SINGAPORE: IEA chief endorses vision for LNG trading hub

(EnergyAsia, December 30 2011, Friday) — The chief economist of the International Energy Agency (IEA) has endorsed Singapore’s goal to become a trading hub and pricing centre for the rapidly growing global liquefied natural gas (LNG) market.

Fatih Birol, who recently presented the findings of its “World Energy Outlook (WEO) 2011” report in Singapore, said the coming ‘Golden Age of Gas’ will be driven by rising supply and demand, particularly in Asia, with Singapore strategically positioned to help balance trade flows and set benchmark prices.

Large companies are making huge investments in large LNG projects with plans for exports to meet rising Asian demand for clean energy.

Dr Birol said: “With its strategic location and long history as a leading oil trading centre, Singapore is now well placed to serve as a key LNG hub. This would give a boost to market flexibility and transparency and help reduce Asia’s long-standing reliance on oil indexation for gas contracts.”

According to the IEA’s New Policies Scenario, global gas demand will grow by an average 1.7% a year to 4.75 trillion cubic metres (tcm) in 2035.

Non-OECD countries will account for 81% of the growth, with China expected to boost its domestic demand from 110 billion cubic metres (bcm) in 2010 to over 500bcm by 2035.

This is the fourth year that Singapore’s Energy Market Authority (EMA), a statutory board under the Ministry of Trade and Industry, and the IEA are co-hosting the ‘World Energy Outlook’ lecture in Singapore.

SINGAPORE: Keppel Offshore & Marine secured record orders worth S$10 billion for 2011

(EnergyAsia, December 30 2011, Friday) — Singapore’s Keppel Offshore & Marine Ltd secured a record of S$10 billion worth of orders from the offshore oil and gas sector. (US$1=S$1.3).

Yesterday, the company signed off on its last orders for the year totalling S$150 million through its subsidiaries, Keppel Singmarine Pte Ltd and Keppel Verolme BV, to push its combined orders for 2011 to S$10 billion.

Keppel Singmarine, Keppel O&M’s specialised shipbuilding division, secured contracts for building a 91-metre container vessel and three 4000 DWT bulk ore/fuel carriers for Papua New Guinea customer Ok Tedi Mining Limited while Keppel Verolme, Keppel O&M’s yard in the Netherlands, is upgrading a semisubmersible drilling rig, Scarabeo 6, for Italy’s Saipem Misr for Petroleu Services SAE.

Chow Yew Yuen, Keppel O&M’s managing director, said:

“With these contracts, our new orders for the year-to-date have reached a record high of some S$10 billion, with deliveries extending to 2015. It reflects the confidence of global customers in the capabilities of our yards across the Keppel O&M group. We have established a solid track record of successfully completed projects and we intend to maintain this by executing our orders to the satisfaction of our customers.

“With a network of yards around the world, we are proud to be able offer a variety of services to customers wherever they are. We will continue to strengthen the partnership with repeat customers like Saipem and gain the trust of new customers like Ok Tedi Mining.”

The container vessel to be built by Keppel Singmarine is capable of loading 3,000 tonnes of copper concentrate or carrying 236 TEU (twenty-foot equivalent unit) of containers. In addition, the three 4000 DWT bulk ore/fuel carriers that Keppel Singmarine will be building, will each be able to carry a minimum of 4,000 tonnes of copper concentrate or 1,900,000 litres of bulk diesel fuel.

The vessels are scheduled for delivery in the second quarter of 2013.

In the Netherlands, Keppel Verolme will upgrade and maintain the semisubmersible drilling rig, Scarabeo 6. The vessel is expected to arrive at the yard in 2Q 2012 for a period of six months.

Work on the rig includes upgrading its drilling capabilities to a water depth of 1,200 metres, the prefabrication and installation of various deck extensions, and the renewal of traction winches, cable spooling winches and double riser tensioners.

A new storage area for risers will be constructed and new sponsons and blisters will be installed to accommodate the new winches as well as enhance buoyancy and stability. The maintenance programme will include refurbishment of the accommodation.

MARKETS: IEA’s chief economist on the world energy outlook

(EnergyAsia, December 30 2011, Friday) — Fatih Birol, chief economist of the International Energy Agency (IEA), recently presented the findings of its “World Energy Outlook (WEO) 2011” report in Singapore.

Amid uncertain energy future demands, he said the world would need a bold change in policy direction or risks locking itself into an insecure, inefficient and high-carbon energy system.

Referring to the recently ended UN climate change summit in Durban, South Africa, Dr Birol said:

“The good news from Durban was that all of the biggest emitters signed up to develop a binding agreement to cut emissions. But as they iron out the details of the plan, countries must also push ahead with practical action to avoid being locked into a high-carbon energy system, particularly in Asia where rising incomes and population will inevitably push energy needs higher.”

As a result of its rapid economic expansion and large population, Asia has become the centre of an increasingly inter-connected global energy markets.

According to the WEO’s central New Policies Scenario, global primary energy demand will increase by one-third between 2010 and 2035, with 90% of that growth coming from non-OECD economies.

China, which recently surpassed the US to become the world’s largest energy consumer, will consume 70% more energy than the US by 2035, although its per capita demand will still be less than half of the US by then.

Dr Birol told the audience of more than 200 professionals that nuclear power capacity is expected to grow by about 70% in 2035, led by China, India and South Korea. But he cautioned that varying policy responses to the Fukushima reactor crisis in Japan could derail the IEA’s projections.

A slowdown in the development of nuclear power would boost the role of renewables, but it would also increase the cost of energy imports, reduce diversity of the fuel mix and make it harder and more expensive to mitigate the effects of climate change.

Dr Birol expects oil prices to continue to face upward pressure on account of global demand rising from 87 million b/d in 2010 to 99 million b/d in 2035, with the net growth coming from the transport sector in emerging economies.

On the supply side, the Middle East and North Africa region will provide around 90% of the total production increase, but it is on the condition that it is able to attract US$100 billion worth of oilfield investments each year between 2011 and 2015.

If it achieves only two-thirds of that target, consumers around the world could face a near-term rise in the oil price to US$150 a barrel, he said.

The WEO projects that coal, which met almost half of the increase in global energy demand over the last decade, could see another 24% increase in use by 2035. Prospects for coal are especially sensitive to energy policies, notably in regions like China which today accounts for almost half of global demand.

Natural gas continues to grow its importance in the energy pie, underscoring key findings of a recent WEO Special Report on the ‘Golden Age of Gas’.

According to the IEA’s New Policies Scenario, global gas demand will grow by an average 1.7% a year to 4.75 trillion cubic metres (tcm) in 2035.

Non-OECD countries will account for 81% of the growth, with China expected to boost its domestic demand from 110 billion cubic metres (bcm) in 2010 to over 500bcm by 2035.

Based on the IEA’s projections, the world’s CO2 emissions over the next 25 years will amount to three-quarters of the total from the past 110 years, and put the world on track for a long-term average temperature rise of 3.5°C. China’s per-capita emissions will match the OECD average by 2035.

Dr Birol said: “There is still some limited time to change course and meet the international goal of limiting the long-term increase to 2°C. However, each year, the necessary measures get progressively tougher and more expensive.

AUSTRALIA: QR National signed 10-year coal haul contract with Rio Tinto

(EnergyAsia, December 30 2011, Friday) — Australian coal haulage firm QR National said it has signed a 10-year contract with Rio Tinto to haul three million tonnes of coal a year starting next month.

It will provide the services from Rio Tinto’s Blair Athol/ Clermont mines to the Abbot Point Coal Terminal (APCT), both located within Queensland state.

QR National said it will leverage its recent A$1.1 billion expansion and upgrade of its national network connecting Goonyella to Abbot Point (GAP), was officially opened last month by Acting Premier Andrew Fraser and QR National Chairman John Prescott. (US$1=A$0.96).

The new long-term contract is the second secured by QR National for coal haulage via the new GAP infrastructure, following an announcement in February 2011 of a 10-year contract with Jellinbah Resources to haul up to six million tonnes/year of coal from the Lake Vermont mine to APCT.

QR National’s managing director and CEO, Lance Hockridge, said:

“We have a strong relationship with Rio Tinto Coal at both the commercial and operational levels and this contract enables us to build on that with a high performance, take or pay contract.”

QR National is Australia’s largest rail freight company with services operating across five states. For financial year 2010/11, it transported more than 240 million tonnes of freight, including coal, iron ore, other minerals, agricultural products and general freight. It also operates and manages the 2,300-km Central Queensland coal network that links mines to coal ports at Bowen, Mackay and Gladstone.

AUSTRALIA: US Peabody Energy completed acquisition of Macarthur Coal

(EnergyAsia, December 31 2011, Friday) — US-based Peabody Energy said it has completed the acquisition of all outstanding shares in Macarthur Coal Limited and will now delist the company from the Australian Securities Exchange. Peabody said its pro forma Australia sales including the acquisition volumes were 32 million tons in 2010. It plans to raise…

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SINGAPORE: Dyna-Mac secures new fabrication orders worth a total S$115 million

(EnergyAsia, December 29 2011, Thursday) — Dyna-Mac Holdings Ltd, a Singapore-based multi-disciplinary specialist provider of detailed engineering, procurement and construction services to the offshore marine, oil and gas industries, said it has secured orders worth a total sum of S$115 million, boosting its order book to a provisional value of S$190 million to date. (US$1=S$1.3).

The company said it has signed letters of intent (LOIs) with Modec, Bumi Armada Berhad and SBM Offshore, leading operators of floating production, storage and offloading vessels (FPSOs), to fabricate nine topside modules, nine piperacks and one turret by end-2013. To be completed in stages, these offshore structures are for use on FPSOs named OSX 3, D1 and Quad 204.

OSX 3 Leasing BV, a subsidiary of OSX Brasil SA and part of the EBX Group, said OSX 3 will be deployed on the Waikiki field in the Campos Basin off the coast of Brazil upon completion.

Bumi Armada’s D1 will be chartered to India’s State-owned Oil and Natural Gas Corporation Limited (ONGC) and deployed in the D1 field, 200km off the west coast of Mumbai.

Quad 204 will be deployed in the UK North Sea. Its turret design is a large internal mounted system with a bogie wheel bearing arrangement, which will moor the FPSO in harsh environmental conditions.

Weighing 10,000 tonnes, its turret is provided with arrangements for connecting 20 mooring lines and up to 28 flexible risers and umbilicals. The turret topside structures consist of five decks and a gantry accommodating the process piping, manifolding, equipment and swivel stack for handling a total fluid throughput of 320,000 b/d.

Desmond Lim Tze Jong, Dynmac’s executive chairman and CEO, said:

“We have been in talks for these projects, amongst others, for some time and we are pleased to have finally sealed these projects, which boosts our current order book to S$190 million. Our tender book remains healthy and we are confident about our growth outlook given that current market dynamics continue to encourage higher spending on exploration and production of oil.

“Our optimism is also supported by Dyna-Mac’s strong track record and reliable reputation as a FPSO / FSO topside module specialist among our customers, many with whom we have entrenched working relationships.”

Established in 1990, Dyna-Mac’s principal business is in the fabrication and assembly of topside modules for floating, production, storage and offloading vessels (FPSOs) and floating, storage and offloading vessels (FSOs) in Singapore. The company also undertakes general engineering and fabrication services for specialized structures for semi-submersibles and sub-sea products on an ad hoc basis.

RUSSIA: Mechel confirmed “high quality” of Elga mine’s coking coal

(EnergyAsia, December 29 2011, Thursday) — Mechel OAO, an NYSE-listed Russian mining and metals company, said a subsidiary has confirmed the “high quality” of coal deposit from its Elga mine in southwestern Siberia.

Southern Kuzbass Coal Company’s washing plant recently produced its first coking coal concentrate out of mine.

“A sample lot of some 4,000 tonnes of Elga’s coking coal was washed at Southern Kuzbass Coal Company OAO’s Sibir plant. The concentrate obtained by industrial washing has qualities which rate the Elga deposit’s coals with high-value grades of caking coals,” said Mechel. The concentrate was tested for industrial coking by Mechel-Coke OOO.

The company added: “Using coal of this quality allows production of coke with high structural durability, which in its turn helps improve technological and economic results of blast furnace production.

“Results of the coking coal washing tests will enable a better understanding of the technological specifics of working with Elga coal. This information will be used in designing and constructing.”

The Elga open pit mine, which started up in August 2011, has produced 20,000 tonnes of oxidised coals, characterised as steam coals with high calorific value.

Mechel OAO chairman Igor Zyuzin said:

“Use of the Elga deposit’s coking coal will provide Mechel’s coke and chemical facilities with fully internally-sourced fuel, which will enable us to significantly improve our coke products’ quality and guarantee our independence from external suppliers. Moreover, Elga Coal Complex’s products will allow Mechel to increase exports of coal grades that are in demand.”

COMPANY: Amnesty reports Dutch court upheld Trafigura guilty verdict in toxic waste dumping case

(EnergyAsia, December 29 2011, Thursday) — Amnesty International has reported that a Dutch court has upheld a guilty verdict against European commodities trader Trafigura for illegally exporting and dumping toxic waste that affected the health of thousands of people in the West African country of Côte d’Ivoire.

Hailing the decision as “an important step towards justice” for the victims, Amnesty International said the judge rejected Trafigura’s appeal against its previous conviction for illegally delivering hazardous waste to Amsterdam while concealing its true nature, and then exporting the cargo to Côte D’Ivoire in 2006.

Benedetta Lacey, a special advisor at Amnesty International who has visited Côte d’Ivoire and met victims of the dumping, said:

“This is a damning verdict against Trafigura which has repeatedly denied any wrongdoing.

“The verdict is clear: Trafigura is criminally accountable for having concealed the harmful nature of the waste on delivery in Amsterdam and for having illegally exported the waste to Cote d’Ivoire. In particular we welcome the court’s finding that EU regulations on hazardous waste did apply in this case.”

The appeal verdict found that the municipality of Amsterdam was able to claim immunity from prosecution for having allowed the toxic waste to leave the Netherlands. Amsterdam Port Services (APS), a Dutch company that had been initially contracted by Trafigura to dispose of the waste, was also cleared of any criminal charges after the appeal court upheld the previous court’s decision that APS had made an ‘excusable error of law’.

“Whilst this is a significant step towards justice there are still many unanswered questions. The Dutch prosecution focussed on events and legal breaches which occurred in the Netherlands alone. It did not consider the impact of the dumping in Côte D’Ivoire or illegal acts committed abroad,” said Ms Lacey.

“States must ensure that multinational companies are prosecuted for illegal conduct that leads to human rights abuses both at home and abroad.”

Amnesty said that Trafigura off-loaded waste from a ship in Amsterdam for disposal in July 2006. A month later, it then reloaded and dumped it in various locations around the city of Abidjan in Cote d’Ivoire.

Following the dumping, Amnesty said more than 100,000 people sought medical attention for a range of health problems that included 15 reported deaths.

AUSTRALIA: Noble Group comments on Yanzhou Coal’s merger proposal with Gloucester Coal

(EnergyAsia, December 29 2011, Thursday) — The following is an edited press release issued by Hong Kong-based commodities trader Noble Group, the majority owner of Australia’s Gloucester Coal, which is targeted for merger by Yancoal Australia Limited.

China’s Yanzhou Coal Mining Company Limited announced that it has entered into an agreement in relation to a proposed merger with Gloucester Coal Limited, under which Gloucester’s assets would be combined with Yanzhou’s Australian coal assets under an ASX-listed merged company, Yancoal Australia Limited.

The Yanzhou assets to be vended into the merged company include its interests in the Austar coal mine, Ashton joint venture, Moolarben joint venture, Yarrabee coal mine, Newcastle Coal Infrastructure Group and Wiggins Island Coal Export Terminal.

Under the proposed merger, all of Gloucester’s ordinary shares would be acquired by Yancoal, in exchange for Gloucester shareholders electing to receive either all ordinary shares in Yancoal or a combination of ordinary shares in Yancoal and contingent value right (CVR) shares.

The proposed merger contemplates that Gloucester shareholders would own 23% of Yancoal, subject to the fulfillment or waiver (as applicable) of the conditions in the merger proposal deed entered into by Yanzhou, Yancoal and Gloucester.

The proposed merger is subject to a number of conditions, including the completion of due diligence by both parties validating the relative value of the Yancoal assets and Gloucester as specified in the proposed merger, the approval of Gloucester shareholders under a scheme of arrangement, the approval of Gloucester shareholders of a capital reduction that will enable a capital return payment, the approval of Yanzhou shareholders as well as Australian and Chinese regulatory and listing approvals being obtained.

Noble has stated to Gloucester’s independent directors that, subject to approval by the Noble board of directors and in the absence of a superior proposal, it intends to vote its shareholding in favour of the proposed merger and would elect to receive all ordinary shares as scheme consideration.

Noble currently controls 64.5% of the ordinary shares in Gloucester.

Noble said it welcomes the proposed merger as it reflects the long-term strategy it has been working on together with the Gloucester board to create a leading Australian listed coal supplier of scale and diversified product mix.

Noble said it also welcomes the proposal to realise approximately A$3.20 cash per share by way of a fully franked special dividend of approximately A$0.56 per share payable prior to the effective date of the merger and a capital return of approximately A$2.64 per share effected prior to the effective date of the merger and payable six months after implementation of the merger. (US$1=A$0.96).

The cash component will crystallise a significant portion of the value in Gloucester shares, while also allowing Gloucester shareholders to retain an ongoing interest in the combined Gloucester and Yancoal assets.

Noble notes the CVR proposal offered under the Proposed Merger which would provide up to A$3 of protected value to Gloucester shareholders. Since acquiring control of Gloucester, Noble has consistently stated its desire to ensure minority investors in Gloucester receive fair and equitable treatment as shareholders in a Noble controlled company.

Consistent with this desire, Noble has elected to waive its rights to the CVR entitlement to enable maximum value protection to be available to minority shareholders in Gloucester. Noble considers this would be a fair and equitable outcome for Gloucester’s minority shareholders.

The merged group will have 11 operating mines in Australia’s New South Wales and Queensland states, significant product diversity and flexibility, a leading infrastructure position and world-class board and management team.

Shareholders in the merged company will also benefit from the availability of significant funding facilities that will be arranged by Yanzhou. This will provide a capital structure which is capable of funding the merged company’s substantial embedded growth options while enhancing returns to shareholders.

In the longer term, the merged company is expected to have very significant cash flow generation which will underpin a progressive dividend policy.

It is Noble’s intention to hold its shares in Yancoal for value accretion.

Noble Group chairman and CEO, Richard Elman, said: “We are excited by the prospect of the proposed merger which envisages the creation of a world class, multi product, multi location, Australia-listed coal company.

“The merged company will be a major force in the global seaborne energy and carbon coal markets, bringing together the parties’ complementary expertise and assets, while maximizing the use of the merged group’s port entitlements.

“The vision for the merged company aligns perfectly with Noble’s stated approach to creating bulk commodity pipelines, developing high quality assets from the ground up and then looking to re-cycle capital, while retaining a strong interest in an enhanced business.”

AUSTRALIA: Coal association calls for funding for carbon capture

(EnergyAsia, December 29 2011, Thursday) — The Australian Coal Association (ACA) has called on the Clean Energy Finance Corporation (CEFC) to take a “technology-neutral approach” to investment, adopt a stage-gated approach to financing high risk projects and be subject to reviews by the Productivity Commission.

In a submission to the Federal government, the association also criticised the decision to exclude carbon capture and storage (CCS) technology from eligibility for CEFC funding.

ACA CEO Nikki Williams said the government’s commitment to public funding of low emission energy technologies should remain a fundamental part of its climate change policy.

She said: “Australia’s carbon tax will not deliver the future energy technology required to meet growing energy demand and meet emissions reductions targets on its own. Government funding is essential to encourage private investment in an area of research, development and demonstration (RD&D) which is inherently high risk, complex and long-term.

“It is vital that there are appropriate mechanisms in place to make ongoing assessments of the development of projects and technologies to maximise the effectiveness of the CEFC funding allocation. For this reason we have recommended the introduction of a stage-gated approach and a role for the Productivity Commission to review the programme.

“CCS is not a coal technology. It is a carbon technology. It is the only technology available to significantly reduce emissions not just from the use of coal and gas, which account for almost 92% of Australia’s electricity generation, but also from industrial processes such as cement and steel manufacturing and natural gas processing associated with liquefied natural gas (LNG) production,” said Dr Williams.

“The CEFC, its funding allocation and the exclusion of CCS was an outcome of the negotiations with the Multi-Party Climate Change Committee. The exclusion of CCS however exacerbates the current funding imbalance between renewables and other low emission technologies. It also handicaps the development of a key low emission solution important to Australia’s energy future.

“Australia has a clear strategic and economic interest in CCS as the world’s largest exporter of coal and is a major exporter of LNG. This is why the decision to exclude CCS from CEFC funding is flawed.”

The ACA submission highlights the view of the International Energy Agency (IEA) that “a ten-year delay in the availability of CCS would increase the cost of achieving a 450 [parts per million] scenario by US$1.14 trillion between now and 2035. The IEA concludes that “intensive investment and effort to demonstrate the commercial viability of CCS is the rational course of action for governments seriously intent on restricting the average global temperature rise to no more than 2ºC”.

Dr Williams said that Treasury modelling underscored the importance of CCS.

“Treasury found that CCS applied to coal and gas could account for around 30% of Australia’s electricity mix by 2050. It also found that without CCS, domestic emissions would be higher by 25 million tonnes per annum (Mtpa) in 2050 – and that does not take account of broader applications of CCS outside of the electricity sector.

“Australia is facing a significant energy challenge and we must investigate the broadest range of low emission energy options”.

The submission highlights the apparent mismatch between the Federal government’s welcome ongoing commitment to CCS funding and the funding allocation for renewable energy technologies.

“Given the enormous potential of CCS in Australia, it is surprising that it has received considerably less funding support than other low emission technologies. Renewable technologies have access to the A$3.2 billion managed by the Australian Renewable Energy Agency as well as the estimated A$20 billion in indirect support provided by the 20% renewable energy target. According to Treasury modelling, this will provide the foundation for renewable energy to deliver an estimated 40% of Australia’s electricity mix in 2050. In contrast, CCS is receiving less than A$2 billion to deliver a potential 30% of the electricity mix.”

The ACA represents Australia’s black coal producers which play a fundamental role in the country’s economy. Black coal is Australia’s second largest export industry (worth A$43.1 billion in 2010-11), directly employs over 40,000 people and provides the fuel for around 55% of its electricity.

IRAQ: Investment amid ongoing disagreement over production sharing contracts in Kurdistan

(EnergyAsia, December 28 2011, Wednesday) — The following is an edited commentary by law firm Herbert Smith.

Disagreement between Iraq’s Federal Government and the Kurdish Regional Government over control of oil and gas reserves in the semi-autonomous region is yet to be finally resolved but that has not stopped an increasing number of major international oil companies from choosing to invest in Iraqi Kurdistan.

Kurdistan, which the Federal government claims holds 200 billion barrels of oil, may control anything from 20% to over 33% share of Iraq’s oil reserves.

Pursuant to regional legislation passed in 2007, the Kurdistan Regional Government (the KRG) has signed more than 35 oil production sharing contracts (PSCs) with foreign companies. Officials representing the Federal government, including Deputy Prime Minister for Energy and former Oil Minister Hussain al-Shahristani, have challenged the validity of both the KRG’s petroleum legislation and PSCs.

Some companies that have signed PSCs with the KRG have been excluded from participating in the tender rounds for oil and gas service contracts conducted by the Federal Government, including the current fourth round tender for exploration blocks.

A dispute over the treatment of oil produced from two blocks subject to PSCs signed by the KRG, Tawke and Taq Taq, which began in June 2009, led to production being halted in October 2009.

Following lengthy negotiations, Iraq’s federal State Oil Marketing Organisation resumed exports of crude from KRG controlled fields in February 2011 through the Kirkuk-Ceyhan pipeline. The details of the current revenue sharing arrangements and timing of payments relating to these exports are unclear but it appears to allow producing companies (Genel Energy, Sinopec and DNO) to recover their costs, at least, pending a more comprehensive agreement.

The KRG’s Minister of Natural Resources, Ashti Hawrami, has estimated that Kurdish oil production could reach 200,000 b/d by end-2011, and one million b/d between 2013 and 2015.

While the arguments between Baghdad and the KRG over Iraq’s northern oil reserves could be described as primarily political, the legal debate centres on the interpretation of the Federal Constitution. This document allocates power between the Federal and regional governments, the KRG being the only regional government currently recognised (other areas within the federation being governorates).

Articles 115 and 121 overlap to give regional governments the authority to legislate in all areas of law not exclusively reserved for the jurisdiction of the Federal government. They also give regional legislation priority over any conflicting federal legislation in such areas.

Article 110 sets out the scope of Baghdad’s exclusive powers while Article 114 identifies powers which are to be shared by Baghdad and regional governments, but neither includes any reference to oil and gas.

The law relating to oil and gas is specifically addressed by Articles 111 and 112. Article 111 is limited to the general principle that oil and gas are owned by the people of Iraq as a whole, but Article 112 provides the most guidance and cause for debate.

The first limb of Article 112 provides that the Federal government may “undertake the management of oil and gas extracted from present fields” with the relevant governorates and regional governments, subject to an obligation to distribute revenues fairly by reference to population and taking into account any historical revenues withheld from the governorate or region.

The second limb provides that the Federal government may “formulate the necessary strategic policies to develop oil and gas wealth” with the relevant governorates and regional governments, subject to an obligation to maximise the Iraqi people’s benefit from such wealth.

The most relevant legislation currently in force is the Oil and Gas Law of the Kurdistan Region – Iraq (Law No. 22 of 2007), which, as noted above, underpins the PSCs signed by the KRG. This law is expressed to be consistent with the constitutional provisions outlined above and excludes the application of all other laws seeking to regulate the petroleum sector in Kurdistan.

Federal legislation to reform and govern the petroleum sector has been stalled in Iraq’s Council of Representatives since 2007 for a number of reasons, including disagreement over its provisions for the balance of power between Baghdad and the governorates and regions.

Revised drafts circulated by the relevant parliamentary committee and then the Council of Ministers in August 2011 have remained ambiguous or silent on this point. It remains to be seen if and when a new law will be passed.

Baghdad and the KRG have a longstanding agreement that all petroleum exported from Iraq should be marketed through the federal State Oil Marketing Organisation and the KRG should receive 17% of the resulting revenues. Their disagreement is over the extent of the KRG’s rights to regulate the petroleum sector in Kurdistan and, in particular, to enter into contracts relating to the exploitation of oil and gas in the region.

Baghdad argues that, by unilaterally passing regional legislation and signing PSCs, the KRG has breached its constitutional obligation to act in concert with the Federal government, rendering the legislation and the contracts void.

The KRG’s position is that first, the general provisions of the constitution allow the KRG autonomy in relation oil and gas law as it is not reserved for the Federal government, and that the specific provisions of Article 112 do not apply for a number of reasons.

The KRG says there were no producing fields in Kurdistan when the constitution came into force in 2006; Article 112(1) relates only to management of petroleum after it is extracted (i.e. in relation to transportation and export); and that Article 112(2) is limited to policy formation in areas such as agreeing production levels in the context of OPEC quotas, rather than regulation and contracting.

COMPANY: ABN AMRO expands energy, commodities and transportation activities in Singapore

(EnergyAsia, December 28 2011, Wednesday) — Dutch bank ABN AMRO said it is expanding the Asian operations of its global energy, commodities & transportation (ECT), private banking and clearing businesses.

Under Maaike Steinebach, CEO for ECT Asia and Country Executive for Hong Kong, the bank said it has rebuilt its regional ECT capabilities over the last 18 months. This includes re-establishing full coverage of the oil and gas, shipping and agricultural, energy and metals commodities markets in its Singapore office. It recently added a metals commodities team in Hong Kong and is building its debt solutions team to complement the bank’s strength in lending.

As part of an ongoing selected re-establishment of its international presence in key locations, the bank said it has just received final approval from the China Banking Regulatory Commission to open a representative office in Shanghai, which it targets to be operational in the first quarter.

Gerrit Zalm, chairman of ABN AMRO, said:

“Asia is a strategically important region for the bank and its clients. We have exceptionally long standing relationships across many industries, which will be better serviced by our renewed presence in key locations as well as deeper product capabilities. This targeted expansion is consistent with our dual international strategy of building the global franchises of our ECT, private banking and clearing businesses, while also supporting the activities of our Dutch clients around the world.”

SRI LANKA: Contractors invited to build fuel terminal at second international airport

(EnergyAsia, December 28 2011, Wednesday) — State-owned Ceylon Petroleum Corporation (CPC) has invited bids from contractors to build an aviation fuel storage terminal at a new international airport being built in Mattala in Sri Lanka’s fast-growing Hambantota district. The 3.6-billion-rupee terminal will support operations at what will be the country’s second international airport located in…

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MARKETS: IEA sees world oil demand rising by 700,000 b/d in 2011 and 1.3 million b/d in 2012

(EnergyAsia, December 28 2011, Wednesday) — The International Energy Agency (IEA) expects global oil demand to increase by 700,000 b/d to 89 million b/d this year, and by another 1.3 million b/d in 2012 to reach 90.3 million b/d. Its latest projections represent a downward revision of 200,000 b/d over the previous forecast issued last…

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CHINA: CNPC starts up upstream, pipeline and refinery projects in Niger

(EnergyAsia, December 28 2011, Wednesday) — China National Petroleum Corp (CNPC) said it has started up an upstream, a pipeline and a refinery in the West African nation of Niger in recent months. Over the last three years, CNPC said it has undertaken an integrated approach in developing Niger’s oil industry and economy by substantially…

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SINGAPORE: Keppel, SembCorp end the year on strong Brazilian momentum

(EnergyAsia, December 27 2011, Tuesday) — Brazil, the world’s 11th largest oil producer, provided the climax to a year of strong performance for Singapore’s two leading upstream oil and gas contractors, Keppel Offshore & Marine Ltd and SembCorp Marine.

According to the Economist magazine, state-owned oil company, Petrobras, has laid out a capital expenditure programme of US$224 billion from 2011 to 2015 as Brazil aims to become among the world’s top five oil producing countries by 2020.

Keppel O&M said its subsidiary, Fernvale Pte Ltd, has secured a US$809 million contract from Urca Drilling BV, a subsidiary of Sete Brasil Participaç’es SA, while Sembcorp Marine’s subsidiary Jurong Shipyard has begun building its first overseas integrated yard in the Brazilian state of Espirito Santo.

The contract brings Keppel O & M’s new orders for the year-to-date to S$9.8 billion. (US$1=S$1.3).

Keppel O& M said it will design and construct a semisubmersible drilling rig based on its proprietary DSSTM 38E design for delivery in the fourth quarter of 2015. The rig will be used to support the exploration of Brazil’s estimated 50 billion barrels of deep-sea oil and gas reserves.

With improved capability and operability, the DSSTM 38E is designed to meet the stringent requirements of the deepwater ‘Golden Triangle’ region, comprising Brazil, Africa and the Gulf of Mexico. It is rated to drill to depths of 10,000 metres below the rotary table in 3,000 metres water depth. Measuring 108 metres in length, the rig has a main deck size of 73 metres by 73 metres, and an operational displacement of 45,000 tonnes.

The DSSTM 38E has accommodation facilities to house a crew of up to 160 men, and both vertical and horizontal riser storage. The vessel is designed to stay in position via eight Azimuthing thrusters and the configurations comply with the American Bureau of Shipping Dynamic Positioned System (DPS-3) requirements.

Joao Carlos Ferraz, CEO of Sete Brasil, which specialises in chartering drilling rigs for Brazil’s pre-salt exploration, said:

“Keppel designed rigs have an established track record of operating efficiently in their respective fields and we are confident that the DSSTM 38E rig will be well suited for offshore Brazil.

As we grow our fleet of drilling rigs to meet the demands of our customers, partnering reliable shipyards which can deliver quality rigs on time and within budget is an imperative for us.”
Chow Yew Yuen, Keppel O&M’s managing director and President of the Americas said:

“We are proud that our proprietary DSSTM 38E design has been chosen by Sete Brasil as their first semi. It is an enhancement of the design from our first two drilling rigs built for Brazil, Gold Star and Alpha Star. The two rigs are now successfully operating in offshore Brazil and we are confident the DSSTM38E will follow in their footsteps.

“We are pleased to be able to partner Sete Brasil in developing drilling solutions for Brazil’s deepwater oil fields. Having delivered several key projects such as the P-52, P-51 and P-56 that have increased Brazil’s production capabilities, we look forward to developing rigs that will further boost Brazil’s offshore drilling resources.

“Having a proven shipyard in Brazil also ensures that we are able to satisfy any local content requirements. With a suite of proprietary deepwater drilling rig designs and more than 30 years of experience participating in Brazil’s oil and gas industry, we aim to provide cost-effective and value-added propositions for Brazil’s offshore and marine industry.”

Jointly developed and owned by Keppel’s Deepwater Technology Group and Marine Structure Consultants, the DSSTM 38E design is in the league of some of the world’s most advanced drilling semisubmersibles. The two DSSTM38 semis, Gold Star and Alpha Star, previously delivered by Keppel FELS to Brazil’s Queiroz Galvão Óleo e Gás (QGOG), are operating efficiently without disruption in offshore Brazil for Petrobras.

Keppel claims to operate one of the most comprehensive shipyards, BrasFELS, in Brazil. The yard’s current projects include the repair and upgrade of Noble’s two Brazil-based drill ships as well as the construction of the first Tension Leg Wellhead Platform (TLWP), P-61 for the Papa-Terra field in Brazil’s Campos Basin for Petrobras and Chevron.

Earlier, Sembcorp Marine said its subsidiary, Jurong Shipyard, is developing Estaleiro Jurong Aracruz, a wholly-owned, locally incorporated Brazilian shipyard, to strengthen its foothold in Brazil as part of its global hub strategy.

Strategically located near the hydrocarbon-rich Basin of Espirito Santo, one of Brazil’s giant pre-salt reservoirs, Estaleiro Jurong Aracruz occupies an 82.5-hectare site with 1.6 km of coastline in the municipal of Aracruz. The state of Espirito Santo is Brazil’s second largest oil producer.

The US$550 million shipyard will be developed in stages with completion scheduled for end-2014. Its facilities will include a 120m x 380m drydock, a one-km berthing quay, ancillary piping facilities and steel fabrication workshops.

Estaleiro Jurong Aracruz will have capabilities to undertake construction of drillships, semi-submersible and jackup rigs, platforms, supply vessels, the integration of FPSOs and topside modules fabrication, in addition to the traditional activities of drilling rig repairs, ship repairs, and modification and upgrade works.

The ground-breaking ceremony, held on December 19 2011, was officiated by the Governor of Espirito Santo, Renato Casagrande, and witnessed by Sembcorp Marine’s chairman Goh Geok Ling as well as directors Mohamed Hassan Marican, Lim Ah Doo and Ron Foo.

Wong Weng Sun, President and CEO of Sembcorp Marine and managing director of Jurong Shipyard, who was also at the event, said:

“We are here at the right place and right time.  The ground-breaking for the development of Estaleiro Jurong Aracruz will provide a clear signal to the Brazilian Oil and Gas market that Sembcorp Marine is completely committed to continue its services to them, in their country.

“With our two decades of experience servicing the Brazilian oil and gas industries, Estaleiro Jurong Aracruz will substantially strengthen our ability to meet our clients’ needs especially in developing the recently discovered giant pre-salt oil and gas reservoirs.

“The Brazilian oil and gas market considers us a major player. We have successfully completed a total of 18 oil and gas exploration, production and storage platforms for Brazilian oilfields. These platforms contribute approximately half of Brazil’s daily oil output.”

MALAYSIA: Black & Veatch helps deliver major clean coal plant in Perak state

(EnergyAsia, December 27 2011, Tuesday) — US engineering firm Black & Veatch said it will provide engineering services and procure balance-of-plant equipment systems for a 1,000MW supercritical clean coal-fired power plant to be built in Malaysia’s Perak state by 2015.

The company will provide technical advisory services to contractor China National Machinery Import & Export Corporation (CMC) as well as procure equipment for the major balance-of-plant facilities outside the power island at Manjung Unit 4.

The equipment procured will include coal and ash handling systems, water and wastewater treatment systems, cooling water pumps, transformers and induced draft fans.

CMC and Alstom formed a consortium in April this year to develop the project for TNB Janamanjung Sdn Bhd (TNBJ) to supply electricity to the national grid, owned and operated by its parent company, Tenaga Nasional Berhad (TNB).

TNBJ operates three 700 megawatt coal-fired units at Manjung for TNB, Malaysia’s largest electricity utility, which owns and operates the national grid and nearly half of the country’s installed power generation capacity.

Supercritical power plants require less coal per megawatt-hour compared to conventional coal-fired plants. As they operate at higher temperatures and increased pressures, supercritical power plants yield higher thermal efficiencies, lower emissions (including carbon dioxide and mercury) and lower fuel costs per megawatt.

Hoe Wai Cheong, a managing director at Black & Veatch’s global energy business, said:

“Malaysia is going through a period of fantastic growth. Industry needs a large volume of power delivered on time and cost effectively.”

Dean Oskvig, President and CEO of Black & Veatch’s global energy business, said:

“We bring a unique ability to deploy our global supply chain. This ensures that we procure high quality, reliable solutions that also minimize costs. As economic and resource issues evolve, there will be more demand for innovation that gives us cost-effective delivery models and technologies.”

Black & Veatch said it has worked on major power infrastructure in Malaysia since the 1990s. Between 1992 and 1996, it helped TNB upgrade the national grid system from 275 kV to 500 kV, and helped prepare an environmental impact assessment for the upgrade. In 1998, Black & Veatch helped TNB deliver its first natural circulation-type heat recovery steam generator system at the 330MW Melaka Combined Cycle Conversion Project in 1998.

Established in 1950, China National Machinery Import & Export Corporation (CMC) is the first large-scale state-owned enterprise engaged in the import and export trade of machinery products and international project contracting business. Since its establishment, it has an accumulated trade volume of over US$85 billion.

ABU DHABI: Chinese Premier Wen Jiabao to deliver keynote speech at World Future Energy Summit on Jan 16

(EnergyAsia, December 27 2011, Tuesday) — Chinese Premier Wen Jiabao will deliver the keynote speech at the 5th annual World Future Energy Summit (WFES) at the Abu Dhabi National Exhibition Centre in the UAE from January 16 to 19.

Premier Wen is expected to touch on the topics of innovation, sustainable development and renewable energy in his speech, according to organisers Masdar.

It said the visit by the Premier of the world’s second largest economy underscores the growing role the UAE and Abu Dhabi are playing in promoting innovation and investment opportunities in renewable energy and clean technologies.

Premier Wen has pledged that China will reduce the carbon intensity of its economy by 17% by 2015 (per unit GDP). Under its 12th Five Year Plan for National Economic and Social Development, China will generate 11.4% of its energy from non-fossil fuels by 2015, and 15% by 2020, up from 8.3% in 2010.

To reach this ambitious goal, China has introduced a range of regulatory and financial incentives, including feed-in tariffs, subsidies, China Development Bank loans, and US$200 billion in stimulus funding for cleantech, carbon emission reductions and energy pricing reserves.

According to Masdar, China is poised to spend US$473.1 billion on clean energy investments in the next five years and will add 370 GW of renewable energy generation capacity by 2020.

The government is also making major investments in grid transmission to overcome capacity constraints and to allow energy-rich regions within the country to export power to energy-poor regions. The five-year plan also provides incentives for hybrid and electric vehicles, charging infrastructure and high speed rail.

“From accelerating the deployment of renewable energy to diversifying the energy mix, the UAE shares a lot in common with China,” said Sultan Al Jaber, CEO of Masdar, Abu Dhabi’s renewable energy company.

“China has emerged as a renewable energy super power, redefining the global industry by increasing both the supply and demand for new energy sources. World leaders recognise that to have a genuine conversation about renewable energy today – big players like China must be involved.”

Masdar City, Abu Dhabi’s own vision for a low-carbon, low-waste sustainable city, China is building high-tech, green cities to test nascent clean and renewable energy technologies.

“Premier Wen will provide WFES participants with firsthand insight into China’s cutting-edge economic strategy and its vision for adopting clean technology and renewable energy,” said Dr Al Jaber.

China and the UAE are expanding bilateral trade now valued at US$25 billion, two-way investment and cooperation on infrastructure construction and the development of renewable energy. Masdar Capital has invested US$25 million in UPCC, a major Chinese wind developer.

Along with Premier Wen’s presence, more than 43 Chinese exhibitors will be attending WFES 2012, and for the first time, host a national pavilion to highlight the country’s rapidly expanding renewable energy market.

Among those present are Shi Zhengrong, CEO of the world’s largest solar panel maker Suntech Power, and Jifan Gao, Chairman and CEO of PV technology leader Trina Solar.

Now in its fifth year, WFES is the world’s foremost annual meeting committed to promoting advancement of renewable energy, energy efficiency, and the water and waste sectors by engaging political, business, finance, academic and industry leaders to drive innovation, business and investment opportunities in response to the growing need for sustainable energy.

More than 26,000 attendees, including 3,000 delegates, 650 exhibiting companies and 20 national pavilions, are expected to participate in the summit.

INDONESIA: Customers warned of further cutbacks as LNG production seen falling by 28% next year

(EnergyAsia, December 27 2011, Tuesday) — International buyers of Indonesian liquefied natural gas (LNG) have been warned to brace for further cutbacks as production is forecast to fall by another 28% next year. Oil and gas regulator BPMigas said Indonesia’s three main LNG export terminals at Bontang, Arun and Aech may be able to produce…

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CHINA: Oil demand up by 2.6% to 9.54 million b/d in November, says Platts

(EnergyAsia, December 27 2011, Tuesday) — China’s apparent oil demand in November rose 2.6% year on year to 39.08 million metric tons (mt) or 9.54 million b/d – the second-highest daily rate recorded this year, according to an analysis by US energy media Platts. This figure, which was just slightly less than February’s 9.58-million-b/d, was…

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THAILAND: Japan’s MHI receives full-turnkey order for 1,600MW GTCC power plant

(EnergyAsia, December 23 2011, Friday) — Japan’s Mitsubishi Heavy Industries Ltd (MHI) said it has received a full-turnkey order for the construction of a 1,600MW gas turbine combined-cycle (GTCC) power generation plant in Thailand.

The order came from Gulf JP NS Company Limited (GNS), a wholly owned subsidiary of Gulf JP Company Limited, a 90/10 joint venture between a local subsidiary of Japan’s Electric Power Development Co Ltd (J-POWER) and Gulf Holding Company Limited, a major Thai power development company.

MHI did not disclose the project’s value.

The plant, which GNS is to build and operate in Nong Saeng district, Saraburi Province, will consist of two 800MW power generation plant trains.

Due to come onstream in June and December 2014, the two units will help meet Thailand’s rising power demand according to the government’s electricity development plan. GNS has already signed a long-term agreement to supply 25 years of electricity to state-owned Electricity Generating Authority of Thailand (EGAT).

MHI said the GTCC plant will primarily consist of four M701F gas turbines, two steam turbines and six generators.

The company will manufacture the gas turbines at its Takasago Machinery Works and the steam turbines at its Nagasaki Shipyard & Machinery Works while Mitsubishi Electric Corporation will manufacture the generators.

Sino-Thai Engineering and Construction Public Company Ltd, a local construction firm, will undertake the civil construction work and installation at the plant site.

]In GTCC plants, a gas turbine and steam turbine are used in combination to generate electricity in two stages, utilising high-temperature exhaust gas from the gas turbine to produce steam to drive the steam turbine.

This configuration enables GTCC plants to achieve higher thermal efficiency, which in turn reduces fuel consumption and results in lower emissions of carbon dioxide (CO2) relative to electricity generation, thereby contributing to environmental protection. Global demand for GTCC power generation plants has been rising in view of their efficient use of fossil fuels and reduced burden on the environment.

DUBAI: Supreme Council of Energy discussed clean coal technology, energy policy and supply-demand issues

(EnergyAsia, December 23 2011, Friday) — Dubai’s Supreme Council of Energy discussed the state of clean coal technology and its application in the emirate at its 14th meeting held last week.

Chairman Sheikh Ahmed Bin Saeed Al Maktoum, presided over the meeting attended by vice chairman Saeed Mohammed Al Tayer, Secretary General and CEO Nejib Zaafrani, and members of the council.

Mr Al Maktoum said: “The council has discussed clean coal power technology which is currently undergoing a feasibility study. We are assessing the potential locations of clean coal plants.”

The council also discussed Dubai’s energy policy and reviewed the Dubai Integrated Energy Strategy 2030 road map dealing with energy supply-demand issues.

Its members will look into the findings of a recent survey on carbon dioxide emission and the prospects for solar power use in Dubai. The council has set a target for reducing carbon dioxide emissions, and the participation of government agencies in deploying energy efficiency measures.

Mr Al Maktoum said: “We have reviewed some potential partnerships with International Energy Forums to take place in Dubai as a host city. The council will be participating in some major events to promote sustainability such as the Water, Energy, and Technology Exhibition in March 2012 as well as the Sustainable Arabia Conference in collaboration with United Nation Development Programme.”

NEW ZEALAND: Gull to build large fuel tank

(EnergyAsia, December 23 2011, Friday) — Gull New Zealand has announced that it is adding a new 10-million-litre fuel tank to its Mount Maunganui storage terminal on the country’s North Island. Construction by Page Macrae Engineering will start next month and will boost the terminal’s capacity to 88 million litres when completed later in 2012….

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IRAN: Asia, Russia and most of Europe resist US-led calls for tougher sanctions

(EnergyAsia, December 23 2011, Friday) — Asia, Russia and most of Europe are resisting Western pressure to further tighten trade and financial sanctions on Iran fearing their potentially catastrophic effects on the fragile global economy. China and Russia have announced their opposition to further isolate the world’s fifth largest oil exporter, while most members of…

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SINGAPORE: IEV subsidiary wins RM262-million contract for wellhead platform, pipeline and host tie-in

(EnergyAsia, December 22 2011, Thursday) — Singapore-listed IEV Holdings Limited said its 30%-owned associate, IEV (Malaysia) Sdn Bhd, has been awarded a year-long RM262-million contract by an unnamed oil and gas operator in Southeast Asia to provide supply and installation services. (US$1=RM3.15).

Starting this month, IEVM will provide the engineering, fabrication, delivery, hook-up and commissioning of a wellhead platform, procurement and installation of a new pipeline and host tie-in to existing offshore production facilities.

IEV said it does not expect the contract to have any material impact on the net tangible assets or earnings for the current financial year ending December 31 2011.

It will be teaming up with a US engineering company who specialises in platform re-use in the Gulf of Mexico. A joint project management team and local subcontractors will be mobilised for the installation, hook-up and commissioning, and host tie-in activities.