SBWire

We maintained our forecasts for the Indian electricity sector this quarter as our assumptions remain relevant. We highlight that certain key themes - namely continued weakness in the economy, further coal shortages, and poor regulatory frameworks - are likely to remain prevalent even in the long-term. From a long-term perspective, we expect thermal energy to maintain its position as the backbone of the Indian power sector, but believe it is unlikely the Indian government will meet its electricity capacity and generation targets.

Peru is advancing its ambitious power sector expansion plans as demand for electricity continues to grow rapidly - driven by the needs of the country's energy-intensive mining industry and healthy growth in consumer demand. While our macroeconomic outlook for Peru remains below consensus based on our bearish stance on global metals prices, which is in turn a consequence of our belowconsensus view on economic growth in China, we maintain that the country's economy remains one of the most dynamic in Latin America. By extension, we forecast that Peru will register robust growth across all segments of its power sector thanks to continued efforts to mine and export its significant mineral wealth. We also note that the government is eager to stimulate investment in power infrastructure, and is working hard to generate interest in a host of attractive investment opportunities.

BMI's latest Germany Petrochemicals Report envisages no increase in ethylene capacity over our forecast period, which will restrict scope for further downstream development. Small-scale capacity is being shut down as German petrochemicals producers seek to cut costs and improve competitiveness. While some basic chemicals plants are being closed, more specialised petrochemicals units are being established, adding value to the production chain.

Hungary's long-term power security looks more assured following the confirmation in February that the Russian government will provide a EUR10bn loan for the upgrade of the Paks nuclear power plant. However, the work constructing two new reactors is set to be completed in 2023/24, meaning the increased capacity will not come online during the course of our forecast period, with Hungary set to remain a net energy importer over the next decade.

The Chinese petrochemicals industry is set for solid growth in output, but this will be constrained by a slower pace of domestic demand for goods. BMI's latest China Petrochemicals Report predicts exports will take the lead, although some segments will continue to suffer over-capacity and downstream operations are set to see some closures to adjust supply to demand.

In 2012, the industrial production index for chemicals declined 0.7% on average, while for rubber and plastic products it plummeted an average of 9.0%, compared with growth of 0.2% and -1.5% respectively in 2011. In the first four months of 2013, the chemicals production index fell by a further 7.3% while the rubber and plastics index fell by 5.0%. This signalled a deterioration of chemical and petrochemicals performance in H113. Although there was an uptick in April, the operating environment has not changed radically to support a sustained recovery.

In the race for attention and upstream investment interest, Hungary is only marginally in the race in central Europe. Despite many desirable elements; a clean regulatory process, proximity to hundreds of millions of customers, a well run downstream sector and pipelines to deliver goods, try as it might, Hungary has so far failed to identify source rock in sufficient quantity and quality to hold out hope of the elephant size discovery that lures the super majors and their large exploration budgets. That said, there are some smaller independents that remain committed and convinced that the absence of competition from those super majors clears the field for them.

Increasingly challenging economics could slow the growth of oil-sands driven production, although we note that liquids-rich shales could be the new engine of liquid output growth. Exploration in the country's offshore acreage and unconventional resources could unearth more oil and gas reserves to support the country's long-term growth prospects. The outlook for Canada's oil and gas industry is still a positive one, though its upstream potential needs more support from the community and the government for infrastructure development.

Slovakia has above-average energy import dependency with high overall energy intensity compared with the regional average. As a result, the EU has made development of better gas interconnections a priority for Slovakia as net gas imports are expected to cost the country around US $3.25bn in 2013. The country remains dependent on Russia, but a recently announced EUR5.9bn EU infrastructure programme aims to allow for more flexibility when negotiating gas purchases and may boost supply. Slovakia has a growing renewable capacity, but a drop in nuclear output has left an energy shortfall that will be filled with increased use of expensive gas power. Efforts to raise domestic gas prices are being resisted by the government, which may reduce the attractiveness of the Slovak gas sector to foreign investors.

The medium-term outlook for South Korea's electricity sector is positive, as stable economic and demographic growth and the government's greater focus on the sector will provide opportunities and minimise electricity shortfalls. However, in the near term, uncertainty clouds the outlook for both incumbents and new entrants, as the public remains distrustful of nuclear power and certain groups resist the building of new transmission projects. However, the government has shown that it is willing to raise electricity tariffs to rein in demand and fuel import bills.

The energy sector will expand steadily in the short- and longer term. An expansion of Slovakia's nuclear capacity will drive generation, while a steady expansion of its manufacturing sector will drive consumption. By mid-decade, Slovakia should become a net exporter of energy. However, risks remain, such as interference in pricing by the government and the rising costs of the project to build two new reactors at the Mochovce nuclear power plant. Several major investments planned for the years ahead may experience delays or fail to materialise altogether.

A slowdown in household consumption and the Kremlin's failure to sufficiently address structural impediments to investment are likely to continue to weigh on the Russian power sector - based on the fact that power demand remains highly correlated with economic development and industrial production. While the Russian power market is huge in terms of its sheer scale, we maintain our view that it will only register subdued growth over our forecast period as macroeconomic headwinds, a difficult political environment and weak institutional capacity continue to discourage foreign investment. As such, with much of the country's aging capacity having been built in the 1960s and 1970s, we expect most of the investment that is channelled into the power sector to be targeted at modernising and substituting aging and inefficient thermal and nuclear capacity, and improving the inadequate transmission infrastructure.

We anticipate healthy growth in Kazakhstan's power sector over BMI's 10-year forecast period, both in terms of generation and consumption. Coal will retain its dominance, accounting for over 80% of the country's energy generation by 2023. However, non-hydro renewables will grow rapidly, with a slew of foreign-financed wind and solar projects in the pipeline. The government is also planning to restart the exploitation of nuclear energy, helped by Kazakhstan's vast uranium wealth. Power production will comfortably meet demand, with Kazakhstan's dependence on energy imports decreasing over the 10-year period. For much of the forecast period, system losses will be considerable, but steady investment in transmission and distribution infrastructure will narrow the supply/demand gap significantly.

We see the recently passed Mexican energy sector reform as the start of a fundamental paradigm shift for the country's hydrocarbons sector. While it does not challenge the national narrative that hydrocarbons belong to the state, working within these constraints the landmark bill takes steps to incentivise private sector involvement through the creation of a flexible contract system. As such, although we stress that it will take a number of years before results are felt in the country's production and reserves data, over the long term we believe this will bolster investment and could reverse a nearly decade-long decline in oil production.

Homeowners in need of repair or installation services for air conditioning in Evesham, Cherry Hill or surrounding areas of New Jersey will have an easier time scheduling an appointment this spring. Always committed to providing their customers with convenient ways to get in touch, McAllister… The Service Company is pleased to announce they are now offering a wide variety of online services this spring. Before summer hits, homeowners can get their repairs out of the way, so they can enjoy the warm weather with ease.

Russia may be moving towards self-sufficiency in polymer production, but BMI's latest Russia Petrochemicals Report warns of slow market growth in 2014 as key consuming industries exhibit low or negative output at the same time as the domestic market is opening up to imports. However, there should be sufficient demand in the market to avoid an imbalance and Russia should be able to ramp up exports, although margins could be low in the face of competition on the global market from the Middle East and the US.

The Philippines' power sector continues to expand, with growth of between 3% and 5% expected throughout our current forecast period to 2018. Recovery following the widespread devastation of Typhoon Haiyan may hamper growth in the short term, but a range of projects in the pipeline means we see strong potential in the longer term, an outlook boosted by an increasingly positive domestic investment environment.

Producers claimed they are seeing benefits, with an increase in capacity utilisation expected in the short term and an increase in investment in the medium term. While tax cuts on raw material purchases should help competitiveness, they will be insufficient to resolve bottlenecks in the sector, according to BMI's latest Brazil Petrochemicals Report.

Keeping in mind large underground potential, we maintain our optimistic outlook for Kazakhstan. However, we continue to underline risks related to resource nationalism and geological complications on major prospects that could deter foreign investors. Kazakhstan's choice to block the sale of ConocoPhillips' Kashagan stake in order to allocate it to CNPC illustrates the uncertainty of the business environment that surrounds the country.

While shale gas exploration has thus far presented a mixed picture, there have been positive below and above-ground developments in recent months. However, while Poland could see its first commercial flow rates in 2014-2015, we remain cautiously optimistic with regard to the country's shale gas production. At the moment, the need for additional exploration, the fact that most companies will likely wait until new regulations are passed before taking final investment decisions on shale gas projects, and assuming that projects take three years to be developed, we have only factored in significant shale gas production into our forecast from 2018-2019. We note that risks lie to the downside, depending on the industry reception of the new regulations and below-ground results.

We have long believed Germany's Renewable Energy Source Act (EEG) will almost certainly be reformed and this is now set to occur following the signing of a grand coalition agreement between Angela Merkel's Christian Democratic Union (CDU-CSU) and the Social Democratic Party (SPD) in December 2013. With SPD Chairman Sigmar Gabriel now installed at the head of a new 'super' ministry that will enable him to oversee economic affairs and energy policy, the revision of the EEG is a priority during Germany's current legislative term - with effective reform critical to cutting the huge cost of Germany's ambitious Energiewende (Energy Transformation). Yet, while reform is necessary to stop spiking electricity prices from curbing Germany's industrial competitiveness, we emphasise that Gabriel has a difficult job ahead of him, as he tries to constrain costs of moving from nuclear to renewable, avoid seriously damage the competitiveness of German industry, while at the same time ensuring the Energiewende is a long-term success.

Denmark is likely to remain an oil and gas net exporter over our forecast period, despite production decline. The government is confident the country will sustain its position as a net exporter of oil and gas until the end of the decade. We expect a partial recovery in oil and gas volumes over the medium term. However, we forecast that overall production will decline in the long term and that exports will become increasingly thin by the end of our forecast period despite a small drop in consumption.

An uptick in offshore investment is providing some relief from the overall downward trend in oil and gas production from the UK. While we see a small boost to oil production from 2017 onwards based on current projects in the pipeline, without new discoveries and given falling volumes from mature fields, this will likely only stem the decline or lead to a small-scale and temporary increase in the country's oil production While the industry has responded positively to the end of a moratorium on shale gas development, as well as to incentives, strong opposition at the local level has already disrupted drilling plans. These challenges only reinforce our view that shale gas is unlikely to make a significant contribution to total gas output before the tail-end of our forecast period.

Nigeria's hydrocarbon sector continues to struggle amid a worsening political and business environment. Most recently, Chevron's decision to move out of the OKLNG project signals that even the large upside potential of the Nigerian gas market is not sufficient to offset the degradation in investor sentiment. The weak output flows in 2012 and 2013 were the consequence of flooding, repeated oil thefts and regulatory uncertainty. We estimate that total oil production for 2013 declined to about 2.4mn barrels per day, and expect production to remain feeble over the coming year. Output should ramp-up more significantly as many large fields come online after 2015, more than offsetting current depletion. Adoption of the Petroleum Industry Bill (PIB), which we do not expect before the Nigerian 2015 election, would be a strong signal for investors that Nigeria's hydrocarbons sector is ready to move forward. Without the adoption of the PIB, further offshore project delays could occur, resulting in a stagnation of Nigerian production.

The Romanian petrochemicals industry is showing solid but not spectacular growth amid a steady recovery in export-oriented industries, but BMI's latest Romania Petrochemicals Report states that the key issue for the sector remains the future of Oltchim, the troubled chemicals manufacturer that the government hopes to privatise this year.