The energy sector is likely to continue to experience challenging conditions in 2011, despite signs that the global economic downturn is beginning to ease.
That was the prediction yesterday from business advisory firm Deloitte.
It also said that former Soviet republics and India, plus technology-driven exploration and production operations, would be prominent in driving the energy sector next year.
For Scottish businesses with a good geographic footprint and niche skills, there was expected to be ample opportunities to capitalise on their competitive advantage as oil and gas drilling activity recovers from the lows of the last two years.
In 2011, the move to secure global energy resources was predicted to likely make emerging markets the fastest-growing area for mergers and acquisitions activity.
Cross-industry deals in emerging markets were said to already account for 30% of global M&A activity, compared to Europe’s share which had fallen to 29% – the lowest in 12 years.
Graeme Sheils, oil and gas partner at Deloitte in Aberdeen, said: “This year has seen significant consolidation in the oilfield services sector both in the UK and globally.
“The post-merger integration skills of acquirers will be severely tested, particularly in emerging markets where, cultural differences, uncertain regulatory environments and complex financings often impede both the rate and value of anticipated synergies.”
Prospects for renewables were said to be looking up as solar technologies increasingly trickled down from industrial users to be embraced by residential consumers and small businesses.
Mr Sheils added: “Just how quickly solar energy can become mainstream will depend heavily upon how swiftly solar technologies can achieve grid parity – the point at which the cost of electricity from renewable sources rivals that derived from more traditional means.
“This is shaped by local climate, utility rates and government support, among other factors.
“Indeed, sustainability considerations are not only becoming key inputs for business decisions, but also decisive factors affecting competition worldwide.”
However, as countries continue to invest in long term environmental and clean energy projects, Deloitte said it was becoming evident that there may not be the necessary skills to push forward the “green” movement.
The firm said that European nations had been struggling for a while to staff their clean energy investments and North America did not seem to be immune to this problem either.
Deloitte said that, similar to the oil industry in recent years, it was vital that skills being developed now in this sector had a means of being replicated as widely as possible, and made available for future generations.
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