March 2012 Energy Index - Bord Gáis Energy

Bord Gáis Energy IndexMARCH 2012

G29839 BG Energy Index March 2012 Rev5 JJ.indd 1 11/04/2012 10:45

Energy Index Graph

Data

31 January 2009 92.1028 February 2009 87.77

31 March 2009 76.8630 April 2009 77.6331 May 2009 84.37

30 June 2009 90.8131 July 2009 88.62

31 August 2009 88.3530 September 2009 85.76

31 October 2009 92.3930 November 2009 94.8231 December 2009 100.00


31 March 2010 104.5730 April 2010 111.2231 May 2010 110.49

30 June 2010 111.6431 July 2010 111.05


31 October 2010 112.6430 November 2010 121.6731 December 2010 135.86


31 March 2011 146.5130 April 2011 147.7631 May 2011 140.73

30 June 2011 134.5431 July 2011 138.57


31 October 2011 136.1431 November 2011 143.88

31 December 2011 143.22

31 January 2012 144.43

31 February 2012 156.81

12 Month Rolling Average

31 October 2009 87.80

30 November 2009 87.15

31 December 2009 88.29

31 January 2010 88.92

28 February 2010 90.20

31 March 2010 92.51

30 April 2010 95.31

31 May 2010 97.49

30 June 2010 99.22

31 July 2010 101.09

31 August 2010 102.82

30 September 2010 104.97

31 October 2010 106.66

30 November 2010 108.89

31 December 2010 111.88

31 January 2011 114.76

28 February 2011 117.91

31 March 2011 121.41

30 April 2011 124.45

31 May 2011 126.97

30 June 2011 128.88

31 July 2011 131.18

31 August 2011 133.64

30 September 2011 135.59

31 October 2011 137.54

31 November 2011 139.53

31 December 2011 140.15

31 January 2012 141.01

31 February 2012 142.38

Oil Graph Data

31 January 2009 65.78

28 February 2009 67.03

31 March 2009 68.43

30 April 2009 70.72

31 May 2009 85.34

30 June 2009 90.70

31 July 2009 92.57

31 August 2009 89.31

30 September 2009 86.74

31 October 2009 93.84

30 November 2009 96.36

31 December 2009 100.00

31 January 2010 94.62

28 February 2010 104.90

31 March 2010 112.38

30 April 2010 121.16

31 May 2010 111.65

30 June 2010 112.54

31 July 2010 110.19

31 August 2010 108.17

30 September 2010 111.13

31 October 2010 109.88

30 November 2010 121.18

31 December 2010 130.36

31 January 2011 135.62

28 February 2011 149.07

31 March 2011 152.09

30 April 2011 156.15

31 May 2011 149.41

30 June 2011 142.55

31 July 2011 149.27

31 August 2011 146.57

30 September 2011 140.51

31 October 2011 144.47

31 November 2011 151.0531 December 2011 152.25

31 January 2012 155.87

31 February 2012 169.16


INDEX DOWN 3% AS WHOLESALE GAS AND ELECTRICITY PRICES FALL AND GLOBAL OIL PRICES STABILISE

OILAfter two months of rising prices, oil prices stabilised in March and traded consistently around $125 a barrel. With fewer reports and statements to stoke fears that a military engagement between the West and Iran was imminent, oil prices remained calm during the month.

In previous months, oil prices had been pushed higher on fears that the world would have insufficient oil to meet its daily demand. These concerns had a weaker influence on prices in March as markets digested claims that Saudi Arabia could increase oil production immediately if required and rumours that strategic reserves of oil were to be released onto the world market. This general confidence in future oil supplies was reflected in the decision by the US to allow oil-related sanctions to go ahead on the belief that there is sufficient oil to fill the petroleum gap left by Iran.

The markets also seem to have paused to consider the potentially negative impact of rising oil prices on future economic growth and the underlying strength of China’s economy following some negative economic releases and forecasts.

OVERALL SUMMARY:The Bord Gáis Energy Index fell 3% in March as a return to milder weather following the severe conditions experienced in Continental Europe in February put downward pressure on wholesale gas and electricity prices.

Falls in the average UK Day-ahead gas and Irish wholesale electricity were recorded in March despite the dramatic news of an uncontrolled gas leak at Total’s Elgin platform in the North Sea towards the end of the month.

1 Mth� -3% 3 Mth� 7% 12 Mth� 4%

1 Mth� 0% 3 Mth� 11% 12 Mth� 11%

The Bord Gáis Energy Index fell 3% in March as a return to milder weather following the severe conditions experienced in Continental Europe in February put downward pressure on wholesale gas and electricity prices.

Falls in the average UK Day-ahead gas and Irish wholesale electricity were recorded in March despite the dramatic news of an uncontrolled gas leak at Total’s Elgin platform in the North Sea towards the end of the month.

1 Mth -3% 3 Mth 7% 12 Mth 4%

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Bord Gáis Energy Index 12 Month Rolling Average

Jan-12Oct-11Jul-11Apr-11Jan-11Oct-10Jul-10Apr-10Jan-10Oct-09Jul-09Apr-09Jan-09

After two months of rising prices, oil prices stabilised in March and traded consistently around $125 a barrel. With fewer reports and statements to stoke fears that a military engagement between the West and Iran was imminent, oil prices remained calm during the month.

In previous months, oil prices had been pushed higher on fears that the world would have insufficient oil to meet its daily demand. These concerns had a weaker influence on prices in March as markets digested claims that Saudi Arabia could increase oil production immediately if required and rumours that strategic reserves of oil were to be released onto the world market. This general confidence in future oil supplies was reflected in the decision by the US to allow oil-related sanctions to go ahead on 1 Mth 0% 3 Mth 11% 12 Mth 11%

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Oct-11 Jan-12Jul-11Apr-11Jan-11Oct-10Jul-10Apr-10Jan-10Oct-09Jul-09Apr-09Jan-09

Bord Gáis Energy Index (Dec 31st 2009 = 100)

After two months of rising prices, the price of a barrel of oil finally stabilised in March at the relatively high monthly average price of $125 per barrel, as the markets focused less on the threat and potential impact of a military engagement between the West and Iran. During the month, the narrative subtly moved from one of imminent war and supply disruption, to the West’s ability to withstand a supply shock as attempts were made to reassure the markets that the world had adequate oil supplies to withstand the loss of Iranian crude. Concern continues to be voiced about the potential impact higher oil prices are having on consumer spending and inflation. A series of mixed economic releases and question marks about the strength of China’s economy also weighed on oil markets as traders consider the viability of the price of a barrel of Brent crude.

Oil Index

*Index adjusted for currency movements.Data Source: ICE


Natural Gas Graph

Data

31 January 2009 195.04

28 February 2009 156.23

31 March 2009 99.24

30 April 2009 92.78

31 May 2009 87.00

30 June 2009 87.56

31 July 2009 76.34

31 August 2009 69.43

30 September 2009 61.72

31 October 2009 77.55

30 November 2009 83.21

31 December 2009 100.00

31 January 2010 125.88

28 February 2010 114.44

31 March 2010 101.67

30 April 2010 106.04

31 May 2010 130.73

30 June 2010 145.29

31 July 2010 157.48

31 August 2010 145.96

30 September 2010 132.67

31 October 2010 148.57

30 November 2010 167.11

31 December 2010 204.87

31 January 2011 188.31

28 February 2011 179.74

31 March 2011 194.03

30 April 2011 181.39

31 May 2011 184.99

30 June 2011 183.36

31 July 2011 179.36

31 August 2011 172.82

30 September 2011 180.07

31 October 2011 180.16

31 November 2011 191.53

31 December 2011 189.94

31 January 2012 184.35

31 February 2012 221.68

Coal Graph Data

31 January 2009 102.58

28 February 2009 93.02

31 March 2009 82.80

30 April 2009 78.58

31 May 2009 76.19

30 June 2009 76.68

31 July 2009 81.48

31 August 2009 84.15

30 September 2009 83.00

31 October 2009 86.26

30 November 2009 88.54

31 December 2009 100.00

31 January 2010 105.77

28 February 2010 95.28

31 March 2010 95.51

30 April 2010 108.11

31 May 2010 125.06

30 June 2010 132.03

31 July 2010 121.85

31 August 2010 123.28

30 September 2010 121.29

31 October 2010 121.83

30 November 2010 150.34

31 December 2010 159.48

31 January 2011 148.31

28 February 2011 149.34

31 March 2011 153.91

30 April 2011 148.29

31 May 2011 145.75

30 June 2011 144.90

31 July 2011 147.62

31 August 2011 149.65

30 September 2011 156.20

31 October 2011 145.04

31 November 2011 142.82

31 December 2011 145.65

31 January 2012 134.66

31 January 2012 125.54

Electricity Graph Data

31 January 2009 127.36

28 February 2009 117.38

31 March 2009 89.56

30 April 2009 88.58

31 May 2009 82.33

30 June 2009 91.74

31 July 2009 83.00

31 August 2009 89.26

30 September 2009 87.28

31 October 2009 91.82

30 November 2009 93.65

31 December 2009 100.00

31 January 2010 105.32

28 February 2010 98.50

31 March 2010 90.42

30 April 2010 93.24

31 May 2010 105.19

30 June 2010 104.88

31 July 2010 106.05

31 August 2010 105.66

30 September 2010 109.05

31 October 2010 112.69

30 November 2010 115.75

31 December 2010 136.21

31 January 2011 123.78

28 February 2011 120.12

31 March 2011 129.24

30 April 2011 127.27

31 May 2011 118.10

30 June 2011 112.46

31 July 2011 112.53

31 August 2011 118.86

30 September 2011 117.61

31 October 2011 114.14

31 November 2011 123.77

31 December 2011 119.63

31 January 2012 117.47

31 February 2012 125.14


COALEuropean coal prices recovered slightly at the end of March following months of subdued activity and falling European prices.

Despite a late rally in prices toward the end of the month (which resulted in a $2 increase in the price of coal in the last week of March), a bearish tone prevailed throughout the European/Atlantic market due to ample supplies, high stockpiles, low demand for electricity and the beginning of spring and warmer weather.

With Europe lacking an appetite for coal, supplies from the US and Colombia are now increasingly finding their way to the Asian-Pacific region. As this region too is well supplied, regional prices of coal around the world continue to be soft. Given that the world’s number one consumer of coal revised its GDP target to 7.5% (from 9-10% in the previous five years), the market will be assessing any potential reduced Chinese demand will have on coal prices in the months ahead.

ELECTRICITYIrish wholesale electricity prices were 8% lower in March compared to February.

A combination of lower gas (with the average monthly Day-ahead price falling 11% in euro terms) and carbon (with the average monthly price down approx 7% in the month) prices, put downward pressure on wholesale electricity prices.

As the majority of electricity used in Ireland is produced by burning gas, internationally traded gas prices heavily influence Irish wholesale electricity prices.

NATURAL GASIn February, following the severe weather experienced in Europe and concerns over Russian gas supplies, the average Day-ahead gas price rose 20%. These dramatic increases proved temporary in nature and were reversed somewhat in March as the average March Day-ahead price fell 11% when compared to February.

A combination of weakening demand due to more seasonably mild weather (thus reducing the need to burn gas to heat homes), healthy supplies of gas from LNG terminals and imports from Norway, and relatively high stock levels, all conspired to put downward pressure on prices.

Despite the dramatic news of an uncontrolled gas leak at Total’s Elgin platform in the North Sea toward the end of the month, prices failed to react. Total are considering various options to tackle the leak which could include taking six months to drill a relief well. A prolonged loss of gas throughout the summer should not be a problem as supplies overall are sufficient to meet the reduced summer demand.

1 Mth� -11% 3 Mth� 4% 12 Mth� 2%

1 Mth� 1% 3 Mth� -13% 12 Mth� -18%

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Natural Gas Index

Coal Index

Electricity Index

*Index adjusted for currency movements.Data Source: Spectron Group

*Index adjusted for currency movements.Data Source: ICE

Data Source: SEMO


EUR/USD

31 January 2009 1.283

28 February 2009 1.272

31 March 2009 1.323

30 April 2009 1.321

31 May 2009 1.412

30 June 2009 1.405

31 July 2009 1.424

31 August 2009 1.434

30 September 2009 1.464

31 October 2009 1.474

30 November 2009 1.498

31 December 2009 1.433

31 January 2010 1.389

28 February 2010 1.360

31 March 2010 1.353

30 April 2010 1.327

31 May 2010 1.230

30 June 2010 1.226

31 July 2010 1.305

31 August 2010 1.269

30 September 2010 1.362

31 October 2010 1.392

30 November 2010 1.304

31 December 2010 1.337

31 January 2011 1.370

28 February 2011 1.379

31 March 2011 1.419

30 April 2011 1.483

31 May 2011 1.437

30 June 2011 1.451

31 July 2011 1.438

31 August 2011 1.441

30 September 2011 1.345

31 October 2011 1.395

31 November 2011 1.3446

31 December 2011 1.2961

31 January 2012 1.3084

31 January 2012 1.3325

EUR/GBP

31 January 2009 0.887

28 February 2009 0.886

31 March 2009 0.925

30 April 2009 0.894

31 May 2009 0.874

30 June 2009 0.853

31 July 2009 0.853

31 August 2009 0.881

30 September 2009 0.914

31 October 2009 0.896

30 November 2009 0.913

31 December 2009 0.888

31 January 2010 0.867

28 February 2010 0.893

31 March 2010 0.891

30 April 2010 0.868

31 May 2010 0.846

30 June 2010 0.819

31 July 2010 0.831

31 August 2010 0.827

30 September 2010 0.866

31 October 2010 0.869

30 November 2010 0.837

31 December 2010 0.857

31 January 2011 0.854

28 February 2011 0.849

31 March 2011 0.883

30 April 2011 0.888

31 May 2011 0.874

30 June 2011 0.903

31 July 2011 0.875

31 August 2011 0.885

30 September 2011 0.860

31 October 2011 0.8615

31 November 2011 0.8562

31 December 2011 0.8334

31 January 2012 0.8302

31 February 2012 0.8372


FX RATESDespite the euro hitting a 16 month low of 1.27 versus the US Dollar on the 16th of January, the currency rebounded to close at 1.33 versus the US Dollar at the end of February. These gains were maintained in March and the exchange rate finished the month at 1.33.

Confidence in the euro was supported by positive comments from the Italian Prime Minister who believes that the euro area’s woes are ‘almost over’ and that a solution to Greece’s challenges is almost accomplished. This tone contrasted sharply with a warning from the Federal Reserve Chairman Ben Bernanke who warned that ‘it’s far too early to declare victory’.

The cautionary tone struck in the US was echoed in the UK where the Bank of England’s Governor said that while the ECB’s long-year loans created a window of opportunity, it remains to be seen whether euro zone area officials will use the time to tackle the problems.

MARKET OUTLOOK:Oil prices, having stabilised in March, will continue to be driven by events as they unfold between the West and Iran. Iran’s reaction to ongoing sanctions could set the tone for the markets in April. Should reported meetings occur between the leaders that defuse the situation, we should see prices ease back. A continued risk premium in the price of a barrel of oil will mean that institutions and politicians will be concerned about the impact higher energy costs is having on inflation, especially given the fragile state of the global economy. Economic releases from the world’s top two economies will be watched closely for evidence of growth in the US and a soft landing in China.

In terms of gas prices, the weather, deliveries of gas, particularly of LNG cargos to the UK, and the markets assessment of the impact of the loss of gas due to the closure of the Elgin platform, will drive prices.

For more information please contact: Fleishman-Hillard — Aidan McLaughlin — 085 749 0484 Bord Gáis Energy — Christine Heffernan — 087 050 5555

RE-WEIGHTING OF BORD GÁIS ENERGY INDEX:Following the SEAI’s 2009 review of energy consumption in Ireland, released in Q4 2010, there was a 9.3% drop in overall energy consumption. The most notable drop of 1.39% was in oil consumption in the form of gasoline and diesel. This reflects the economic downturn experienced at the time. The share of natural gas and electricity increased by 0.63% and 0.57% respectively. An increase in the use of renewables and peat, at the expense of coal in electricity generation was also observed. As a result the Bord Gáis Energy Index has been reweighted to reflect the latest consumption data. This has had a minimal effect on the overall shape of the Index, but may indicate future trends.

Disclaimer:The contents of this report are provided solely as an information guide. The report is presented to you “as is” and may or may not be correct, current, accurate or complete. While every effort is made in preparing material for publication no responsibility is accepted by or on behalf of Bord Gáis Eireann, the SEMO, ICE Futures Europe, the Sustainable Energy Authority of Ireland or Spectron Group Limited (together, the “Parties”) for any errors, omissions or misleading statements within this report. No representation or warranty, express or implied, is made or liability accepted by any of the Parties or any of their respective directors, employees or agents in relation to the accuracy or completeness of the information contained in this report. Each of the Parties and their respective directors, employees or agents does not and will not accept any liability in relation to the information contained in this report. Bord Gáis Eireann reserves the right at any time to revise, amend, alter or delete the information provided in this report.

1 Mth� 0% 3 Mth� 3% 12 Mth� -6% EURUSD

1 Mth� -1% 3 Mth� 0% 12 Mth� -6% EURGBP

1 Mth 0% 3 Mth 3% 12 Mth -6% EURUSD

Oct-11 Jan-12Jul-11Apr-11Jan-11Oct-10Jul-10Apr-10Jan-10Oct-09Jul-09Apr-09Jan-090.60

0.80

1.00

1.20

1.40

1.60

FX Rates

Electricity 18.40%

Coal3.16%

Gas 13.52%

Oil 64.93%


Technology

March 2012 Energy Index - Bord Gáis Energy