statistics■ Employees: 1,289

■ Total power sales in 2009: 9.1 million kWh

■ Owned generation: 2,539 megawatts (regulated), 1,065 megawatts (merchant/tolled)

■ 11,571 distribution circuit miles

■ 1,224 transmission circuit miles

■ Capitalization: $1.88 billion


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Chesapeake Energy Corporation was founded in 1989 by its CEO, Aubrey K. McClendon, and former President and COO, Tom L. Ward. Today Chesa-peake is the second-largest producer of natural gas, a Top 20 producer of oil and natural gas liquids and the most active driller of new wells in the US. Headquartered in Oklahoma City, the company’s operations are focused on discovering and develop-ing unconventional natural gas and oil ⇒ elds onshore in the US. Chesapeake owns leading positions in the Barnett, Fayetteville, Haynesville, Marcellus and Bossier natural gas shale plays and in the Eagle Ford, Granite Wash and various other unconventional liquids-rich plays. The company has also verti-cally integrated its operations and owns substantial midstream, compression, drilling and oil⇒ eld service assets. With more than 9,700 employees and an enter-prise value of approximately $31 billion, Chesapeake intends to continue leading the industry in develop-ing greater supplies of US unconventional natural gas and liquids in the years ahead.

Operations StrategyThrough strong leadership, investment in technol-

ogy and an aggressive land acquisition program in shale plays, Chesapeake has built the industry-lead-ing shale position. Chesapeake is the only producer to have #1 or #2 positions in the Haynesville, Mar-cellus, Barnett, Fayetteville and Bossier Shale plays. Additionally, we now own the largest inventory of leasehold in two of the Top 3 new unconventional liquids-rich plays—the Eagle Ford Shale and the Niobrara Shale.

McClendon’s strategy is also focused on advanta-geous joint venture agreements with world class partners and executing a sophisticated commodity hedging strategy that consistently delivers cash gains and increases the overall natural gas and oil price realizations for Chesapeake.

Natural Gas AdvocateChesapeake has taken a leadership position in educat-

ing policymakers, the press and the public about natural gas. Its key message is that natural gas is clean, afford-able, abundant and American. With a more than 120-year supply in the United States, natural gas is clearly the best scalable green energy solution for the country, reducing the nation’s dependency on foreign oil and keeping jobs and money in the US. To help deliver these messages, Chesapeake provided funding to form the American Clean Skies Foundation, a Washington, D.C.-based think tank dedicated to promoting energy conservation and the greater use of cleaner fuels, including natural gas. The company also is committed to its CNGNow initiative, which promotes the use of compressed natural gas as a transportation fuel. Chesapeake is very active in Ameri-ca’s Natural Gas Alliance (ANGA), which includes 29 of the nation’s largest independent natural gas producers.

Community MindedIn every community where Chesapeake operates, it is

committed to building partnerships in education, com-munity development, social services and health. In 2010, Chesapeake has committed over $22 million to charitable giving. Chesapeake sets high standards in service, and strongly encourages employees to do the same. During the 2010 United Way campaign for central Oklahoma, the company and its employees contributed a record $4.1 million, more than twice the level given by any donor in central Oklahoma. Additionally, Chesapeake employees donated more than 30,000 volunteer hours in 96 commu-nities across all of Chesapeake’s operations.

Chesapeake Energy Corporation

Aubrey K. McClendonChairman of the Board President and CEOChesapeake Energy Corporation

StatisticsNet Acres (in millions): 13.8

Q3 2010 Daily Production (mmcfe/d): 3,043

Q3 2010 Proved Reserves (tcfe): 16.7

Q3 2010 Risked Unproved Resources (tcfe): 102

YTD Revenues (in millions): $7,392

YTD Adjusted Net Income (in millions): $692

Market Capitalization (in millions): $16,742

Employees: 9,700


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CONSOL Energy, the leading diversi⇒ ed coal and gas producer in the eastern United States, is a mem-ber of the Standard & Poor’s 500 Equity Index and the Fortune 500. It was recently named one of the “Top 100 Most Trustworthy” companies for 2010 by Forbes. CONSOL Energy has annual revenues approach-ing $5 billion, operates 11 bituminous coal mining complexes in six states, reports proven and probable coal reserves of 4.5 billion tons and has annual coal production of nearly 70 million tons. It is also the region’s leading gas producer, with proved reserves of 2.9 trillion cubic feet.

Led by Chairman, President & CEO Brett Harvey, CONSOL Energy has established ⇒ ve core corporate values: safety, compliance, continuous improvement, productivity and cost control. Safety is of primary importance to CONSOL Energy, which has earned the reputation as the nation’s safest coal and gas produc-er, with accident incident rates far below the national averages for the energy industry.

In addition, CONSOL Energy continues with its ef-forts to ensure that the extraction and use of important coal and gas resources are consistent with the protec-tion of our natural environment. One example of these efforts is that CONSOL Energy maintains the largest R&D group in the industry devoted exclusively to burning coal more cleanly.

Coal still accounts for about 70% of CONSOL En-ergy’s earnings, and in terms of our coal operations in the eastern United States, CONSOL leads the coal industry in revenue, net income and the production and reserves of high-quality bituminous coal.

While coal will continue to be an important busi-ness unit for CONSOL, the company has taken dra-matic steps recently to increase its natural gas busi-ness. This past spring, CONSOL acquired the oil and gas exploration and production business of Dominion Resources Inc.

As a result of the $3.475 billion agreement to acquire Dominion’s E&P business, CONSOL Energy will be the largest, and among the fastest growing and lowest cost producers of natural gas in the eastern United States. In addition, it gives the company a leading position in the strategic Marcellus Shale fairway by tripling our devel-opment assets to approximately 750,000 acres.

During that same period, CONSOL Energy an-nounced an agreement to make an offer to acquire all of the shares of CNX Gas common stock that it did not previously own. The buy-back of CNX Gas shares was completed last summer.

Collectively, coal and gas fuel about 70% of all US power generation, which places CONSOL Energy in a very favorable position to seize opportunities presented in the marketplace for both fuels. With CONSOL En-ergy’s coal and gas reserves located mainly east of the Mississippi River, this gives the company an advantage as one of the major fuel suppliers to users in the north-eastern quadrant of the United States, with its high population density and increasing demand for energy. According to the Energy Information Administration, demand for coal is expected to grow by 28% and for gas the expectation is it will grow by 38% by 2035.

Additional information about CONSOL Energy can be found at its web site: www.consolenergy.com.

CONSOL Energy Inc

J. Brett HarveyChairman, President and CEOCONSOL Energy Inc

Fast facts■ Began operations in 1864.

■ Through its subsidiary, CNX Land Resources Inc, has timber and environmental enhancement projects, as well as commercial real estate development ventures and property leasing activities for energy production.

■ Maintains a ⇓ eet of 29 vessels and 650 barges. CONSOL’s river operations annually transport nearly 20 million tons of coal, including about 7 million tons produced by CONSOL Energy, along the inland waterways of the United States.

■ Its subsidiary, Fairmont Supply, is a full-line distributor of mining and industrial supplies.


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Ramping Up Energy Ef⇒ ciencyIn October 2008, the Michigan legislature passed

PA 295, also known as the known as the “clean, re-newable and ef⇒ cient energy act.”

The new legislation was designed to promote energy optimization. It implemented standards to cost-effectively diversify state energy resources and promote private investment in energy ef⇒ ciency.

An Ambitious Ramp-UpInitially, DTE Energy and other Michigan utilities

were faced with some extraordinary ramp-up chal-lenges due to the time line embedded in the legisla-tion. The law required a series of actions among the commission and utilities to establish temporary rules and ⇒ le plans.

In ⇒ ve months, the DTE Energy team: ■ Filed design plans for both Detroit Edison and

MichCon, although the two are run as one com-bined program,

■ Supported its plans during contested case hearings,■ Hired ⇒ ve implementation contractors and one

Evaluation, Measurement & Veri⇒ cation (EM&V) contractor, and

■ Established a tracking and call tree infrastructure.Core programs included ENERGY STAR® lighting

and appliances, HVAC, audit and weatherization, low income, multifamily direct install, appliance recycling, and prescriptive and non-prescriptive commercial and industrial programs. At the same time, the team used customer research to establish a program identity (Your Energy Savings), strategy, logos and web site.

All this was accomplished while the energy compa-ny was operating within one of the most challenging economic circumstances in its history.

Extraordinary ResultsThe campaign launched in June 2009, and set the pace

to far surpass the energy savings goal outlined in the leg-islation. The 2009 year-end results were extraordinary.

Nearly 45,000 business and residential customers participated directly in the program through rebates and services. In addition, more than 300,000 customers

purchased 2.1 million discounted compact ⇓ uorescent light bulbs through local retailers.

As a result, DTE Energy surpassed the original plan for gas and electric savings. Detroit Edison saved 203 GWh and MichCon saved 0.250 BCF. This equates to 0.42% of electric sales and 0.14% of gas sales in savings.

Customer research supports these numbers. Pro-gram awareness started at 41% after launch and rose as high as 49%. In the ⇒ rst half of 2010, this awareness number has increased into the low 60s.

Customer-Focused ProgramThe strategic vision of the Your Energy Savings

program is to enable customers to reduce their en-ergy bills by actively controlling, and reducing, their energy use. Programs were designed to cover as much of the customer base as possible, in order to build engagement.

The ultimate goals for the program re⇓ ect this cus-tomer focus. They include:■ All customers believe that DTE Energy is helping

them with their energy bills by offering relevant programs and valuable education forums.

■ Employees from across the company are aware of the programs and are energy ef⇒ ciency advocates.

■ Programs are designed with the customer in mind, and are executed without defects.

■ Our regulatory relationship is fully aligned, our ⇒ lings transparent and error free and we spend our money prudently in the eyes of the customer.

■ We provide only those programs that are truly valuable to customers, and both Detroit Edison and MichCon earn their performance incentive every year.

Company Pro⇒ le DTE Energy (NYSE: DTE) is a Detroit-based diversi-

⇒ ed energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include Detroit Edi-son, an electric utility serving 2.1 million customers in Southeastern Michigan, MichCon, a natural gas utility serving 1.2 million customers in Michigan and other non-utility, energy businesses focused on gas storage and pipelines, unconventional gas production, power and industrial projects, and energy trading.

DTE Energy

Gerard M. AndersonCEODTE Energy


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Green Gas International builds, owns and operates plants around the world that convert methane and waste from coal mines, land⇒ lls, wet and dry biomass into clean energy and carbon credits. The company of-fers an integrated management solution covering the entire value chain, including: project design, ⇒ nance, project management, operations, maintenance, carbon credits and power sales. With operations spanning around 50 projects in nine countries, Green Gas is headquartered in the Netherlands and currently has some 500 employees.

The company focuses on smaller clean energy proj-ects requiring USD 5-30 million of initial capital in-vestment. The size of these projects and the fragmen-tation of the market often make it dif⇒ cult to bring the necessary technical and management resources to bear to ensure a superior return on investments. Partnering with ⇒ nanciers, investors and resource owners, Green Gas gives focus to what is often a non-core business for them, using the management and operating platform of Green Gas to create a more predictable outcome from the execution and opera-tion of these projects.

Green Gas, through its specialist knowledge of gas management, enhances the principal business of its customers, through improved safety and productiv-ity and improved environments in and around cus-tomers’ operations. Green Gas offers a commercially attractive solution and brings economic bene⇒ ts to local communities.

Since its foundation in July 2005, Green Gas has developed rapidly. It achieved a compound annual growth (CAGR) in revenue of 354% between 2006 and 2009, with revenues of USD 80 million in 2009. Earn-

ings before interest, tax, depreciation and amortisation (EBITDA) grew from a negative USD 3 million in 2006, to USD 9.6 million in 2009, representing a CAGR in EBITDA of 379% between 2006 and 2009.

In addition to achieving organic growth, Green Gas has successfully completed a number of signi⇒ cant mergers and acquisitions. In 2006, the company ac-quired G.A.S. Energietechnologie, Germany—a leader in the construction and operation of combined heat and power (CHP) plants. Concurrently, it acquired Hofstetter Umwelttechnik of Switzerland, a prominent combustion technology and equipment supplier. In 2007, Green Gas merged with OKD, DPB of the Czech Republic, a coal mine methane (CMM) company with local operations and 50 years experience in coal mine services, CMM management and utilization.

From the outset, Green Gas has been led by Chris Norval, Executive Chairman and CEO. It now counts on an international team of experts drawn from a variety of backgrounds, including: mining, power, gas management, carbon credits and environmental protection. In less than ⇒ ve years, Green Gas has built an industrial platform, by combining companies and technologies to address a completely new market evolving from the global focus on climate change. The result is a truly integrated Green Gas solution, adding the necessary technology and expertise in the clean energy/climate change mitigation industry.

Green Gas International B.V.Jachthavenweg 109h1081 KM Amsterdam The NetherlandsT: +31 (0)20 570 2250F: +31 (0)20 570 2222www.greengas.net

Green Gas International

Chris NorvalExecutive Chairman and CEOGreen Gas International


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Kosmos Energy is a premier international indepen-dent oil exploration and production company with major oil discoveries offshore West Africa. Kosmos’ ⇒ nds include the giant Jubilee Field in Ghana’s deep waters, which was one of the largest oil discoveries worldwide in 2007 and the biggest ⇒ nd offshore West Africa during the last decade. The Dallas-based com-pany, as technical operator for development of the Ju-bilee Field and leader of the Integrated Project Team, is developing Jubilee on an aggressive timetable with ⇒ rst production expected in late 2010 only three-and-a-half years after discovery. With seasoned leadership, a proven track record and a solid ⇒ nancial founda-tion, Kosmos is well positioned to continue delivering substantial value to its investors.

Focus: AfricaKosmos was founded in 2003 when members of

the company’s senior management team, backed by leading private equity ⇒ rms Warburg Pincus and The Blackstone Group, sought to replicate and build on the success they had at Triton Energy where they explored for and developed oil and gas reserves in West Africa’s Gulf of Guinea. Kosmos chose to focus on West Africa because it contains some of the world’s most proli⇒ c hydrocarbon systems that are largely undeveloped, has a competitive cost structure and has host governments that are eager to develop their countries’ natural resources.

Financial StrengthKosmos has raised nearly US$2.3 billion in commit-

ted capital to pursue its strategy in West Africa. War-burg Pincus and The Blackstone Group have provided Kosmos with substantial equity commitments, and a consortium of international lenders has provided Kos-mos with more than $1.2 billion in debt commitments.

Strategy for SuccessKosmos’ strategy is to pursue drill bit success by

generating exploration ideas, nurturing them to drill-ing, and then expediting ⇒ eld appraisal and devel-opment. The company’s exploration focus, which is

deeply rooted in a fundamental, geologically based approach, is on emerging petroleum systems where source rocks and reservoirs have been established, but where commercial discoveries have yet to be made. This strategy and focus help accelerate coun-tries’ development of their natural resources and maximize Kosmos’ upside potential. Additionally, Kosmos forms partnerships with established industry players and host governments, accesses a strategic-scale interest in each project and manages entire ventures when possible.

The Kosmos team comprises some of the indus-try’s best and brightest. The company’s explorers use a winning combination of innovative thinking and proven technology to ⇒ nd oil in areas labeled unpro-spective by others. Kosmos’ in-house technical team includes individuals with complementary areas of expertise that span the exploration process, including geology, geophysics, geochemistry, reservoir engi-neering and other associated disciplines. Integration of these disciplines is key to creating Kosmos’ competi-tive advantage.

Solid Corporate CitizenKosmos is a solid corporate citizen that is helping

countries develop their energy industries by hiring and training local residents and building indigenous ener-gy-related organizations to create legacies of oil and gas expertise. The company reinvests in its operational areas, and builds and maintains cooperative relation-ships that empower communities and local businesses. Kosmos is sensitive to the preservation of the environ-ment and is dedicated to making a minimal impact on the surroundings in its operational areas.

Kosmos Energy

Brian MaxtedCOOKosmos Energy

Highlights■ Founded in 2003 by seasoned management team with

backing by Warburg Pincus and The Blackstone Group

■ Established new, signi⇒ cant oil province with Jubilee discovery offshore Ghana in 2007

■ Made four subsequent hydrocarbon discoveries offshore Ghana to date

■ Commencing Jubilee oil production in late 2010, only 3.5 years after ⇒ eld discovery


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North Delhi Power Limited (NDPL) is a joint venture of The Tata Power Company Limited (part of TATA Group, the largest business house in India), and the Government of Delhi, India, with the major-ity stake and control held by Tata Power. The com-pany, incorporated as part of the Delhi Power Sector Reforms process, commenced distribution of power in North Delhi from July 2002, post unbundling and privatization of the government-owned, vertically integrated State Electricity Board. With a registered consumer base of 1.2 million and peak load of around 1315 MW, the company’s operations span across an area of 510 sq kms.

NDPL is the frontrunner in implementing power distribution reforms in the capital city and is acknowl-edged for its consumer friendly practices. Since priva-tization, the Aggregate, Technical and Commercial losses in the NDPL area have been reduced to around 14% from 53% in July 2002, an unprecedented reduc-tion of around 74% in less than eight years.

On the power reliability front, too, there has been signi⇒ cant improvement, with additional capex of USD 530 million being incurred since takeover against inherited (in 2002) asset base of USD 200 million. For supplementing availability and enhancing reliability of supply, NDPL is also establishing a 90 MW gas based combined-cycle power project which is expect-ed to be commissioned in January 2011.

The company, since inception, has taken the lead in technology adoption, it being the only utility in the country to implement systems such as SCADA, GIS, GSAS, DMS and OTS. OMS implementation and a smart grid pilot are presently underway. As a mem-ber of the Global Intelligent Utility Network coalition, NDPL is working with 10 other international utili-ties and IBM to accelerate development of common standards, technology solutions and processes for

intelligent networks.NDPL has to its credit several ⇒ rsts: SCADA-con-

trolled unmanned grid stations, GSM modem-based AMR on a mass scale with more than 60% of its rev-enues being billed through AMR, a GSM-based street lighting system and a SMS-based fault management system. Through innovative integration of CRM, back-end processes and GIS, NDPL is the ⇒ rst, and prob-ably the only, utility in the country to offer “Same/ Next Day Connections.”

NDPL is a socially responsible organization which is committed to inclusive growth in a sustainable man-ner. The company has a well-de⇒ ned three pronged corporate sustainability strategy based on compensa-tory, business-oriented and philanthropy approaches which ensure win-win for both the company and the society. Sensitive to the issue of climate change, NDPL aims to be energy and water neutral (for its own consumption) by 2015. NDPL is setting up solar plants in its area, with a capacity of around 1.1 MW having already been commissioned.

The company has won several accolades for pio-neering efforts in power distribution. It has been conferred the National Award for Meritorious Perfor-mance thrice by the government of India. It also has the distinction of being the ⇒ rst Indian power distri-bution utility to win the prestigious Edison Award in 2008 for Innovative Use of Technology and in 2009 for Policy Advocacy. Some of the other key recognitions include a Utility of the Year Award for four consecu-tive years (2007 to 2010) by Asia Power, Singapore and the Balanced Scorecard Hall of Fame Award in 2008 by International Palladium. Mr. Sunil Wadhwa, MD NDPL, has been conferred Asia Power’s Most Inspirational CEO of the Year Award 2008 and Udyog Rattan (Industry Jewel) Award 2010 by the Indian Institute of Economic Studies.

With its achievements in Delhi, NDPL is now look-ing to extend its expertise in power distribution to other Indian cities, as well as globally.

For additional information, please visit www.ndpl.com.

North Delhi Power Limited

Sunil WadhwaManaging DirectorNorth Delhi Power Limited


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NRG Energy Inc is a Fortune 300 company that owns and operates one of the country’s largest and most diverse power generation portfolios. Head-quartered in Princeton, NJ, our power plants provide nearly 26,000 megawatts of generation capacity—enough to supply nearly 21 million homes—includ-ing power from a growing portfolio of low and no-carbon sources such as nuclear, wind and solar power. Our two retail businesses, Reliant Energy and Green Mountain Energy Company, serve more than 1.8 million residential, business, commercial and industrial customers.

At NRG, we believe that climate change is one of the most signi⇒ cant challenges facing our planet and we want to be a part of the solution. NRG has completed or is currently pursuing a variety of clean energy initiatives, all of which are poised to create substantial engineering, construction and operations jobs over the next several years. We believe these efforts will jumpstart critical reductions in our country’s carbon and other air emissions, and decrease our country’s dependence on foreign oil.

As part of that commitment on the generation side, we are a leading ⇒ nalist for a government loan guarantee to build new American nuclear power at our South Texas Project facility. This year, we’ve also made substantial progress in solar power. NRG owns the largest photovoltaic solar ⇒ eld in Califor-nia at Blythe, and we are building an even larger PV project at Avenal. In California’s Mojave Desert, NRG is the leading investor in Ivanpah, which—when completed—will be the world’s largest solar thermal project.

Our clean energy portfolio also includes four wind farms in Texas and initiatives to develop biomass and

offshore wind projects at various locations. To address existing fossil fuel plants, NRG is building a commer-cial-scale carbon capture demonstration project, which will test a process to reduce carbon emissions at one of our Texas plants. This project will be among the ⇒ rst of its kind and is expected to be online in 2014.

In addition to generating more clean power, NRG is also working on the retail side to support electric vehicles and reduce emissions even further. Reliant Energy is building the ⇒ rst phase of a citywide public network of fast-charging stations—an important step toward making the transition to electric vehicles sim-ple, practical and affordable. Reliant also has received a government stimulus grant to expand the rollout of smart energy solutions to residents statewide.

Green Mountain Energy gives its customers in select markets nationwide the choice of buying their electricity from clean generation sources. By provid-ing clean, domestic sources of energy in combination with the smart grid and an electric vehicle charging infrastructure in the garage and on the road, our ef-forts will improve America’s energy security, drive industrial innovation and contribute to the ⇒ ght against global climate change.

NRG’s expertise in renewable energy extends beyond our commercial projects and dovetails into our NRG Global Giving efforts. In September, NRG received recognition from the Clinton Global Initia-tive for funding a project to expand the use of clean solar energy in Haiti. By installing low-maintenance, zero-fuel solar panels to power street lighting, water irrigation, ⇒ sh farming and other vital needs, the proj-ect hopes to stimulate economic development in areas that are in the process of recovering from the January 2010 earthquake.

With investments in solar, wind, nuclear power and electric vehicle infrastructure, NRG is working to help America transition to a clean energy economy.

NRG Energy Inc

David CranePresident and CEONRG Energy Inc

The third edition of the Singapore International Energy Week (SIEW), which took place from October 27th to November 4th, engaged some 14,000 policy makers, industry leaders and academics on issues centered around the Smart Energy Economy and the corresponding actions needed to build a sustainable future in Asia and the rest of the world.

Mr. Lawrence Wong, Chief Executive of the Energy Market Authority, which organized the seven day event, said, “Singapore recognizes that no single city or country will have all the answers. To succeed, we must work together to strengthen the region’s framework for

energy co-operation, and share our experience and ex-pertise. From the discussions and debates at this year’s Singapore International Energy Week, we know that governments and businesses have found it to be a useful focal point for fruitful conversations and partnerships.”

The highlights of the Energy Week were the Sin-gapore Energy Lecture, delivered by Singapore’s Prime Minister Lee Hsien Loong, and the inaugural Singapore Energy Summit, where smart actions that promote energy sustainability and security such as ef-⇒ cient energy use, investment in technology, explora-tion of renewable and alternative energy sources and the smarter use of fossil fuels were discussed.

Adding further breadth to the Week were three major energy trade shows and a myriad of dialogues, roundtables and networking sessions all address-ing the pertinent energy issues of the day. Climate change, in the lead up to multilateral discussions in Cancun, and the role of the private sector in the new energy future were also highlighted throughout the Week. The former, through in-depth discussions on general policy perspectives, as well as those speci⇒ -cally represented by China, India and the United States; and the latter, by way of business-focused events dealing with the oil and gas industry, power generation, carbon trading and clean energy ⇒ nancing and solutions.

The Singapore International Energy Week aims to continue being the premier platform for key decision makers to shift the energy agenda from discussion to action, as Asia looks set to grow into the world’s larg-est consumer of energy in future years.


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Singapore International Energy Week

Mark your calendars! SIEW 2011 will be held from October 31 to November 4, 2011, and will encompass a compre-hensive schedule of conferences, exhibitions, networking sessions and business matching opportunities. Visit www.singapore.iew.com.sg for more information.

The program line-up will include key events such as:

■ Singapore Energy Lecture

■ Singapore Energy Summit

■ Carbon Forum Asia

■ Clean Energy Expo Asia

■ Asia Smart Grids Conference and Expo

Come meet with key energy policy makers, industry and thought leaders to exchange best practices, see the latest tech-nologies and turn discussion on issues-of-the-day into action!

SIEW 2011

S-OIL Corporation is a $ 14 billion integrated re⇒ ning company and a reliable supplier of petroleum, petro-chemical and lube products to over thirty countries around the world. Since its establishment in 1976, S-OIL has shown outstanding performance by realizing operational excellence and sound ⇒ nancial structure.

Renowned for a successful joint venture with Aramco Overseas Company, a subsidiary of Saudi Aramco, and Hanjin Group, a world-leading company in logistics and transportation, S-OIL has been able to ensure the stable import of crude oil as well as a steady supply of petroleum products.

S-OIL operates three CDUs with aggregate pro-cessing capacity of 580 MB/D and a large-scale Bunker-C Cracking Center, which consists of various conversion processes such as Hydrocracker, RFCC, RHDS, etc., through which most of residual crude is upgraded into light and/or low sulfur products. In addition, S-OIL produces basic raw materials for the petrochemical industry; 740 KTA of Para-Xylene, 200 KTA of Benzene, and 200 KTA of Propylene, and has a full line-up of API Group-III to Group-I lube base oils with daily production capacity of 30,000 barrels, which is the 2nd largest single-re⇒ nery capacity in the world.

S-OIL has been a forerunner of implementing a di-versi⇒ ed marketing strategy, supplying about 40% of the re⇒ ned products in domestic market while export-ing the remaining 60% to over 30 countries includ-ing Japan, China, the US and many other countries around the globe.

Based on its core competitiveness, in 2009, S-OIL was proudly awarded Downstream Operations of the Year by Platts, named as one of Global 500 by Fortune, and obtained the highest credit ratings among Asian re⇒ ners from S&P and Moody’s.

S-OIL has continuously made investments to further improve pro⇒ tability for its long-term sustainability. In July 2009, S-OIL completed construction of the Alkylation unit, which produces high quality gasoline blending stock, and is currently constructing #2 Aro-matic Complex capable of producing 960 KTA of Para-Xylene and 280 KTA of Benzene in order to strengthen the company’s petrochemical business with a target of completion by June 2011.

Furthermore, S-OIL has embarked on a new journey in 2009 by establishing a strategy framework which consists of three strategic directions, which are, “Fur-ther Investment in Re⇒ ning Business,” “Integration with Petrochemical Business,” and “Renewable Energy Business” along with strategic imperatives that col-lectively serve to meet the expectations of our C.E.O. (Customers, Employees, and Owners & Stakeholders). Through successful execution of these strategic imper-atives, S-OIL aims to achieve balanced growth in terms of economic, social and environmental values.

Equipped with this solid strategy framework, S-OIL will relentlessly pursue materializing a well-diversi⇒ ed business portfolio that can lead the waves of change. In the end, such strengths will enable S-OIL to break through an ever-changing business environ-ment encompassing the entirety of the horizon of the energy industry.


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S-OIL Corporation

S-OIL strives to satisfy the expectations of our C.E.O. (Customers, Employees and Owners & Stakeholders), aiming at achieving sustainable pro⇒ table growth.

Ahmed A. SubaeyRD and CEOS-OIL Corporation

StatisticsRevenue : US$ 13.7 billion (2009)

Location : Seoul (Head Of⇒ ce) / Ulsan (Re⇒ nery)

Re⇒ nery Capacity : 580,000 BPSD

Key Businesses : Oil Re⇒ ning, Petrochemical Product Manufacturing, Production of LubeBase Oil

Employees : 2,473 persons (as of Dec 31, 2009)

Sales Volume : 193,716 thousand barrels (2009)


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Southern Company is one of the nation’s leading producers of electricity. It is committed to providing solutions to national energy issues and challenges facing the industry. During 2010, the company led a renaissance in new nuclear generation, researched new carbon capture processes, continued to develop advanced coal technologies and explored renewable energy options.

New NuclearSouthern Company is moving forward with con-

struction of the ⇒ rst new nuclear units to be built in the United States in more than 30 years. Based on the progress and integrity of the project in Georgia—as well as the company’s history of strong operational performance—the plant was awarded the nation’s ⇒ rst nuclear loan guarantees earlier this year. Target dates for completing the units are 2016 and 2017.

Carbon CaptureThe US Department of Energy’s National Carbon

Capture Center is located in Wilsonville, Alabama, where scientists and researchers from government, industry and universities are developing the next gen-eration of carbon capture technologies. DOE selected Southern Company to manage and operate the center because of its long-term commitment to research and development. The company is currently testing vari-ous carbon capture and storage processes at seven sites in the Southeast.

21st Century Coal TechnologiesSouthern Company is building the nation’s ⇒ rst

commercial-scale plant using an advanced technol-ogy developed in partnership with DOE and others. The project in Mississippi uses an integrated gasi⇒ ca-tion combined-cycle process to convert coal to gas, removing 99% of sulfur dioxide and particulates and generating 65% less carbon dioxide emissions through carbon capture and sequestration. Southern Company

and its partners currently are marketing this new tech-nology internationally. The ⇒ rst plant built using the process will begin operating in China in 2012.

Renewable Energy OptionsSouthern Company is currently building one of

the nation’s largest biomass-fueled plants in Texas, planning to convert an existing coal-burning plant to biomass in Georgia, and building one of the nation’s largest solar installations in New Mexico. The com-pany also has numerous other studies and projects under way using biomass, wind, geothermal, land⇒ ll gas/solid waste and solar.

About Southern Company Southern Company is headquartered in Atlanta and

employs 26,000 people. It consistently outperforms the S&P 500 Index and has increased its dividends for the past nine consecutive years.

Southern Company ranks among the top utilities in customer satisfaction and diversity. In 2010, the company received the US Secretary of Defense’s high-est award recognizing business support of employees serving in the military.

With more than 42,000 megawatts of generating capacity, Southern Company serves 4.4 million cus-tomers in the Southeast through four electric utili-ties—Alabama Power, Georgia Power, Gulf Power and Mississippi Power. In addition to superior customer service, these brands are known for high reliability and retail electric prices below the national average. Other Southern Company subsidiaries include a competitive generation business, a licensed nuclear operator, and wireless communications and ⇒ ber-optic providers.

Southern Company

Tom FanningChairman, President and CEOSouthern Company

2009 Statistics■ Power sales: 186 billion kilowatt-hours

■ Operating revenues: $15.74 billion

■ Earnings: $1.64 billion

■ Assets: $52.05 billion

Staples is the world’s largest of⇒ ce products compa-ny, with 2009 sales of $24 billion and 91,000 associates, serving in 25 countries. An early champion of environ-mental leadership, Staples has been actively engaged for more than a decade in a wide range of energy ef⇒ -ciency programs designed to preserve the environment.

Staples today celebrates the success of its industry-premier energy ef⇒ ciency program, taken to new levels of excellence in the last two years through its partnership with EPA ENERGY STAR. These fully integrated energy programs demonstrate the com-pany’s genuine commitment and are designed to help businesses and customers “make it easy” to be good stewards of the environment, a long-standing corpo-rate commitment.

Energy ef⇒ ciency is a key component of Staples Soul, a holistic approach to achieving environmental excel-lence, and includes the development and sourcing of environmental products, easy access recycling ser-vices, renewable energy and environmental education. Through these progressive programs, Staples has estab-lished an impressive track record of performance and credibility while delivering a positive ⇒ nancial index.

Staples understands that energy ef⇒ ciency is a fundamental business advantage and is committed to making a difference. They recognize the synergy among all components of their business. Their uni⇒ ed sustainable mission starts with energy ef⇒ ciency at their ENERGY STAR distribution centers that trans-port products ef⇒ ciently to their energy ef⇒ cient stores. This approach creates superior value throughout the chain to employees, customers and stockholders.

Staples’ leading program includes initiatives such as EPA ENERGY STAR certi⇒ cations, Six Sigma proj-ects, facility energy audits, monitoring and reporting of metrics, lighting retro⇒ ts, hybrid vehicles to raise ⇓ eet ef⇒ ciency, alternative energy like solar and fuel cell, HVAC optimization, monitored control systems, LEED Certi⇒ cation, their Wake Up Kids school energy education program, awareness programs, more than 600 ENERGY STAR products available to their cus-tomers through a network of more than 2,000 retail fa-

cilities and ful⇒ llment centers of which more than 140 have earned the prestigious ENERGY STAR award in 2010. The results are impressive:

■ The reduction achieved in energy consumption has prevented the release of more than 70,000 tons of carbon dioxide equivalent emissions, equating to CO2 emissions produced by the energy consump-tion of almost 6,000 homes in one year.

■ Staples has 34 solar projects throughout the US, preventing the release of 12,700 tons of CO2, equat-ing to the energy consumption of 1,000 homes since 2005. In 2010, Staples achieved an incredible milestone of 20,000,000 kWh of energy for their solar program.

■ A LEAN Six Sigma program incorporating en-ergy waste elimination, awareness training, usage metrics and store re-commission was rolled out in 2010. Progress toward achieving aggressive goals is tracked by facility with monthly reports and webinars, sharing of best practices and analysis of site energy pro⇒ les.

Staples leadership and operational excellence are priorities to maintain a meaningful and effective long-term sustainability strategy. Today, Staples continues to exceed its corporate commitment to the environ-ment while undertaking a domestic and international business expansion. Staples is proud of numerous awards for its high operational performance and envi-ronmental management.


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Staples Inc

Ronald L. SargentChairman and CEOStaples Inc

Statistics■ One of the largest corporate purchasers of green power,

ranked No. 5 among all retailers.

■ Operates a 385 KW fuel cell which supplies 90% of the base building electrical requirements for a 330,000 sq. ft. DC in California.

■ Staples committed to reducing their absolute carbon emissions by 7% from 2001 to 2010. To date, they have reduced carbon emissions by 9% from 2001 to 2008.

■ Staples has 34 solar installations throughout North America and just passed 20 million kWh for total solar production.

insight

FinalistRising Star of the Year

FinalistRising Star of the Year

Nodal Exchange is the fi rst commodities exchange dedicated to offering locational (nodal) futures con-tracts and related services to participants in the orga-nized North American electric power markets. Nodal Exchange offers cash settled futures contracts for power on over 1,800 hubs, zones and nodes as well as a Henry Hub natural gas contract. Nodal Exchange’s auction and OTC trade platforms effectively facilitate trading. All contracts are central counterparty cleared by LCH.Clearnet, with participants enjoying signifi cant capital effi ciencies from Value-at-Risk margining as well as cross-margining. Nodal Exchange provides superior basis and credit risk management to its par-ticipants. www.NodalExchange.com

Stream Energy is honored to be recognized as an emerging industry leader in the global energy mar-ketplace. As the largest network marketer of en-ergy in the U.S., the company has been propelled to more than $2 billion in total sales in only fi ve years in business. This achievement redefi ned the way energy retailers consider how to market energy to consumers. The result has been a strengthening of the deregulated marketplace and unprecedented growth in the direct sales segment. The company has expanded from its Texas base into Georgia and Pennsylvania and is on a fast track to continue the rapid rate of expansion.Dallas, Texas, 214-800-4400, www.streamenergy.net

FinalistDeal of the Year

Ventyx, an ABB company, is a leading business solutions provider of software, data, and services to global energy, util-ity, communications, and other asset-intensive organizations. Ventyx personnel solve complex technical challenges with innovative solutions and deep industry-specifi c domain expertise. We offer a broad range of solutions to address our customers’ most critical needs, including: asset management, customer care, energy analytics, energy operations, energy trading and risk management, mobile workforce management and utility network management. Acquired by power and automation technology group ABB in June 2010 and merged with the Network Management business unit within its Power Systems Division, Ventyx is the industry’s sole supplier of both enterprise-wide information technology (IT) and power automation systems. By adding ABB’s network management software offerings (SCADA, distribution management, outage management, and market management systems and services), Ventyx for the fi rst time closes the gap between operations technology (OT) and IT platforms and automation systems. As a result of this unparalleled breadth of solutions, Ventyx can be found across the globe improving our operational and fi nancial performance with innovative applications of technology and expertise that help clients manage critical infrastructure, meet growing energy demands and provide a smarter grid.

insight

FinalistInfrastructure Project of the Year

Adriatic LNG, is the company that designed, built and now operates the LNG Terminal located offshore Italy, in the northern Adriatic Sea, about 15 kilometres off the Veneto coastline. It was established in May 2005 by two global energy leaders, Qatar Petroleum and ExxonMobil, with Edison, an Italian gas operator. The offshore Terminal is designed around a concrete gravity base structure, which houses two cryogenic LNG tanks, and supports facilities for mooring and unloading LNG vessels, the regasifi cation plant and a pipeline to transport the gas onshore. It is 375m long, 115m wide and the main deck is 18m above sea level.This state-of-the-art facility has been created to provide the Italian gas market with major new, diversifi ed and reli-able sources of energy. Built with cutting edge technologies and boasting a highly innovative design, the Adriatic LNG Terminal adds to Italy’s LNG import capacity and energy diversity. With a design regasifi cation capacity of 8 billion cubic meters per year (775 million cubic feet of natural gas per day), approximately 10% of the country’s natural gas consumption, the terminal is becoming a global gateway for LNG and in this way it is contributing to improved security of energy supply for Italy.

To learn more about PJM, visit us online at www.pjm.com

Working to Perfect

the Flow of Energy

PJM Interconnection ensures the reliability of the

high-voltage electric power system serving 51

million people in all or parts of 13 states and the

District of Columbia. PJM coordinates and directs

the operation of the region’s transmission grid, which

includes 56,350 miles of transmission lines; administers

a competitive wholesale electricity market; and plans

regional transmission expansion improvements to

maintain grid reliability and relieve congestion.

FinalistDeal of the Year

Zorlu Energy Group, whose foundations were laid with the establishment of Zorlu Enerji Elektrik Üretim A.ù. in 1993, have integrated activities locally and globally, extending from generation and sales or electric power, distribution and sales of natural gas and project process to “turnkey” installation and long-term maintenance and operation of power plants. Zorlu Energy Group’s installed capacity of 738 MW electricity and 192 tons/hour steam at 5 natural gas powered, 7 hydraulic, 1 geothermal, 1 wind and 1 diesel plants in various regions of Turkey. Zorlu Energy Group has cemented its presence in Europe, Asia and the Middle East to evaluate opportunities in the fi eld of energy and become a regional power. The projects carried out in Russia, Paki-stan and Israel are important steps in reaching this target.


Over the past decade or so of the Platts Global Energy Awards the in-dustry has experienced many ups and downs. This year’s winners refl ect some of the best moments of 2010. But, certainly, we cannot forget or ignore the tragedies that struck the industry this year. April was a very diffi cult month for energy with fi ve reported coal mining disasters—four in China and one in the United States. Then, on April 20, who can forget the images of the oil rig explosion and fi re in the Gulf of Mexico? These disasters remind us that energy can be a dan-gerous business. Many energy com-pany employees put their lives on the line every day so we can have light in our lives, heat in our homes and fuel in our tanks.

This year’s Platts Global Energy Awards are dedicated to all the men and women who work for energy com-panies across the globe, who take risks every day to supply us with precious electric power, oil, natural gas and re-newable energy. We applaud you!

China, Europe and the Middle EastSteal the Show

The Platts Global Energy Awards, in its 12th year, has never been more global. With eight countries represent-ed on stage at Cipriani Wall Street in New York City on December 2, 2010, and with many of the US based win-ners taking prizes for projects outside the US, 2010 can be called the year of true globalization for the Awards.

In addition, 2010 marked another key milestone in globalization for the

program. For the fi rst time in its his-tory a Chinese company won a Platts Global Energy Award—and not just one, but two, including Energy Com-pany of the Year, the program’s most prestigious honor. CNOOC Limited will be forever in the archives as the fi rst company from China to win a Platts Global Energy Award

It is apparent that all companies, no matter where they are located, are look-ing at smarter, more effi cient, cleaner and more sustainable ways of produc-ing energy through their vision and leadership, operational prowess, unique programs, complex projects or lead-ing technologies. So, to better show-case achievements, this year the Platts Global Energy Awards are organized in much the same way.

As you read the following highlights of the winning submissions, you will also see that, indeed, innovation, lead-ership, commitment, safety, customer satisfaction and sense of community know no geographical bounds. These winning qualities come from all over the world.

Vision and Leadership

CEO of the Year Rafael VillasecaGas Natural FenosaSpain

CEO Rafael Villaseca led the merger between Gas Natural and Unión Feno-sa in September 2009 resulting in the creation of a multinational company in the gas and electricity sector, oper-ating in more than 23 countries with

global energy awards

A Refl ection and DedicationPatsy Wurster, Director, Platts Global Energy Awards and Publisher, Platts Insight



over 20 million customers. The merger generated value for all its stakeholders including increased profi ts for share-holders, integrated services for its cus-tomers, additional career options for employees and social development for communities in the countries in which it operates.

Through Villaseca’s leadership, the merger and integration was carried out within the planned time-frames con-tributing to greater operational, fi nan-cial and tax effi ciencies. Within the fi rst year after the end of the purchase process, Villaseca rolled out the com-pany’s integrated strategic plan for the next four years.

The CEO of the Year category typi-cally attracts a large number of nomi-nations. This year was no exception. The quality of the list made selecting fi nalists, and ultimately picking one winner, especially challenging. How-ever, it became strikingly clear to the judges that Rafael Villaseca’s leadership in bringing these two large, respected companies together amidst such eco-nomic uncertainty was the story of CEO achievements for the past year. From the start, both the opportuni-ties and risks were known, measured and presented with full transparency. The musical score itself may have been good, but the conductor made all the difference to the performance and guaranteed its success.

Deal of the Year NRG Energy IncUnited States of America

In May 2009, NRG completed the $287.5 million acquisition of Reliant Energy’s Texas retail business, which provides electricity service to nearly 1.6 million customers. The combination of Reliant’s retail business—the second largest mass market electricity provider in Texas—and NRG’s wholesale power generation business created a strong, more reliable player in the competi-tive Texas electricity market. By back-ing Reliant’s load-serving requirements with NRG’s generation in ERCOT, they signifi cantly reduced transaction costs and credit risk.

This transaction closed in a mere 60 days, which is even more noteworthy due to the fact that NRG was confront-ing a hostile takeover attempt with a would-be acquirer at the time. The suc-cessful and speedy closure of the Reliant acquisition proved to be a critical factor in NRG winning this battle and remain-ing an independent company. By creat-ing additional, substantial shareholder value and integrating it quickly to max-imize NRG’s earnings, NRG essentially compelled the other company to either increase its bid to refl ect this additional value or walk away. The resulting up-ward bid did not suffi ciently recognize Reliant’s value and NRG shareholders rejected the proposal in July 2009.

In the fi rst 14 months of NRG owner-ship, Reliant has already proven to be a highly profi table investment, imme-diately accretive to free cash fl ow and EBITDA. Specifi cally, Reliant’s adjusted EBITDA was $642 million in 2009 and $385 million in 2010—over $1 bil-lion total as of June 30, 2010, or $4 per share, a phenomenal 400% return on the investment.

The shrewd leadership and visionary tactics of fending off an aggressive, hos-tile takeover with one hand, while em-ploying the other to make strategic moves into the market impressed the Platts Awards judges. Convincing its sharehold-ers to stick with his vision, David Crane led NRG Energy out of the pack, by man-aging all of this at a remarkable pace.

Energy Company of the YearCNOOC LimitedChina

CNOOC Limited, one of the world’s largest exploration and production companies, made strong strategic in-vestment plays in 2009 and 2010 push-ing its way onto the global scene. With reputation, ethics, innovation and lead-ership in the forefront of judges’ minds, CNOOC stood out, bringing home Chi-na’s fi rst Global Energy Award, 2010 Energy Producer of the Year.

In 2009, CNOOC deployed its op-eration resources, and steadily ad-vanced its intensive engineering, con-struction and development activities.



Streamlined management enabled the company to maintain producing oil fi elds at comparatively high produc-tion time effi ciencies, further con-tributing to its production growth. In exploration, the impressive number of new discoveries and successful ap-praisals strengthened the foundation of its long-term development.

While focusing on making great ef-forts to provide clean and reliable energy to the community, CNOOC also treated social responsibility as another lead-ing priority. They not only challenged their management team to enhance CNOOC’s core competitiveness, achieve sustainable development and create val-ue for the shareholders, but also to pay close attention to various stakeholders by encouraging development between the company and the community, and between humanity and nature.

What stood out for the judges was Chi-na’s gutsy surge into the global energy scene this year. In the fi rst half of 2010, CNOOC successfully completed several signifi cant acquisitions. Through both its 50% interest holdings in Bridas Cor-poration, establishing a solid platform for South American business develop-ment and its aggressive move to invest up to $2.16 billion in Chesapeake’s Eagle Ford shale gas project in October of 2010, CNOOC demonstrated its com-mitment to becoming a “world class” energy company.

Industry Leadership AwardPJM InterconnectionUnited States of America

PJM Interconnection has made a unique contribution to the foundation for competitive wholesale electricity markets. Their organization stands out as the largest, most innovative leader among independent grid operators in reliability, competitive markets and positive results of a robust transmission planning process.

PJM focused attention and diligent ef-forts toward defending the integrity of its markets—an intangible yet critical component of any energy marketplace, especially during this era when partici-pants and the general public demand

greater confi dence in the stability and fundamental fairness of markets.

Three key actions by PJM have strengthened wholesale electricity plat-forms in the US:

◆ Initiating credit reforms to acceler-ate settlement processes, enhance collateral requirements, return $1 billion in working capital back to PJM member companies and en-act stronger credit rules for affi li-ated fi rms under one corporate um-brella. This was quickly adopted by other transmission operators.

◆ Pursuing the regulatory fi lings and civil lawsuit in pursuit of justice against a default by a hedge fund en-gaging in fi nancial arbitrage within PJM markets. The result of this ef-fort was an $18 million settlement with the defaulting entity, all of which was reimbursed to PJM mem-ber companies who had covered the costs of the original default.

◆ Establishing a structure and envi-ronment throughout the PJM com-munity that relentlessly identifi es and shuns market manipulators, thereby reinforcing the strength and fairness of electricity markets.

PJM’s sustained operating perfor-mance and commitment to ethical be-havior among its market participants has set a high standard for all competi-tive energy markets and earned them the 2010 Industry Leadership Award.

Lifetime Achievement AwardDuring this year’s judging meeting,

this category brought the most vigor-ous debate. Every nomination had good competitive merit to compete and after long, healthy and sometimes prickly discussion the judges agreed this should not be a “winner take all” category; rather, a threshold to surpass. So while each of the fi nalists in 2010 could have easily been winners for their contribu-tions, there were two awards for Lifetime Achievement that actually changed the industry in some way—one for entre-preneurial engineering and the other for propelling policy making.



Peter CartwrightAvalon EcoPowerUnited States of America

Peter Cartwright has led a distin-guished career in the power industry including: Princeton University’s Proj-ect Matterhorn, a project developing thermonuclear energy for the Atomic Energy Commission, 19 years with General Electric’s Nuclear Energy Divi-sion, 21 years with Calpine as founder and CEO, and continues activity in the sector with Avalon EcoPower.

The sheer magnitude of the power plant development that Mr. Cartwright was able to accomplish during his ten-ure at Calpine is a testament to his dedi-cation to the industry. He effectively cre-ated the IPP sector for developers with scale which has endured over 25 years.

Cartwright has often been recognized for his entrepreneurial spirit and vision. He developed a reputation as a shrewd deal maker and excellent risk manager. His leadership style was to empower his people with responsibility and author-ity and then “get out of their way.”

As a visionary in clean energy who was ahead of his time, Peter Cartwright was instrumental in the development of both geothermal energy and natural gas fi red generation. Cartwright has a long history of clean energy accom-plishments including nuclear power plant development across the globe with General Electric and being the founder of the premier independent power provider, Calpine Corporation.

It became clear to the judges panel that the creator of the Independent Power Producer market must be recog-nized in that this system has allowed important players, many of them fi -nalists for a Global Energy Award this year, to build their companies. For this, the judges bestowed the honor of Lifetime Achievement to Peter Cart-wright of Avalon EcoPower, a company he founded.

Elizabeth “Betsy” MolerExelon CorporationUnited States of America

Elizabeth “Betsy” Moler has been a preeminent voice on energy poli-

cy throughout her 40-year career in Washington, D.C.

Moler was a staff member for 20 years on Capitol Hill, beginning as a staff assistant in the offi ce of Senator Mike Gravel of Alaska. She went on to serve on the staff of the Senate Ener-gy and Natural Resources Committee as counsel for both Chairman Henry M. “Scoop” Jackson of Washington and Chairman J. Bennett Johnston of Louisiana. During her time on the Committee, she was the principal staff member responsible for all natural gas issues and helped craft the Natural Gas Policy Act of 1978.

In 1988, at the urging of all 19 mem-bers of the committee, President Ron-ald Reagan nominated her to serve as a commissioner on the Federal Energy Regulatory Commission (FERC). She was reappointed to the commission by Presidents George H.W. Bush and Bill Clinton. President Clinton designated her to serve as the commission’s chair in 1993. Moler is the longest serving member of FERC and the only member appointed by three different Presidents.

President Clinton then nominated Moler to be Deputy Secretary of the US Department of Energy (DOE). While at DOE, she was the principal architect of the Clinton Administration’s Compre-hensive Electricity Competition Act, which was presented to the Congress in June 1998.

In 2000, Moler joined Exelon Cor-poration to head its Washington, D.C. offi ce where she served as executive vice president of Government Affairs and Public Policy. In this position, she remained a vital resource to public of-fi cials concerned about energy policy, testifying before Congress and FERC on numerous occasions. In recent years, Moler has worked tirelessly with many in the utility and NGO communities to persuade Congress to pass climate change legislation. She retired from Ex-elon in June 2010.

Moler, as evidenced by her dedication to advancing the nation’s energy and environmental policy, is well deserving of Platts Global Energy Awards’ Life-time Achievement.



Operational Excellence

Downstream Operations of the YearExcelerate EnergyUnited States of America

Excelerate Energy is the world leader in developing innovative solutions for both expanding and emerging LNG markets. With over 50 successful com-mercial operations just within the past year, ship-to-ship transfer is now the backbone for the year-round delivery of LNG supply into locations such as Ku-wait and Argentina. Since the launch of new transfer operations in August 2009, Kuwait has imported approximately 1.8 MMt representing about 20% of the nation’s total natural gas consumption. During the winter period, Argentina’s LNG imports represented 7% of the na-tional consumption.

Excelerate developed facility designs to meet two distinctive natural gas delivery challenges. For offshore deep-water settings, Excelerate designed the Gateway system which enabled the fi rst ever discharge of natural gas through a Submerged Turret Loading (STL™) buoy system. The Gateway concept is demonstrated in the de-sign of Gulf Gateway and Northeast Gateway Deepwater Ports located in the Gulf of Mexico and Massachusetts Bay, respectively. Near-shore/dockside applications utilize GasPort technol-ogy using a variety of confi gurations to further extend their fl exibility. Ex-amples include the Bahia Blanca (Ar-gentina), Teesside (UK), and Mina Al-Ahmadi (Kuwait) GasPorts.

The judging panel for this year’s Awards was very pleased with Excel-erate’s entry. They felt this type of operation differentiates downstream, and gives refining a new face. “With their novel operations in LNG, they took ostensibly large risks and went against the norm of this industry,” stated the judges. It was these im-pacting facts that created strong con-sensus among the panel. Excelerate proved a dubious segment and many nay-sayers flat wrong; and in doing so, was awarded Downstream Opera-tions of the Year.

Power Company of the YearXcel EnergyUnited States of America

Despite the economic challenges of the past couple years, Xcel Energy stayed true to its commitments to the environment and to its customers and communities, while managing to achieve outstanding fi nancial results.

Environmental leadership has been, and will continue to be, an impor-tant part of Xcel’s overall strategy. It is building a clean energy future through use of advanced, clean energy tech-nologies, expanded energy effi ciency programs, and with innovative busi-ness strategies. Wind, biomass, hydro and solar energy represent 14% of their energy mix. Geographic advantages contribute to their ability to increase renewable energy resources at a reason-able cost to customers.

In 2009, Xcel completed a major emissions reduction project in Min-nesota that included converting two coal-fi red plants to natural gas fa-cilities and completely refurbishing a coal-fi red plant.

The judges applauded Xcel’s De-mand Response model and recog-nized their renewable energy portfolio as one of the best. Xcel has invested in smart grid like no other company by launching the fi rst US SmartGrid-City, a technology pilot taking place in Boulder, Colorado, allowing Xcel to explore smart-grid tools in a real-world setting.

Its 92% positive customer satisfac-tion score is an improvement of seven percent since 2006. Electric system reliability continues to be the biggest contributor toward customer satisfac-tion in all Xcel’s jurisdictions.

Under Richard Kelly’s tremendous stewardship, Xcel’s strategy goes be-yond the traditional mission of a regulated utility. In embracing en-vironmental leadership, it is taking prudent, balanced steps to reduce the impact of their operations on the environment while promoting tech-nological and public policy advance-ments that will encourage a cleaner electric system.



Energy Producer of the YearCNOOC LimitedChina

In 2009, offshore China, CNOOC Limited’s independent explorations resulted in 15 new discoveries and 11 successful appraisals. These include many independent discoveries in the adjacent area around Shijiutuo uplift and Liaodong Bay in the Bohai area, and are anticipated to become a new base for its reserve growth.

In terms of production sharing con-tracts (PSC) exploration, CNOOC’s efforts resulted in two new discover-ies and one successful appraisal. Out-side of China, CNOOC made two dis-coveries and one successful appraisal. During 2009, 11 new fi elds were started as a result of effective project management, more than 20 projects were under construction and all have been operating smoothly. In 2009, CNOOC’s reserve replacement ratio (RRR) amounted to 163%, whereas its owned-net proved reserves of ap-proximately 2.66 billion barrels of oil equivalent (BOE), and its average dai-ly net production was 623,896 BOE.

Some very powerful nominations from international companies were submitted in this category this year. The judges believed CNOOC stood above the rest due to its strong push onto the global scene—redefi ning it-self as a world class player.

In 1H2010, CNOOC Limited suc-cessfully completed several signifi -cant acquisitions. Through its 50% interest holdings in Bridas Corpo-ration, CNOOC established a solid platform for business development in South America. Through the tech-nical service contract for Missan oil fi eld in Iraq, CNOOC entered this resource rich area along with the super-majors. Increasing the share of ownership in the Panyu 4-2/5-1 oil fi eld added to its low risk assets in the core operation area. Showing its strength, CNOOC invested $2.1 bil-lion in Chesapeake’s Eagle Ford shale gas project in October of 2010, put-ting an exclamation point at the end of an exceptional year. With mul-

tiple moves to acquire and strategi-cally merge, CNOOC Limited landed the prize.

Rising Star AwardGreen Gas International, BVNetherlands

Since its foundation in 2005, Green Gas International has turned the idea of developing Coal Mine Methane (CMM) and landfi ll gas (LFG) projects, which convert methane into energy, into a profi table and successful busi-ness. It has since 2007 constructed some 38MWeq of projects in Czech Republic, USA, Colombia and Ukraine. The company achieved a CAGR in revenue of 354% between the calen-dar years 2006 and 2009. Green Gas now covers CMM, LFG, biomass and biowaste. It has methodically expand-ed its portfolio through a mixture of organic growth, mergers and acqui-sitions and entering new markets. Green Gas, which is headquartered in the Netherlands, now operates around 50 projects in 9 countries.

All this was achieved under the lead-ership of an experienced team that suc-cessfully managed the integration of new business, the expansion into new markets and the management of com-plex partnerships with mine, landfi ll gas owners, producers of biowaste and biomass and the carbon market.

As a result of its operations, Green Gas brings signifi cant environmental and economic benefi ts to the commu-nities in which it is active. This arises through the conversion of methane and waste into energy, which results in the elimination of signifi cant green-house gas emissions. Green Gas cur-rently reduces green house gas emis-sions by over 3.0 million tons of CO2 equivalent annually.

This entire category was brimming with good nominations challeng-ing the fi eld. Green Gas stood out in very signifi cant ways. Its enormous impact on the climate, detailed in its nomination, and unbelievable 3-year growth rate demonstrated very pre-cisely just what the Rising Star Award is all about.



Outstanding Programs

Community Development Program ofthe YearOMV PakistanPakistan

OMV Pakistan made a smart strategic move in giving back to the very commu-nities in which it continues to operate. The community development program of OMV Pakistan aims to support inte-grated and sustainable initiatives con-tributing to the well being of the com-munities in its operational areas. Its operational areas are predominantly ru-ral, where the communities are deprived of the very basic necessities of life.

Working in collaboration with the lo-cal populace, the District Governments and local NGOs, the development proj-ects were brought in line with the Unit-ed Nations Millennium Development Goals and cover the sectors of educa-tion, health, water, agriculture and live-lihoods identifi ed through baseline and community needs assessment studies.

OMV took the fi rst step toward ac-quainting the local community with its basic educational right by running 63 primary schools in the remote villages of its operational areas.

A Mother Child Health Care Centre for maternal health care and a Family Medical Centre for emergency and di-agnostic services along with outreach health care services for remote com-munities were established. Further-more, OMV has been implementing a Hepatitis B vaccination program for local communities.

Water supply schemes are provided in areas where water resources are scarce. Modern farming techniques are intro-duced by setting up fruit demonstration farms, energy problems are resolved by providing electricity to 13 villages com-prising of 121 households and voca-tional skill training is provided to local women as is support to local artisans by marketing their products in local, na-tional and international markets.

These multi-faceted programs con-tinue to provide security in OMV’s op-erations while building up the quality of life in Pakistan. The panel of judges

recognized that OMV’s commitment to develop their community in such an unstable environment was exceptional and courageous. Overcoming all these challenges with impressive results won over the hearts and minds of the judges.

Energy Effi ciency Program of the Year—Energy SupplierBaltimore Gas & Electric (BGE)United States of America

Baltimore Gas & Electric, by its own admission, was a late bloomer in en-ergy effi ciency. However, in 2009, they blossomed in a big way. BGE went from offering no energy effi ciency programs to offering ten diverse programs for all customer segments. The programs’ ag-gressive goals were achieved in record time, within budget, in a high quality manner and they are still experiencing tremendous success.

In 2009, BGE introduced a compre-hensive portfolio of residential and commercial energy effi ciency programs to add to the already successful BGE Smart Energy Savers ProgramSM set of Demand Side Management initiatives.

Residential programs included: light-ing discounts, appliance rebates, recy-cling (freezers and refrigerators), HVAC equipment and services rebates, Quick Home Energy Check-up (a modifi ed en-ergy audit), an Online Energy Calcula-tor, Home Performance with ENERGY STAR® comprehensive audits, ENERGY STAR® for New Homes and Limited In-come Energy Effi ciency.

For commercial and industrial cus-tomers, BGE provided incentives and engineering services for projects from retrofi tting existing ineffi cient equip-ment, major renovation and end-of-life equipment replacements, to new con-struction and equipment purchases.

An integrated marketing plan helped build awareness and motivated cus-tomer participation. Operational ef-fi ciencies and well-designed programs appealed to a variety of customers. Over 15% of residential customers participated in the fi rst year. BGE’s strategic promotion of these programs received praise from key stakehold-ers including the Maryland Energy



Administration and won recognition from the Association of Energy Servic-es Professionals’ national chapter and the American Marketing Association’s Baltimore Chapter 2010 Marketing Ex-cellence Award.

Its impressive 18-month results swayed the judges to honor the late-comer to the effi ciency party over some of the vet-eran suppliers who have been leaders in effi ciency over the past decade. With programs like these, Baltimore Gas & Electric will likely be one of the industry standards well into the future.

Energy Effi ciency Program of theYear—Commercial End-UserTesco plcUnited Kingdom of Great Britain

By reducing total energy consump-tion by only a few percentages, Tesco, one of the world’s leading retailers, has been able to save millions. Recogniz-ing the carbon footprint of its busi-ness, Tesco set aggressive goals to create a greener, more sustainable business, including reducing its overall carbon emissions by 50% by 2020.

Tesco’s awareness on energy consump-tion has generated enormous savings on its energy bills. This was made possible through introducing and maintaining continuous enterprise wide energy ef-fi ciencies. To achieve this, in 2009 the company committed to:

◆ Become a zero-carbon business by 2050

◆ Reduce the emissions of the prod-ucts it sells by 30% by 2020

◆ Help customers reduce their carbon footprint by 50% by 2020

◆ Halve emissions from their 2006/07 baseline portfolio of buildings by 2020

◆ Cut emissions for stores built 2007 to 2020 to half the CO2 of 2006 stores

◆ Reduce emissions per case delivered by 50% by 2012

One of the key partnerships Tesco formed to help it signifi cantly reduce its energy consumption was with Ener-gyICT, an Elster Group Company, that

provides energy management, Smart Grid and smart metering solutions. En-ergyICT’s sophisticated energy manage-ment platform, EIServer, incorporated all vital functionalities that are indis-pensable for a modern energy man-agement system including meter data management (MDM) and advanced metering infrastructure (AMI) support, which helped Tesco to data-mine the vast quantities of energy information and highlighted the stores’ areas of en-ergy ineffi ciency.

Through its collaboration with Energy-ICT, Tesco is well on its way to obtaining these inspirational goals, with a direct infl uence on the reduction of CO2 emis-sions: the total energy consumption of all Tesco stores in the United Kingdom, combined, has plummeted by 20%.

Tesco’s highly ambitious goals im-pressed the judges. Not only are their aspirations large, they are achieving big results.

Green Energy Initiative of the YearAlter NRG CorporationCanada

Alter NRG Corp is a publicly traded company pursuing alternative energy solutions to meet the growing demand for environmentally responsible energy in world markets.

Through its wholly-owned subsid-iary, Westinghouse Plasma Corpora-tion, Alter NRG Corp is commercial-izing the industry leading plasma gasifi cation technology to provide renewable and clean energy solutions from a variety of low value inputs such as waste and biomass to produce various energy outputs including elec-trical power, syngas and liquid fuels (e.g. ethanol and diesel). In addition, through its other wholly-owned sub-sidiary, CleanEnergyTM, Alter NRG Corp’s objective is to capitalize on the rapidly growing geoexchange residen-tial and commercial heating and cool-ing market, enabling consumers to re-duce their carbon footprint and reduce the cost and volatility of energy bills using the energy from the earth.

Alter NRG is already providing clean energy solutions worldwide by con-



verting waste and variable low grade feedstocks into useable energy like power or ethanol. With over $100 mil-lion spent on research and develop-ment, 18 patents and over 30 years of operation, Alter NRG’s/WPC’s prov-en plasma technology can be found around the globe, producing impres-sive results under the most demanding industrial applications.

The technology has been used to develop the world’s largest hazardous waste plasma gasifi cation facility and North America’s fi rst commercial-scale plasma gasifi cation project to receive regulatory approval.

Judges acknowledged that Alter NRG took a 20-year-old technology and implemented it in a way no oth-er company has managed to do. With two proven technologies, two wholly-owned subsidiaries and a twofold ob-jective, Alter NRG is poised to provide solutions for the key issue of our time: maintaining the balance between en-ergy and the environment.

Premier Projects

Energy Construction Project of the Year Bechtel Power Corporation / FirstEnergy / Babcock & Wilcox / Stantec IncUnited States of America

In 2005, FirstEnergy began a $1.8 billion project to retrofi t state-of-the-art air emission controls at the W.H. Sammis Plant in Stratton, Ohio. The project, completed in June of 2010, has been called the most diffi cult air emission control retrofi t project in the country because of the extremely lim-ited space for installation of the new equipment and systems, the complex-ity associated with integrating the emissions control equipment with the seven existing boiler units and the lo-gistical issues associated with complet-ing the project in coordination with on-going plant operations.

Bechtel Power Corporation served as the engineering, design and procure-ment contractor for the majority of the project and general contractor for the construction work. Babcock & Wil-

cox Power Generation Group (B&W) designed and installed two key com-ponents of the project—scrubbers to remove sulfur dioxide and selective catalytic reduction equipment to re-move nitrogen oxides. Additional en-gineering services were provided by Stantec Consulting Services, as subcon-tractor to B&W.

Bechtel’s nomination put into per-spective the signifi cant logistical chal-lenges and constraints resulting from the site location adjacent to the Ohio River, the Cumberland Lock and Dam, State Highway Route 7 (SR 7), the Vil-lage of Stratton and the Norfolk South-ern Railroad. As further evidence of the challenges of this site location, a con-crete deck over three football fi elds in length was built in the 1980s over SR 7 for a previous retrofi t of fl y ash controls.

Overall, more than 18 months were spent selecting the technology and optimizing the system designs, and then planning the project schedule. The project sequence, various project scopes, and fi nal tie-ins were coordi-nated and integrated with on-going Sammis Plant operations and planned outages. The fact that this 5-year proj-ect was completed early, without any forced outages of the existing boiler units, and within the original budget is directly related to this detailed plan-ning and integration.

While the judges agreed that retro-fi t-ting coal fi red power plants is not a new concept, this mega project stood out as a world class engineering, construction and management accomplishment by some of the most accomplished compa-nies in the construction business.

Engineering Project of the YearFluor CorporationUnited States of America

Beginning in 2003, Fluor successful-ly provided feasibility, FEED, detailed engineering, procurement support, construction support, hook-up and commissioning support and the sec-ondment of personnel for the Bohai Bay Phase II Development Project, located in approximately 90 feet of water, 140 miles offshore in Bohai Bay, China. The



project, jointly owned by ConocoPhil-lips China (COPC) and China National Offshore Oil Corporation (CNOOC), was for the development of an oil fi eld with a capacity of 190,000 barrels of oil per day of production.

The Bohai Phase II Development Project is the largest Fluor-executed offshore project measured in services revenue and the fourth largest proj-ect in Total Indicated Cost. The fl oat-ing production, storage and offl oading unit, one of the largest in the world, measures 320 meters long by 63 meters wide, can process 190,000 bopd, and can store two million barrels. The top-sides modules alone weigh more than 30,000 metric tons. The project also in-cludes fi ve 40-slot wellhead platforms and 55 kilometers of subsea pipelines. The one-of-a-kind technology used for crude separation via centrifuges, and the innovative solutions in solids han-dling and power generation/distribu-tion also set this project apart.

In addition to generating $167 mil-lion in approved value awareness sav-ings for the client, Fluor created value through world-class design and quality support services in addressing offshore-specifi c challenges such as interface management and weight control. Their work-sharing effort saved $50 million in engineering costs. Effi ciencies in the repetitive design of the fi xed platforms saved an additional $65 million.

The safety record for this project was remarkable with zero lost time inci-dents on more than 3.4 million man-hours expended in their Houston, Ma-nila and Shanghai offi ces.

This project wowed the judging pan-el and resulted in its only unanimous decision in 2010. They were most im-pressed by the sheer scope of the proj-ect, its unique challenges, but more im-portantly, the innovative solutions that Fluor provided.

Infrastructure Project of the YearAdriatic LNGItaly

Terminale GNL Adriatico Srl, com-monly known as Adriatic LNG®, is the company that designed, built and now

operates the fi rst-ever built offshore LNG regasifi ciation terminal.

The Adriatic Terminal is the world’s fi rst offshore liquefi ed natural gas (LNG) receiving and regasifi cation fa-cility. It is also the fi rst ever facility to incorporate LNG storage into a con-crete Gravity Based Structure (GBS). And, it is the fi rst signifi cant new gas import facility for Italy in 6 years, overcoming many regulatory and per-mitting challenges in the course of its development.

Throughout construction, and now in the operational phase, safety and the environment have been the fi rst priority for Adriatic LNG. The project achieved an excellent safety record which continues since its start-up. The Terminal is highly energy effi cient, utilizing waste heat recovery from the power generators and sea water to pro-vide heat for the regasifi cation process.

This facility was created to provide the Italian domestic gas market with a major new, safe and reliable source of energy. Built with cutting edge tech-nologies and boasting a highly innova-tive design, the Adriatic LNG Terminal adds to Italy’s LNG import capacity and energy diversity, with a regasifi cation capacity of 8 billion cubic meters per year (775 million cubic feet of natural gas per day), approximately 10% of the country’s natural gas consumption.

The project was recognized by this year’s judges as one of the most strate-gic operations in the region with the potential to improve competitiveness in the Italian natural gas market.

Leading Technologies

Commercial Technology of the YearSunivaUnited States of America

Solar cell manufacturers are current-ly split into two categories: low-cost, low-effi ciency and high-cost, high-effi ciency. Suniva is bridging the gap by offering highly effi cient cells at low cost. The company is currently manu-facturing solar cells that turn 18.2+% of available sunlight into energy and it has plans to reach 20+% effi ciency by



the end of 2011. Highly effi cient cells are important because they increase the amount of power produced by each module in a solar array. This decreases hardware and installation costs, allow-ing customers to create more power in a smaller space compared to less effi cient cells, which require more space, and thus, more materials. Suniva’s technol-ogy is bringing the solar industry closer to parity with traditional energy gen-eration costs.

Suniva’s technical sophistication has allowed the company to continually improve its effi ciency. In addition to its own research and development, the company has exclusive rights to approx-imately 20 years of intellectual property from Georgia Tech’s University Center of Excellence in Photovoltaics. Innova-tive process changes combined with im-proved manufacturing techniques, re-ductions in raw material consumption and enhanced cell effi ciency are mak-ing Suniva’s vision a reality.

The company’s commercial success has been evident since its launch—when Suniva announced that its fi rst manufacturing line was operational, it simultaneously stated that it had se-cured over $1B in orders. The company is sold out into 2011, with exports to Europe and Asia amounting to more than 90% of its sales.

Suniva’s innovative solar cells are helping move solar into the main-stream, eventually without subsidies or incentives. In other words, Suniva is making solar “sensible” for every-one who needs power and has access to sunshine.

Exploding out of the blocks in 2008 as a start-up, to having over $1 billion in 2010 orders and a “sold-out” status through 2011, put Suniva at the top of the category for the judges.

Sustainable Technology Innovationof the YearAquamarine PowerUnited Kingdom of Great Britain

Aquamarine Power developed an in-novative product called “Oyster” which produces clean sustainable electricity from ocean wave energy. The compa-

ny’s innovative technology combined with a pioneering route-to-market strat-egy is leading the way in an exciting new renewable energy sector.

With a proven technology, signifi -cant private and public investment, a ground-breaking joint development agreement with a major United King-dom utility and exclusive develop-ment rights to the fi rst 200MW Oyster wave farm, Aquamarine Power stole the show in this Platts Global Energy Awards’ category.

The Oyster technology is now oper-ating in the harsh seas off the western coast of the Orkney Islands in Scot-land. Oyster 1 was offi cially switched on at the European Marine Energy Centre (EMEC) test facility in Novem-ber 2009—making Oyster one of the few wave energy technologies to go from the drawing board to full-scale power production.

A key factor in Oyster’s innovation is that it has been designed to survive. In essence, the device is simply a large pump which provides the power source for a conventional onshore hydro-elec-tric power plant. All of the complex electronics are onshore, and there are only seven moving parts offshore.

Oyster’s location is also innovative. By locating Oyster near the shore, the device naturally avoids the massive storm forces which it would be exposed to in the open ocean. By the time a storm reaches the Oyster, the waves are a maximum 12 meters high. These big waves push the Oyster towards the seabed before it bobs back up to meet the next wave. As the waves get bigger it is pushed further under the water al-lowing the excess energy in the wave to fl ow over the top of the Oyster. This inherent survivability means there is no need for complex control systems or for Oyster to shut down in stormy conditions—it will continue to produce power, whatever the weather.

Aquamarine Power is driving inno-vation in a brand new industry which will help secure the world’s energy fu-ture, reduce climate change and cre-ate sustainable economic development through job creation. ■

© Exelon Corporation, 2010

Congratulations.

We take this occasion to salute Betsy

Moler, who served as Exelon’s Executive

Vice President of Government and

Environmental Affairs and Public Policy, on

her recognition as a finalist for the Global

Energy Lifetime Achievement Award.

From her time as counsel and senior counsel

for the United States Senate Committee on

Energy and Natural Resources under Senators

Henry M. (“Scoop”) Jackson and J. Bennett

Johnston, to her tenure as a member and chair

of the Federal Energy Regulatory Commission

(FERC) and as Deputy Secretary of the

United States Department of Energy, Betsy

has been a leader in shaping our industry.

While we salute all of tonight’s finalists, we

particularly thank Betsy for her service,

both to our nation and to our industry.


insight

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Thursday, August 26, 2010

Day-ahead markets for delivery Aug 26 ($/MWh)

ERCOT Index Change Range Deals Volume Avg $/Mo

On-peak

ERCOT, North 39.78 -3.11 39.40-40.05 54 3,500 63.86

ERCOT, Houston 40.26 -5.52 40.00-40.50 12 825 64.95

ERCOT, West 39.25 -2.00 39.25-39.25 N.A. N.A. 63.40

ERCOT, South 40.00 -3.54 40.00-40.00 N.A. N.A. 64.12

Off-Peak

ERCOT, North 24.50 -0.20 24.50-24.50 N.A. N.A. 29.67

ERCOT, Houston 24.33 -0.45 24.00-25.00 7 300 29.65

ERCOT, West 24.25 5.00 24.25-24.25 N.A. N.A. 27.04

ERCOT, South 24.50 0.25 24.50-24.50 N.A. N.A. 29.40

Southeast Index Change Range Deals Volume Avg $/Mo

On-peak

VACAR 36.00 -2.75 36.00-36.00 N.A. N.A. 55.09

Southern, into 35.37 -2.88 35.00-36.00 11 750 55.07

Florida 42.50 -2.75 42.50-42.50 N.A. N.A. 61.34

TVA, into 35.25 -2.75 35.25-35.25 N.A. N.A. 54.59

Entergy, into 33.00 0.25 33.00-33.00 N.A. N.A. 53.76

Off-Peak

VACAR 19.50 -1.00 19.50-19.50 N.A. N.A. 26.46

Southern, into 22.75 -0.88 22.75-22.75 N.A. N.A. 28.86

Florida 28.00 -1.00 28.00-28.00 N.A. N.A. 33.93

TVA into 21 00 1 00 21 00 21 00 N A N A 27 66

After delaying a decision for several months, Ohio regulators

took less than five minutes Wednesday to approve a new electric

security plan for FirstEnergy that calls for biennial power auctions

starting in October on behalf of the company’s Ohio Edison,

Cleveland Electric Illuminating and Toledo Edison subsidiaries.

Alan Schriber, chairman of the Public Utilities Commission

, said the plan, which runs from June 1, 2011, through May 31,

2014, “confers significant benefits across a broad spectrum of

customers. In keeping with sound public policy, the plan also

promotes energy efficiency programs and renewable energy

resource development.”

But the Ohio Consumers’ Counsel, the state’s residential

utility consumer watchdog, blasted the order, accusing the PUC

PUCO OKs FirstEnergy electric security plan

(continued on page 10)

American Electric Power says new data about thermal

overloads on transmission lines in the PJM Interconnection

show even more need for the proposed Potomac Appalachian

Transmission Highline. PJM itself says the data strengthen the

New data prompt fresh look at PJM line options

P

ec

n

En

n b

m

ai

h

ca

g

cie

t.

su

ch

E

ss

d

e

p

Asia Pacific

Halyard natural gas to supply

Western Australian market 2

South Korean STX buys Encana Canadian

gas field 2

Japan to drill for gas hydrates 2011-2012 2

Pakistan State Oil’s flood damage costs to rise 3

3

Europe, Middle East & Africa

KazMunaiGaz plans higher crude output

Gazprom increases gas flow to Turkey on

line outage 4

Iraqi Kirkuk crude oil flow to Ceyhan halted:

source 5

ShaMaran buys stake in Kurdistan explorer 5

Iran details gasoline self-sufficiency plan 5

Contents

Volume 88 / Number 170 / Tuesday, August 31, 2010

US proposes new fuel-efficiency car ratingsWould replace decades-old system to include GHG emissions

Washington—The Obama administration pro-

posed August 30 to replace the decades-old

fuel efficiency labeling system for new cars

and trucks with one of two new approaches

that would also rank vehicles according to

their greenhouse gas emissions.

One option under the initiative, which is

being spearheaded by the Environmental Pro-

tection Agency and the Department of Trans-

portation, would assign vehicles letter grades

ranging from A+ to D. The grades would be

based on vehicles’ fuel efficiency—either in

terms of miles per gallon or miles per change,

in the case of electric vehicles—as well as

tailpipe carbon dioxide emissions that are

blamed for global climate change.

A second proposed option would omit the

letter grades and simply rank vehicles on slid-

ing scales for fuel efficiency, CO2 emissions

and other air pollutants.

Both options would phase out the conven-

tional miles-per-gallon stickers that automak-

ers have put in the windows of new cars and

trucks for decades.

“The old, petroleum-centric labels, simply

land, administrator of DOT’s National Highway

and Traffic Safety Administration, told

reporters on a conference call.

DOT and EPA will take public comments

on the two proposed labeling options for 60

would take effect in 2012.

“We think a new label is necessary for

consumers to make the right decision for the

their wallets and the environment,” said Gina

McCarthy, EPA assistant administrator for air

and radiation.

Under the letter-grade option, electric vehi-

cles would receive an A+, and high-perform-

receive a D, officials said. That approach would

balances CO2 emissions with gas mileage and

plug-in hybrids would be graded on a ratio that

assumes 33.7 kilowatt hours of electricity

Notably, neither labeling option would(Continued on page 7)

Oilgram News]

Indian refiners hike July crude runs 3.2%

also lump cars and trucks into a metric that

aren’t good enough anymore,” David Strick-

average annual fuel costs. Electric cars and

ance cars that use a lot of gasoline would

used for every one gallon of gasoline.

4

Iraqi Kurds slam oil ministry on RWE deal 4

days, Strickland said, adding the new systemdays, Strickland said, adding the new system

n the two proposed labeling options for 60o

sT and EPA will take public commentDO

eporters on a conference call.r

dand Traffic Safety Administration, tol

land, administrator of DOT’s National Highway

would take effect in 2012.

“We think a new label is necessary for

consumers to make the right decision for the

their wallets and the environment,” said Gina

McCarthy, EPA assistant administrator for air

and radiation.

Under the letter-grade option, electric vehi-

cles would receive an A+, and high-perform-

ance cars that use a lot of gasoline would

receive a D, officials said. That approach would

also lump cars and trucks into a metric that

C t tContentsContentsnew fuel-efficiency car ratingsold system to include GHG emissions

ministration pro-

he decades-old

m for new cars

ew approaches

according to

ons.

ative, which is

vironmental Pro-

rtment of Trans-

les letter grades

ades would be

ency—either in

miles per change,

s—as well as

ions that are

ange.

n would omit the

vehicles on slid-

CO2 emissions

e out the conven-

s that automak-

of new cars and

c labels simply

aren’t good enough anymore,” David Strick-

balances CO2 emissions with gas mileage and

average annual fuel costs. Electric cars and

plug-in hybrids would be graded on a ratio that

assumes 33.7 kilowatt hours of electricity

used for every one gallon of gasoline.

Iraqi Kurds slam oil ministry on RWE deal 4

Iraqi Kirkuk crude oil flow to Ceyhan halted:

source 5

ShaMaran buys stake in Kurdistan explorer 5

Iran details gasoline self sufficiency plan 5

4ine outagel

azprom increases gas flow to Turkey onG

Indian refiners hike July crude runs 3.2% 3

akistan State Oil’s flood damage costs to rise 3P

2apan to drill for gas hydrates 2011-2012J

2gas field

anadian outh Korean STX buys Encana CS

2testern Australian markeW

alyard natural gas to supply H

csia PacifiA

Europe, Middle East & Africa

4azMunaiGaz plans higher crude output K

Notably, neither labeling option would(Continued on page 7)

Gas Daily

www.platts.com

Tuesday, August 31, 2010

Daily price survey ($/MMBtu)

NATIONAL AVERAGE PRICE: 3.710

Trans. date: 8/30

Flow date(s): 8/31

Midpoint +/- Absolute Common Volume Deals

Permian Basin Area

El Paso, Permian 3.350 -0.010 3.32-3.44 3.32-3.38 334 59

Waha 3.430 +0.000 3.37-3.60 3.37-3.49 828 125

Transwestern, Permian 3.225 -0.065 3.20-3.37 3.20-3.27 41 12

East Texas-North Louisiana Area

Carthage Hub 3.630 +0.045 3.60-3.66 3.62-3.65 116 32

NGPL, Texok zone 3.615 +0.000 3.57-3.73 3.58-3.66 722 107

Tx. Eastern, ETX 3.595 +0.015 3.52-3.60 3.58-3.60 3 4

Tx. Gas, zone 1 3.725 +0.045 3.67-3.83 3.69-3.77 460 79

East-Houston-Katy

Houston Ship Channel 3.790 -0.020 3.74-3.85 3.76-3.82 336 55

Katy 3.775 -0.005 3.74-3.86 3.75-3.81 1207 165

South-Corpus Christi

Agua Dulce Hub 3.680 -0.085 3.68-3.68 3.68-3.68 7 1

NGPL, STX 3.650 -0.040 3.62-3.85 3.62-3.71 147 24

Tennessee, zone 0 3.710 +0.045 3.60-3.82 3.66-3.77 186 45

Tx. Eastern, STX 3.695 +0.050 3.66-3.80 3.66-3.73 33 10

Transco, zone 1 3.705 +0.005 3.67-3.80 3.67-3.74 106 20

Louisiana-Onshore South

ANR, La. 3.770 +0.050 3.66-3.92 3.71-3.84 385 82

Columbia Gulf, La. 3.730 +0.020 3.68-3.88 3.68-3.78 347 65

THEMARKET

Buoyed by the return of heat in the East and hurricane activ-

ity in the Atlantic, the October NYMEX gas futures contract

finished its first day as the prompt month 10.7 cents higher

at $3.812/MMBtu, ending an eight-session prompt-month slide. Cash

prices likewise followed demand higher in many regions.

Phil Flynn, analyst at PFGBest Futures, said the October contract

seemed to be getting a “post-expiration bounce” after the September con-

tract tumbled 16.6 cents to expire Friday at a new 11-month low.

Heat, hurricanes push October NYMEX higher


Natural gas production in the Lower-48 states in June fell 1.2%, or

810,000 Mcf/d, from May levels, marking the first month-to-month

decline since December, the Energy Information Administration said

Monday.

EIA said gas production from the federal offshore Gulf of Mexico in

June continued a four-month slide with a 4.8% or 300,000 Bcf/d decline,

which the agency attributed to Hurricane Alex and pipeline problems.

Wyoming also saw a production slump of 5.5% or 380,000 Mcf/d because

Gas output falls for first time this year: EIA


Adriatic LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103AES Dominicana . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84AES El Salvador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85America’s Natural Gas Alliance . . . . . . . . . . . . . . . 13American Municipal Power, Inc . . . . . . . . . . . . . . 86ARMZ Uranium Holding Co . . . . . . . . . . . . . . . . . . . 87Bechtel Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Cairn India Limited . . . . . . . . . . . . . . . . . . . . . . . . . . 88Capgemini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 82Chesapeake Energy. . . . . . . . . . . . . . . . . . . . . . . 90, 91Cleco Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89CONSOL Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33DTE Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Elster . . . . . . . . . . . . . . . . . . . . . . . . inside back coverEntergy Corp . . . . . . . . . . . . . . . . . . inside front coverExelon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115Fortune . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Green Gas International . . . . . . . . . . . . . . . . . . . . . . 94Indji Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Kosmos Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95Landis+gyr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56North Delhi Power Ltd . . . . . . . . . . . . . . . . . . . . . . . 96NextEra Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47Nodal Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . 102NRG Energy Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97Oracle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Peabody Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52PJM Interconnection . . . . . . . . . . . . . . . . . . . . . . . 103SAIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . back coverSingapore International Energy Week . . . . . . . . . 98S-OIL Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99SolArc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Southern Company . . . . . . . . . . . . . . . . . . . . . . . . . 100Staples Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101Stream Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Ventyx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Xcel Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Zorlu Energy Group . . . . . . . . . . . . . . . . . . . . . . . . . 103

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