Energy & Utilities Outlook - Five factors that will shape the future of European Utilities

Predictions for 2007 and beyond

Publication Date	July 2006
Publisher	Datamonitor
Product Type	Report
Pages	10
ISBN Number	not applicable
Product Code	DAT00426

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£895.00
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Summary

Introduction

Europe is currently the most active gas and power M&A market in the world. The lead-up to full market liberalization is pushing deal activity to ever higher levels. Political involvement will continue to influence deal-making, and the EU will be forced to confront a tension between free movement of capital and anti-competitive consolidation.

Scope

An examination of acquisition premiums and how they relate to gas and power M&A strategies.
A review of government involvement in European gas and power M&A.
An analysis of the impending conflict between free capital flows in the EU and the drive for effective EU-wide competition.
A projection of market competitive intensity.

Highlights

The Commission's defence of open energy investment is conversely leading to major industry consolidation and possibly an undermining of competition.

By the end of 2007 it is highly likely that the 6 largest utilities will account for over 50% of total European gas and power supply.

Reasons to Purchase

Understand key features of European M&A activity in 2007.
Understand how M&A-driven industry consolidation will spur EU competition action.

Content

Catalyst
- As security of supply issues move to the fore against a backdrop of rising oil prices and political tensions, the role of the Gas Exporting Countries Forum (GECF), and its potential role as a cartel, grow.
Summary
- A number of gas consumers, particularly those heavily dependent on imports, have expressed fears that the GECF has the potential to emerge as a gas version of OPEC. Behind these fears are concerns that any such emergence of a gas cartel will bring with it price spikes and a detrimental impact to energy supply security. However, despite these concerns it is increasingly apparent that the GECF lacks the necessary cohesion and required structural factors to emerge as a gas cartel, despite the agendas of some of its members.
Methodology
Analysis
- The GECF is a loosely defined group of gas producers seeking to represent and benefit their mutual interests
- The combined strength of the GECF members represents a significant proportion of gas production
- Collectively the GECF controls the majority of global gas reserves
- The production and reserve positions of GECF members varies widely
- The role of gas in the overall hydrocarbon production mix is another area of considerable difference amongst GECF members
- A wide divergence exists in the stages of economic growth and development as reached by GECF members
- There are a number of structural and political factors making it unlikely that the GECF will emerge as a gas OPEC
- The future role and influence of the GECF will remain limited
Appendix
- Further reading
- Ask the analyst
List of Figures
- Figure 1: GECF production
- Figure 2: GECF reserves
- Figure 3: GECF Production versus Reserves
- Figure 4: GECF Oil and Gas Production (2005)
- Figure 5: GECF Per Capita GDP Levels (2005)