Tag Archives: Energy

Caterpillar expects tough 2015, restructuring anticipated

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World’s leading manufacturer of construction and mining equipment Caterpillar has said it expects a tough 2015 as a result of the modest improvement anticipated globally as well as the continued weakness in commodity prices—particularly oil, copper, coal and iron ore as to which the company depends on for its sales.

The company adds to undertake restructuring actions  that will cost the company about $150 million above the restructuring it has undertaken over the past two years designed to lower our long-term cost structure.

According to Caterpillar Chairman and Chief Executive Officer Doug Oberhelman the recent dramatic decline in the price of oil is the most significant reason for the year-over-year decline in our sales and revenues outlook.

“Current oil prices are a significant headwind for Energy & Transportation and negative for our construction business in the oil producing regions of the world.  In addition, with lower prices for copper, coal and iron ore, we’ve reduced our expectations for sales of mining equipment,” Oberhelman said.

Caterpillar expect sales and revenues in 2015 to be about $50 billion down from 55 billion last year.

The company has also lowered its expectations for the construction equipment sales in China despite a growth in 2014.

“While we are, without a doubt, facing a tough year in 2015, we’re driving cost management through additional restructuring actions and continued operational improvements gained from our focus on Lean Management.  While 2015 will be difficult, the work we’ve done to improve our cost structure, market position and quality will position us for better results when the world economy and the key industries we serve improve,” Oberhelman added.

ExxonMobil’s outlook for energy sees global demand fuelled by increase in consumption by developing nations

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Significant growth in the global middle class, expansion of emerging economies and an additional 2 billion people in the world will contribute to a 35 percent increase in energy demand by 2040, according to a new report released today by ExxonMobil.

According to the 2015 Outlook for Energy: A View to 2040 demand increases will see the world continue to become more efficient in its energy use,.

Without efficiency gains across economies worldwide the report says energy demand from 2010 to 2040 would be headed toward a 140 percent increase instead of the 35 percent forecast in the report.

ExxonMobil’s Outlook for Energy projects that carbon-based fuels will continue to meet about three quarters of global energy needs through 2040, which is consistent with all credible projections, including those made by the International Energy Agency.

The outlook further shows a shift toward lower-carbon fuels in the coming decades that, in combination with efficiency gains, will lead to a gradual decline in energy related carbon dioxide emissions.

Wind, solar and biofuels are expected to be the fastest-growing energy sources, increasing about 6 percent a year on average through 2040, when they will be approaching 4 percent of global energy demand. Renewables in total will account for about 15 percent of energy demand in 2040.

Nuclear energy, one of the fastest-growing energy sources, is expected to nearly double from 2010 to 2040, with growth in the Asia Pacific region, led by China, accounting for about 75 percent of the increase.

“This research offers important perspective about the factors that will drive the world’s energy needs in the coming decades. Helping individuals, businesses and governments to better understand the elements that shape future energy supply and demand around the world is essential to aid investments and create effective energy policy,” says Rex W. Tillerson, chairman and chief executive officer of Exxon Mobil  Corporation. “

The Outlook for Energy also provides ExxonMobil’s long-term view of global energy demand and supply with its findings aimed at helping guide the company’s investments, which support its business strategy.

The outlook is developed by examining energy supply and demand trends in 100 countries, 15 demand sectors covering all manner of personal and business needs and 20 different energy types.

The global middle class is expected to climb from about 2 billion in 2010 to almost 5 billion people by 2030, representing more than half of the world’s population, according to the Brookings Institution.

As projected, that middle class expansion – largely in India and China – will be the largest in history and will have a profound impact on energy demand along with income gains, on-going societal changes such as expanded infrastructure, electrification and urbanization will contribute to greater energy use.

Africa’s liquids exports are expected to decline as local demand more than doubles as non-OECD countries will represent 70 percent of global energy demand by 2040, but energy demand per person in these nations will remain well below OECD levels.

Other highlights from the report shows that energy required to meet rising electricity demand will account for about half of total demand growth while technologies that unlock new unconventional oil and gas supplies will help enable oil and natural gas to meet about 65 percent of global energy demand growth.

By 2040 the report shows abundant sources other than conventional crude and condensate will account for about 45 percent of global liquids production, compared with less than 25 percent in 2010.

At the same time rising natural gas demand will be met with abundant new supplies and significant expansion in trade as unconventional gas production nearly quadruples and LNG trade triples by 2040.

Unconventional sources of energy changing traditional supply chain model

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The global energy industry is undergoing a seismic shift, in part driven by development of new, unconventional sources of energy, such as shale gas, tight oils, coal seam gas and oil sands.

This is according to a white paper on the dynamics, challenges and opportunities that are shaping the current energy sector released by DHL.

The document explains that the shift is requiring executives to rethink traditional energy supply chain models and implement a highly integrated approach, to drive down logistics costs and enhance profit margins.

Jonathan Shortis, Vice President – Energy Sector EMEA (Europe, the Middle East and Africa says that the need and desire to explore new geographies and develop new technologies to reach and extract unconventional gas reserves has become ever more apparent.

“While growth in the conventional energy sector currently hovers around 1 to 2 percent per annum, the unconventional segment is booming.”

The BP Energy Outlook 2030 predicts that shale gas production will triple, and that tight oil production will increase more than six-fold by 2030. Unlike conventional oils though, unconventional extraction demands higher and continuous investment.

In terms of Africa’s energy sector, Shortis says that there has been significant growth in oil and gas exploration and production, on the continent in recent years.

“There is no sign of Africa’s exploration activity slowing down, and the continent is expected to continue on its growth path as its attractiveness as an investment destination for the sector becomes ever more apparent due to its untapped resources and potential of new discoveries.”

Shortis however adds that, as in many other parts of the world, the development of unconventional reserves in the region is still in its infancy.

“While there is a view that reserves in areas such as North Africa (Morocco, Algeria, Libya) and South Africa are substantial, little development has taken place.”

The white paper explains that due to the ongoing shift in geographies of energy production and demand, energy companies are required to adjust their approach to supply chain management.

Shortis explains that from a supply chain perspective, both conventional and unconventional energy companies face an intriguing set of challenges.

“Supply chains supporting conventional energy market, are still developing as companies have had to expand into ever more inaccessible and remote locations to support the growth in global demand. In such areas, conventional energy faces the same challenge as unconventional, and that is to establish and maintain a robust infrastructure to support production in undeveloped and/or remote geographies.”

Shortis says that executives quoted in the white paper admit that energy companies often struggle to deal with the complexity of the supply chain and that they are challenged by a lack of visibility and predictability when they are working with multiple stakeholders at numerous drilling locations.

“To address this issue, leading companies are adopting an end-to-end supply chain operating model, instituting a data-driven, integrated solution that connects all stakeholders in the chain. This solution blends state-of-the-art visibility and analytics with best-practice process management to achieve bottom line results,” concludes Shortis.

The white paper, titled Building the smarter energy supply chain, is based on research by Lisa Harrington, Associate Director at the Supply Chain Management Center of the Robert H. Smith School of Business, University of Maryland.

 

 

 

Africa Oilfield Logistics Limited to Establish Logistics Hub in Northern Kenya

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African focussed support services and logistics company Africa Oilfield Logistics Ltd has announced that Ardan Risk & Support Services the Company’s primary investment, has entered into a 15 year lease over a sizeable land plot in Northern Kenya, which will be used for warehousing, fuel distribution, cold storage and fleet maintenance.

This land Ardan says will be developed into the first of several planned logistics hubs and will support Ardan’s Technical Division as well as its expanding operations in Northern Kenya centered on the rapidly growing oil exploration and production industry in the region.

“Establishing a logistics hub in the burgeoning energy and natural resource destination of Northern Kenya will be a key differential for our business over the coming years,” said Chief Executive Officer of Africa Oilfield Carl Esprey.

In addition to the lease, negotiations are ongoing for an option over a further 25 acres of land in the vicinity to further support the Company’s long term regional expansion plans.

“The development of warehouses and infrastructure for fuel distribution, cold storage and fleet maintenance will enable us to meet the needs of companies in the region, and in time, we will also be able to offer warehouse space directly to our clients on a lease basis creating an additional revenue stream,” he concluded.

UK listed firms must report all payments to governments starting 2015

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British energy and mining firms will from January 1 2015 have to disclose all payments they make to governments in countries they operate in as the UK government increasse its noose on corruption especially in the natural resources sector.

The companies under the new rule will have 11 months to report to the companies’ house with the business ministry terming this move as likely to increase benefits to populations in places they operate in mostly in developing countries. The UK is determined to lead by example, which is why we have introduced reporting requirements on UK-based extractives companies early. Oil, gas and mining can, if well managed, deliver precious economic benefits to the populations of developing countries. Too often, though, the assets from resource-rich countries are not benefiting local people or the local economy,” Reuters quotes Business Minister Jo Swinson said in a statement.

The new rule that was announced on Friday follows consultations with industry stakeholders and members of the public.

Although the move has received backing from many who say this will increase transparency there is however concerns from companies that this could lead to increased expenses.

Reuters while citing oil and mining majors including BHP Billiton, Chevron and ExxonMobil noted concerns that many companies may decrease the attractiveness to list in Britain with costs associated with filing estimated by BP at about $6.5 million to deliver the first filing and $2.5 million a year thereafter.

The Association of British Independent Oil Exploration Companies (BRINDEX) has said the new rules will affect smaller companies more than the giants terming it as an unnecessary administrative burden.

The first Africa Climate Resilient Infrastructure Summit set for November

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The African Union Commission (AUC) will on the 17th – 19th November 2014 co-host the Africa Climate Resilient Infrastructure Summit (ACRIS) in Ethiopia that will catalyze action to deal with the challenge across the industry sectors including ICT, Energy, Water, food security, agriculture and transport infrastructure.

The summit that will be hosted at the AU Conference center in Addis Ababa will highlight investment ready projects, showcase African leadership in their development and explore strategies, explore strategies and effective practices that can accelerate development and adoption of efficient technologies.

Under energy the delegates will discuss: Fossil Fuels & Nuclear Generation, Renewable Wind Energy, Electricity Transmission and Distribution as well as Fuel Processing & Storage.

Among delegates expected at the conference include ministers, multilateral development partners, sub-regional and regional organizations, municipal authorities, technology providers, investors, service providers among others.

ACRIS is also expected to expand bilateral cooperation and trade between governments.

RTCC (Responding to Climate Change) which is an official observer to the UN Climate Change Negotiations will be the official media partner at the summit while Entico Corporation is the official organizer.

Infrastructure spending to more than double to $9 trillion annually by 2025

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Global capital project and infrastructure spending is expected to grow to more than $9 trillion annually by 2025, up from $4 trillion in 2012, according to a new report issued by PwC, ‘Capital project and infrastructure spending: Outlook to 2025′.

The report, for which Oxfords Economics provided research support, analyses infrastructure spending across 49 of the world’s largest economies which account for 90 percent of global economic output. It covers five industry sectors – extraction, utilities, manufacturing, transport and social – and forecasts their impact on seven major world economic regions ((Western Europe, Latin America, Asia-Pacific, Middle East, sub-Saharan Africa, Former Soviet Union and Central and Eastern Europe).  It estimates the scale of current infrastructure investment and assesses the prospects for future investment from now to 2025. Overall, close to $78 trillion is expected to be spent globally between now and 2025 on capital projects and infrastructure.

The report finds that during 2011-12, the global infrastructure market rebounded from the global financial crisis, and will continue to grow between 6-7% yearly to 2025.

The report shows that that the recovery will be geographically uneven, led mainly by Asia, as spending overall shifts from West to East. The Asia-Pacific market will represent nearly 60 percent of all global infrastructure spending by 2025, driven mainly by China’s growth. Western Europe’s share will shrink to less than 10 percent from twice as much just a few years ago.

Long term underlying trends in demographics, technology, natural resources, urbanisation and shifting economic power will continue to have an enormous effect on which areas of spending will grow. These paradigm shifts, together with a return to global growth are projected to drive significant spend for infrastructure worldwide for decades to come.

Jonathan Cawood, PwC Head of Capital Projects and Infrastructure for Africa, says: “Emerging markets, especially China and other countries in Asia, without the burden of recovering from a financial crisis, will see much faster growth in infrastructure spending.

The pace of urbanisation is also on the increase, with the biggest shift in urbanised populations likely in China, India, Ghana, Nigeria, and the Philippines. Urbanisation drives the demand for water, power, transportation and technology infrastructure.

“Megacities in both emerging and developed markets- reflecting shifting economic and demographic trends – will create enormous need for new infrastructure. These shifts will leave a lasting, fundamental imprint on infrastructure development for decades to come.

“As economies develop, the types of infrastructure investment needed evolve, but not every country makes infrastructure spending a priority. If you don’t invest when your economy is growing, you may find yourself very quickly at a point where your runways and roads and ports and rail lines are choked.”

Overall infrastructure spending in the sub-Saharan region is projected to grow by 10% a year over the next decade – exceeding $180 billion by 2025 – while maintaining its 2% share of the global infrastructure market. Nigeria and South Africa dominate the infrastructure market, but other countries like Ethiopia, Ghana, Kenya, Mozambique, and Tanzania are also poised for growth. Growth prospects in most of the region’s economies look promising as they were not affected as much by the global financial crisis of 2008.

A substantial increase in spending in the basic manufacturing sector is expected in sub-Saharan Africa. Annual spending in the chemical, metals and fuels sector is forecasted to increase across the seven major African economies to $16 billion, up from about $6 billion in 2012.

The financial crisis of 2008 has not had a major effect on South Africa’s infrastructure spending. From an estimated $7 billion in 2001, investment in infrastructure grew relatively consistently to reach $22 billion by 2012.

Transportation investment is also expected to grow rapidly in South Africa over the coming decade, in particular in the road and rail subsectors. Transportation investment will likely grow to just short of $9 billion by 2025.

Infrastructure spending overall is forecasted to reach around $60 billion by 2025 for South Africa, having grown by 10% on average a year. However, South Africa is likely to lose share of regional spending relative to Nigeria. Nigeria’s better fiscal position and oil revenues will likely enable it to outperform South Africa over the coming decade, says the report.

Overall infrastructure spending in Nigeria is expected to grow from $23 billion in 2013 to $77 billion in 2025. A more investor-friendly environment towards oil investment is also likely to boost this projection further.

In contrast to Asia-Pacific’s success, investment in western economies has been constrained by the legacy of banking crises, fiscal austerity and a shallow economic recovery. CP&I spend is shifting to the emerging economies, particularly Asia. Asia’s share of global CP&I spend is projected to increase from 28% in 2012 to 39% in 2018 and 47% by 2025.

The report also shows that spending on utility infrastructure is expected to be significantly stronger in countries that need to upgrade deficient energy, water, and sanitation services and in economies that are rapidly urbanising, such as China, Ghana and Nigeria. The greatest growth of spending for utilities is expected in sub-Saharan Africa where an annual rate of 10.4% between now and 2025 is forecasted. Spending for electricity production and distribution is expected to rise from $15 billion in 2012 to $55 billion, while expenditures for improvements in water and sanitation services are forecasted to increase from $3.3 billion in 2012 to about $10 billion by 2025.

According to the report the extraction sector, driven by both oil and gas as well as non-oil and gas industries, will grow at an annual rate of 5%. Oil and gas extraction activity and infrastructure spending are expected to vary across countries and regions. Extraction spending in sub-Saharan Africa is projected to increase at 8% annually over the next decade. The bulk of spending is likely to take place in South Africa and Tanzania.

Demographic shifts will play a major role in determining the type of social infrastructure a country requires. Aging populations, especially in Eastern Europe and Japan, will necessitate more healthcare facilities, while emerging markets are projected to increase investments in both healthcare, as well as education for their young people. The report shows that the annual growth rate for social infrastructure spending is expected to be particularly strong – about 12% in sub-Saharan African where both schools and healthcare facilities will be in high demand.

In addition, climate-related disasters are driving growth in preventative infrastructure spend and in post disaster recovery. Climate change is also spurring investments in water resources, renewable energy and clean technologies.

Cawood adds: “Resources and consumer market potential coupled with trade, economic and political reforms, increasing urbanisation and shifts in demographics will drive the majority of investment in Africa. It is crucial for policymakers, citizens and businesses to understand the factors that unlock infrastructure investment and development and to act responsibly and strategically within a long term vision to create the right conditions for success.”

Energy top on the agenda as US-Africa summit kicks off in Washington

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This week over 50 African heads of state will discuss ways of improving trade between their countries and the United states as well as how to tap into the United States economy.

The summit to be hosted by US President Barrack Obama is also expected to open opportunities for business people from both continents to share ideas and network.

A topic that will be high on the agenda is energy with meetings with energy executives also known to have already been arranged.

Already the Corporate Council on Africa whose main sponsor is Camac Energy with exploration projects in Nigeria, Kenya, Ghana and Gambia has arranged a business forum where President Goodluck Jonathan of Nigeria and President Uhuru Kenyatta and Ghana’s President John Mahama will be chief guests.

President Kenyatta is also set to have meetings with energy companies in Houston during his stay in the US that is expected to lure more US oil companies into the country with only Marathon Oil, Anadarko and Camac currently exploring after the departure of Apache.

Houston is home to many energy companies including: ConocoPhillips, Halliburton, Baker Hughes, Apache, Marathon Oil, Spectra Energy, Camac Energy, Cameron International, EOG Resources, Anadarko, MRC Global to mention but a few. As of 2013, 24 Fortune 500 companies are headquartered in Houston.

“My visit will focus on strengthening ties between the US and Kenya in trade, capital investment, infrastructure, energy and security,” said Kenyatta in a statement posted on his Facebook page.

While in the US Kenyatta will also hold talks with World Bank President Jim Yong Kim and meet with a select group of business people who have Kenya specific investment proposals at a forum convened by the Kenya Private Sector Alliance, the Kenya National Chamber of Commerce and Industry, and the US Chamber of Commerce.

President Yoweri Museveni also hinted that among the top priorities of East African governments will be the financing of the LAPSSET project which has seven project components and which require an estimated budget of $24.5 Billion.

Among the seven project components include two of which are energy related ie. Oil pipelines (Southern Sudan and Ethiopia) and an Oil refinery at Bargoni in Kenya’s coast province.

“Our discussion was especially informed by the upcoming Africa-USA Summit on 4-7 August 2014 that will allow the leaders a chance to engage with American investors on this project. This being a continuation of similar engagements that are being held with investors from across the Middle East and the Indian Ocean Rim,” said Museveni in a statement after holding a meeting in state house Nairobi last week with his Kenyan, South Sudan and Ethiopian counterparts.