Analyzing Credit Risk in the US Energy Industry
The global energy industry has explored many options to meet the growing energy needs of industrialized economies wherein production demands are to be met with supply of power from varied energy resources worldwide. There has been a clearer realization of the finite nature of oil resources and the ever higher pushing demand for energy. The world has yet to stabilize on the complex geopolitical undercurrents which influence the oil and gas production as well as supply strategies globally.
Energy trading takes place primarily in the OTC markets that inherently have counterparty credit risk. The collapse of Enron, volatile energy prices, defaults on performance and a spate of continuous credit downgrades of energy trading companies have resulted in substantial reduction of counterparty confidence in the US energy trading industry. Managing credit risk has now become an important factor in the US Energy Industry.
Aruvian's R'search’s report – Analyzing Credit Risk in the US Energy Industry - analyzes how to manage credit risk in the US Energy Industry and the CNRA initiative. The report also takes a look at the global energy industry and the US energy industry.
Energy trading takes place primarily in the OTC markets that inherently have counterparty credit risk. The collapse of Enron, volatile energy prices, defaults on performance and a spate of continuous credit downgrades of energy trading companies have resulted in substantial reduction of counterparty confidence in the US energy trading industry. Managing credit risk has now become an important factor in the US Energy Industry.
Aruvian's R'search’s report – Analyzing Credit Risk in the US Energy Industry - analyzes how to manage credit risk in the US Energy Industry and the CNRA initiative. The report also takes a look at the global energy industry and the US energy industry.
A. EXECUTIVE SUMMARY
SECTION 1: ANALYZING THE GLOBAL ENERGY INDUSTRY
B. A LOOK AT THE GLOBAL ENERGY INDUSTRY
B.1 Global Energy Demand & Resource
B.2 Energy Consumption Patterns Worldwide
B.2.1 Energy Demand – Oil Based
B.2.2 Energy Demand – Coal Based
B.2.3 Penetration of Natural Gas in Energy Markets
B.2.4 Electricity Driven Demand
B.2.5 Role of Nuclear Energy as Energy Feeder
B.2.6 Hydroelectricity Consumption
C. REVENUE RETURNS ON GLOBAL ENERGY MARKETS
C.1 Oil Demand – Fuelling Growth Worldwide
C.2 China’s Coal Demand – Major Influence in World Markets
C.3 Developing World Electricity Consumption - Adding Up in the Global Pie
C.4 Renewable Energy
C.4.1 Hydroelectricity
C.4.2 Wind Energy
D. GLOBAL ENERGY DEMAND & SUPPLY DYNAMICS
D.1 Oil
D.2 Natural Gas
D.3 Energy Prices
D.4 Energy Usage
E. GLOBAL ENERGY MARKET – FUTURE OUTLOOK
SECTION 2: ANALYZING THE US ENERGY INDUSTRY
F. INTRODUCTION TO THE INDUSTRY
F.1 Industry Definition
F.2 Segmenting the Industry
F.3 Profiling the Industry
G. LOOKING AT TRENDS, IMPACTS, INDUSTRY FORCES & CHALLENGES
G.1 Impacts on the Industry
G.2 Issues Facing the Industry
G.3 Industry Trends
G.4 Growth Opportunities Present in the Industry
G.5 Competitive Forces Impacting the Industry
H. TRENDS IN US ENERGY INTENSITY
H.1 Impact of High Energy Prices on Manufacturers
H.2 Impact of High Energy Prices on Chemicals Industry
H.3 Impact of High Energy Prices on the Metals Industry
H.4 Impact of High Energy Prices on Other Industries
I. POLICY RESOLUTIONS TO THE US ENERGY CRISIS
I.1 Supply-Side Resolutions
I.2 Demand-Side Resolutions
I.3 Resolving Cost Issues
I.4 Resolving Regulatory & Legal Issues
I.5 Boosting Industry Performance through Government Programs
I.6 Conclusion
J. US ENERGY INDUSTRY: PEST FRAMEWORK ANALYSIS
J.1 Political Features
J.2 Economic Features
J.3 Social Features
J.4 Technological Features
K. US ENERGY INDUSTRY: PORTER’S FIVE FORCES STRATEGY ANALYSIS
K.1 Bargaining Power of Buyers
K.2 Bargaining Power of Suppliers
K.3 Competitive Rivalry in the Industry
K.4 Threat of New Entrants
K.5 Threat of Substitutes
K.6 Conclusion
SECTION 3: CREDIT RISK IN THE US ENERGY INDUSTRY
A. INTRODUCTION
B. UNDERSTANDING CREDIT RISK MANAGEMENT
B.1 Overview
B.2 Defining Credit Risk?
B.3 Looking at Principal Risk?
B.4 Looking at Replacement Cost Risk
B.5 Looking at Liquidity Risk
B.6 Looking at Credit Risk Mitigation Methods
B.6.1 Reduction
B.6.2 Transfer
B.6.3 Combining Reduction & Transfer
B.6.4 Summing up the Process
C. ANALYZING THE CCRO INITIATIVE
C.1 Introduction
C.2 Looking at the Benefits of Multilateral Netting
C.3 Further Collateral Requirements
C.4 Role of Bilateral Contracts
C.5 Understanding Master Bilateral Netting
C.6 Understanding Multilateral Netting
D. ANALYZING THE CLEARING, NOVATION & RELEASE AGREEMENT (CNRA)
D.1 Overview
D.2 Implications of the CNRA
D.3 Selection Process of the Clearinghouse
D.4 Reporting of Transactions
D.5 Enforcement of Conditioned Trades
D.6 Non-Conditioned Trades
D.7 Risk Management
D.8 Settlement Process
D.9 Associated Technologies
D.10 Disclosures &Governance
E. CONCLUSION
SECTION 4: CONCLUSION
A. APPENDIX
B. GLOSSARY OF TERMS
SECTION 1: ANALYZING THE GLOBAL ENERGY INDUSTRY
B. A LOOK AT THE GLOBAL ENERGY INDUSTRY
B.1 Global Energy Demand & Resource
B.2 Energy Consumption Patterns Worldwide
B.2.1 Energy Demand – Oil Based
B.2.2 Energy Demand – Coal Based
B.2.3 Penetration of Natural Gas in Energy Markets
B.2.4 Electricity Driven Demand
B.2.5 Role of Nuclear Energy as Energy Feeder
B.2.6 Hydroelectricity Consumption
C. REVENUE RETURNS ON GLOBAL ENERGY MARKETS
C.1 Oil Demand – Fuelling Growth Worldwide
C.2 China’s Coal Demand – Major Influence in World Markets
C.3 Developing World Electricity Consumption - Adding Up in the Global Pie
C.4 Renewable Energy
C.4.1 Hydroelectricity
C.4.2 Wind Energy
D. GLOBAL ENERGY DEMAND & SUPPLY DYNAMICS
D.1 Oil
D.2 Natural Gas
D.3 Energy Prices
D.4 Energy Usage
E. GLOBAL ENERGY MARKET – FUTURE OUTLOOK
SECTION 2: ANALYZING THE US ENERGY INDUSTRY
F. INTRODUCTION TO THE INDUSTRY
F.1 Industry Definition
F.2 Segmenting the Industry
F.3 Profiling the Industry
G. LOOKING AT TRENDS, IMPACTS, INDUSTRY FORCES & CHALLENGES
G.1 Impacts on the Industry
G.2 Issues Facing the Industry
G.3 Industry Trends
G.4 Growth Opportunities Present in the Industry
G.5 Competitive Forces Impacting the Industry
H. TRENDS IN US ENERGY INTENSITY
H.1 Impact of High Energy Prices on Manufacturers
H.2 Impact of High Energy Prices on Chemicals Industry
H.3 Impact of High Energy Prices on the Metals Industry
H.4 Impact of High Energy Prices on Other Industries
I. POLICY RESOLUTIONS TO THE US ENERGY CRISIS
I.1 Supply-Side Resolutions
I.2 Demand-Side Resolutions
I.3 Resolving Cost Issues
I.4 Resolving Regulatory & Legal Issues
I.5 Boosting Industry Performance through Government Programs
I.6 Conclusion
J. US ENERGY INDUSTRY: PEST FRAMEWORK ANALYSIS
J.1 Political Features
J.2 Economic Features
J.3 Social Features
J.4 Technological Features
K. US ENERGY INDUSTRY: PORTER’S FIVE FORCES STRATEGY ANALYSIS
K.1 Bargaining Power of Buyers
K.2 Bargaining Power of Suppliers
K.3 Competitive Rivalry in the Industry
K.4 Threat of New Entrants
K.5 Threat of Substitutes
K.6 Conclusion
SECTION 3: CREDIT RISK IN THE US ENERGY INDUSTRY
A. INTRODUCTION
B. UNDERSTANDING CREDIT RISK MANAGEMENT
B.1 Overview
B.2 Defining Credit Risk?
B.3 Looking at Principal Risk?
B.4 Looking at Replacement Cost Risk
B.5 Looking at Liquidity Risk
B.6 Looking at Credit Risk Mitigation Methods
B.6.1 Reduction
B.6.2 Transfer
B.6.3 Combining Reduction & Transfer
B.6.4 Summing up the Process
C. ANALYZING THE CCRO INITIATIVE
C.1 Introduction
C.2 Looking at the Benefits of Multilateral Netting
C.3 Further Collateral Requirements
C.4 Role of Bilateral Contracts
C.5 Understanding Master Bilateral Netting
C.6 Understanding Multilateral Netting
D. ANALYZING THE CLEARING, NOVATION & RELEASE AGREEMENT (CNRA)
D.1 Overview
D.2 Implications of the CNRA
D.3 Selection Process of the Clearinghouse
D.4 Reporting of Transactions
D.5 Enforcement of Conditioned Trades
D.6 Non-Conditioned Trades
D.7 Risk Management
D.8 Settlement Process
D.9 Associated Technologies
D.10 Disclosures &Governance
E. CONCLUSION
SECTION 4: CONCLUSION
A. APPENDIX
B. GLOSSARY OF TERMS
