Energy, utilities and mining

Globalisation 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

Oil and gas prices were at record highs in mid-2008, only to experience a rapid decline as the global economy fell into recession. Experts agree that the demand for hydrocarbons will increase as the global economy improves, particularly in emerging markets, such as China and India. Oil and gas companies cannot focus on the short-term alone. The search for additional supply is essential to controlling the up and down industry cycle. Replacement reserves are located in more challenging locations, including deeper offshore waters and more remote onshore locations. In some cases, governments are restricting access to reserves. Energy companies are also 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 continue as companies with large cash balances look for access to supply, or expansion into new markets.

Utilities

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. The sector is on a journey of major change, anticipating a world with a much wider range of technologies than at present and where the shape of the industry changes. Companies are seeking to extend their value chain both upward and downward to secure supply and end-markets. The traditional boundaries that define the utilities industry are becoming blurred as the interdependence of different energy sectors and between utility and technology companies is becoming more critical.

Mining

While in recent years the mining industry saw commodity prices rise, and profits follow, the global economic downturn changed things over a period of months. Mineral deposits and mine developments are often in remote areas and host governments and other stakeholders often have stringent requirements for mining companies. These requirements on top of normal business challenges, such as commodity price movements, efficiency of operations, optimising taxes, environmental, health and safety, and community needs, ensure that mining is challenging for all industry participants. 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. Mining companies around the world are responding to these challenges through innovative strategies - seeking new capital resources, technological improvements, and consolidation.