February 2012 Energy Index - Bord Gáis Energy

Bord Gáis Energy IndexFEBruary 2012

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


THE BOrD GÁIS ENErGy INDEX INCrEaSES 8% IN FEBruary– INDEX 11% HIGHEr THaN IN FEBruary 2011 –

OILAs tensions between the West and Iran over its nuclear programme escalated in February, oil prices hit new record highs in euro and British Pound terms. Oil began the month at $111 and ended it at $123 and hit a nine month high of $125.

There were a number of events which suggest to the market that the possibility of a military engagement with Iran is a little more likely. Fears that this would disrupt global supplies of oil and gas pushed prices up. Firstly, Iran made an unexpected announcement that it was to halt oil exports to British and French companies. Secondly, inspectors were refused access to nuclear facilities. Thirdly, a UN report claimed that Iran has sharply increased its production of enriched uranium. Suspicion remains that there is a possible military dimension to Iran’s nuclear programme.

Economic releases continue to suggest that the global economy is recovering slowly and this also supported oil prices.

OVEraLL SuMMary:The Bord Gáis Energy Index rose 8% in the month with record oil and gas prices being recorded. A confluence of perfect factors from geopolitical tensions, supply constraints, rising demand, a weaker US Dollar and improving market confidence, resulted in the price of a barrel of Brent oil hitting an all time record in euro terms. Gas prices rose dramatically early in the month due to severe winter weather across continental Europe and prices hit levels not seen since 2006.

1 Mth 8% 3 Mth 9% 12 Mth 11%

1 Mth 9% 3 Mth 12% 12 Mth 14%

60

100

140

180

Poin

ts

Bord Gáis Energy Index 12 Month Rolling Average

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

60

100

140

180

Poin

ts

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

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

During 2011, despite record global demand and uncertainties over supplies from North Africa and the Middle East due to the Arab Spring, Brent oil appeared unable to break out of the $100-$120 range for any length of time. However, in February, oil prices increased by nearly $12 and closed above the significant $120 a barrel price for 9 days. Cold weather and worries over the reliability of Russian gas supplies sent European, and in turn, UK traded gas prices soaring early in February to above £1 a therm. These prices did ease to more normal levels as the weather and supplies improved but the monthly average price out turned 20% higher month on month following a very mild January.

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 fell 7% in February as stockpiles at European generators and discharge terminals remained high. Indeed, because of the high coal stocks, European prices failed to react at all to the severe weather early in February. This was in stark contrast to natural gas which absorbed much of the shock because of the lack of supplies from Russia. A strengthening energy commodities market and improving economic sentiment also failed to put any upward pressure on prices.

During the month, coal prices fell to a 16 month low to trade below $100/mt for most of the month. Prices have been falling steadily since September when they were trading at over $126/mt. It is felt that the market would require one to two months of sustained cold weather to erode stocks sufficiently to put upward pressure on prices but this is now unlikely given that the winter is behind us. There were also no palpable signs that Chinese buyers were back in the markets during February following the country’s Lunar New Year festivities.

ELECTrICITyIrish wholesale electricity prices were 5% higher in February compared to January. A combination of higher gas (with the average monthly Day-ahead price rising 20% in euro terms) and carbon (with the average monthly price up approx 20% in the month) prices, increased 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.

Despite the significant increase in the cost of producing electricity, wholesale prices were restrained somewhat due to subdued demand as a result of mild weather in Ireland.

NaTuraL GaSDue to the severe weather experienced in Europe and concerns over Russian gas supplies, in the first week of February, Day-ahead prices hit their highest level in more than 6 years on the UK gas trading hub at over £1 a therm. The Day-ahead price remained high during the exceptional cold snap that saw an increase in demand for gas-fired heating and which tested supplies. During this period, continental Europe sought exports from the UK to compensate for reduced deliveries from the east and prices escalated.

The average Day-ahead gas price in February when compared to January was up 20%.

As temperatures improve, prices at the UK trading hub did ease back to levels between 57–60 p a therm with demand but conservation of stock levels, declining LNG deliveries to the UK and storage facility outages, continued to support prices.

1 Mth 20% 3 Mth 16% 12 Mth 23%

1 Mth -7% 3 Mth -12% 12 Mth -16%

1 Mth 5% 3 Mth 1% 12 Mth 4%

Poin

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100

150

200

250

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95

150

205

260

Poin

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100

140

180

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 raTESDuring February, the euro gained against most major world currencies including the British Pound and US Dollar. Given the currency movements observed, it would appear that the markets perceive that, although not resolved, progress has been made toward dealing with the sovereign credit crisis in Europe. This perception was boosted in the month following agreement from Brussels to provide Greece with an additional bailout worth €130 billion.

Despite the euro hitting a 16 month low of 1.27 versus the US Dollar on the 16th of January, the currency has rebounded to close at 1.33 versus the US Dollar on 29 Feb. In fact, the US Dollar weakened against most major currencies in February and this decline tends to boost the allure of investments priced in US Dollars, including oil. Increasing risk appetite and a commitment from the US Federal Reserve to keep interest rates low is weighing on the US Dollar.

MarkET OuTLOOk:With oil prices rising $12 during February, Governments and institutions are starting to raise concerns for the first time about the effect this may have on consumer spending (particularly in the US and particularly in the year of a presidential election), the fragile economic growth and inflation. During the month, European inflation accelerated 2.7% and estimates are for the euro-region economy to shrink moderately in 2012. Rising energy costs threaten to weaken the region’s economy by reducing the purchasing power of companies and consumers. Despite these concerns, oil prices will continue to be driven mainly by the market’s perception of tensions between the West and Iran and the likelihood or otherwise of a military engagement. Supply/demand dynamics and developments in foreign exchange will continue to influence prices. Markets will also continue to monitor the state of the world’s major economies through economic releases which have been generally positive so far in 2012.

In terms of gas prices, markets will be hoping for greater deliveries of LNG to Britain and increased supplies of gas from storage to the market.

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 2% 3 Mth -1% 12 Mth -3% EuruSD

1 Mth 1% 3 Mth -2% 12 Mth -1% EurGBP

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%

February 2012 Energy Index - Bord Gáis Energy

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