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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
2011
Global Energy Outlook
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insight
December 2010 insight 1
Publishers Note
Guest Editors Note
Ross McCracken
Patsy Wurster
The 2011 Global Energy Outlook issue of Platts Insighta key resource for short-
and long-term planningdraws on the 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 ForumClean 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 Rankings
TM
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 nancial metrics, considering customer focus, community in-
volvement, integrity and leadership before granting one of these prestigious awards.
This years Global Leaders 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 Coal
If 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 exibility of a gas-red power plant in
a future where 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. Its simply too expensive. Natural gas in the US
is cheap, making projects where the economics are already challengingCarbon
Capture and Storage, Integrated Gasication Combined Cycle and so onlook
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 regasication terminals on standby.
Ross McCracken
Editor, Platts Energy Economist
2 insight December 2010
Inside
Authors
1 Publishers Note
Patsy Wurster
1 Guest Editors 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 OConnell
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 Reection and Dedication
Patsy Wurster
Kate Dourian heads Platts Middle East ofce 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 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 FTs 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 Henry
Edwardes-Evans
Bill Holland Shahrin
Ismaiyatim
David R.Jones John Kingston
Ross McCracken James OConnell William Powell Aneesh Prabhu Nadia Rodova Swami
Venkataraman
Frank Watson
December 2010 insight 3
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 nance, bankruptcies and mergers & acquisitions in the oil and
gas industries. A graduate of St. Josephs 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 ofcer.
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 olens 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 worlds 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 masters degree in European studies from
the London School of Economics and his undergraduate degree is from the
University of East Anglia.
James OConnell, 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
& Poors. 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) certication
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 ofce, 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-
sias Financial Academy and in Journalism from the Moscow State University.
Swami Venkataraman is a director in Corporate and Government Ratings
with Standard & Poors, and a member of the Utilities, Energy, and Project
Finance Ratings Group. He joined S&P Indian afliate CRISIL in 1997 and has
worked since 1999 in both the New York and San Francisco S&P ofces. 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 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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December 2010 insight 5
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. Were run-
ning out of oil, dont 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 thats
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 economys
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 Sustainability
John 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
6 insight December 2010
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 uids, freeing massive volumes of
once unreachable natural gas.
Gas Keeps Flowing
Its difcult to overstate the impact
that shale gas has had in the years since
George Mitchell rst successfully com-
bined hydraulic fracturing and hori-
zontal drilling. And the game is only
just beginning, possibly redening 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), its hard to nance
those lines. Were 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 whats 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 isnt
happening anymore, primarily be-
cause the spread between gas and
oil keeps these wells protable,
and the gas keeps owing.
Multiple Impacts
Except 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.
December 2010 insight 7
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-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
difcult 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 gasication 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 solars 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 didnt
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 Opposition
The 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 awed. Its not that they dont
believe the reserves exist. Its because
they dont 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. Bermans
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 pricewhich as you read this
probably starts with a fourmay be
a dream-killer.






December 2010 insight 9
Chattanooga
Eagle
Ford
Rio Grande
Embayment
Texas-
Louisiana-
Mississippi Salt Basin
Uinta Basin
Devonian (Ohio)
Marcellus
Utica
Appalachian
Basin
Antrim
Barnett
Bend
New
Albany
Woodford
Barnett-
Woodford
Lewis
Hilliard-
Baxter-
Mancos
Excello-
Mulky
Fayetteville
Floyd-
Neal
Gammon
Cody
Haynesville-
Bossier
Hermosa
Mancos
Pierre
Conasauga
Pearsall-
Eagle Ford
Michigan
Basin
Ft. Worth
Basin
Palo Duro
Basin
Permian
Basin
Illinois
Basin
Anadarko
Basin
Greater
Green
River
Basin
Cherokee Platform
San Juan
Basin
Williston
Basin
Black Warrior
Basin
A
rdm
ore B
asin
Paradox Basin
Raton
Basin
Maverick
Sub-Basin
Montana
Thrust
Belt
Marfa
Basin
Valley and
Ridge Province
Arkoma Basin
Forest
City Basin
Piceance
Basin
Shale Gas Plays, Lower 48 States
0 200 400 100 300
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 worlds 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 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 Revolution
Bill 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 countrys
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
10 insight December 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 signicant 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 elds into a gas factory that, for
the rst time in 40 years, produces more
gas than can be consumed. Two of those
techniqueshorizontal drilling and hy-
draulic fracturingcame 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
rst of Mitchells 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 uids down the well under ex-
tremely high pressures to crack the rock,
creating ssures in the previously imper-
meable formation. To hold those ssures
open and allow gas to ow continuous-
ly, proppantssand and silicaswere
added to the mix. Through 30 wells and
nearly ten years, Mitchell pumped 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
werent well-dened? Three-dimension-
al seismic surveys, initially developed
by ExxonMobil, use seismic data to cre-
Slant-hole well
Horizontal well
Lenticular
reservoir
Blanket
reservoir
1. Slant and horizontal drilling.
Source: US Geological Survey
December 2010 insight 11
2011 global energy outlook - natural gas
ate a three-dimensional map of tight
reservoirs such as shale. Processing and
manipulating the huge amounts of data
collected from seismic surveyors didnt
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 Reserves
Independent 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
playthe 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 prot-
able shale plays across the country: South-
western Energy in Arkansas Fayetteville
Shale, Devon in Oklahomas 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 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 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 Chesapeakes 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 efcient 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 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
T
c
f
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
2011 global energy outlook - natural gas
12 insight December 2010
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 Concerns
However, 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 industrys
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 industrys 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 worlds second largest
gas eld (behind Irans South Pars).
Going Global
Despite the difculties, 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 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-
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, Norways Statoil, Frances Total, In-
dias Reliance and Chinas CNOOC.
3. Hydraulic fracturing.
Source: Chesapeake Energy
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14 insight December 2010
Gas markets went through the mangle
in 2010, as growing competition global-
ly pointed up the 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 reected 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 Glut
European 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 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 sellthe 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 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 Link
William 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.
December 2010 insight 15
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 UKs
National Balancing Point, despite re-
cord demand, and prices were gener-
ally stable.
That combinationtoo much sup-
ply, too little demand and improved
transmission between marketsdrove
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 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 Gas
As a consequence, producers have
been slow to take 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 Qatars 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 marketsnot 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 Italys Eni have
been doing what they can to ofoad
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
rmly than Norways 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
20
30
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
/
t
h
US HH UK NBP NWE GCI
1. Gas prices for UK spot, oil-linked Europe and Henry Hub.
Source: Platts
16 insight December 2010
2011 global energy outlook - gas markets
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 Issues
GDF 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 contractsto 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, reects 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. Regasication and
system entry costs appear to offset any
advantage that LNG sellers might gain
from the apparent arbitrage.
Deja Vu
The parallels between the most lib-
eral market in Europethe UKin 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 risksoil 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 EUs carbon dioxide emissions and
cope with the intermittency of growing
wind capacity.
Asia Rising
Despite the surplus of gas, spot pric-
es for LNG in Asian markets have im-
proved. Platts assessments show they
have doubled, compared with last years
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 countrys nuclear 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 Asias still
fast developing economies has prompt-
ed stronger prices in Asia. Taiwan, in
particular, has added a new LNG termi-
nal, new gas-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 examplethe latter being
the rst instance where Chinese, rather
than Japanese or Korean companies,
have signed enough off take agreements
to underpin the nancing of an Asian
LNG project. However, they have also
contracted with Myanmar for pipeline
gas, to join the already-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, Chinawhich is also continuing
to develop its own gas production cen-
terscan 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 inuence
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 reect 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 moneyespecially in plays
where there are natural gas liquids ac-
cumulations, which compensate for
the relatively low price that an MMBtu
of gas commands.
December 2010 insight 17
2011 global energy outlook - gas markets
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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December 2010 insight 19
If fundamentals are the primary deter-
minant of a commoditys 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
Agencys 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, Chinas 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 Chinas
two largest oil companies, the China
National Petroleum Corporation and
Sinopec, could meet demand for only
about two weeks.
oil
China: Driving the
Oil Price
Ross 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
demandcar manufacturing. This suggests that if China
sneezes, the oil market will catch more than just a cold.
20 insight December 2010
2011 global energy outlook - oil
Surplus Capacity
Stock 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 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 inu-
ences prices. This 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
renery 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, signicantly 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 reects 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 reects both
the drop in demand as a result of the af-
termath of the 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
December 2010 insight 21
2011 global energy outlook - oil
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 latters
rise and fall since 1998.
Financials and Speculation
Fundamentals, of course, are not the
only game in town. Much has been
made of the 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 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 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 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
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.
m
i
l
l
i
o
n

t
o
n
s
-2.00
-1.00
0.00
1.00
2.00
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
m
i
l
l
i
o
n

t
o
n
s
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
22 insight December 2010
2011 global energy outlook - oil
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 fallingnow. 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, 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 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-
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 isnt 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 Support
With attention focused on the de-
mand side of the market, Chinas 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 worlds largest car
market in November 2009, surpassing
the United States. It had previously ex-
ceeded Japan as the worlds largest mak-
er of automobiles. Three notable aspects
of this industry are, 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
December 2010 insight 23
2011 global energy outlook - oil
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 Chinas pattern of
social and economic development.
When the 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 Chinas 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 countrys job cre-
ationsaw a severe slowdown in growth.
However, in retrospect, Chinas 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-
ets, 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 countrys growing structural addic-
tion to petroleum.
Expansion Fears
The tensions this creates are already
evident. In September, Chinas automak-
ers rejected an ofcial warning that un-
checked growth in the industry was lead-
ing to excess capacity and could harm
the wider economy. Chen Bin, an ofcial
with the National Development and Re-
form Commission, Chinas 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 worlds larg-
est auto market. Fan Zhong, a senior
5. OECD stocks position.
Source: US Energy Information Administration
Year
Total 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
24 insight December 2010
2011 global energy outlook - oil
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 Chinas auto
industry might seem excessive, but the
market has huge potential for restructur-
ing and growth, said Hu Xinmin, honor-
ary chairman of CAAM. Chinas 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 industrys healthy prots and ancil-
lary economic benets. Twenty-seven
of the Chinese mainlands 31 prov-
inces, autonomous regions and mu-
nicipalities have plants that are able to
produce 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 protable sector quickly, resulting
eventually in over capacity and a large
amount of inefcient plant.
Nevertheless, there is condence that
Chinas 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, Chinas 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-
nas 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 countrys 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 = Peoples Republic of China, - = no data available
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26 insight December 2010
Given the tumultuous history of Mid-
dle Eastern politics, its 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 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. Its
aim is no less than to surpass Saudi Ara-
bia as the regions biggest oil producer.
I hope the Iraqis are not about to re-
vive the quota parity game, said one
regional oil ofcial 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
oilelds. I thought that issue was dead
and buried, he added. The revision is,
in fact, quite conservative given other
estimates of Iraqs potential.
However, the response was swift. Iran,
refusing to be trumped by Iraq, an-
nounced its own crude oil reserve hike,
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.
Iraqs current expansion plans, and Irans
sanction-induced stagnation, suggest the
latter stands to lose its position as OPECs
second largest producer, whatever level of
reserves it claims.
Trouble Behind, Trouble Ahead
When Iraq invaded Kuwait in August
1990, the world lost some 5 million b/d
of crude oilthe 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 nal agreement.
Todays OPEC is a different animal.
The organization has become more
streamlined and more proactive in re-
OPEC
OPEC at 50
Kate 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. Iraqs oil expansion plans will test
OPECs cohesion, while the organizations customers continue
to demand it invest in spare capacity just as they do
everything they can to reduce their own demand.
December 2010 insight 27
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 groups 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 Arabias King Abdullah
has publicly endorsed. Yet even the Sau-
dis 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 signicant cushion of
spare capacity, most of it in Saudi Arabia.
Supply Crunch Forecast
The 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 processwhich resulted
in the current level of spare capacityhas
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 aeld
as Australia, while Dubai was due to get
its 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 signicant 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 signicant 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 Germanys 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 ve years just
to stay in the same place, as well as meet-
ing decline rates from existing elds.
Weise said that a comfortable cush-
ion of spare capacity beyond 2015 would
require OPEC to undertake a contin-
ued program of signicant 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 gures are calculated by Platts.
28 insight December 2010
2011 global energy outlook - OPEC
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 signicant impact on investments in en-
ergy projects in the next decade, he said.
Capacity Guardians
Most of the worlds 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 Arabias crude oil reserves of
260 billion barrels to grow by 40% over
time and recovery rates from its major oil
elds to climb to 70%, twice the global
average, as part of the kingdoms 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 sourcesnamely coal, oil and
natural gasare expected to account for
about four out of every 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.
Its costly to have that kind of capacity
idle and it was costly to build it, he said.
But we dont build it for the short term.
This capacity, we build it for the next de-
cades and generations. So were 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
conicts 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
m
i
l
l
i
o
n

b
/
d
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
2. OPEC surplus crude oil production capacity.
Source: US Energy Information Administration
ISSUE DATE: February 28, 2011 (on sale: February 14, 2010)
DEADLINE: January 6, 2011
MATERIALS DUE: January 24, 2011
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30 insight December 2010
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, Russias 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 countrys
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 countrys GDP, he said.
Russias 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 Requirements
The government needs economic di-
versication 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 Russias
petrodollars. First, crude production is
expected to rise at a lower rate than the
countrys GDP, leading to a cut in the
sectors share in the budget. Second,
all new oil and gas 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
countrys older declining oil and gas as-
Russia
Russia Grapples
With Modernity
Nadia 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 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.
December 2010 insight 31
2011 global energy outlook - Russia
sets, but improved terms for investors
mean less for the federal budget.
Before the 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 eld developments and temporary
exemptions from export duty for crude
pumped in the countrys new oil prov-
ince, East Siberia. In addition, low levels
of taxation were to remain in the gas
sector. However, with the countrys 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 stie investment. Russia has consoli-
dated its position as the worlds 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
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 worlds 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-Pacic 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 countrys existing
elds. The green 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 dont 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
rm over the next few years, backed by
fast growing demand from Asia-Pacic,
but in a market as volatile as the oil mar-
ket, nothing can be taken for granted.
Looking Eastward
With the locus of demand growth
having shifted rmly to Asia, Russia has
advanced signicantly 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 Development
Natural gas gures predate recent plan to expand output to 1 Tcm a year by 2030
32 insight December 2010
2011 global energy outlook - Russia
China. First, Russia launched the new
East Siberia-Pacic 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 blends total
sales in the 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 Russias state-run Rosneft and
Chinas 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 renery near Tianjin. The
project will help Rosneft enter Chinas
retail market as it envisages mutual
construction of at least 500 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 issuethat
of priceshas 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
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 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 doesnt 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 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 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 Development
Natural gas gures predate recent plan to expand output to 1 Tcm a year by 2030
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34 insight December 2010
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 years nadir. This has put
pressure on power prices, margins and
new investment. The rst signs of nan-
cial strain are beginning to show.
An example was provided by Alstom
on October 5. The French power engi-
neering 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 companys 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-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 Renewables
Renewables growth through the
recession has created a new dynamic
in the power market. Green power
is immune to demand patterns and
prots 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 Dream
Henry Edwardes-Evans, Editor, Power in Europe
Europes 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.
December 2010 insight 35
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. Well be a
leader in this transition, but that puts
extra pressure on Vattenfall. We want
to increase prots and value, strength-
en our balance sheet and reduce CO
2

exposurethat is going to be expen-
sive in the future.
In tune with a downbeat set of half-
year statements from Europes util-
ity majors, Loseth warned of a much
weaker market outlook, with a lot of
new production coming online to
meet the EUs 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 well be ready
for growth.
In his presentation, Loseth did not
refer to the companys hitherto 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 CO
2
by other
means. The company has a target of
reducing its emissions to 65 million
mt/yr from todays 90 million mt/yr.
Further, Loseth said that phase two
of the companys ambitious Magnum
gasication/CCS project in the Neth-
erlands would only proceed when the
technologies were viable.
CCS Doubts
This 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 EUs binding tar-
gets for 2020 on renewables and green-
house gas reductions (a 20% cut).
Along with energy efciency 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
levelnot 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.
36 insight December 2010
2011 global energy outlook - power
stalled in demonstration plants by
2020 to 35 GW by 2030. CCS equipped
generation would account for 8.7% of
all power capacity.
Ancillary Plant
The European Commissions 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 (%)
December 2010 insight 37
2011 global energy outlook - power
role of the thermal plant moves away
from baseload dispatch towards the
provision of ancillary services, fuel ef-
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 dont
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-red plants are performing a
minimum of two start-ups a day by
2020. This could knock ve years off
a CCGTs 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. Spains power demand
prole uctuates a lot between winter
and summer, an operator told Platts.
In spring, demand is quite lowyou
dont need your heating and you dont
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, were going to
become weather predictors.
15
25
35
45
55
65
T
W
h
Sep-10 Apr-10 Nov-09 Jun-09 Jan-09 Aug-08 Mar-08
France UK Germany Italy Spain
2. West European electricity demand, monthly view.
Source: GermanyBDEW, FranceRTE, ItalyTerna, SpainREE, UKNational Grid
For Germany, provisional 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 efciency drops
while costs rise.
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Jacques Besnainou, President, AREVA NP Inc.
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December 2010 insight 39
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 countrys 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 Administrations 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 benets, 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 urry of newbuild projects. However,
that enthusiasm has slowed signicant-
ly since 2007 although at least some of
the projects with loan guarantees ap-
pear to be moving forward.
Uncertain Economics
The 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 signicantly. 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 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 Newbuild
Aneesh Prabhu and Swaminathan Venketaraman, Standard & Poors
Low gas prices, little progress on carbon legislation and tighter
borrowing requirements post-nancial crisis, have all
dampened the momentum behind the so-called US nuclear
renaissance. S&Ps Swaminathan Venketaraman and Aneesh
Prabhu assess the newbuild outlook from a credit perspective.
40 insight December 2010
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 Premium
New 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 difcult
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 condence 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 xed and which
cost overrun risks will remain, even
after 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 industrys 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.
December 2010 insight 41
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 signicant risks,
even for technologies further along
the Nuclear Regulatory Commissions
review process. Regulators can require
amendments to design even after they
issue certications, such as with the
NRCs 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 Record
The nuclear power industrys 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.
Westinghouses and the Shaw Groups
ability to deliver completed units on
schedule and within budget is unclear.
The 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 ux, and further government sup-
portin the guise of loan guarantees or
a price on carbonwill 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.
Coal
30.5%
337,300
Oil
5.8%
63,655
Total: 1,104,487 MW
Natural gas
41.2%
454,611
Nuclear
9.6%
106,147
Hydro
7.0% 77,731
Other renewables
3.7% 41,384
Other
2.1% 23,659
1. US electricity capacity, nameplate capacity, in MW.
Source: EIA, 2008
Coal
44.6%
1,764,486
Oil
0.7% 25,792
Total: 3,953,112 GWh
Natural gas
23.3%
920,378
Nuclear
20.2%
798,745
Hydro
6.9%
272,131
Other renewables
3.6% 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 satised with President Obamas rst-year performance
on energy issues.
Findings also reveal that executives believe the industrys greatest challenges are uncertain legislation, the environ-
ment, incorporating new technology, 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 years
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 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
>GainInsight.
13 Platts/Capgemini Utilities Executive Study
@ Copyr|g|l P|alls ad Capger|| 2009-2010 A|| R|g|ls Reserved
Number of UtiIity Customers
500,000 up to 700,000
8%
Over 1,500,000
27%
300,000 up to 500,000
23%
1,200,000 up to 1,500,000
11%
700,000 up to 900,000
10%
900,000 up to 1,200,000
9%
Less than 300,000
13%
Base: Total sample (n=105); "No Answer is excluded.
Question A3: How many retail customers does your organization have?
1 Platts/Capgemini Utilities Executive Study
@ Copyr|g|l P|alls ad Capger|| 2009-2010 A|| R|g|ls Reserved
Areas of ResponsibiIity
22
4
5
9
9
12
12
13
13
14
16
17
18
19
19
23
23
33
0 10 20 30 40 50
Other
LegaI
NucIear
AII areas of the organization
Information TechnoIogy
Operations - Transmission
RetaiI Marketing / SaIes
Corporate Communications
Procurement
Operations - Generation
Customer Service
Project Management Office (PMO) / Cost
Reduction / Integration
ReguIatory / GovernmentaI Affairs
Operations - Distribution
Operations - TechnoIogy
Finance / Treasury / Accounting
Trading / Risk Management
Corporate Strategy / PIanning / M&A
Percentage Base: Total sample (n=106)
Question S4: Please check any and all areas that apply in your current position.
(Respondent could select >1 response.)
Other mentions include:
Billing and revenue recovery
Business Development
Community Relations
Compliance
Corporate Safety and Human Resources
Customer Programs/Demand Response; Renewable
Energy Procurement; Purchased Power; Renewable
ntegration to the Grid
Demand-Side Management
Development
Distributed Energy Services
Engineering
Engineering and Construction
Engineering, Construction, Capital Project
Management, outage management
Environmental (n=2)
EPCM company
Gas procurement
Generation Planning, Engineering Services, New
Generation Licensing and Construction
Governance, ssues Management, Community
nvestment
HR, Safety, Security, Facilities
nternal Audit
nternal Business Services, Environment, Fish &
Wildlife, and Energy Efficiency
nvolved with all areas of Operations
Support for all areas of Operations
Download your complimentary copy of the Platts/Capgemini
Utilities Executive Study at www.us.capgemini.com/PlattsStudy
December 2010 insight 43
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 worlds 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 Rdsand 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 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 rst time, driving PV equipment
spending to a new quarterly high, market
analysis 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 prot 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 tariffsarguing 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.
Germanys 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 Energy
David 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.
44 insight December 2010
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 rened to be
fed directly into natural gas pipelines. The
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 Investors
Yet 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 industrys 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 nancing for large-scale projects
as the global nancial crisis squeezed credit
sources. In industrialized nations, the wind
industry is denitely in the doldrums,
Clements said. It will denitely be a weak
year for US and European wind, impacted
by low demand for power.
Onshore wind has endured difcult
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 nancing problems plaguing the in-
dustry might begin to ease in 2011. The
debt markets have been shut the last few
years, but its getting a little easier, he
said. But the capital markets arent par-
ticipating, and we havent seen direct
debt involvement.
Perkins noted, though, that alternative
nancing sources are lling some gaps,
such as direct participation by deep-pocket
investors, such as Masdars 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 nance: Denmarks 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 Markets
Ernst & Youngs latest Renewable En-
ergy Country Attractiveness Indices, pub-
lished in August, ranked China as the
worlds most attractive target for renew-
ables investors.
The United States, previously atop Ernst
& Youngs leader board, fell to No. 2 as
doubts persisted about whether the US
2500
2000
1500
1000
500
G
W
2007 2008 2009 2010 2015 2020 2030
Reference Moderate Advanced
1. Global cumulative wind power capacity.
Source: Global Wind Energy Council
December 2010 insight 45
2011 global energy outlook - renewables
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, Asias two renewable ener-
gy leaders, Chinawhich four years ago
failed to rank even in the Top 10and
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 capacitymore than
any other country. The nations wind
power capacity has exploded as onshore
wind farm construction has grown 40-
fold over the last decade.
Much of the wind power industrys
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, GWECs
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 & Youngs
ndings on Asias ascendancy. The Asia
Pacic 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 Pacic,
published in July by law rm Norton Rose.
Asia Pacics renewable energy markets
will also become an important region for
investment . . . Much of the future growth
in renewable energy will ultimately come
from Asia Pacic.
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. Its not nec-
essarily about the demise of more estab-
lished markets. Its more complimentary,
Ernst & Youngs Perkins said.
At the same time, new types of busi-
nessessome of which have never been
involved in energy productionare
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 nancial


institutions into renewables markets as
alternative funding sources emerge for
large-scale projects

Non-energy companies enter renewables


markets

Growing international trade disputes


46 insight December 2010
2011 global energy outlook - renewables
nent manufacturer ZF Friedrichshaven
for wind-turbine gearboxesa deal that
could inspire participants in Americas
beleaguered auto industry. This mirrors
diversication 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 Watch
On a larger scale, the renewables indus-
try is confronting challenges unknown
just 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 Beijings government support policies
for renewables violate international trade
rules. The USW called on the Obama ad-
ministration to le a complaint with the
World Trade Organization about Chinas
green-technology practices.
Similarly, Japan has 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. Its 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 Brazils wind energy association
has called for further auctions dedicated
solely to wind energy, such as the govern-
ments 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 nancing requirement
is very large. There are legal requirements,
but legislation wont 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 . . .
Its 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
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 nalists 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 efcient fossil-red
power plant in the industry.
www.NextEraEnergy.com
48 insight December 2010
Coal may be in retreat in the OECD, but
the development of coal-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 Indias 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 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 Pacic. 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-Pacic, almost
every major power-related asset sale or
coal
Adventures Abroad
for Coal
James OConnell, 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 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 elds of coal, power and transport.
December 2010 insight 49
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
Indias 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 identied.
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 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 Indias biggest steel man-
ufacturers, Steel Authority of India Ltd,
Indias largest power provider NTPC Ltd,
Indias 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 ofcial
said, conrming that it is also scouting
for mines in Australia and South Africa.
Private Indian power companies in-
volved in the countrys 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 rst to move was Tata
Power, which bought a 30% equity stake
in Bumi Resources, Indonesias 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 signicant 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 ination 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
Chinas 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 its 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
wouldnt 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 ina-
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, Riversdales 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 eld
50 insight December 2010
2011 global energy outlook - coal
sit up and take notice with a urry of
deals. Indian conglomerate Adani Group
swooped on assets owned by Australias
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
ination-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 ination.
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 ofcial said.
Development is expected to start in 2011
and take about two years to complete,
according to the head of Indonesias
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
Adanis 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
Grifn Coal and its power station assets
in the third quarter of this year. Aus-
tralias Wesfarmers, which operates the
Premier thermal coal mine next to Grif-
n Coals 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 Grifns mines, leaving
the way open for others. Grifn 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.
Conrming its liking for transport as-
sets, in mid-October, the Adani Group
conrmed its interest in leasing Austra-
lias 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
Queenslands central coast.
Chinese Adventures Abroad
In January, Yanzhou Coals A$3.5
billion ($3 billion) acquisition of Aus-
tralian coal producer Felix Resources
was endorsed by Australias resources
and energy minister Martin Ferguson.
According to the ministers 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 2010
Australias 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
2011 global energy outlook - coal
December 2010 insight 51
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 Japans 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 efcient energy-use businesses,
Mitsui said. Mitsui named Mongolia as
one country where it could work with
Shenhua, but it didnt disclose any spe-
cic 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 eld in Mongolia, one
of the worlds largest undeveloped coal
deposits. A Shenhua Group subsidiary
also recently conrmed plans to com-
plete a 10 million mt/year coal mining
project in the Watermark area of Aus-
tralias 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
nance development of coal projects,
according to Russias energy ministry,
following a meeting of a bilateral sub-
commission on energy cooperation in
September. Russias 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 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 Russias 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 countrys 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 Indias 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 Pacic and Indian
Oceans, Chinese and Indian demand
centers present both a growing market
and a source of investment capital.
2008 2009
Europe
India
Other Asia
Other
Europe
India
Other Asia
Other
1. Continental export shiftsSouth Africas RBCT.
Source: RBCT
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December 2010 insight 53
The 2009 UN negotiations in Copen-
hagen were widely 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 nancial
meltdown experienced in 2008-2009,
but it is still perceived as a relatively
distant one. Hobbled by the world -
nancial crisis, governments are instead
struggling with the difcult task of
simultaneously reducing decits 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 worlds 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 worlds
carbon meter ticks on.
Sino-US Agreement Required
China and the United States hold
the keys to a deal because without the
worlds two largest emitting nations on
board any global emissions reduction
deal is unlikely to be enough to bring
the atmospheric concentration of CO
2
down 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, Chinas position remains: you
rst, perhaps we follow later. This is
all very well, but by Chinas own esti-
emissions
Mexican Standoff: What
Can Come of Cancun?
Frank Watson, Managing Editor, Platts Emissions
The worlds best attempt to combat climate changethe
1997 Kyoto Protocolexpires 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 years 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.
54 insight December 2010
2011 global energy outlook - emissions
mates, it has already eclipsed the US
as the worlds number one emitter
of greenhouse gases and it continues
to build coal-red power plants at a
rate sufcient 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 Washingtons ra-
tionale for not ratifying Kyoto in the
rst place.
So as the atmospheric concentration
of CO
2
rises year-on-year, Beijing and
Washington continue to stare each
other down, each hoping the other
blinks 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-
culty lies in 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 Reality
A new binding global deal to cut
greenhouse gas emissions is almost
certainly not going to be agreed in
Mexico. The UNs top climate ofcial,
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
signicant 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 worlds 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
signicant 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 ofcials agree that
the Cancun summit wont 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:
Its certainly going to be very difcult
to get a nal deal . . . I hope that we
can demonstrate real progress in some
of the dossiers that will make up a nal
deal. I hope that well see progress on
forestry, and on monitoring, report-
ing and verication [of emissions]. Its
absolutely crucial that everybody is re-
porting in a fair way, he said.
Huhne also pointed to the impor-
tance of 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
CO
2
increases each year, China and the US
continue to stare each other down, each
hoping the other blinks rst. This Mexican
standoff is nothing new . . .
December 2010 insight 55
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. NRDCs
international climate policy director
Jake Schmidt said that, 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
difcult 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 signicant
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 condence
by progressively building the agree-
ment component by component, said
Schmidt. And, third, he said, Cancun
needs to produce sufcient momen-
tum for the UN negotiations in South
Africa in 2011 and the Rio 2012 Earth
Summit to 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-
cation of emissions among the big
emerging economies. Mechanisms to
facilitate technology transfer to de-
veloping countries could see progress,
and 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.
CO
2
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 CO
2
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 CO
2
concentration level, corresponding temperature increases and year that
concentrations would need to peak to maintain specic 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 condence by
progressively building the agreement
component by component,
Jake Schmidt, US NRDC
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December 2010 insight 57
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 years end. Despite a dif-
cult two years that has prompted rap-
id consolidation, the petrochemicals
industry has shown resilience.
Oil Price Link
The 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
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 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
beneciary of the concerted effort by
the governments of the major devel-
petrochemicals
Petrochemicals:
Consolidation
and Recovery
Shahrin Ismaiyatim, Global Editorial Director, Platts Petrochemicals
The petrochemicals sector, often cited as an economic
bellwether, has slowly recovered from the 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.
58 insight December 2010
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 easinga highly ac-
commodative monetary policy stance
designed to inject liquidity into the
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 ofcially over.
However, once these measures ran
their course, the global economy start-
ed to sputter. Fears of the dreaded dou-
ble dipa second recession following
quickly on the heels of the rstresur-
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, Chinas currency is tied to
the dollar at a level which many argue
900
800
700
600
500
400
11/08 1/09 3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10
1000
1100
1200
1300
1100
900
700
500
300
1300
1500
1700
$
/
m
t
$
/
m
t
PGPI (left) Global Ethylene (right) Global PE (right)
1. Petrochemical prices recover over 50% since 2008 crash.
Source: Platts
60
65
70
75
80
85
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
$
/
m
t
$
/
b
b
l
750
800
Dated Brent (left) Naphtha CIF NWE (right)
2. High crude pressures napththa-petchems crack.
Source: Platts
December 2010 insight 59
2011 global energy outlook - petrochemicals
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 metals safe haven status.
This concern over a drop back into re-
cession prompted QE2a 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 nancial system.
The problem is that it is not nding a
productive use and is being directed to-
wards commodity investments that are
seen as safe havens against the ination
that such monetary stimulus is likely to
provoke. Commodity prices thus ap-
pear to be a beneciary of government
policy in two ways: rst, through stim-
ulating the real economy, and second,
as a means of nancial investment.
High Feed Cost
Although 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 prot-
ability for steam cracker operators using
naphtha as a feedstock. The PCM cur-
rently reects 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
$
/
o
z
900
950
1000
1050
1100
1150
1200
1250
1300
1350
1400
1
1.1
1.2
1.3
1.4
1.5
1.6
London Gold (left) Eur/$ (right)
3. Weak dollar pushes funds into commodity sectors.
Source: Platts
60 insight December 2010
2011 global energy outlook - petrochemicals
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 polyolens 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 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
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
$
/
m
t
$
/
m
t
-200
-100
0
100
200
300
400
500
Platts Petrochemical Cracker Margin Spot
500
550
600
650
700
750
800
850
900
Naphtha CIF NWE
4. Steam cracker margin tightens as naphtha value spikes.
Source: Platts
Congratulations to the 2010 Award of Excellence Winners.
Rising Star Award
Alter NRG Corp
ARMZ Uranium Holding Co.
CoaLogix
Element Markets LLC
Enviromena Power Systems
Green Gas International BV
Nodal Exchange
OPOWER
OTC Global Holdings
Pricelock, Inc.
Stream Energy
Viridity Energy
Operational Excellence
Sustainable Technology Innovation of the Year
Aquamarine Power
Calera
Cool Earth Solar
CURRENT Group, LLC
Enel Ingegneria e Innovazione SpA
Fomento de Construcciones y Contratas, S.A. (FCC)
Ice Energy
Idaho National Laboratory
MyCelx Technologies / IBN SINA
SolFocus
Virent Energy Systems, Inc.
Westport Innovations Inc.
Leading Technologies

www.GlobalEnergyAwards.com
Recognizing tle Stais of
tle ulobal Eneigy Inuustiy
62 insight December 2010
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 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 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 prots
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. Prots 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 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
Revival
Ross McCracken, Editor,
Platts Energy Economist
Platts Top 250 Global Energy
Company Rankings

reviewed.
Platts Top 250 Global Energy
Company Rankings measures
nancial performance by ex-
amining each companys as-
sets, revenue, prots 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 & Poors busi-
ness (like Platts, a division of
The McGraw-Hill Companies).
December 2010 insight 63
top 250 global energy companies
But one persons loss is anothers 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 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 prots 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 Ten
Reigning supreme at the top of the
rankings for the sixth consecutive year
is US major ExxonMobil. Despite be-
ing fth in terms of asset value, Exx-
onMobil came second in terms of both
revenues and prots. Platts rankings
are based on a combination of assets,
revenues, prots and return on capi-
tal invested for listed companies with
over $2 billion in assets. While Exxon-
Mobils 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 reects a strong per-
formance in 2009 relative to its peers.
BPs revenues dropped by a third, but
prots by only little more than a fth.
Contrast this with Chevron and Shell,
which moved down from second and
third respectively to ninth and tenth.
Both saw prots more than halve.
3-year
CGR %
Platts
Rank
Rank Company Country Industry
1 China Resources Power Holdings Hong Kong IPP 50.5 121
2 PTT Aromatics & Rening 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 Intl 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.
64 insight December 2010
top 250 global energy companies
Platts
Rank
2010
Assets Revenues Prots
Return on
invested capital
3-year
CGR%
Industry
code
Company 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/Pacic Rim 212,305 6 149,213 7 15,135 5 10.4 49 13.9 IOG
8 China Petroleum & Chemical Corp China Asia/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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 = diversied 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 = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.
December 2010 insight 65
top 250 global energy companies
Platts
Rank
2010
Assets Revenues Prots
Return on
invested capital
3-year
CGR%
Industry
code
Company State or country Region $ million Rank $ million Rank $ million Rank ROIC % Rank
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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic Rim 16,056 135 7,866 139 969 86 7.4 84 21.1 C&CF
94 Bharat Petroleum Co Ltd India Asia/Pacic 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/Pacic 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
Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversied 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 = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.
66 insight December 2010
top 250 global energy companies
Platts
Rank
2010
Assets Revenues Prots
Return on
invested capital
3-year
CGR%
Industry
code
Company State or country Region $ million Rank $ million Rank $ million Rank ROIC % Rank
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/Pacic 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/Pacic Rim 7,739 199 5,790 163 713 104 14.2 18 17.8 GU
108 Tokyo Gas Co Ltd Japan Asia/Pacic 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/Pacic Rim 44,489 45 15,708 76 455 144 1.5 227 0.9 EU
111 GS Holdings Corp Korea Asia/Pacic 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/Pacic 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/Pacic Rim 15,273 141 4,281 183 685 107 6.8 97 50.5 IPP
122 PTT Exploration & Production Thailand Asia/Pacic Rim 9,266 183 3,586 195 666 111 10.9 43 10.2 E&P
123 KEPCO Inc Korea Asia/Pacic Rim 77,530 23 28,798 38 -82 238 -0.1 238 7.4 EU
124 Osaka Gas Co Ltd Japan Asia/Pacic Rim 16,284 134 11,922 102 526 133 4.1 168 -2.3 GU
125 AGL Energy Australia Asia/Pacic 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/Pacic 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/Pacic 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/Pacic Rim 4,167 246 15,578 79 276 181 9.6 61 -1.3 R&M
134 Chugoku Electric Power Co Japan Asia/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic 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
Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversied 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 = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.
December 2010 insight 67
top 250 global energy companies
Platts
Rank
2010
Assets Revenues Prots
Return on
invested capital
3-year
CGR%
Industry
code
Company State or country Region $ million Rank $ million Rank $ million Rank ROIC % Rank
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/Pacic 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/Pacic Rim 4,628 238 2,828 216 459 142 14.1 19 40.3 C&CF
159 Tata Power Co Ltd India Asia/Pacic Rim 6,866 216 3,781 193 423 150 8.8 66 39.7 EU
160 Korea Gas Corp Korea Asia/Pacic 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/Pacic Rim 7,563 204 14,869 85 195 213 5.2 136 5.9 R&M
163 China Yangtze Power Co China Asia/Pacic Rim 23,694 103 1,613 240 676 108 3.5 192 16.8 IPP
164 Tenaga Nasional Bhd Malaysia Asia/Pacic Rim 21,826 111 8,460 129 270 183 1.9 220 12.2 EU
165 PTT Aromatics & Rening Plc Thailand Asia/Pacic 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/Pacic 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/Pacic 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/Pacic 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 Osi 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 Intl Power Generation Co China Asia/Pacic 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/Pacic Rim 7,446 205 3,105 208 325 171 6.4 109 28.4 EU
199 Showa Shell Sekiyu KK Japan Asia/Pacic 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
Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversied 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 = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.
68 insight December 2010
top 250 global energy companies
Platts
Rank
2010
Assets Revenues Prots
Return on
invested capital
3-year
CGR%
Industry
code
Company State or country Region $ million Rank $ million Rank $ million Rank ROIC % Rank
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/Pacic Rim 15,179 143 5,929 161 240 196 2.3 210 -2.0 EU
204 Shenzhen Energy Group Co Ltd China Asia/Pacic Rim 4,428 241 1,667 238 292 177 9.8 55 17.9 IPP
205 PowerGrid Corp Of India India Asia/Pacic Rim 13,706 151 1,527 243 437 148 4.1 170 24.2 EU
206 TonenGeneral Sekiyu Corp Japan Asia/Pacic 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/Pacic 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/Pacic 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/Pacic 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/Pacic Rim 17,635 129 5,972 160 83 235 0.7 234 -0.6 EU
227 Huadian Power Intl Corp Ltd China Asia/Pacic Rim 14,709 146 5,367 168 170 223 1.8 221 34.3 IPP
228 GD Power Development Co Ltd China Asia/Pacic 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/Pacic Rim 4,636 237 2,254 227 234 199 6.6 106 20.2 IPP
236 Saras Rafnerie 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/Pacic 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/Pacic 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/Pacic 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/Pacic Rim 5,560 272 4,473 190 119 262 3.1 224 -0.01 GU
Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversied 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 = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.
December 2010 insight 69
top 250 global energy companies
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 USs 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 nancial pressures, but set asides,
expenditures and asset sales of around
$20 billion will directly impact the
companys 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 BPs size. BPs shares have already
bounced from an apparent oor price,
beyond which investors see value in
the company. A $20 billion asset write
down would shift BP only from fourth
to 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? Indias 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%.
Protability, however, remains low in
relation to its asset base and revenues.
Regulated prices in the companys 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 years rankings to 6th
this year, the only non-IOG company
in the top ten, although it is a sizeable
gas producer. The companys 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 prot, more than
600% above the previous year.
This also made E.ON rst among elec-
tric utilities, having been seventh the
previous year. However, E.ON has seen a
see-saw ride. Reporting prots of $9,991
million in 2007 on revenues of $100,651
million, prots 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 extremes2008s performance was
particularly poor relative to its peers, the
rebound in 2009 unusually good.
The slump in prots 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 nancial in-
3-year
CGR %
Platts
Rank
Rank 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.
Source: Capital IQ/Platts
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.
70 insight December 2010
top 250 global energy companies
Top
Asia
Platts
Rank
2010
Assets Revenues Prots
Return on
invested capital
Industry
code
Company 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
Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversied 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 = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.
struments of 6,552 million. In 2009,
the rebound came predominantly from
energy trading activities rst and sales
in its new markets segment second.
E.ONs nancial patterns look more like
a trading rm than a utility, suggesting
future volatility ahead.
Asia on the Ascendant
It is clear that Asia as a whole has
substantially improved its position in
the global energy 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
December 2010 insight 71
top 250 global energy companies
Top
Asia
Platts
Rank
2010
Assets Revenues Prots
Return on
invested capital
Industry
code
Company 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 & Rening 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 Intl 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
Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversied 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 = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.
top spot, while the China Petroleum &
Chemical Corp comes in second, oust-
ing CNOOC Ltd, which falls to sixth
place. Indias Reliance Industries Ltd
moved from fourth to third, while In-
dias Oil and Natural Gas Corp Ltd rises
from fth to fourth. Two companies
have moved out of the Asian top ten:
the India Oil Corp Ltd, which may re-
ect late nancial reporting of its 2009
results, and Japans 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 prots in 2009, which
might be taken as emblematic of the
shift taking place within the down-
stream sector. In this sectorrening
and marketingmany 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: Indias Reliance Indus-
tries, Taiwans Formosa Petrochemical
Asian companies in 2010 Top 250 (continued)
72 insight December 2010
and South Koreas GS Holdings. Four
Asian R&M companies fell in both the
regional and global rankings: India Oil
Corp., South Koreas SK Energy Co. Ltd
and S-Oil Corp, and Indias Hindustan
Petroleum Corp. Ltd. Nevertheless, Asia,
and India in particular, continues to
dominate the R&M sector with all ve
of the top R&M companies hailing from
Asia, three of those from India.
The fastest rising company in Asia
this year was Australias 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 protability. 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 prots in the nan-
cial year ending June 1, 2009, A$6,700
million reected a gain resulting from
the dilution of Origins interest in Aus-
tralia Pacic LNG following US major
ConocoPhillips subscription for shares
to form a 50:50 joint venture.
Nevertheless, Origins underlying
prots were also up by 20% at $530
million and further gains have been
posted for rst-half 2010. Origins high
place in the Asian and global Platts
rankings is exaggerated this year by
its asset sale related prots, 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 Taiwans For-
mosa PetroChemical, toughing it out in
a sector experiencing 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, prots 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 prots in its key ren-
ing segment were down.
A signicant trend has been the rela-
tive rise in the regional rankings of
Japanese electric utilities, beneting
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. Japans electric utilities
were thus hammered in 2008Tokyo,
Kansai and Chubu all reported losses
for the yearbut beneted in 2009.
New Asian Entrants
Of the new Asian entrants, ve are
from China, ve from southeast Asia,
one from India and one from Australia.
Chinas 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 countrys 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-
top 250 global energy companies
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/Platts
All rankings are computed from data assessed on June 1, 2010.
December 2010 insight 73
top 250 global energy companies
trant to the top 250 came in the form
of the Japan Petroleum Exploration Co,
reecting 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 eld
in Iraq to be developed with Malay-
sias 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 rst company
in the top rankthe Manila Electric Co,
the countrys largest distributor of elec-
tricity. For Thailand, Thai Oil made a re-
entry, while PTT Aromatics and Rening
Plc was ranked 156th overall and 45th in
Asia, reecting the amalgamation of the
Aromatics Public Company Ltd and Ray-
ong Renery Public Company Ltd.
For Malaysia, Diversied 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 additionthe only one in
the Coal and Combustible Fuels seg-
mentminer Adaro Energy Tbk entered
the ratings at 158th. Adaro, Indonesias
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 Fore
Within the global top 20, eleven
companies are from the BRICsBrazil,
Russia, India and Chinacompared
with just six the year before. Moreover,
while BRICs still account for four of
the top ten, all are rising; Russias Gaz-
prom gained six places to come third
in the top 250 rankings, Brazils Petro-
bras rose 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 benet 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 worlds most
protable 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 worlds 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 rst in
terms of both assets and prots 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 & Rening 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.
Source: Capital IQ/Platts
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.
top 250 global energy companies
74 insight December 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 conict
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 atter
any oil company, owing to higher oil
prices in that 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, reecting the
presence of the worlds rst and third
largest coal industries in China and In-
dia respectively and the coal export in-
dustries of Australia and Indonesia.
Of the ve C&CF companies in the
fastest growing Asian companies, three
are Chinese and two Indonesian. Coal
outside Asia 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.
Brazils 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 Canadas 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%.
Thailands PTT Aromatics & Rening Plc
takes second place, and Indonesias 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 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
Rank
Rank 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.
Source: Capital IQ/Platts
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 250 global energy companies
December 2010 insight 75
ing companies. Russian companies are
particularly prominent: of the top ten,
RusHydro JSC comes rst with a 3-yr
CGR of 77.8%, despite a major accident
in August 2009, which took ofine the
companys 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 rm AK Transneft
Oao is ninth with 20.1%. This reects
opportunities arising from the deregu-
lation of Russias 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.
Spains Iberdrola continued its strong
growth performance. Iberdrola SA is
ranked 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 Leaders
While 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. Canadas
3-year
CGR %
Platts
Rank
Company
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 & Rening 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 Intl 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
Rank
Company
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/Platts
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.
top 250 global energy companies
76 insight December 2010
Cameco rose from eighth to 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
Indonesias Adaro Energy Tbk were both
new entrants to the sectoral leader board.
Diversied Utilities appear to have
weathered the 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 rst
and second places respectively. The UKs
Centrica Plc was a strong riser, moving
from 145 to 42 in the global rankings, as
it returned to protability, taking fourth
place in the top ten DUs. Veolia Environ-
ment was another new entrant, while
MidAmerican Energy Holdings of Iowa
and Frances 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 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 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-
stellations restructuring appears to have
brought quick benets. Although rev-
enue dropped from $19,818 million in
2008 to $15,599 million in 2009, prots
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 tenChiles
Endesa and Brazils Tractebel Energia SA
now there are four. The Chinese compa-
nies saw a strong recovery in prots in
2009 as international feedstock prices
dropped from the highs of 2008, return-
ing a prot margin to regulated domestic
power prices. Leaving the top tier were
the UKs Drax Group, Spains Iberdrola
Renewables and US IPP Mirant Group.
By contrast, in all of the oil and gas
segmentsIOGs, 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 prots,
and then the subsequent fall in prots
in 2009 as oil and gas prices dropped.
In the S&T segment there were no
new entrants. Russias Transneft stayed
on top. The most notable change was
Enbridges 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 Enbridges two oil spills in 2010 and
Pacic Gas & Electrics fatal gas line ex-
plosion in San Bruno, California.
For Gas Utilities, Enis takeover of Bel-
giums Distrigas left a vacant spot in the
top ten that was lled by the Nether-
lands Gasunie. Spains Gas Natural re-
mained at the top, with Indias Gail (In-
dia) Ltd moving up from fth to second.
More change was seen in the IOGs and
E&P sectors. For IOGs, Russias Rosneft
and Italys Eni were nudged out of the
top ten, while Russias 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 ve
companies each for BRIC versus OECD
IOGs in the top ten, but Gazprom, the
worlds 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 Brazils Petrobras
fourth, as opposed to eighth and sixth
last year, while BPs second place is clear-
ly under threat.
December 2010 insight 77
top 250 global energy companies
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: Whos Up, Whos Down.
Source: Capital IQ/Platts
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
2010 Rank 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.
Source: Capital IQ/Platts
REGIONAL Industry
rank
2010
State or
country
Platts
rank
2010 Region Company
Americas 3 CONSOL Energy Inc Pennsylvania 114
Asia/Pacic Rim 1 China Shenhua Energy Co Ltd China 19
REGIONAL Industry
rank
2010
State or
country
Platts
rank
2010 Region Company
Americas 5 Public Service Enterprise Group Inc New Jersey 44
Asia/Pacic Rim 14 AGL Energy Australia 125
EMEA 1 RWE AG Germany 12
OVERALL
Platts
rank
2010 Rank Company State or country
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 diversied utilities.
Source: Capital IQ/Platts
78 insight December 2010
top 250 global energy companies
REGIONAL Industry
rank
2010
State or
country
Platts
rank
2010 Region Company
Americas 6 Exelon Corp Illinois 26
Asia/Pacic Rim 13 Tokyo Electric Power Co Inc Japan 54
EMEA 1 E.ON AG Germany 6
OVERALL
Platts
rank
2010 Rank Company State or country
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.
Source: Capital IQ/Platts
REGIONAL Industry
rank
2010
State or
country
Platts
rank
2010 Region Company
Americas 7 ONEOK Inc Oklahoma 157
Asia/Pacic Rim 2 Gail (India) Ltd India 107
EMEA 1 Gas Natural Sdg SA Spain 58
OVERALL
Platts
rank
2010 Rank Company State or country
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.
Source: Capital IQ/Platts
REGIONAL Industry
rank
2010
State or
country
Platts
rank
2010 Region Company
Americas 1 Constellation Energy Group Inc Maryland 31
Asia/Pacic Rim 2 NTPC Ltd India 52
EMEA 3 International Power Plc United Kingdom 72
OVERALL
Platts
rank
2010 Rank Company State or country
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.
Source: Capital IQ/Platts
REGIONAL Industry
rank
2010 State or country
Platts
rank
2010 Region Company
Americas 4 XTO Energy Inc Texas 51
Asia/Pacic Rim 1 Oil & Natural Gas Corp Ltd India 18
EMEA 3 Tatneft Oao Russian Federation 46
OVERALL
Platts
rank
2010 Rank Company State or country
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.
Source: Capital IQ/Platts
December 2010 insight 79
top 250 global energy companies
REGIONAL Industry
rank
2010 State or country
Platts
rank
2010 Region Company
Americas 1 Exxon Mobil Corp Texas 1
Asia/Pacic Rim 6 Petrochina Co Ltd China 7
EMEA 2 BP Plc United Kingdom 2
OVERALL
Platts
rank
2010 Rank Company State or country
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.
Source: Capital IQ/Platts
REGIONAL Industry
rank
2010 State or country
Platts
rank
2010 Region Company
Americas 10 Valero Energy Corp Texas 131
Asia/Pacic Rim 1 Reliance Industries Ltd India 13
EMEA 6 Tupras Turkey 96
OVERALL
Platts
rank
2010 Rank Company State or country
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 rening and marketing.
Source: Capital IQ/Platts
REGIONAL Industry
rank
2010 State or country
Platts
rank
2010 Region Company
Americas 2 Enbridge Inc Canada 60
EMEA 1 AK Transneft Oao Russian Federation 36
OVERALL
Platts
rank
2010 Rank Company State or country
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.
Source: Capital IQ/Platts
Where the Numbers Came From
This 9th annual survey of global energy companies by Platts
Energy Insight magazine measures companies nancial per-
formance using four metrics: asset worth, revenues, prots,
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 & Poors business,
which is, like Platts, a division of The McGraw-Hill Compa-
nies. This year, in addition to recognizing the best 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 nancial reporting standard, the
data used is from the full year of 2009. Since then, material
changes in a companys 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-
nys numerical ranking for asset worth, revenues, prots, 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 gureswidely regarded as a driver of cash ow and
valuewere 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.
80 insight December 2010
top 250 global energy companies
ASSETS
Platts
rank
2010 Rank 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 nancial indicator.
Source: Capital IQ/Platts
REVENUES
Platts
rank
2010 Rank Company Revenues, $ million
1 Royal Dutch Shell Plc 278,188 10
2 Exxon Mobil Corp 275,564 1
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
7 Petrochina Co Ltd 149,213 7
8 Conocophillips 136,016 24
9 Eni Spa 117,006 16
10 E.On Ag 115,772 6
PROFITS
Platts
rank
2010 Rank Company Prots, $ million
1 Gazprom Oao 25,578 3
2 Exxon Mobil Corp 19,280 1
3 BP Plc 16,578 2
4 Petrobras 16,002 4
5 Petrochina Co Ltd 15,135 7
6 Royal Dutch Shell Plc 12,518 10
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
2010 Rank 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 AMERICAS
Industry
code
Platts
rank
2010 Rank 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.
Source: Capital IQ/Platts
ASIA / PACIFIC RIM
Industry
code
Platts
rank
2010 Rank Company State or country
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, AFRICA
Industry
code
Platts
rank
2010 Rank Company State or country
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 = diversied 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 = rening and marketing, S&T = storage and transfer
More on the Web
Find each companys prole and view all the data on our web site:
www.platts.com/Top250Home.aspx
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December 2010 insight 83
2010 GLOBAL ENERGY LEADERS
SPECIAL ADVERTISING SECTION
Capgemini is again proud to be the
principal sponsor of the Global Energy
Awards. Each year, the Platts Global En-
ergy Awards gala ceremony is a unique
moment where the leading energy and
utilities companies come together with
important stakeholders from govern-
ment, academia and professional services to celebrate the most successful industry companies,
projects and people of the year.
The most striking industry event of 2010 has undoubtedly been the BP Macondo disaster in
the Gulf of Mexico which has dominated the headlines since April 2010. The energy industry is
facing the challenges that the ramications of the incident will present for oil and gas explora-
tion in the coming years. The growing global appetite for oil in the foreseeable future coupled
with natural declines in existing production is creating a formidable challenge for the industry
to bring on new production capacity.
During 2010, the Utilities industry has started to recover from the economic crisis. In Europe
both prices and consumption have gone up, which is not yet the case in the United States. Cap-
gemini, one of the worlds leading business consulting, systems integration and outsourcing
rms for energy and utility companies, truly understands the challenges the industry faces.
Our commitment to the energy industry does not stop with the Global Energy Awards. We
participate in the progress of the energy industry through a variety of research and conference
programs, addressing the hot topics of the market:

Capgemini produces an on-going program including in-depth studies and surveys that are
recognized as valuable thought leadership by our clients, with topics such as Nuclear En-
ergy, Sustainability, Smart Metering and Smart Grid, Integrated Oil Operations and Content
Management

Our European Energy Markets Observatory, this year in its 12th edition, is an annual report
that tracks the progress in establishing an open and competitive electricity and gas market
in Europe as well as the progress on security of supply and the European Union Climate-
Energy package objectives

The annual Platts/Capgemini Utilities Executive Study provides an overview of the electric
and natural gas industry from executives throughout North America

Our industry experts present our thoughts and points of view at major conferences worldwide

We collaborate with industry-leading partners including SAP, Oracle, Intel, Cisco, HP, GE
and Ventyx

Over many years we have built with our partners an active Smart Energy Alliance (Capgem-
ini, Cisco, GE, HP, Intel and Oracle) to promote smart grids and smart meters
I wish to convey Capgeminis sincere congratulations to all nominees and winners of the
2010 Platts Global Energy Awards for their leadership and commitment to serving their em-
ployees, customers, business partners and shareholders.
Warmest Regards,
Colette Lewiner
Global Sector Leader, Energy, Utilities and Chemicals
Capgemini
84 insight December 2010
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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 diversied 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-gasication installations,
a 160,000 M3 Liqueed 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 efcient 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 Infrastructure
Dominican 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 liquied 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 efciency
of the work processes, collecting and protecting in-
come, and mitigating high-impact operational risks.
AES Dominicana
Marco De la Rosa
CEO
AES 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%


December 2010 insight 85
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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 Efforts
Our 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 benetted from rural electrica-
tion projects carried out jointly with the national
government, municipal ofces and local commu-
nities, aimed at having El Salvador 100% electried.
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 efcient
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 ofces 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
benet these unique forest reserves in El Salvador.
Actions Based on Values
Our corporate valuesPut Safety First, Act with
Integrity, Honor Commitments, Strive for Excellence
and Have Fun through Workare 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 Salvador
Through 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 Handal
CEO
AES El Salvador
86 insight December 2010
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American Municipal Power, Inc (AMP) is the
nonprot 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 ofcials from member communities, is actively
engaged in policy-making and provides strong leader-
ship to the organization.
AMPs 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 efciency
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

AMPs 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

AMPs 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 landll 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 AMPs 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 CEO
American Municipal Power, Inc
December 2010 insight 87
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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 nations
nuclear activitiesand is the mining arm of the Russian
nuclear industry operating all of the countrys uranium
mining assets. It is currently ranked as the worlds
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 signicantly 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 prole worldwide. In 2009,
it made its biggest foreign acquisitionsecuring 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.
ARMZs objective is to become the leading uranium
miner globally.
ARMZ Uranium
Holding Co
Statistics

Uranium output in 20094,624 tons

Uranium output growth in 200925%

Uranium resource base632,000 tons by January 1, 2010

Employees10,000

Revenue in 2009$967 million


Panoramic view of JSC Khiagda.
88 insight December 2010
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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 Indias 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 Indias 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 & CEO
Mr. Rahul Dhir, 44, joined Cairn India in May 2006 as
the chief executive ofcer 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.
Rahuls 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 Dhir
Managing Director and CEO
Cairn India Limited
Statistics
Project Completed

Ravva and Cambay Development

Commissioning of the Mangala Processing Terminal

Commissioning of the Mangala to Salaya crude pipe-


linelongest continuously heated and insulated pipeline
in the world
Employees 1,300
Sales >165,000 barrels of oil equivalent per day
Crude Processing Capacity

Rajasthan205,000 barrels of oil per day (bopd) with


scope for further expansion

RavvaOil, 70,000 bopd, and natural gas, 95 million


standard cubic feet per day (mmscfd)

SuvaliOil, 10,000 bopd, and natural gas, 150 mmscfd


Certications ISO 14001 and OSHAS 18001
December 2010 insight 89
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In 1935, Cleco Corp began as an ice company in a
small south Louisiana town. Seventy-ve years later,
the companys 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 Performance
Cleco 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 rening
industry, for fuel. In addition, Cleco recently acquired
one of the most efcient generating units in the state, a
combined-cycle unit named the Acadia Power Station.
This 580-megawatt units low heat rate makes using
natural gas an effective way to provide cost-efcient
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 difcult 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 Performance
Adding Madison 3 and the Acadia Power Station to
its existing generation eet has more than doubled the
utilitys rate base and increased its generation capacity
by more than 85%. At the time of Madison 3s ground-
breaking, Clecos 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 signicantly completed project nancing
prior to the 2008 economic downturn.
Clecos growth strategy is proving to have a posi-
tive impact on stock price as the corporations 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. Madison
President and CEO
Cleco 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


90 insight December 2010
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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 companys
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 oileld 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 Strategy
Through 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 playsthe Eagle Ford Shale and the
Niobrara Shale.
McClendons 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 Advocate
Chesapeake 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 nations 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-
cas Natural Gas Alliance (ANGA), which includes 29 of
the nations largest independent natural gas producers.
Community Minded
In 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 Chesapeakes operations.
Chesapeake Energy
Corporation
Aubrey K. McClendon
Chairman of the Board
President and CEO
Chesapeake Energy Corporation
Statistics
Net 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
92 insight December 2010
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CONSOL Energy, the leading diversied coal and
gas producer in the eastern United States, is a mem-
ber of the Standard & Poors 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
regions 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 nations 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-
ergys 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
Dominions 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-
ergys 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 Harvey
Chairman, President and CEO
CONSOL 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. CONSOLs


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.
December 2010 insight 93
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Ramping Up Energy Efciency
In October 2008, the Michigan legislature passed
PA 295, also known as the known as the clean, re-
newable and efcient 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 efciency.
An Ambitious Ramp-Up
Initially, 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 & Verication (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 Results
The 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 Program
The 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 reect 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 efciency 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 Prole
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. Anderson
CEO
DTE Energy
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Green Gas International builds, owns and operates
plants around the world that convert methane and
waste from coal mines, landlls, 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 difcult 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 benets 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 signicant
mergers and acquisitions. In 2006, the company ac-
quired G.A.S. Energietechnologie, Germanya 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 109h
1081 KM Amsterdam
The Netherlands
T: +31 (0)20 570 2250
F: +31 (0)20 570 2222
www.greengas.net
Green Gas International
Chris Norval
Executive Chairman and CEO
Green Gas International
December 2010 insight 95
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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 Ghanas 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: Africa
Kosmos was founded in 2003 when members of
the companys 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 Africas Gulf of Guinea. Kosmos chose to focus
on West Africa because it contains some of the worlds
most prolic 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 Strength
Kosmos 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 Success
Kosmos 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 companys 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-
trys best and brightest. The companys 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 Citizen
Kosmos 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 Maxted
COO
Kosmos Energy
Highlights

Founded in 2003 by seasoned management team with


backing by Warburg Pincus and The Blackstone Group

Established new, signicant 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
96 insight December 2010
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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 companys 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
signicant 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-dened 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 Powers 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 Wadhwa
Managing Director
North Delhi Power Limited
December 2010 insight 97
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NRG Energy Inc is a Fortune 300 company that
owns and operates one of the countrys 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 homesinclud-
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 signicant 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 countrys carbon
and other air emissions, and decrease our countrys
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, weve
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 Californias Mojave Desert,
NRG is the leading investor in Ivanpah, which
when completedwill be the worlds 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 stationsan 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 Americas energy security, drive
industrial innovation and contribute to the ght
against global climate change.
NRGs 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 Crane
President and CEO
NRG 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 regions framework for
energy co-operation, and share our experience and ex-
pertise. From the discussions and debates at this years
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 Singapores
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 worlds larg-
est consumer of energy in future years.
98 insight December 2010
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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 rening
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-renery capacity in
the world.
S-OIL has been a forerunner of implementing a di-
versied marketing strategy, supplying about 40% of
the rened 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
reners from S&P and Moodys.
S-OIL has continuously made investments to further
improve protability 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 companys 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 Rening 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-
diversied 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.
December 2010 insight 99
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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
protable growth.
Ahmed A. Subaey
RD and CEO
S-OIL Corporation
Statistics
Revenue : US$ 13.7 billion (2009)
Location : Seoul (Head Ofce) / Ulsan (Renery)
Renery Capacity : 580,000 BPSD
Key Businesses : Oil Rening, Petrochemical Product
Manufacturing, Production of Lube
Base Oil
Employees : 2,473 persons (as of Dec 31, 2009)
Sales Volume : 193,716 thousand barrels (2009)
100 insight December 2010
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Southern Company is one of the nations 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 Nuclear
Southern 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 Georgiaas
well as the companys history of strong operational
performancethe plant was awarded the nations rst
nuclear loan guarantees earlier this year. Target dates
for completing the units are 2016 and 2017.
Carbon Capture
The US Department of Energys 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 Technologies
Southern Company is building the nations rst
commercial-scale plant using an advanced technol-
ogy developed in partnership with DOE and others.
The project in Mississippi uses an integrated gasica-
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 Options
Southern Company is currently building one of
the nations largest biomass-fueled plants in Texas,
planning to convert an existing coal-burning plant to
biomass in Georgia, and building one of the nations
largest solar installations in New Mexico. The com-
pany also has numerous other studies and projects
under way using biomass, wind, geothermal, landll
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 Defenses 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-
tiesAlabama 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 Fanning
Chairman, President and CEO
Southern 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 worlds largest ofce 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 efciency 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-
panys 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 efciency 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 efciency is a
fundamental business advantage and is committed
to making a difference. They recognize the synergy
among all components of their business. Their unied
sustainable mission starts with energy efciency at
their ENERGY STAR distribution centers that trans-
port products efciently to their energy efcient stores.
This approach creates superior value throughout the
chain to employees, customers and stockholders.
Staples leading program includes initiatives such as
EPA ENERGY STAR certications, Six Sigma proj-
ects, facility energy audits, monitoring and reporting
of metrics, lighting retrots, hybrid vehicles to raise
eet efciency, alternative energy like solar and fuel
cell, HVAC optimization, monitored control systems,
LEED Certication, 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 fulllment 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
CO
2
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 CO
2
, 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 proles.
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.
December 2010 insight 101
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Staples Inc
Ronald L. Sargent
Chairman and CEO
Staples 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
Finalist
Rising Star of the Year
Finalist
Rising Star of the Year
Nodal Exchange is the 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 Exchanges
auction and OTC trade platforms effectively facilitate
trading. All contracts are central counterparty cleared
by LCH.Clearnet, with participants enjoying signicant
capital efciencies 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 ve
years in business. This achievement redened 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
Finalist
Deal 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-specic 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 industrys sole supplier of both enterprise-wide information technology (IT) and power
automation systems. By adding ABBs network management software offerings (SCADA, distribution management, outage
management, and market management systems and services), Ventyx for the 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 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
Finalist
Infrastructure 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 regasication 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, diversied and reli-
able sources of energy. Built with cutting edge technologies and boasting a highly innovative design, the Adriatic LNG
Terminal adds to Italys LNG import capacity and energy diversity. With a design regasication capacity of 8 billion
cubic meters per year (775 million cubic feet of natural gas per day), approximately 10% of the countrys 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 l earn more about PJM, vi si t us onl i ne at www. pj m. 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 regions 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.
Finalist
Deal of the Year
Zorlu Energy Group, whose foundations were laid with the
establishment of Zorlu Enerji Elektrik retim A.$. 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 Groups 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 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.
104 insight December 2010
Over the past decade or so of the
Platts Global Energy Awards the in-
dustry has experienced many ups and
downs. This years winners reect
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
difcult month for energy with ve
reported coal mining disastersfour
in China and one in the United States.
Then, on April 20, who can forget the
images of the oil rig explosion and 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 years 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 East
Steal 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 rst time in its his-
tory a Chinese company won a Platts
Global Energy Awardand not just
one, but two, including Energy Com-
pany of the Year, the programs most
prestigious honor. CNOOC Limited
will be forever in the archives as the
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 efcient, 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 Villaseca
Gas Natural Fenosa
Spain
CEO Rafael Villaseca led the merger
between Gas Natural and Unin 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 Reection and
Dedication
Patsy Wurster, Director, Platts Global Energy Awards and Publisher, Platts Insight
December 2010 insight 105
global energy awards
over 20 million customers. The merger
generated value for all its stakeholders
including increased prots 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 Villasecas leadership, the
merger and integration was carried out
within the planned time-frames con-
tributing to greater operational, nan-
cial and tax efciencies. Within the
rst year after the end of the purchase
process, Villaseca rolled out the com-
panys 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
nalists, and ultimately picking one
winner, especially challenging. How-
ever, it became strikingly clear to the
judges that Rafael Villasecas 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 Inc
United States of America
In May 2009, NRG completed the
$287.5 million acquisition of Reliant
Energys Texas retail business, which
provides electricity service to nearly 1.6
million customers. The combination
of Reliants retail businessthe second
largest mass market electricity provider
in Texasand NRGs wholesale power
generation business created a strong,
more reliable player in the competi-
tive Texas electricity market. By back-
ing Reliants load-serving requirements
with NRGs generation in ERCOT, they
signicantly 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 NRGs earnings, NRG essentially
compelled the other company to either
increase its bid to reect this additional
value or walk away. The resulting up-
ward bid did not sufciently recognize
Reliants value and NRG shareholders
rejected the proposal in July 2009.
In the rst 14 months of NRG owner-
ship, Reliant has already proven to be
a highly protable investment, imme-
diately accretive to free cash ow and
EBITDA. Specically, Reliants adjusted
EBITDA was $642 million in 2009 and
$385 million in 2010over $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 Year
CNOOC Limited
China
CNOOC Limited, one of the worlds
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-
nas 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.
106 insight December 2010
global energy awards
Streamlined management enabled the
company to maintain producing oil
elds at comparatively high produc-
tion time efciencies, 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
CNOOCs 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-
nas gutsy surge into the global energy
scene this year. In the rst half of 2010,
CNOOC successfully completed several
signicant 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 Chesapeakes
Eagle Ford shale gas project in October
of 2010, CNOOC demonstrated its com-
mitment to becoming a world class
energy company.
Industry Leadership Award
PJM Interconnection
United 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 marketsan intangible yet critical
component of any energy marketplace,
especially during this era when partici-
pants and the general public demand
greater condence 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 afli-
ated rms under one corporate um-
brella. This was quickly adopted by
other transmission operators.

Pursuing the regulatory lings and
civil lawsuit in pursuit of justice
against a default by a hedge fund en-
gaging in 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 identies
and shuns market manipulators,
thereby reinforcing the strength
and fairness of electricity markets.
PJMs 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 Award
During this years 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 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 wayone for entre-
preneurial engineering and the other
for propelling policy making.
December 2010 insight 107
global energy awards
Peter Cartwright
Avalon EcoPower
United States of America
Peter Cartwright has led a distin-
guished career in the power industry
including: Princeton Universitys Proj-
ect Matterhorn, a project developing
thermonuclear energy for the Atomic
Energy Commission, 19 years with
General Electrics 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 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 -
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 Moler
Exelon Corporation
United 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 ofce 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 commissions 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 Administrations 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.
ofce where she served as executive
vice president of Government Affairs
and Public Policy. In this position, she
remained a vital resource to public of-
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 nations energy and
environmental policy, is well deserving
of Platts Global Energy Awards Life-
time Achievement.
108 insight December 2010
global energy awards
Operational Excellence
Downstream Operations of the Year
Excelerate Energy
United 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
nations total natural gas consumption.
During the winter period, Argentinas
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 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 congurations
to further extend their exibility. Ex-
amples include the Bahia Blanca (Ar-
gentina), Teesside (UK), and Mina Al-
Ahmadi (Kuwait) GasPorts.
The judging panel for this years
Awards was very pleased with Excel-
erates 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 Year
Xcel Energy
United 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 nancial results.
Environmental leadership has been,
and will continue to be, an impor-
tant part of Xcels overall strategy. It is
building a clean energy future through
use of advanced, clean energy tech-
nologies, expanded energy efciency
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-red plants to natural gas fa-
cilities and completely refurbishing a
coal-red plant.
The judges applauded Xcels 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 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 Xcels jurisdictions.
Under Richard Kellys tremendous
stewardship, Xcels 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.
December 2010 insight 109
global energy awards
Energy Producer of the Year
CNOOC Limited
China
In 2009, offshore China, CNOOC
Limiteds 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, CNOOCs
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 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,
CNOOCs 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 sceneredening it-
self as a world class player.
In 1H2010, CNOOC Limited suc-
cessfully completed several signi-
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
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
eld added to its low risk assets in
the core operation area. Showing its
strength, CNOOC invested $2.1 bil-
lion in Chesapeakes 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 Award
Green Gas International, BV
Netherlands
Since its foundation in 2005, Green
Gas International has turned the idea
of developing Coal Mine Methane
(CMM) and landll gas (LFG) projects,
which convert methane into energy,
into a protable 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, landll
gas owners, producers of biowaste and
biomass and the carbon market.
As a result of its operations, Green
Gas brings signicant environmental
and economic benets 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 signicant green-
house gas emissions. Green Gas cur-
rently reduces green house gas emis-
sions by over 3.0 million tons of CO
2

equivalent annually.
This entire category was brimming
with good nominations challeng-
ing the eld. Green Gas stood out in
very signicant 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.
110 insight December 2010
global energy awards
Outstanding Programs
Community Development Program of
the Year
OMV Pakistan
Pakistan
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 identied through baseline and
community needs assessment studies.
OMV took the 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 OMVs op-
erations while building up the quality
of life in Pakistan. The panel of judges
recognized that OMVs 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 Efciency Program of the Year
Energy Supplier
Baltimore Gas & Electric (BGE)
United States of America
Baltimore Gas & Electric, by its own
admission, was a late bloomer in en-
ergy efciency. However, in 2009, they
blossomed in a big way. BGE went from
offering no energy efciency 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 efciency programs
to add to the already successful BGE
Smart Energy Savers Program
SM
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 modied 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 Efciency.
For commercial and industrial cus-
tomers, BGE provided incentives and
engineering services for projects from
retrotting existing inefcient 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-
ciencies and well-designed programs
appealed to a variety of customers.
Over 15% of residential customers
participated in the rst year. BGEs
strategic promotion of these programs
received praise from key stakehold-
ers including the Maryland Energy
December 2010 insight 111
global energy awards
Administration and won recognition
from the Association of Energy Servic-
es Professionals national chapter and
the American Marketing Associations
Baltimore Chapter 2010 Marketing Ex-
cellence Award.
Its impressive 18-month results swayed
the judges to honor the late-comer to the
efciency party over some of the vet-
eran suppliers who have been leaders
in efciency over the past decade. With
programs like these, Baltimore Gas &
Electric will likely be one of the industry
standards well into the future.
Energy Efciency Program of the
YearCommercial End-User
Tesco plc
United Kingdom of Great Britain
By reducing total energy consump-
tion by only a few percentages, Tesco,
one of the worlds 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.
Tescos 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-
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 CO
2
of 2006
stores

Reduce emissions per case delivered
by 50% by 2012
One of the key partnerships Tesco
formed to help it signicantly reduce
its energy consumption was with Ener-
gyICT, an Elster Group Company, that
provides energy management, Smart
Grid and smart metering solutions. En-
ergyICTs 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 inefciency.
Through its collaboration with Energy-
ICT, Tesco is well on its way to obtaining
these inspirational goals, with a direct
inuence on the reduction of CO
2
emis-
sions: the total energy consumption of
all Tesco stores in the United Kingdom,
combined, has plummeted by 20%.
Tescos highly ambitious goals im-
pressed the judges. Not only are their
aspirations large, they are achieving big
results.
Green Energy Initiative of the Year
Alter NRG Corporation
Canada
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
gasication 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, CleanEnergy
TM
, Alter NRG
Corps 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-
112 insight December 2010
global energy awards
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 NRGs/WPCs 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 worlds largest hazardous
waste plasma gasication facility and
North Americas rst commercial-scale
plasma gasication 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 Inc
United States of America
In 2005, FirstEnergy began a $1.8
billion project to retrot 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 difcult air
emission control retrot 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 projectscrubbers 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.
Bechtels nomination put into per-
spective the signicant 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 elds in
length was built in the 1980s over SR 7
for a previous retrot of 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 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-t-
ting coal 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 Year
Fluor Corporation
United 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
December 2010 insight 113
global energy awards
project, jointly owned by ConocoPhil-
lips China (COPC) and China National
Offshore Oil Corporation (CNOOC),
was for the development of an oil 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 oat-
ing production, storage and ofoading
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 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-
specic challenges such as interface
management and weight control. Their
work-sharing effort saved $50 million
in engineering costs. Efciencies in the
repetitive design of the 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 ofces.
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 Year
Adriatic LNG
Italy
Terminale GNL Adriatico Srl, com-
monly known as Adriatic LNG

, is the
company that designed, built and now
operates the rst-ever built offshore
LNG regasiciation terminal.
The Adriatic Terminal is the worlds
rst offshore liqueed natural gas
(LNG) receiving and regasication fa-
cility. It is also the rst ever facility to
incorporate LNG storage into a con-
crete Gravity Based Structure (GBS).
And, it is the rst signicant 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 rst
priority for Adriatic LNG. The project
achieved an excellent safety record
which continues since its start-up. The
Terminal is highly energy efcient,
utilizing waste heat recovery from the
power generators and sea water to pro-
vide heat for the regasication 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 Italys LNG import capacity and
energy diversity, with a regasication
capacity of 8 billion cubic meters per
year (775 million cubic feet of natural
gas per day), approximately 10% of the
countrys natural gas consumption.
The project was recognized by this
years 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 Year
Suniva
United States of America
Solar cell manufacturers are current-
ly split into two categories: low-cost,
low-efciency and high-cost, high-
efciency. Suniva is bridging the gap
by offering highly efcient 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+% efciency by
114 insight December 2010
global energy awards
the end of 2011. Highly efcient 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 efcient
cells, which require more space, and
thus, more materials. Sunivas technol-
ogy is bringing the solar industry closer
to parity with traditional energy gen-
eration costs.
Sunivas technical sophistication has
allowed the company to continually
improve its efciency. In addition to
its own research and development, the
company has exclusive rights to approx-
imately 20 years of intellectual property
from Georgia Techs 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 efciency are mak-
ing Sunivas vision a reality.
The companys commercial success
has been evident since its launch
when Suniva announced that its 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.
Sunivas 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 Innovation
of the Year
Aquamarine Power
United Kingdom of Great Britain
Aquamarine Power developed an in-
novative product called Oyster which
produces clean sustainable electricity
from ocean wave energy. The compa-
nys 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, signi-
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 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 ofcially switched
on at the European Marine Energy
Centre (EMEC) test facility in Novem-
ber 2009making Oyster one of the
few wave energy technologies to go
from the drawing board to full-scale
power production.
A key factor in Oysters 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.
Oysters 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 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
conditionsit will continue to produce
power, whatever the weather.
Aquamarine Power is driving inno-
vation in a brand new industry which
will help secure the worlds 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 Exelons Executive
Vice President of Government and
Environmental Affairs and Public Policy, on
her recognition as a nalist 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 tonights nalists, we
particularly thank Betsy for her service,
both to our nation and to our industry.
116 insight December 2010
insight
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www.platts.com
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 companys 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 states 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
Newdata prompt fresh look at PJMline 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 Oils 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 ratings
Would replace decades-old system to include GHG emissions
WashingtonThe 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 efficiencyeither in
terms of miles per gallon or miles per change,
in the case of electric vehiclesas 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 DOTs 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
arent 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 system days, Strickland said, adding the new system
n the two proposed labeling options for 60 o
s T and EPA will take public comment DO
eporters on a conference call. r
d and Traffic Safety Administration, tol
land, administrator of DOTs 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 t Contents Contents
new fuel-efficiency car ratings
old 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
encyeither in
miles per change,
sas 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
arent 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
4 ine outage l
azprom increases gas flow to Turkey on G
Indian refiners hike July crude runs 3.2% 3
akistan State Oils flood damage costs to rise 3 P
2 apan to drill for gas hydrates 2011-2012 J
2 gas field
anadian outh Korean STX buys Encana C S
2 t estern Australian marke W
alyard natural gas to supply H
c sia Pacifi A
Europe, Middle East & Africa
4 azMunaiGaz 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
THE
MARKET
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
(continued on page 2)
Natural gas production in the Lower-48 states in June fell 1.2%, or
810,000 Mcf/d, fromMay levels, marking the first month-to-month
decline since December, the Energy Information Administration said
Monday.
EIA said gas production fromthe 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
(continued on page 6)
Adriatic LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
AES Dominicana . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
AES El Salvador . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Americas Natural Gas Alliance . . . . . . . . . . . . . . . 13
American Municipal Power, Inc . . . . . . . . . . . . . . 86
ARMZ Uranium Holding Co . . . . . . . . . . . . . . . . . . . 87
Bechtel Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Cairn India Limited . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Capgemini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42, 82
Chesapeake Energy. . . . . . . . . . . . . . . . . . . . . . . 90, 91
Cleco Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
CONSOL Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
DTE Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Elster . . . . . . . . . . . . . . . . . . . . . . . . inside back cover
Entergy Corp . . . . . . . . . . . . . . . . . . inside front cover
Exelon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Fortune . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Green Gas International . . . . . . . . . . . . . . . . . . . . . . 94
Indji Watch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Kosmos Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Landis+gyr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
North Delhi Power Ltd . . . . . . . . . . . . . . . . . . . . . . . 96
NextEra Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Nodal Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
NRG Energy Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Oracle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Peabody Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
PJM Interconnection . . . . . . . . . . . . . . . . . . . . . . . 103
SAIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . back cover
Singapore International Energy Week . . . . . . . . . 98
S-OIL Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SolArc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Southern Company . . . . . . . . . . . . . . . . . . . . . . . . . 100
Staples Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Stream Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Ventyx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Xcel Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Zorlu Energy Group . . . . . . . . . . . . . . . . . . . . . . . . . 103
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Realize the full potential of the
Smart Grid with EnergyAxis

By combining science, engineering, and technology expertise with business acumen,


we address the technical and business interdependencies that determine success.
From analyzing and integrating leading technologies to designing, building, and
operating infrastructure systems, we apply deep domain expertise to strengthen
our customers enterprises and help them thrive in a complex world.
For detailed information, visit saic.com/EEandI
At SAIC we provide innovative, integrated solutions to meet our
customers energy, environmental, and infrastructure challenges.
Cultivating solutions throughout the entire project life cycle
Energy | Environment | National Security | Health | Critical Infrastructure
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