Globalization and the need for a secure, affordable energy supply go hand-in-hand. Economic development is dependent on sufficient sources of energy – oil, gas, electricity, coal, and others. The availability and security of these resources are on the minds of many, from consumers, to political leaders to company executives.
PricewaterhouseCoopers has been providing professional services to energy, utilities, and mining companies for more than 100 years. We help companies confront the industry's most challenging changes and issues, including:
- Addressing sustainability
- Complying with regulatory & Reporting requirements
- Improving performance & Operational effectiveness
- Managing industry Regulatory change
- Industry transactions & Consolidation
- Managing financial risk
- Managing geopolitical risk
- Recruiting & Retaining a skilled workforce
- Securing the supply
Oil and gas prices are at record highs, and are not expected to decline given the growing demand for these resources. Replacement reserves are located in more challenging locations, including deeper offshore waters and more remote onshore locations. Emerging markets, including China and India, have among the fastest growing consumption rates for hydrocarbons. Energy companies are diversifying their product mix, as non-traditional fuel sources become more price competitive, and alternative fuels are gaining interest. New investment in LNG, oil sands, oil shale, ethanol and other sources and products are showing rapid growth.
In such changing market conditions, oil and gas companies must also contend with changing regulatory requirements involving environmental, governance and reporting issues. The competitive environment is also changing, with national oil companies seeking greater participation in the global marketplace. M&A activities will likely increase as companies with large cash balances look for access to supply, or expansion into new markets.
The utility sector is complex and changing rapidly as companies pursue new models of value creation. Some strategies fiercely reinforce the traditional integrated utility strength of owning production, distribution and the customers. Others seek competitive advantage (or have it thrust upon them by regulators) by concentrating on particular parts of the energy chain. Previously sacrosanct national boundaries are falling as cross border investment progresses. Energy trading is becoming a risky essential. But the trend to liberalisation, convergence and competition for end customers is by no means uniform across territories. National differences abound.
Recent years have proven much more profitable for the mining industry. High commodity prices continue to drive improved results across a range of key performance indicators for the industry. Improvements in profitability mask substantial increases in operating costs, which have occurred due to supply side constraints. Operating expenses have continued their increase, as has exploration expenditures. However, profit margins are expected to remain high for the near future, driven by exceptional demand sustaining the current commodity price levels. Indeed, we live in interesting times. Unprecedented demand, primarily driven by Asia, continues. New supply is coming on stream for many commodities, but is struggling to catch demand, partially as a result of under investment in the 1990s. Challenges ahead include improving mining safety, managing the complexities of environmental and regulatory requirements, and improving financial performance through improved processes and cost controls. Mining companies around the world are responding to these challenges through innovative strategies - seeking new capital resources, technological improvements, and consolidation.
