investment

On 29 January 2015, Royal Dutch Shell confirmed that it intends, subject to regulatory approval, to resume its US Arctic drilling programme at a cost for 2015 of at least $1bn. To date, Shell's Arctic programme has been a failure despite capital expenditure in excess of $6bn. 2012's drilling season beset by multiple operational failings was followed by a 'pause' for 2013 and a forced reversal of 2014 plans because of a US court decision.

Investors will soon be offered further equity (an FPO of 10 per cent) in the Indian Government majority-owned Coal India Limited (CIL).

This FPO will likely position investing in Coal India as an “opportunity” for investors in a robust emerging market, on the basis of widely held assumptions regarding India’s continued reliance on thermal coal for power generation; and it having among the largest, lowest priced coal resources in the world.

The Arctic Ocean is the last frontier for international oil companies, with rapid reductions in ice cover (due to climate change from the combustion of fossil fuels) making the exploitation of newly discovered offshore resources possible, at least theoretically. Royal Dutch Shell’s (Shell) proposed drilling programme in Alaska this year is seen as leading the charge into Arctic exploration by major oil companies.

International oil companies continue to rely on Canadian tar sands for future growth. Tar sands extraction projects are again expanding and the industry ambition is to grow production from today’s level 37 per cent by 2015 and an extraordinary 138 per cent by 2025. Significant risks however still face the industry. Major environmental constraints remain - particularly greenhouse gas emissions and water use - as well more conventional challenges, including labour, equipment and service cost inflation in the region.