Deloitte Energy Predictions 2011 report

Even as the global economic downturn begins to ease, the energy sector is still likely to experience challenging conditions entering 2011. Serving as a global and unified measure of economic recovery, the price of oil and the strength and sustainability of the recovery will impact the ways in which all forms of energy are produced and consumed.

'Energy plays a pivotal role in driving the global economy,' says Peter Bommel, Deloitte Touche Tohmatsu Limited Global Energy & Resources Industry Leader. 'Anticipating the course of the Energy and Resources sector over the next 12 months is not easy, but Deloitte's Energy Predictions report aims to stimulate debate, inform of possible industry directions, and help identify opportunities and potential courses of action.'

'The key issues of talent management in the Energy & Resources sectors, sustainability of green economy, implications of technology, innovation and resource management, especially water management, are not only the issues faced by the industry itself, but also require policy makers and public sector response. All the challenging conditions provide an exciting opportunity and a reminder of how important role energy plays in the economy,' added Farrukh Khan, Audit Partner and Energy & Resources Leader, Deloitte Balkans.

Emerging markets break out as the fastest-growing area for M&A

• M&A activity in the energy industry appears to be occurring in waves, with the Oil and Gas companies from emerging markets leading the way. A second wave of M&A is now occurring that involves state-owned companies from Russia, South Korea, Brazil, and Malaysia. The third wave, which is only now beginning to take shape, involves national oil companies from India and the CIS region.
• Moving forward, a company's post-merger integration skills will be paramount, particularly in emerging markets where complex financings, cultural differences, and uncertain regulatory environments often impede the realization of anticipated synergies.
• China's growing partnerships with resource-rich nations will likely provide an economic boost to the republic as well as to the global economy in the years ahead. These partnerships will have a positive effect on energy markets as well as on infrastructure and industry.

The refining industry moves East

• While OECD countries are seeing weaker demand, the market is rising in the East; this suggests a long-lasting trend.
• It's difficult to predict how fast Asian consumers will increase their purchases in the years ahead and which refined products will take the lead. It is safe to assume that gasoline and its derivatives will remain in high demand and consequently will require refineries to increase up-time to fill this demand.

Nuclear power renaissance in emerging markets

• Clean energy development is a leading priority for many governments. With nuclear power being one of the cleanest and most reliable sources of energy, the nuclear industry is poised for tremendous growth that is likely to fit well with many established government policies.
• Emerging markets however face the challenge of integrating nuclear power into country infrastructure

Prospects for renewables are looking up as solar goes mainstream

• In 2011 and beyond, solar technologies will increasingly trickle down from industrial users to be embraced by residential consumers and small businesses.

The water-energy nexus grows in importance

• Sustainability considerations are not only becoming key inputs for business decisions, but also decisive factors affecting competition worldwide.

Petroleum Exploration & Production operations advance by technological leaps and bounds

• The recent series of environmental, health, and safety incidents in the Oil and Gas industry will likely result in greater governmental oversight of all types of energy production.

Electric cars give auto markets a jolt

• Consumers have always had plenty of options concerning the look and feel of their cars and trucks, but they will soon have just as many choices concerning what powers them.
• Hybrid electric vehicles will likely remain popular, but plug-in electric hybrids and pure electric vehicles are also likely to proliferate based on consumer demand.

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