Oil and gas exploration fuels market in Southeast Asia
Southeast Asia is poised to become one of the global hot spots for upstream oil and gas activities over the next five years owing to the global surge in O&G exploration and production. Exploration, primarily in marginal and deepwater fields, is receiving a boost due to declining production in existing fields, unexplored acreages with high hydrocarbon potential, and advancements in deepwater production technology.
Based on current reserve discoveries and each Southeast Asian country's O&G development program, new analysis from Frost & Sullivan (www.frost.com/prod/servlet/svcg.pag/EGEP), Strategic Analysis of the Upstream Oil and Gas Market in Southeast Asia, finds that the market earned revenues of $38.75 billion in 2012 and estimates this to reach $58.32 billion in 2017 at a compound annual growth rate of 8.5 percent.
“Technological enhancements, increasing gas demand, and rising oil prices have made marginal fields attractive for development, propelling the growth of drilling rigs and pipeline installations in Southeast Asia,” said Frost & Sullivan Energy and Environmental Research Analyst Pradi Wigianto. “Declining O&G production in conventional shallow water fields has also encouraged investments in the exploration of deepwater and marginal fields.”
Malaysia and Indonesia present the highest potential for deepwater and marginal fields’ development. Marginal fields, in particular, will drive the upstream O&G market in Malaysia as related investment policies have already been deployed. In Indonesia, the government has released additional incentive schemes and tax holidays to attract investments for E&P in deepwater and marginal fields.
The lack of government initiatives in many other Southeast Asian nations may, however, dissuade investors from entering the region's market. Investment opportunities in E&P are fraught with high risks as potential fields are found in remote areas, heightening production costs due to their location and lack of infrastructure. Nevertheless, opportunities exist for O&G equipment suppliers and service companies to provide investors with the latest equipment using breakthrough technology at a competitive cost.
“Southeast Asian countries are trying to structure an appealing investment regulation for foreign participation in the upstream O&G market without comprising on national policy,” said Wigianto. “In the newly opened markets of Myanmar and Cambodia especially, policies regarding O&G investments are in the drafting stage, and will stimulate exploration and expansion in the coming years.”
Ofwat allows retailers to raise prices from April
Retailers can recover a portion of excess bad debt by temporarily increasing prices from April 2022, according to an Ofwat statement.
The regulator confirmed its view that levels of bad debt costs across the business retail market are exceeding 2% of non-household revenue, thereby allowing "a temporary increase" in the maximum prices. Adjustments to price caps will apply for a minimum of two years to reduce the step changes in price that customers might experience.
Measures introduced since March 2020 to contain the spread of Covid-19 could lead to retailers facing higher levels of customer bad debt. Retailers’ abilities to respond to this are expected to be constrained by Ofwat strengthening protections for non-household customers during Covid-19 and the presence of price caps.
In April last year, Ofwat committed to provide additional regulatory protection if bad debt costs across the market exceeded 2% of non-household revenue.
Georgina Mills, Business Retail Market Director at Ofwat said: “These decisions aim to protect the interests of non-household customers in the short and longer term, including from the risk of systemic Retailer failure as the business retail market continues to feel the impacts of COVID-19. By implementing market-wide adjustments to price caps, we aim to minimise any additional costs for customers in the shorter term by promoting efficiency and supporting competition.”
There are also three areas where Ofwat has not reached definitive conclusions and is seeking further evidence and views from stakeholders:
- Pooling excess bad debt costs – Ofwat proposes that the recovery of excess bad debt costs is pooled across all non-household customers, via a uniform uplift to price caps.
- Keeping open the option of not pursuing a true up – For example if outturn bad debt costs are not materially higher than the 2% threshold.
- Undertaking the true up – If a 'true up' is required, Ofwat has set out how it expects this to work in practice.
Further consultation on the proposed adjustments to REC price caps can be expected by December.
"While it’s great that regulators are helping the industry deal with bad debt in the wake of the pandemic, raising prices only treats the symptoms. Instead, water companies should head upstream, using customer data to identify and rectify the causes of bad debt, stop it at source and help prevent it from occurring in the first place," she said.
"While recouping costs is a must, water companies shouldn’t just rely on the regulator. Data can help companies segment customers, identify and assist customers that are struggling financially, avoiding penalising the entire customer in tackling the cause of the issue."
United Utilities picks up pipeline award
A race-against-time plumbing job to connect four huge water pipes into the large Haweswater Aqueduct in Cumbria saw United Utilities awarded Utility Project of the Year by Pipeline Industries Guild.
The Hallbank project, near Kendal, was completed within a tight eight-day deadline, in a storm and during the second COVID lockdown last November – and with three hours to spare. Principal construction manager John Dawson said the project helped boost the resilience of water supplies across the North West.
“I think what made us stand out was the scale, the use of future technology and the fact that we were really just one team, working collaboratively for a common goal," he said.
Camus Energy secures $16m funding
Camus Energy, which provides advanced grid management technology, has secured $16 million in a Series A round, led by Park West Asset Management and joined by Congruent Ventures, Wave Capital and other investors, including an investor-owned utility. Camus will leverage the operating capital to expand its grid management software platform to meet growing demand from utilities across North America.
As local utilities look to save money and increase their use of clean energy by tapping into low-cost and low-carbon local resources, Camus' grid management platform provides connectivity between the utility's operations team, its grid-connected equipment and customer devices.