ReleaseWire

MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage.

Fuelled by the world's third largest proven gas reserves, Qatar has positioned itself as the leading global exporter of liquefied natural gas (LNG). Rising competition, led by liquefaction growth in Australia, the US and potentially East Africa, will pose a challenge to Qatar's hold on the global gas market later in the decade. Qatar is responding by making increasing efforts diversify its economy through expanding its downstream and petrochemical sectors. Furthermore, the country is growing the international presence of Qatar Petroleum International to offset what will likely be slow growth in domestic oil and gas revenues given the absence of plans for an expansion of LNG and GTL export capacity.

BMI View: Nigeria's hydrocarbon sector continues to struggle amid a worsening political and business environment. Most recently, Chevron's decision to move out of the OKLNG project signals that even the large upside potential of the Nigerian gas market is not sufficient to offset the degradation in investor sentiment. The weak output flows in 2012 were the consequence of flooding, repeated oil thefts and regulatory uncertainty. We estimate that total oil production for 2013 declined to about 2.4mn, and expect production to remain feeble over the coming year. Output should ramp-up more significantly as many large fields come online after 2014, more than offsetting current depletion. Adoption of the Petroleum Industry Bill, which we do not however expect before the Nigerian 2015 election, would be a strong signal for investors that Nigeria's hydrocarbons sector is ready to move forward.

Although oil output is on track to register its 12th consecutive year of decline on an annual basis, the fall should be less pronounced than the previous year's 8%. With a strong response to licensing rounds, high levels of investment, highly prospective frontier acreage, and discoveries in mature areas, Norway retains a number of strengths and opportunities despite the continued downtrend in production. However, we note that as new projects come online from the end of the decade, production is on track to rebound. With sizable untapped gas potential and our forecast for steady reserve additions, production decline should be mitigated, with overall gas output remaining flat over the forecast. We expect Norway to retain its role as key supplier of gas to Europe.

The recently-brokered deal between Iran and the international community appears to have cleared the way for the Iranian government to push ahead with developing the country's nuclear power industry. Although there is much that remains to be seen about the deal and how it will play out in the years ahead, the loosening of international sanctions could encourage increased international investment in the domestic power industry, helping Iran to develop and a significant regional exporter of electricity.

Late 2013 brought little joy to South Africa's power market. The main supplier, public utility Eskom, announced in November 2013 that the country was facing an emergency in terms of electricity provision - something that we had been warning for some time. Continual delays to the provision of new power stations and ageing infrastructure at existing ones have combined to create an ever-widening electricity gap. South Africa's over dependence upon coal as a source of power also limits Eskom's options further. Renewable energy is gaining popularity in the country, with the third auction held since 2011 gaining 93 bids - 17 of which were granted preferred bidder status - but while renewables will help increase electricity generating capacity, they will not solve South Africa's fundamental power problems. Without investment in new facilities, and comprehensive upgrades of existing ones, power outages are set to continue.

The Brazilian petrochemicals market will continue to grow through 2014, with an easing of raw material costs and the depreciation of the real helping local producers to regain lost market share, according to BMI's latest Brazil Petrochemicals Report. However, in the long-run the country will need to tackle the challenge of US competition with crackers fed by ethane derived from low cost shale gas sources.

Upstream exploration has been experiencing a boom recently due to the increasing prospectivity of South Africa's underexplored offshore and as well as progress in the field of shale gas and coal bed methane development. Majors ExxonMobil and Total have joined Shell in exploring South Africa's offshore, while growing political support to move forward with shale development should see permits issued at some point in Q1 2014. All these developments point towards considerable upside to South Africa's oil and gas sector which will struggle to match growing demand over the coming years.

While China is increasingly dependent on energy imports - particularly gas - owing to rapid growth in its energy demand, there is considerable upside potential from its unconventional oil and gas resources. However, a more open environment to foreign investment is needed in order to meet the ambitious production targets set by the state, especially if its vast unconventional resources are to be maximised in light of difficult below-ground conditions. In the meantime, oil and gas demand could surprise to the downside if economic expansion comes under pressure.

U.S. natural gas product demand continues to rise, reaching its highest level in four years in December 2013. Experts believe domestic production will continue to increase in 2014 and Exxon Mobile Corp. states they believe this demand will increase by 65 percent in 2040. "Companies looking to expand in this area and offer more horizontal drilling and hydraulic fracturing find Drilling Chemicals offers the Drilling Fluids and other materials needed to be successful in this field," Jon Madea of Drilling Chemicals declares.

MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage.

MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage.

Chile is one of the most attractive markets in Latin America, with political stability, natural resources and healthy economic growth all adding to its appeal. But in terms of energy, Chile's geography and considerable distances between urban areas and potential sources of power create challenges in the electricity market. Hydroelectricity accounts for around a third of production, but it is a sector shrouded in regulatory uncertainty and lengthy appeals processes. This quarter sees talk of new hydro projects, but that doesn't mean that these proposals will become a reality any time soon. In the thermal sector, gas-fired projects are gaining ground, and these will appeal because of their reliability when compared to renewable sources of power. That said, renewable energy will continue to play an increasing role in the electricity mix, with solar and wind power projects particularly popular.

MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage.

MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage.

We have maintained our forecasts for the Indian electricity sector this quarter as our assumptions remain relevant. We highlight that certain key themes - namely continued weakness in the economy, further coal shortages, and poor regulatory frameworks - are likely to remain prevalent even in the long-term. From a long-term perspective, we expect thermal energy to maintain its position as the backbone of the Indian power sector, but believe it unlikely that the Indian government will meet its electricity capacity and generation targets.

The Ukrainian power sector is set to continue to struggle in relation to regional peers in 2014, with investment likely to prove sparse over the course of our forecast period. While the Ukrainian government's decision to step back from signing and Association Agreement with the European Union, in favour of closer links with Russia, may provide some short-term economic relief, it will likely hinder the country's investment profile for years to come and stem any Western plans for investment in the power sector.

The medium-term outlook for South Korea's electricity sector is positive, as stable economic and demographic growth and the government's greater focus on the sector will provide opportunities and minimise electricity shortfalls. However, in the near term, uncertainty clouds the outlook for both incumbents and new entrants, as the public remains distrustful of nuclear power and certain groups resist the building of new transmission projects. However, the government has shown that it is willing to raise electricity tariffs to rein in demand and fuel import bills.

In a move that indicates Nigeria's power sector could be on the verge or realising some of its considerable potential, state-owned Power Holding Company of Nigeria (PHCN) has ceased to exist after the federal government handed ownership of successor companies to the private sector. This is hugely significant for Nigeria as it attempts to draw vast sums of private investment into the power sector - so as to meet surging demand for electricity and support rapid economic growth. That said, although we have long felt that the future of Nigeria's power sector will depend on the success of the privatisation process, we remain cautious. Capacity expansion will be gradual and will remain subject to considerable risks and delays. While significant demand for electricity undoubtedly exists, disputes over tariffs, gas shortages and concerns about the country's business environment could all weigh on investment.

The UAE will continue to a major focus of upstream investment as it targets increasing production to 3.5mn barrels per day (b/d) by 2018. However recent reports that this date may be delayed to 2020 in light of project delays could also be a result of rapidly growing competition for export markets. We expect steady growth in oil and gas production over the course of our forecast period. Increased production of the latter will be critical to limiting the UAE's import requirement as consumption continues to outstrip demand, even with some US$25bn set to be investment in gas projects in Abu Dhabi alone.

MarketLine's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage.

BMI View: Despite abundant below ground potential, Kuwait looks set to continue underperforming as its business environment outweighs the lure of its remaining below ground resources. We expect Kuwait to miss its 4mn b/d by 2020 target on the back of numerous delays to upstream projects. Setbacks are also leading to delays to a planned - and sorely needed expansion of gas capacity, as well as to major downstream projects. While we expect downstream projects to eventually advance, we believe liquids supplies will disappoint as gas supply tightens, leading to an increasing reliance on imports.

BMI View: Our bullish outlook for the UAE power sector remains in place this quarter, as the UAE authorities at both federal and emirate levels continue to prioritise generating capacity expansion programmes. Although we question whether targets will be met with the anticipated speed, the government and its parastatal utilities are doing most things right, with the country expanding its electricity mix to include a wider range of fuel sources, spanning from traditional steam and gas turbines to carbon-light technologies, such as renewables and nuclear.

Nigeria has the potential to be a major petrochemicals producer in Africa, but is held back by the infrastructural problems and major political challenges, according to BMI's latest Nigeria Petrochemicals Report. While plans are afoot to raise polymers and fertiliser capacities, these are susceptible to delays and cancellations.

BMI's latest UK Petrochemicals Report states that while the British petrochemicals industry will return to its pre-recession level of output, recent capacity closures will prevent any return to 2008 levels of production. Instead, the sector will focus on more high-value, low volume production, exploiting niche markets where it has a global competitive edge.