MARKETS: Suspected fraud cases cast doubt over European carbon trade

(EnergyAsia, February 22 2011, Tuesday) — Europe’s carbon trade faces an uphill task to regain credibility as the European Commission continues investigations into damaging allegations of possible widespread fraud and theft of carbon permits.The commission has allowed some national registries to resume trade after having completely suspended trade in the permits for weeks till January…

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INDIA: OVL’s oil assets to be split with Sudan’s separation

(EnergyAsia, February 22 2011, Tuesday) — Indian upstream company ONGC Videsh Ltd (OVL) faces the challenge of having to operate in the newly separated countries that once constituted Sudan.OVL has interest in both the north and the oil-rich south which voted overwhelmingly to secede last month. The company has a 25% stake in the 1,600-km…

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COMPANY: BP looks to sell off US refineries, grow in Asia

(EnergyAsia, February 22 2011, Tuesday) — UK major BP is looking to raise US$4.4 billion by selling off some of its US refining and retail assets, and will focus on growing its business in Asia, Russia and Brazil in the coming year.BP reported net profit of US$4.36 billion or US$1.47 per share in the fourth…

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AUSTRALIA: Shell expects approval for Australia LNG Project by June

(EnergyAsia, February 22 2011, Tuesday) — Royal Dutch Shell said it expects to approve the construction of its proposed $10 billion floating liquefied natural gas (LNG) project off Western Australia by end-June.Dubbed the Prelude, the floating plant could start production by 2016.The project, which will employ 350 people, is estimated by some analysts to cost…

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COMPANY: Energy fund First Reserve Corporation opened Hong Kong office

(EnergyAsia, February 22 2011, Tuesday) — First Reserve Corporation, a world leading energy private equity firm with US$20 billion in its buyout funds, said it has formed First Reserve Asia Limited and opened an office in Hong Kong in February 2011.The company said it made these moves to reflect the growing importance of Asia to…

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SINGAPORE: Two research houses upgrade outlook and stock price of PEC Ltd

(EnergyAsia, February 21 2011, Monday) — Two research houses have recommended the stock of Singapore-listed PEC Ltd after upgrading their outlook for the oil and gas engineering firm. CIMB has set a target price of SS$1.54, after raising PEC’s outlook from ‘neutral’ to ‘outperform’, while Phillip Securities has recommended the stock as a ‘buy’ with…

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MARKETS: Brent-WTI spread reached record US$19.48

(EnergyAsia, February 21 2011, Monday) — Brent’s premium over US benchmark WTI futures rose to a record US$19.48 a barrel last Thursday, as the world oil markets continue to worry about events in the Middle East while the US remains seemingly untouched. Brent and the many regional benchmarks around the world have been holding above…

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MALAYSIA: Collaboration with Asian firms, tax incentives to boost oil and gas investments

(EnergyAsia, February 21 2011, Monday) — Malaysian oil and gas companies are expected to increase collaboration with their counterparts in Southeast Asia to jointly acquire and develop proven or marginal fields, invest in new upstream technology to enhance hydrocarbon recovery (EOR) and improve reservoir management practices. Consultant Frost & Sullivan made this prediction in conjunction…

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THAILAND: PTTEP will keep its oil licences in Australia

(EnergyAsia, February 21 2011, Monday) — Australia will not revoke the licences of Thai state upstream firm PTT Exploration & Production PLC after being assured that it will raise its operating standards to prevent a recurrence of a major oil leak in Timor Sea in August 2009. Energy Minister Martin Ferguson said PTTEP had satisfied…

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PERU: Stockopedia speaks to Rex Canon of Maple Energy

(EnergyAsia, February 21 2011, Monday) — Later this year, the arid coastline of north-west Peru will set the scene for the start of an ethanol production project that could transform the profitability of AIM-listed integrated energy group Maple Energy. After years of major engineering work, ethanol will begin flowing from what promises to be one of the lowest cost production operations of its type in the world, the company told Stockopedia.

Maple came to UK’s AIM exchange in July 2007 with a portfolio of Peruvian oil and gas exploration, production and processing assets, together with plans to develop its new US$254 million ethanol project which is now fully funded to completion in the second half of 2011. The economics of the new facility are impressive, not least because Peru’s coastline offers ideal conditions to grow the most efficient feedstock for ethanol production – sugar cane.

Starting on just over half of a land bank totalling 13,500 hectares, Maple has designed an environmentally conscious operation that is expected to produce up to 35 million gallons of ethanol per year for export, together with 37 MW of electricity from a co-generation power plant.

In the six months to June 30, 2010, Maple delivered revenues of US$35 million, up from US$28.3 million year-on-year, with pre-tax profits coming in at US$100,000 against a loss of US$15.5 million. Ebitda rose to US$5.3 million from US$2.4 million.

Over the last 12 months, the Maple Energy share price on AIM (they also trade in Lima) has fallen from a high of 84.75pence in January 2010 to a low of 41 pence last August and recently traded at 69.5 pence. Maple’s peers include AIM listed Gold Oil and Toronto listed Petrominerales (TSX: PMG), both of which have oil assets in Peru. Meanwhile, AIM groups GTL Resources and Clean Energy Brazil have ethanol interests in California and Brazil respectively.

Production will mark a major turning point for Maple, which last year sold its 14.3% stake in its first major project in the country – the Aguaytia gas and electric power project – for $28 million to Duke Energy. That deal streamlined its portfolio down to a modest oil production arm, a refining and marketing business based from the Pucallpa refinery and a chance shale gas discovery on the Santa Rosa prospect in Block 31-E (the company had originally be drilling for oil). Maple’s chief executive, Rex Canon believes the ethanol plant will have a major impact on the company’s future.

Rex, you have been with Maple Energy since the late 1980s. Tell me about the business and your strategy in Peru?

We are an independent energy company focused on Peru. We’ve got different business units, one is ethanol and the other one is in the hydrocarbon space. The biggest project is our ethanol project up on the north coast of Peru.

We had a predecessor company, which was in the US and which was also under the Maple name, and we were in the oil and gas production business, we operated at one time over 500 wells. We were also in natural gas gathering and processing, which means we were building and operating natural gas pipeline systems and gathering systems as well as processing plants which extracted gas liquids from gas production. We came down to Peru in the mid-1990s to look at opportunities.

The political landscape was changing in Peru at the time and they were just starting to discuss the privatisation of the oil and gas, and the electricity sectors. So we really came down here early on, and we ended up signing agreements with the government which got us into both the oil and gas business and also into the power business.

Our first big project at that time was to develop a $273 million fully integrated natural gas and electric power business, which included developing the first gas field to be commercialised in Peru ever – that was Aguaytia.

What triggered the move from Aguaytia into the ethanol space?

Aguaytia was a project conceived by Maple and it was our team that was responsible for developing it, constructing it and putting it into operation. That was our first big project in Peru. We have since done other things in the oil and gas sector and got interested in ethanol in the last few years.

We have a production, refining and marketing business in the central jungle of Peru. We were following ethanol because there are mandates all over the world to mix ethanol with gasoline. Just by being here in Peru, we knew the best feedstock for producing fuel grade ethanol was sugarcane, in terms of cost efficiency and energy efficiency.

Peru was arguably the best place in the world to grow sugarcane in terms of yields. That is what getting us focused on that opportunity and we now have a project that is under construction, fully integrated and we expect it to go into commercial operation in the second half of this year.

How challenging is it to put something like this together?

In terms of doing large scale greenfield projects in Peru, we’ve already done that before with the Aguaytia project.

A lot of the challenges have been overcome in that we have got all the key permitting in place and we have got the financing. We are substantially into the construction and a very significant part of the work that remains is being done under contracts that, in most cases, are fixed price and they’re very solid project-financed style contracts. There were certainly a lot of challenges but we have overcome most of those and we are in position to be in commercial operation in the second half of next year.

How complex has it been to negotiate this project with the Peruvian authorities?

It’s easy from the standpoint that it is a new industry really for Peru. There’s actually one other project that’s recently gone into operation, we’ll be the second one, but essentially this is a new industry as far as ethanol is concerned.

Peru has been producing sugar cane for a long time but as far as the concept of producing fuel grade ethanol this is something that is really more recent. It is a greenfield project and we’re creating jobs.

During the operation phase we’ll have 500 to 600 permanent employees, but if you look at the indirect employment created through other service providers, it is several multiples of that number. So we’re creating jobs, it’s a new industry and it is something that we have had a lot of support for, not just from the federal government and regional government but also from the local communities.

Will you be exporting the ethanol or processing it through your own refinery?

We are not really intending to produce this for our refinery, this is principally an export-driven business. There is a mandate for ethanol in Peru; the requirement here is that 7.8% of motor gasoline is to be ethanol. Now that particular mandate is being rolled out right now so it is already in effect in some parts of Peru but it is going to take another year or so to roll that out nationwide.

But even once that is rolled out nationally the demand in Peru is around 25 million gallons or so per year. Our production is expected to exceed that. There’s another project already in operation in Peru and I expect that there’ll be other projects.

While we may be selling some in the local market, this is principally an export-driven business.

We will be producing a very high quality product in terms of technical specifications but we’ll also be meeting all the sustainability requirements for the European market. We are using the most efficient feed stock, sugarcane, we are converting arid lands to production; there is nothing that has been cultivated on a commercial basis out there before. The coast of Peru it is really an arid coast, and we are using ‘drip irrigation’ so there is no issue about competition for water. It is about as green as you can get.

What are your longer-term plans?

The first step for us is that we actually own 13,500 hectares and we also have a substantial amount of water rights. Our plan in the first phase is to develop 7,800 hectares of cane plantation, and that is underway right now. In the next phase we will increase that total plantation up to about 10,000 hectares. We are looking for other opportunities in the river basin area we are in as well as other areas in Peru for other potential projects.

What impact will this project have on your financial performance in the years to come?

We have a production, refining and marketing business that is producing revenues and it has a stable source of cash flow.

Once we go into operation on our ethanol project the top line revenues from that business are expected to exceed what we are doing in the oil and gas business.

Our oil production is in the range of about 500 barrels a day, which is high quality crude oil that we’re producing from fields that we operate and have 100% interest in.

We own some of our own drilling rigs and work-over equipment, and we have an ongoing programme to maximise and optimise what we can get out of those fields. In addition to that we purchase natural gasolines from Aguaytia Energy, which was the business that we developed but later sold, on a long term basis and that feed stock goes into our refining operation.

The short story is that integrated business of production, refining and marketing is really just something that we are not spending much capital on at the moment, we are just trying to optimise what we can out of the existing business.

There is an opportunity in shale gas that requires further evaluation. We were drilling an oil prospect and while we didn’t find oil we did drill into a fairly significant deposit of shale gas. It needs further evaluation to determine the possibilities.

You brought Maple Energy to London’s AIM market in July 2007. Why do you think the company should be a stock worth watching for retail investors?

The big events coming up, I think this year certainly, will be going into commercial operation on the ethanol business.

We expect to be among the low-cost producers worldwide. We expect our direct production cost to be in the range of 75 cents per gallon. If you consider the administrative cost on top of that of about 14 cents a gallon and our transportation, storage and marketing estimates, you get to an all in projected cost of about $1.28 per gallon.

That is really a delivered cost at Rotterdam, which is what we are expecting our target market point to be. Prices of ethanol now are in the range of $3 to $3.25 per gallon. Ethanol is a commodity and the price varies every day but there is quite a bit of spread there.

Considering our expected production, there is a lot of cash flow that we expect to come out of that business once we go into commercial operation. The big changing point is going to be when we do go into commercial operation.

For the full interview, please click http://www.stockopedia.co.uk/page/partner-network/


TIMOR LESTE: Wartsila receives orders for power generating equipment

(EnergyAsia, February 18 2011, Friday) — Finland’s power solutions provider Wartsila Corporation said it recently received an order from Puri Akraya Engineering Ltd to supply engines and other equipment for two projects in the Democratic Republic of Timor-Leste, formerly known as East Timor. The Helsinki-based company said it will supply seven 18V46 generating sets with…

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SOUTH KOREA: Siemens Energy to supply new-generation gas turbine plant to GS Electric Power

(EnergyAsia, February 18 2011, Friday) — Siemens Energy, a leading German supplier of products, solutions and services for power generation, transmission and distribution, said it recently received an order to supply high-efficiency gas turbine (H Class) to South Korean utility GS Electric Power and Services Co Ltd (GS EPS). As a turnkey project scheduled to…

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THAILAND: PTTEP said 40%-owned Canadian oilsands project has started production

(EnergyAsia, February 18 2011, Friday) — Thai upstream company PTT Exploration and Production Public Co Ltd (PTTEP) said it has started oil sands production at its partly-owned Kai Kos Dehseh (KKD) project in the northeast of Alberta province in Canada. The company said the KKD project, an in-situ project involving an oil sands deposit covering…

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MIDDLE EAST: IMF calls for region to focus on “inclusive growth”

(EnergyAsia, February 18 2011, Friday) — In the wake of spreading violent protests in the Middle East, the International Monetary Fund (IMF) has called for the region to focus on “inclusive growth” and “give better-targeted help to poorer households”.   As a silver lining, the IMF said the popular protests could unleash the region’s long-term…

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SINGAPORE: Keppel FELS secures US$1.38 billion worth of rig orders from Maersk, Transocean

(EnergyAsia, February 18 2011, Friday) — In probably its most lucrative week ever, Keppel FELS Limited said it has secured contracts to build oil rigs worth nearly US$1.38 billion from subsidiaries of Denmark’s A.P. Moeller-Maersk and US Transocean. On February 15, the Keppel Offshore & Marine Ltd (Keppel O&M) unit said it signed a near-US$1…

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SINGAPORE: Global players establish LNG trading operations ahead of 2013 start-up of terminal

(EnergyAsia, February 18 2011, Friday) — More international companies are establishing liquefied natural gas (LNG) trading desks in Singapore, supporting the city state’s plan to become a regional gas trading hub. At least 12 companies have established presence in Singapore ahead of the expected start up of the S$1.7 billion LNG terminal on Jurong Island…

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UPSTREAM: Concern with deepwater risks starting to hurt oil production

(EnergyAsia, February 17 2011, Thursday) — Growing concerns over the risks associated with deepwater drilling are starting to negatively oil production among some of the industry’s key players. Following a serious incident last May, Norwegian energy group Statoil has shut 50 wells at its Gullfaks field. The company expects its North Sea production to continue…

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MIDDLE EAST: Oil companies cut drilling operations on fears of spreading unrest

(EnergyAsia, February 17 2011, Thursday) — Some Western oil and gas companies like Apache Corp, BG Group, Statoil, Shell and Transocean have temporarily closed offices and curtailed drilling operations in response to the on-going unrest in Egypt. While the country is still reeling from three weeks of popular revolt that has led to the overthrow…

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MARKETS: LNG prices expected to surge if Suez Canal traffic is disrupted

(EnergyAsia, February 17 2011, Thursday) — Liquefied natural gas (LNG) prices would surge if the political troubles in Egypt lead to a disruption in traffic through the Suez Canal, said industry participants. As the main passageway between Europe and Asia, the canal handles around 3.1 million tonnes per month of LNG or some 14% of…

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MARKETS: Global LNG demand growth to outpace supply this year

(EnergyAsia, February 17 2011, Thursday) — After years of glut and price weakness, the world liquefied natural gas (LNG) market is set to turn to deficit this year, due largely to rising demand from Asia, the Middle East and Latin America, analysts said. According to Bernstein Research, the recent glut in global LNG capacity will…

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MARKETS: Middle East turbulence drives traders to bet on US$250 oil

(EnergyAsia, February 17 2011, Thursday) — With an eye to possible geopolitical upheavals in the Middle East, some traders are betting on US WTI crude oil futures contract reaching US$250 a barrel sometime this year. The New York Mercantile Exchange (NYMEX) has reported a surge in the number of call options placed on US$250 oil…

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IRAN: New refinery to boost fuel self-sufficiency

(EnergyAsia, February 17 2011, Thursday) — Iran said its newly commissioned oil refinery in Arak town will boost the country’s gasoline production by 100,000 b/d when it reaches full commercial operation. Oil minister Seyed Masoud Mirkzaemi has boasted that the Shazand refinery, located about 240 km south of Tehran, will meet his country’s entire gasoline…

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AUSTRALIA: Consultant forecasts “bright future” for wind and solar markets

(EnergyAsia, February 16 2011, Wednesday) — The Australian renewable energy (RE) markets, especially its wind and solar power sectors, has a “bright future” as it continues to grow at a rapid rate and receives strong support from the government in the form of incentives, achievable numerical targets, and launch of industry specific programmes. According to…

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INDIA: German bank enlisted to help process payment for Iranian crude oil imports

(EnergyAsia, February 16 2011, Wednesday) — After nearly two months of a standoff, India has decided to use a German bank to handle its euro payments for its crude oil imports from Iran. Indian companies will make payments through Europisch-Iranische Handelsbank AG (EIHBank) of Hamburg, instead of the State Bank of India. Last December, fearing…

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QATAR: IMF predicts economy to grow 20% this year

(EnergyAsia, February 16 2011, Wednesday) — The International Monetary Fund has projected Qatar’s economy to grow 20% this year, noting that the country has weathered the global financial crisis exceptionally well. In its recent 2010 Article IV Consultation paper, the IMF noted that Qatar’s continuing public investment in infrastructure will keep growth high in the…

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