The latest EIC Monitor tracking new active and future projects across the global energy industry shows a mixed bag of results this quarter with power leading the way while other sectors are slightly down.
Overall, the number of new projects announced this quarter (Q2: April – June 2011) have remained relatively static, while the total potential investment value is down US$ 108 billion (28%) over the previous quarter. In Q2 2011 there were 553 new projects across the global energy supply chain with an estimated total value of US$ 280 billion, compared to 548 in Q1 2011 totalling US$ 388 billion, and 415 new projects in Q2 2010 worth US$ 321 billion.
Only the power sector has shown a growth in new project announcements this quarter, up 13% in potential investment value. The renewable energy and upstream sectors have shown the largest drop in potential investment values, however this can be attributed to several large project announcements in the previous quarter.
Upstream, midstream and downstream sectors
The upstream sector has seen a slight decrease in the number of new projects, down from 79 in Q1 2011 to 65 in Q2 2011 with a 66% decrease in potential investment value over the same period (down from US$ 56.6 billion to US$ 19.4 billion). The big drop in the value of project announcements this quarter is mainly due to several large project announcements in the previous quarter. Brazil, Norway and Russia top the activity list this quarter, with 15 projects accounting for over 40% of the potential investment value.
The midstream sector has seen an 8% decrease in the number of projects, but a 16% increase in project value since Q1 2011, up from US$ 36.2 billion to US$ 42 billion in this quarter. Two pipeline projects in the Basra area of Iraq – the Basra to North Iraq Pipeline and the Basra to Haditha pipeline – contribute US$ 20 billion of this quarter’s midstream activity. Outside of Iraq, USA, India and China are the most active, contributing a further US$ 8.2 billion in project announcements.
In the downstream sector, the number of new quarterly projects in Q2 2011 has decreased by 8% since Q1 2011 with a 13% decrease in the total potential investment value to US$ 48.6 billion. Malaysia and China make up more than half of the projects in this quarter’s downstream figures. Key projects include the potential US$ 20 billion Pengerang Refinery and Petrochemical Integrated Development project in Malaysia; the US$4.1 billion Xinjiang Nileke Coal to Gas Project in China; and the US$ 1.5 billion Ganqimaodu Coal to Liquid Project in China.
Global power projects
In the renewable sector the number of new projects has decreased by 6% in Q2 2011, with new projects down from 228 in Q1 2011 to 214 this quarter. The potential investment value has dropped by 49% from US$ 160.1 billion in Q1 2011 to US$81.3 billion this quarter. It should be noted that this drop can be attributed to one large project reported last quarter, the US$ 80 billion Grand Inga Hydropower project in the Democratic Republic of Congo. The USA is leading the way again this quarter, with 49 new projects with a combined total potential investment value of US$ 15.5 billion. The UK continues to develop its renewables portfolio with 70 projects announced, including 59 onshore wind farms. Six of the ten largest renewable energy projects announced this quarter are hydro electric projects.
In the power sector, the number of new projects announced has increased by 44% this quarter (144 compared to 100 in Q1 2011) with the potential total investment value of new projects also being up by 13% from US$ 79 billion in Q1 2011 to US$ 89 billion in Q2 2011. The USA, China and India account for 38 projects, with a combined potential investment value of US$41.6 billion. Nuclear tops the list in terms of the largest projects this quarter, with four nuclear plant projects – one in Clinch River, Tennessee, USA valued at US$ 6 billion, and three future projects in China each valued at US$ 3.5 billion: the Liangjiashan Nuclear Power Plant; the Jiutai Nuclear Power Plant; and the Songjiang Nuclear Power Plant.
This quarter’s results show a bumpy ride on the road to recovery for the global energy industry. While it is good to see the power sector showing some positive signs of growth in new project announcements, new projects reported in the renewables and upstream sectors show disappointing numbers. However, excepting some very large project announcements last quarter, the picture shows that the industry as a whole is holding steady.
Author: Mike Major, CEO of the EIC