ZURICH: Swiss engineering group ABB reported a rise in smaller orders and signs of recovery in some sectors hit by recent cutbacks by oil and gas companies, saying these were a better guide to the future than a drop in volatile big-ticket orders.
The transmission and industrial automation company said its overall order intake fell 3 percent in the three months ended March 31, when adjusted for currencies and divestments, halting an uptick at the end of 2016.
But ABB Chief Executive Ulrich Spiesshofer said he was encouraged by the 2 percent growth in base orders — projects under $15 million — which he said were the most reliable indicator of growth in the business.
Sales adjusted for currency fluctuations and divestments also rose by 3 percent, ABB’s best performance since the second quarter of 2015.
“Base orders in three of our four divisions are up,” Spiesshofer said.
“Large orders are lumpy. They fluctuate from quarter to quarter, and this quarter had lower larger orders. This is something I wouldn’t take as the overall sentiment.”
Before the fourth quarter of 2016, ABB’s order book had fallen for six straight quarters, putting pressure on the company to turn around its fortunes and catch up with rivals such as Germany’s Siemens.
Analysts said the order downturn was expected, and ABB’s stock rose 2 percent in early trading following earnings that beat forecasts.
A $200 million gain from one-offs including selling its high voltage cable business to Denmark’s NKT Cables last year, helped ABB lift net profit by 45 percent to $724 million, ahead of forecasts of $489 million in a Reuters poll.
Revenue fell 1 percent to $7.85 billion, though it rose 3 percent after stripping out the effect of divestments and currency fluctuations. The performance was highlighted by Barclays analyst James Stettler as ABB’s highest sales performance in two years.
In recent quarters, ABB has been wrestling with reduced orders from process industries such as oil and gas where customers have reacted to lower raw materials prices by postponing or canceling investments in new equipment.
Oil prices will likely continue to influence ABB’s results during 2017, the company said, while political uncertainties linked to developments such as Britain’s exit from the European Union would also weigh.
But Spiesshofer said he was seeing the “first signals of market stabilization in some process industries, as well as some growth signals in early-cycle businesses.”
The company said some macroeconomic signs in the US remained positive, while growth in China was expected to continue. The two countries are ABB’s two largest markets.
ABB sees some signs of recovery in sectors hit by energy downturn
ABB sees some signs of recovery in sectors hit by energy downturn
‘The age of electricity’: WEF panel says geopolitics is redefining global energy security
- Surging demand, critical minerals, US-China rivalry reshaping energy security as nations compete for influence, infrastructure, control over world’s energy future
LONDON: Electricity is rapidly replacing oil as the world’s most strategic energy commodity, and nations are racing to secure reliable supply and influence in a changing energy landscape.
Global electricity demand is growing nearly three times faster than overall energy consumption, driven by artificial intelligence, electric vehicles, and rising use of air-conditioning in a warming world.
“We are entering the age of electricity,” said Fatih Birol, the executive director of the International Energy Agency, during a panel discussion titled “Who is Winning on Energy Security?” at the World Economic Forum in Davos on Tuesday.
Unlike oil, electricity cannot be stockpiled at scale, forcing governments and companies to prioritize generation, transmission, and storage, making regions with stable infrastructure increasingly important on the global stage.
US-China rivalry
Energy security is increasingly about control and influence, not just supply. The rivalry between the US and China now extends beyond oil to critical minerals, energy infrastructure, and long-term energy partnerships.
“The contrast between the US approach and China’s is stark,” said Meghan O’Sullivan, director of Harvard University’s Belfer Center. “The US, until recently, focused on access, not control. China flips that, seeking long-term influence and making producers more dependent on them.”
O’Sullivan highlighted China’s Belt and Road Initiative, which invests in energy infrastructure and critical minerals across Africa, Latin America, and Asia to secure influence over production and supply chains.
“It’s not just the desire to control oil production itself, but to control who develops resources,” she said, citing Venezuela as an example. The South American nation holds some of the world’s largest crude oil reserves, giving it outsized geopolitical importance. Recent US moves to expand influence over Venezuelan oil flows illustrate the broader trend that great powers are competing to shape who benefits from energy resources, not just the resources themselves.
“There’s no question that the intensified geopolitical competition between great powers is playing out in more competition for energy resources, particularly as the energy system becomes more complex,” O’Sullivan added.
Global drivers of the electricity era
The rise of electricity as a strategic commodity is also transforming global supply chains. Copper, lithium, and other minerals have become essential to modern energy systems.
“A new ‘energy commodity’ is copper,” said Mike Henry, CEO of BHP. “Electricity demand is growing three times faster than primary energy, and copper is essential for wires, data centers, and renewable energy. We expect a near doubling, about a 70 percent increase in copper demand over 25 years.”
Yet deposits are harder to access, refining is concentrated in a few countries, and supply chains are politically exposed.
“The world’s ability to generate electricity reliably will increasingly depend on materials and infrastructure outside traditional oil and gas markets,” Birol said.
AI and digital technologies amplify the challenge with large-scale data centers consuming enormous amounts of electricity.
The Middle East’s strategic relevance
While the global focus is on electricity demand and great-power rivalry, the Middle East illustrates how traditional energy hubs are adapting.
Majid Jafar, the CEO of Crescent Petroleum, highlighted the region’s enduring advantages: abundant reserves, low-carbon potential, and strategic geography.
“Geopolitical instability reinforces, if anything, the Middle East’s role as a supplier with scale, affordability, availability, and some of the lowest carbon reserves,” he said.
Jafar emphasized the region’s ability to navigate the growing US-China rivalry.
“Amid US-China global friction, the Middle East has managed to remain on good terms with both sides,” he said, noting that flexible policy and engagement help preserve influence while balancing competing interests.
The region is also adapting to the electricity-driven era. AI data centers and digital technologies are multiplying power needs. Jafar said: “One minute of video consumes roughly an hour’s electricity for an average Western household. Multiply that across millions of servers and billions of people and the scale is staggering.”
Infrastructure investments further strengthen the Middle East’s strategic position. In the Kurdistan Region of Iraq, the Runaki Project has expanded natural gas–fueled power plants to provide 24/7 electricity to millions of residents and businesses, reducing reliance on diesel generators and supporting economic growth.
According to Jafar, the combination of energy resources, capital, leadership, and agile policymaking gives the Middle East a competitive edge in meeting global electricity demand and navigating the complex geopolitics of energy.
While the panel highlighted the Middle East as one example, in the age of electricity, energy security is defined as much by influence and infrastructure as by barrels of oil, with the US-China rivalry determining who gains and who is left behind.
