CHINA: Zhejiang Zhong Ao Energy and US Louis Dreyfus Highbridge Energy to jointly set up storage terminal

(EnergyAsia, December 22 2011, Thursday) — US-based Louis Dreyfus Highbridge Energy (LDH) LLC said it has established a joint venture with China’s Zhejiang Zhong Ao Energy Co Ltd, to construct an oil and petrochemical import-export terminal near  Shanghai city in China.

Louis Dreyfus Zhong Ao Energy Co Ltd will develop the facility in Zhoushan City on Liuheng Island in two phases starting with a 1.4-million-barrel petrochemical storage facility and deep water port with a 75 foot draft. The second phase will add 7.5 million barrels of storage capacity for crude oil and petroleum products and associated expansion of and connectivity to the port. The cost of the investment was not revealed.

Stamford, Connecticut-based LDH Energy said it will be a minority partner in the joint venture providing commercial development expertise while Zhong Ao will manage day-to-day operations.

The joint venture has received regulatory approval with US law firm White & Case acting as legal counsel to LDH Energy in connection with the transaction.

William C. Reed II, LDH Energy’s co-chairman, CEO and President, said:

“This transaction is core to our global growth strategy and is the first of several initiatives to expand our presence in the Asia Pacific region. In this case, we elected to partner with Mr Wang Yuanwan, chairman of Zhejiang Zhong Ao Energy Co Ltd.

“With the rapid growth of the energy market in China, we are excited that we could find a joint venture partner whose strengths complement ours. We are delighted to be working with Mr Wang and look forward to a long and successful partnership with him and his organisation.”

Mr Wang said:

“We take great pride in forming a strategic alliance with LDH Energy. This partnership combines our strengths with LDH Energy’s expertise operating and commercialising midstream energy assets. This facility is being developed in one of the most economically advanced regions in China and a rapidly growing center of the country’s energy market. We look forward to working together with LDH Energy to build a world class terminal and storage facility to serve the leading energy and petrochemical companies in China.”

LDH Energy is a diversified merchant energy company with integrated operations involving the marketing and merchandising of energy commodities and the ownership and operation of midstream physical assets. It is the merchant energy platform of the Louis Dreyfus Group and the multi-strategy hedge fund of Highbridge Capital Management LLC with offices in Houston, Texas; Calgary, Canada; Lausanne, Switzerland; Shanghai, China; and Singapore.

Zhong Ao, a subsidiary of Shanghai Zall Enterprise Development (Group) Co Ltd (Zall), is a rapidly growing and diversified private enterprise group established in 1992 whose main businesses include petrochemical and metal merchant trading, storage terminals and logistics, ship building and repairing, real estate development, elevator, project investment and asset management. Headquartered in Shanghai, Zall has more than 20 subsidiaries in China.

IRAN: 2011 oil revenues expected to reach record of more than US$100 billion

(EnergyAsia, December 22 2011, Thursday) — Iran’s oil revenues have risen sharply in 2011 and will reach an all-time high of more than $100 billion for the year, according to estimates by US consultant IHS Cambridge Energy Research Associates (IHS CERA).At nearly a third higher than 2010, the revenue increase  has been the result of…

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GAS: PwC study extols economic impact of shale development, fails to deal with water issues

(EnergyAsia, December 21 2011, Wednesday) — PwC has just issued a press release (http://www.pwc.com/us/en/press-releases/2011/abundance-of-shale-gas.jhtml) for a study predicting enormous economic benefits from developing America’s abundant shale gas reserves.

Predictably, and unfortunately, it does not go into detail about fracking’s equally enormous negative and troubling impact on water rights and supply. The fracking method for extracting natural gas requires the injection of toxic chemicals at high pressure into tight formations and shale buried deep in the earth.

In the US, Europe and Australia, people living near areas where fracking activities are common have been reporting for some time that the chemicals have filtered into their water sources and air. The US EPA recently released its findings on a case in Wyoming state that it had investigated, confirming that fracking chemicals were indeed found in drinking water. See http://energyasia.com/public-stories/gas-us-government-confirms-fracking-chemicals-found-in-water-aquifer.

Increasingly, it looks like humanity will have to choose between meeting its energy or water needs. The PwC researchers will have to dig deeper to find out how much water supplies will have to be sacrificed for the production of a certain amount of shale gas. Some will choose their right to water, which means these PwC predictions will likely prove overly-optimistic.

This comment first appeared on www.EnergyContents.Blogspot.com.

KAZAKHSTAN: Domestic unrest could slow down government’s plans to develop economy, oil and gas projects

(EnergyAsia, December 21 2011, Wednesday) — Amid major celebrations of a breakthrough oil deal and its 20th anniversary of independence from Soviet rule on December 16, Kazakhstan was suddenly faced with the biggest outbreak of deadly anti-government violence in recent memory. As many as 50 people, including several retrenched oil workers, were reported killed during…

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MARKETS: OPEC expects world oil demand to grow by 900,000 b/d in 2011, 1.1 million b/d in 2012

(EnergyAsia, December 21 2011, Wednesday) — World oil consumption will rise by 900,000 b/d in 2011, and by 1.1 million b/d to 88.9 million b/d next year, said the Organisation of Petroleum Exporting Countries (OPEC) in its latest monthly forecast.

Compared with last month’s forecast, the cartel has kept unchanged its expectations for world oil demand growth for 2011.

However, it has revised down its 2012 figures by 100,000 b/d on account of slowing economic growth in the OECD which is expected to have spill-over effects on China and India.

With its members raising production by 560,000 b/d, the cartel said global oil supply increased 1.31 million b/d in November to average 89.12 million b/d. It estimates that non-OPEC raised production by 750,000 b/d.

For 2011, the cartel expects non-OPEC supply to rise by 200,000 b/d in 2011, down by about 50,000 b/d from its previous estimate as a result of slower production growth from Australia, Syria, Sudan and Azerbaijan.

For 2012, it expects non-OPEC oil supply to increase by 700,000 b/d over the current year, around 100,000 b/d lower than the previous assessment. Most of the increase will come from the US, Brazil, Canada, Colombia and Russia.

OPEC said it expects its members to add 400,000 b/d of natural gas liquids (NGL) and non-conventional oil supplies for both 2011 and 2012.

Despite the continuing gloom over the US and European economies, OPEC expects the world economy to grow by 3.6% in 2011 as well as 2012.

But it revised down its 2012 forecast for the OECD from 1.7% to 1.5%, with the US economy seen expanding by 1.7% instead of 1.8%, and the Euro-zone growing by just 0.4% instead of 0.7%. Japan is forecast to expand by 1.9% in 2012 compared with 2% in its previous forecast.

With China’s economy remaining “resilient”, OPEC boosted its forecast for the country’s 2012 growth to 8.7% from 8.5%. However, this will be somewhat offset by India’s “decelerating” momentum as its economy will grow by 7.5% instead of 7.6%.

THAILAND: Germany’s Conergy secures contract to build 9MW solar park

(EnergyAsia, December 21 2011, Wednesday) — Germany’s Conergy said it has been selected by CH Karnchang Public Company Limited to supply the components as well as jointly serve as the engineering and design consultants for its 9MW solar park in Thailand.

Conergy will work closely with local partner Ensys Co Ltd who will provide the local engineering and installation services for the project being developed by CH Karnchang’s subsidiary, Bangkehnchai Co Ltd.

The 79,000-sq m solar park in Pak Thong Chai district in Nakhon Ratchasima province, located about 259 km northeast of Bangkok is targeted for completion next June. It is expected to produce 12,778 MWh of electricity a year, supplying power to nearly 4,000 households.

Conergy, which did not reveal the value of the contract, said the solar-produced electricity will help Thailand eliminate an estimated 7,000 tons of carbon dioxide emissions annually.

For CH Karnchang, this will be its first solar park project and marks another milestone in its 40-year history of developing outstanding infrastructure projects in Southeast Asia. The company expects to develop more solar park projects in Southeast Asia as well as contribute to Thailand’s plans to increase the share of renewable energy to 25% of the country’s total energy mix by 2022.

Alexander Lenz, President of Conergy South East Asia & the Middle East, said the recent floods devastating Thailand have created “very challenging” conditions, but insisted that they will not derail the company’s plan to continue building solar parks in the country.

“If anything, the type of extreme weather we see in Thailand and many other countries around the world is more reason to get behind solar power as a clean, sustainable, and safe source of energy.

“I am very proud of the Conergy South East Asia team for securing this new project to build the next important solar power plant in Thailand, despite the recent unfortunate events caused by the severe weather conditions in the country.”

Marc Lohoff, Corporate Vice President and President for Conergy Asia Pacific & Middle East, said:

“Their achievement again underscores Conergy’s strong position in the emerging Southeast Asian market, in line with our success in India, Australia and the Middle East. Customers trust our high quality solutions as they know that we are committed to deliver the highest performance systems even in the most challenging environments.”

Chumpol Patanukom, Director of Ensys Company Ltd, said: “The future is moving towards low impact and sustainable renewable energy resources and Thailand’s Power Development Plan is also focusing and following such global trends. We are very happy to be part of this 9MW solar park project of CH Karnchang together with Conergy to supply clean and sustainable power to our community.”

Hamburg-based Conergy AG is a leading solar company, with 1,500 employees in 14 countries on four different continents. As a system supplier, the Conergy Group develops and produces crystalline solar modules, inverters and mounting systems at three locations in Germany.

Since its founding in 1998, the Frankfurt Stock Exchange-listed company has sold more than 1.5 gigawatts of solar energy.

As one of Thailand’s leading general contractors and basic infrastructure developers, CH Karnchang Public Company Limited has more than 30 years of successful experiences in the construction of large-scale infrastructure, building complex and general civil works.

Since its establishment in 1996, Ensys Co Ltd has been focusing on providing electrical power solutions for heavy and basic industries. Besides supplying high voltage substations, power distribution and completed electrification solutions, Ensys has been building up its renewable energy business, with focus on biomass and solar power.

UAE: SOCAR venture secures loan from Arab banks for oil terminal project in Fujairah

(EnergyAsia, December 21 2011, Wednesday) — Arab Petroleum Investments Corp (APICORP), a development bank owned by 10 Arab oil-producing nations, and National Bank of Fujairah PSC have agreed to lend the first tranche of a US$110 million loan for the construction of an oil storage terminal in Fujairah in the UAE.

In a statement, APICORP, which is owned by the Organisation of Arab Petroleum Exporting Countries (OAPEC), said it signed off on the US$61 million tranche to Socar Aurora Fujairah Terminal (SAFT) to develop the 641,000-cubic metre terinal. SAFT is jointly owned by the State Oil Company of Azerbaijan (SOCAR), Swiss commodity trader Aurora Progress SA and the Fujairah government.

In May this year, APICORP said it was awarded the role of sole arranger by SAFT in the face of strong competition from international banks.

The deal has enhanced APICORP’s role as a key facilitator of capital flows to the Arab energy sector amidst an environment marked by continuing scarcity of US-dollar funding and the withdrawal of many international financial institutions that have traditionally been lenders to the energy industry in the region.

Ahmed Bin Hamad Al-Nuaimi, APICORP’s CEO and general manager, said:

“We are delighted to announce this finance package for a project that is expected to add value to the development of the oil logistics infrastructure of Fujairah, an important international petroleum trading hub, as well as the burgeoning trading sector of the region,

“As part of its mission, APICORP seeks to support such vital oil and gas projects, especially at a time when international banks are withdrawing from the region.”

Through its strong involvement in trade finance and project finance transactions in the region in 2011, the bank has been consolidating its position within the regional banking industry.

Mr Al-Nuaimi added: “The volatility in European and global financial markets and new banking regulations have seen international financial institutions significantly reducing their project finance resources in the region in order to focus on their home countries.

“This withdrawal has created new strategic opportunities for regional banks such as APICORP to play an even more important role in energy-related transactions in the region. Our vast expertise as a multilateral development bank in providing financing solutions and financial advisory services for energy transactions puts us in an ideal position not just now, but also in the year ahead, to play such an enhanced role.”

For the year to date, APICORP said it has participated in US$11 billion worth of project finance and trade transactions in Egypt, Libya, Qatar, Saudi, Morocco and the UAE, committing US$1.3 billion.

APICORP’s active involvement in the secondary market for project finance this year has helped it consolidate and strengthen its financial position. The bank has made secondary-market acquisitions of high-quality energy-related assets in the Gulf Cooperation Countries worth close to US$600 million.

“These acquisitions made at very attractive discounts have enabled APICORP to enhance the average yield of its loan portfolio and maintain the size and quality of its project finance asset portfolio in a tough economic environment,” said Mr Al Nuaimi.

“APICORP’s strong banking fundamentals and robust capital position, endorsed by the A1 issuer rating we received from Moody’s, have helped us to push forward both our vision for hydrocarbon industry development in the Arab world as well as our important commercial priorities.

“The extremely successful issue of our debut Saudi Arabian Riyal (SAR) 2 billion (US$533 million) bond in October last year also helped expand our ability to support energy projects in the region.”

With assets valued at US$4.3 billion at the end of 2010, APICORP has participated in direct and syndicated energy finance transactions worth in excess of US$127 billion since 1975. Its aggregate commitments in these transactions, both in equity and debt, are valued at more than US$12 billion.

Established by OAPEC in 1975, APICORP is mandated to contribute to the development of the Arab hydrocarbon and energy industries through equity and debt financing, advisory and research. Its shareholders include the governments of the UAE (17%), Kuwait (17%), Saudi Arabia (17%), Libya (15%), Iraq (10%), Qatar (10%), Algeria (5%), Syria (3%), Bahrain (3%) and Egypt (3%).

Headquartered in the Al-Khobar/Dammam area in eastern Saudi Arabia, the bank operates a banking branch in Manama in Bahrain.

ASIA: Central Asian states aim to develop gas reserves, increase exports

(EnergyAsia, December 20 2011, Tuesday) — Uzbekistan has proved natural gas reserves of three trillion cubic metres and probable reserves including the Caspian Sea shelf of 5.9 trillion cubic metres. Its main markets are Tajikistan, Kyrgyzstan, Kazakhstan, Russia and China, exporting nearly a quarter of its annual production of more than 60 billion cubic metres…

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CHINA: Domestic LNG production could triple by 2015

(EnergyAsia, December 20 2011, Tuesday) — China could triple its domestic production of liquefied natural gas (LNG) to 7.5 million tonnes a year by 2015, according to the China Petroleum and Chemical Industry Federation. The industry group said China now has more than 20 LNG production plants in operation and is building at least another…

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RUSSIA: Opposition to trans-Caspian gas pipeline projects increases

(EnergyAsia, December 20 2011, Tuesday) — Russia is stepping up its opposition to plans to develop pipelines to export oil and gas from Central Asia to Europe. While China has made significant progress in expanding pipeline access to oil and gas reserves in Turkmenistan, Kazakhstan and Uzbekistan, Russia appears more worried about the numerous proposed…

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AUSTRALIA: BP starts up bitumen and bunker storage terminal in Brisbane

(EnergyAsia, December 20 2011, Tuesday) — BP Australia has officially started up its new bitumen and marine fuel import terminal on the Brisbane River at Pinkenba in Queensland state.

The marine fuel terminal comprises new tanks with the capacity to store 30,000 tonnes and a dedicated barge wharf supported by a new double-hulled bunker barge that will enable BP to store and deliver three different marine fuels.

BP said it has also boosted its bitumen supply capacity by more than 50% with the addition of the terminal and the expansion of an existing facility in Townsville. With the capacity to supply bitumen to seal or pave 10,000 km of Queensland’s road, the new terminal will help meet the state’s growing demand for road repair and construction as it continues to recover from the massive floods early this year.

Craig Wallace, Queensland’s Minister for Main Roads, Fisheries and Marine Infrastructure, formally opened the terminal at a ceremony last week, marking the end of three years of construction.

Susan Dio, BP’s managing director for the Bulwer Island Refinery, said:

“Queensland is a hugely important state for BP. As well as manufacturing, we supply fuel for aviation, shipping, road transportation and the state’s mining and agricultural industries. This multi-million dollar investment adds to our capacity to support the state’s expanding economy.
“Infrastructure investment is good for business and BP is proud to be playing its part in keeping Queensland moving,” she said.

SINGAPORE: JTC seeks operator for first phase of Jurong Island’s underground oil storage terminal

(EnergyAsia, December 20 2011, Tuesday) — Singapore state industrial landlord JTC Corporation (JTC) said it has launched a two-stage request for proposal (RFP) to engage an operator to manage and operate the first phase of the Jurong Rock Caverns (JRC), Southeast Asia’s first underground hydrocarbon storage facility.

Located beneath Jurong Island, the cavern’s S$890 million first phase is scheduled to be completed in stages between 2013 and 2014. (US$1=S$1.3). The operatorship contract is due to start in 2013 for a period of 15 years.

The applications for the first stage of the RFP will be evaluated based on criteria such as financial stability, experience, capability and track record.

JTC has invited companies to submit their applications by January 13, with details available on GeBiz, the Singapore government’s e-procurement portal, www.gebiz.gov.sg.

JTC said shortlisted participants will be invited to submit their business proposals within two months. Submissions will be evaluated based on individual merits, with emphasis placed on factors which includes fees, technical propositions and proposed commercial activities.

Manohar Khiatani, JTC’s CEO, said:

“Jurong Rock Caverns is an example of how we create space to overcome our limited land resource and ensure the competitiveness and sustainability of Singapore’s chemical industry in the long run. The two-stage RFP for the JRC operator is to ensure rigour in our selection process so that a capable and qualified operator is engaged to operate and manage the caverns. We target to get an operator on board by second half 2012.”

This will be JTC’s second attempt at appointing an operator for the project. In 2007, it had pre-qualified established players like Vopak and Horizon Terminals, but was forced to delay the process with the arrival of the global financial crisis in 2008.

Construction of the project started in 2007. Its first phase tanks will have the capacity to store 1.47 million cubic metres of crude oil, condensate and oil products. JTC has signed up Jurong Aromatics Corporation (JAC) as its first customer.

MARKETS: ESAI study focuses on seven trends impacting world oil markets in 2012-2013

(EnergyAsia, December 19 2011, Monday) — US energy consultant ESAI has released a study, Global Oil Trends 2012-2013, focusing on the impact of seven trends on the world oil markets in 2012 and 2013.

These include refining capacity expansion, rising caution towards nuclear energy, tighter regulations on shipping carbon emissions, a slowdown in the supply and demand of alternative fuels, growth in the petrochemicals industry, the continuing boom in non-conventional oil and gas, and the struggle to reform the financial sector.

A press release issued by the Wakefield, Massachusetts company did not mention if the study had considered the impact of geopolitical developments and military conflicts on global oil flows.

ESAI said the reduction in refining capacity along the US East coast will weaken the light sweet crude premium and enlarge the market for European gasoline exports, which in turn will reorient global gasoline flows.

“The addition of almost three million b/d of refining capacity in 2012 and 2013, half of which is in Asia, will keep the region long some petroleum products despite healthy demand growth.

“The addition of 1.2 million b/d of coking and hydro-cracking capacity will contribute to the volume of clean light products, and destroy fuel oil, especially in the Atlantic Basin. This will narrow the ultra-low sulphur diesel vs high sulphur fuel oil spread.

“Refining capacity expansions will redraw the global diesel trade map. For example, the US will export more, Europe is likely to import less. Brazil will import more. China may end up importing.”

ESAI said countries will hesitate to expand the use of nuclear power, preferring to use fuel oil. It predicts that by end-2013 it will be clear just how many countries will reconsider the role of nuclear power in their energy mix.

The study expects stricter shipping emissions controls to boost demand for low sulphur fuel oil, and encourage marine diesel on the margin of the bunker market.

ESAI expects a slowdown in the growth of the biofuels industry. Ethanol and bio-diesel have penetrated the transport fuels markets at a steady clip over the last few years, but will be affected by the limitations of existing mandates and the absence of second generation bio-fuels.

While vehicle technologies will proliferate due to better fuel economy in the US and China, ESAI said this trend will have only a marginal impact on gasoline demand.

The study sees a bright future for natural gas-based liquid fuels due to the price advantage of natural gas in some regions.

Petrochemicals consumption could be affected by the inability of China’s refineries to produce enough light naphtha feedstock. On the other hand, ESAI sees India becoming a bigger supplier to the rest of Asia.

“While it’s not clear that India’s surplus will meet China’s deficit directly, India’s supplies to other Asian countries will undoubtedly divert other supply to China,” said ESAI.

The study predicts the US and Canada emerging as key areas of growth in non-OPEC production.

The US will benefit from the growth in shale oil output, with the Bakken and other basins contributing to crude supply increase of more than 200,000 b/d. Canada’s oil sands will add at least another 300,000 b/d to non-OPEC production.

ESAI predicts that financial reforms and regulations will have “some limited impact” on open interest in the futures markets. It pinpoints the exemptions for non-commercials and swap dealers to dictate the magnitude of the impact of this new regulation on the global oil markets.

COMPANY: BDP names Richard Strollo managing director for South Asia

(EnergyAsia, December 19 2011, Monday) — Logistic specialist BDP International (BDP) has named Richard Strollo to the position of managing director for South Asia. BDP is a leading privately owned logistics firm, serving more than 4,000 customers globally including chemical and petrochemical companies.

Mr Strollo will lead a team of more than 600 across six countries serving some of the world’s fastest growing economies.

A logistics professional for 18 years, Mr Strollow started his career in the US, but has worked the last 15 years in Asia, holding senior positions in Taiwan, The Philippines, Indonesia and South Korea. Before his appointment, he was managing director in the Philippines with DHL.

Michael Andaloro, chief operating officer of BDP International, said:

“BDP continues to grow its presence and its customer base in South Asia. As more trade occurs between Southern Hemisphere nations, the South Asia market will take on an even greater role in BDP’s portfolio. That’s why we are pleased to have an industry and regional expert like Richard Strollo join us to head up our South Asia team.”

Mr Strollo said: “BDP has a unique culture within the transport and logistics industry. Its family-owned structure means decisions and action can be taken quickly to respond to changes in the market. It is a dynamic place to work, and I am looking forward to the challenge.”

MONGOLIA: MEC starts up new road to deliver coal to China

(EnergyAsia, December 19 2011, Monday) — Mongolia Energy Corporation (MEC) Limited said it has started delivering coal to China with the completion of a new 311-km road linking the Khushuut mine in Mongolia to Takeshensken in the Xinjiang region.

Following last month’s official recognition of the project’s completion by Mongolia’s State Commission Inspection Committee, MEC is certified as having constructed the country’s longest hard-surface paved road for coal transport.

The Hong Kong Stock Exchange-listed company said the road crosses 17 bridges within five districts in the Khovd province. It supports a payload of up to 110 tonnes while facilitating more than 200 waste water pipes.

MEC said the new paved road has a direct positive impact on its operations as it helps reduce travelling time by half from the eight hours previously needed to truck coal along what used to be a gravel road.

While declining to disclose the value of the investment, MEC said the road project is the biggest infrastructure development project for Khovd province, and one of the largest road investment projects by a privately owned mining enterprise in the country.

“Not only does it provide an efficient mode of transportation for the local residents, the project also created hundreds of jobs and a considerable income” for the government and the people,” it said.

MEC CEO James Schaeffer Jr. said:

“The Khushuut Road indicates a milestone in our coking coal exporting and our team will continue our efforts in all aspects to expand our Khushuut operations.”

CHINA: Sinopec Kantons aims to become a major oil storage operator with proposed acquisitions in five terminal

(EnergyAsia, December 19 2011, Monday) — Sinopec Kantons Holding Ltd is aiming to become a major oil storage terminal owner and operator in Asia with its proposed acquisitions of stakes in five joint ventures from its parent China Petroleum & Chemical Corp (Sinopec).The Hong Kong Stock Exchange-listed company has announced that it will fund the…

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AUSTRALIA: Caltex cuts profit forecasts, moves closer to ceasing oil refining

(EnergyAsia, December 19 2011, Monday) — Australia’s largest downstream oil company may follow the lead of its rivals to scrap its loss-making refinery operations following another warning of a large full-year profit downgrade.

Caltex, which has already begun reviewing its refining business, expects its 2011 after-tax operating profit including significant items to fall to between A$180 million and $200 million compared with last year’s A$302 million on account of the strong Australian dollar and weak refining margins.

The significant items include the costs associated with the decisions to close the company’s fluidised catalytic cracking unit (FCCU) and propane de-asphalting unit (PDU) at its Kurnell refinery in Sydney (announced in October 2011), redundancies associated with the decision to outsource most of its in-house maintenance activities at the Kurnell and Lytton refineries in Brisbane (announced in August 2011), and other consulting costs.

In a statement, Caltex, which could end up focusing on fuel marketing and retailing, said:

“The deteriorating external conditions continue to present challenges and pressure refining earnings. Despite these headwinds, the refining team has focused on driving efficiencies and maintaining safe and reliable operations. The detailed work to review the role of Caltex’s refineries in supplying customers is ongoing. A broad range of options is being explored and the complex nature of this work means that a decision is still a number of months away.

“Marketing continues to focus on its core strategy of driving sales of premium fuels, diesel, jet and lubricants, with record volumes achieved to date for each of these products. Based on this volume growth and continued strength in convenience store earnings, the marketing team expects to achieve a record result for 2011.”

Like Shell and Mobil, Caltex has found itself increasingly unable to compete against the larger and more modern refineries of Asia.

MARKETS: Fitch expects sustained M&A activity in Asian oil and gas sector in 2012

(EnergyAsia, December 16 2011, Friday) — US ratings agency Fitch said it expects merger-and-acquisition (M&A) activities to remain strong in Asia’s oil and gas sector in the coming year.In a new report, “2012 Outlook: Asia Oil & Gas”, Fitch Ratings said it is keeping its ‘stable’ rating on the sector even though sustained high capital…

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MARKETS: HIS says 2011 Brent crude price highest in 151-year history

(EnergyAsia, December 16 2011, Friday) — The annual average price of global crude benchmark Brent for 2011 is expected to be the highest in both real and nominal terms in the 151-year history of the industry, said US consultant HIS CERA.It expects Brent to average about $111 for the year at the end of 2011,…

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VIETNAM: PHI Group, Sao Nam Group to jointly build coal-fired power plant in Quang Tri province

(EnergyAsia, December 16 2011, Friday) — US-based energy and natural resources company PHI Group Inc said it has signed a memorandum of understanding with Sao Nam Group, a Vietnamese company engaged in energy, mining, real estate, and infrastructure, to build a coal-fired power plant in Hai Lang District in Vietnam’s southeast Quang Tri Economic Zone.The…

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INDONESIA: Ramba divests subsidiary to raise S$3.18 million for exploration works

(EnergyAsia, December 16 2011, Friday) — Singapore-based upstream company Ramba Energy Limited said it expects to raise S$3.18 million from the sale of shares in a subsidiary to finance its exploration of the Lemang block in southern Sumatra in Indonesia. (US$1=S$1.3).

Ramba, which plans to start drilling the block in the first quarter of next year, will sell off its majority stake in subsidiary PT Sugih Energy Tbk through Indonesia’s PT Sinar Mas Securitas acting as the placement agent and underwriter.

Ramba CEO, David Aditya Soeryadjaya, said:

“The divestment of Sugih Energy is part of Ramba’s strategy to increase investment in exploration assets that demonstrate potential, specifically the Lemang block. We are very confident in our assets and our work programme in moving forward in 2012.”

Ramba Energy Limited holds a 41% interest in the Lemang block, a 70% interest in the Jatirarangon block in West Java, and the entire stake in the West Jambi block in Sumatra.

AUSTRALIA: China’s DADI completes A$24 million investment in MetroCoal

(EnergyAsia, December 16 2011, Friday) — China’s DADI Engineering Development (Group) Co Ltd has completed its acquisition of a 15.3% stake in Australia’s Metrocoal for A$24 million. (US$1=A$1).

The Australian miner said the Chinese firm has fully paid for its purchase of 32 million of its ASX-listed shares at A$0.75 each.

With Chinese regulators giving their approval for the transaction, MetroCoal said it has appointed DADI chairman Dongping Wang to its board, while DADI has appointed Robert Finch, managing director of its Australian subsidiary, Aury Australia Pty Ltd, as the alternate director to Mr Wang.

MetroCoal chairman David Barwick said:

“Finalising the placement was an exciting phase in the development of the company’s Surat Basin thermal coal projects (in Queensland state). We could not have wished for a more professional partner in DADI and we look forward to Mr Wang joining our board.’’

DADI is a major Chinese coal company offering the full range of services including open cut mine design, underground mine design, coal process plant design, coal processing research and development and engineering, procurement and construction projects. With over 2,000 employees, DADI has been involved in many significant coal projects including the completion of more than 30 open cut and underground mining projects, the design and supply of over 70 coal processing plants and three water slurry treatment plants.

In developing its fully-owned coal projects in the Surat Basin in south eastern Queensland, MetroCoal has a vision to build a substantial business based on exporting thermal coal from underground and open cut mining operations.

SHIPPING: More vessels to use LNG as marine fuel, says consultant Zeus Development

(EnergyAsia, December 15 2011, Thursday) — Forty-eight carrier ships will soon be fuelled by liquefied natural gas (LNG), with more to follow, said consultant Zeus Development Corporation which will share this and other findings from its survey of the marine industry at an upcoming conference in Houston, Texas.

The company will discuss the use of LNG as a marine fuel when it hosts the World LNG Fuels Conference on January 25 to 26.

In the US, natural gas prices are hovering at a 10-year low of less than US$3.50 per million BTU. However, in Asia, prices have nearly tripled to around US$17-$18 since Japan began reducing its nuclear energy use following the Fukushima Daiichi plant disaster in the earthquake-tsunami tragedy of March 2011.

Tom Campbell, analyst at Zeus, said: “Low natural gas prices make the switch to LNG-fuel tempting for some marine operators. However, it is the enforcement of International Maritime Organisation (IMO) emissions standards that is driving the trend.”

In 2015 and 2016, the IMO’s Tier III standards ratchet down sulphur and nitrogen oxide emissions in a 200 nautical mile radius around North America and Europe, known as emission control areas. The alternatives to LNG include scrubbers and after-exhaust treatment systems, which are expensive and cumbersome.

“Fleets tend to use after-exhaust treatment systems for existing ships, but newbuild ships that can be designed for LNG’s characteristics tend to use LNG,” Mr Campbell said.

In the past two years, he said 11 new LNG-fuelled ships have been built, including patrol vessels, fuelling barges, tugboats and ferries. Within these categories, LNG usage varies from high-speed ferries to large cruiser ferries.

According to Zeus, the use of LNG as a marine fuel is beginning to take root in South America, the Gulf of Mexico, Quebec, Washington State and New York. Alongside the trend are proposals for fuelling facilities. New bunkering facilities are being discussed in Trinidad and Tobago, Dubai and Singapore.

Zeus said the speakers at the World LNG Fuels Conference include Shane Guidry, chairman and CEO of Harvey Gulf, which has ordered two LNG-fuelled offshore service vessels, Captain James DeSimone, chief operations officer for the Staten Island Ferry, and Val Noel, president of Pacer Cartage, who is slated to take delivery of its first four of 40 LNG-fuelled Kenworth T440 trucks for operation in Los Angeles.

KAZAKHSTAN: Government acquires 10% stake in Karachaganak project for US$3 billion

(EnergyAsia, December 15 2011, Thursday) — KazMunaiGas, the state-owned oil and gas company of Kazakhstan, has agreed to pay US$3 billion for a 10% stake in the country’s Karachaganak gas and condensate project in a landmark agreement to settle years of disputes with foreign investors.

According to the consortium developing the project, KazMunaiGas (KMG) will acquire the stake proportionately from each member including joint operators UK’s BG Group (32.5%) and Italy’s ENI (32.5%), US major Chevron International Petroleum Company (20%) and Russia’s Lukoil (15%) by June 30 2012. With KMG’s participation, BG Group and ENI will each own 29.25% of the shares, while Chevron will hold 18% and Lukoil will have 13.5%.

Backed by one of the world’s largest oil and gas reserves, Kazakhstan is Central Asia’s largest economy and a key player in the geo-political landscape involving Russia, Europe and China. Commensurate with its rise, Kazakhstan has been seeking to revise the original 1997 agreement signed with the Karachaganak consortium during the early post-Soviet era.

For the government of President Nursultan Nazarbayev, the agreement will strengthen his already tight control of the country which celebrates its 20th anniversary of independence from the Soviet Union on December 16.

BG Group said the contractors will receive a total pre-tax US$3 billion payment for transferring 10% of their rights and interest in the production sharing agreement to develop the giant gas-condensate field in north-western Kazakhstan to KMG.

The payment and transfer will be made in two parts, starting with US$1.5 billion in cash in exchange for a 5% stake in the project. Later, KMG will make a payment comprising US$500 million cash and US$1 billion non-cash consideration in exchange for the remaining 5% interest.

According to BG Group, the non-cash consideration includes final and irrevocable settlement of cost recovery and other related claims and the allocation of an additional two million tonnes/year capacity for the Karachaganak project in the Caspian Pipeline Consortium export pipeline.

The contracting companies will be responsible for paying tax of US$1 billion on the total consideration.

They will also make a US$1 billion loan to KMG to be repaid in instalments over a three-year period. The loan will be repaid from the proceeds of KMG’s share of oil and gas sales from its 10% interest, backed by a guarantee from Samruk-Kazyna, the country’s sovereign wealth fund.

The parties will retain the terms and conditions of the production sharing agreement signed in 1997 for Karachaganak’s development.

Ashley Almanza, BG Group’s executive vice president, said:

“Karachaganak is estimated to have hydrocarbons initially in place of nine billion barrels of condensate and 48 trillion cubic feet of gas – to date less than 10% of that resource has been produced. (This) agreement ensures strong alignment with the Republic of Kazakhstan and provides the foundation for realising the vast remaining potential and value in Karachaganak.”

Chevron vice chairman George Kirkland said: “Chevron has a long and productive history in Kazakhstan. We look forward to KazMunaiGas joining the Karachaganak partnership and working together toward further development of this field.”

IRAQ: Engineering firm Shaw group to undertake feasibility study to rehabilitate 140,000 b/d refinery

(EnergyAsia, December 15 2011, Thursday) — The Shaw Group Inc, a US engineering company, said it has been awarded a contract by Iraq’s state-owned South Refineries Company to provide a feasibility study for the rehabilitation of its 140,000 b/d refinery in Basra city.

The study will assess the refinery’s condition and estimate the engineering, equipment supply and construction services required to improve its operation.

Shaw Group said the study is funded by the United States Trade and Development Agency (USTDA) through a grant to the South Refineries Company, which is owned by Iraq’s Ministry of Oil. This is the first grant the agency has provided directly to an Iraqi entity, marking the USTDA’s support of Iraq’s long-term economic development.

James Glass, president of Shaw’s Energy & Chemicals Group, said:

“This study will help to promote the development of Iraq’s oil business and modernise vital facilities. This is Shaw’s fourth refining project in Iraq, reinforcing our continuing commitment to the Middle East region.”

In Iraq, Shaw is conducting feasibility studies and front end engineering and design (FEED) for two grassroots 150,000 b/d refineries near the cities of Maissan and Kirkuk, for the Oil Ministry. The FEED work includes all process units, offsite facilities and utilities for both refineries.

Through a fluidised catalytic cracking alliance, Shaw said it and partner Axens are providing a process design package for a 30,000 b/d residual fluidised catalytic cracking (RFCC) unit at Midland Refineries Company’s refinery in Daura.

Shaw said the undisclosed value of the contract will be included in its Energy & Chemicals segment’s backlog of unfilled orders in the first quarter of fiscal year 2012.