AUSTRALIA: White Paper focuses on energy security, reforms, gas and clean energy

(EnergyAsia, February 22 2012, Wednesday) — The Australian government is focused on enhancing energy security, market reforms, developing the country’s vast natural gas resources, and encouraging the development of clean energy use.
The goals were spelt out in the recently released draft Energy White Paper for public consultation, alongside the 2011 National Energy Security Assessment and the Strategic Framework for Alternative Transport Fuels. The papers are part of a series of latest government initiatives to address challenges confronting Australia’s energy sector. 

The draft Energy White Paper calls for strengthening the resilience of Australia’s energy-policy framework, re-invigorating market reform, developing the country’s energy resources (particularly gas), and accelerating clean energy outcomes.

The Department of Resources, Energy and Tourism has begun a period of consultation on the draft Energy White Paper, including information sessions to be held in every state and territory capital city with deadline for written submissions set on March 16 2012.

The government said it plans to release the final Energy White Paper around mid-2012.

The Minister for Resources and Energy, Martin Ferguson, said:

“Over the next two decades, Australia will require massive investment in the gas and electricity sectors – around $240 billion in generation, transmission and distribution.

“We need sound regulatory frameworks and confidence from investors to ensure that the necessary investment is delivered, and the White Paper seeks to deliver this stable framework.

“The 2011 National Energy Security Assessment shows that overall Australia has a positive energy security assessment but we must remain vigilant, and the White Paper seeks to establish a more robust policy framework to increase our responsiveness to emerging challenges.

“In a period of significant change, improving the resilience of energy policy is critical. The government therefore proposes that a strategic review of national energy policy be undertaken every four years, supported by a review every two years of national energy security. This will allow us to assess, and respond as required to emerging strategic market or policy developments in a timely and predictable way.

“The White Paper also focuses on the next round of energy market reform including further privatisation of energy assets and the removal of retail price regulation to increase efficiencies and remove distortions in markets that deter private sector investment and are harmful to consumers’ interests.

“Further work should also be undertaken to extend energy market governance arrangements and principles to all Australian energy markets.

“In terms of consumers, the government recognises that the community has experienced a period of rising energy prices. The White Paper recognises the need for greater consumer engagement to improve community understanding of investment and price drivers, which can lead to greater empowerment in terms of making informed decisions around managing energy use and associated costs.

“In a period of significant change, improving the resilience of energy policy is critical. The government therefore proposes that a strategic review of national energy policy be undertaken every four years, supported by a review every two years of national energy security. This will allow us to assess, and respond as required to emerging strategic market or policy developments in a timely and predictable way.”

Alongside the release of the draft Energy White Paper, and following the passage of legislation giving effect to the carbon price, the government also announced it would no longer proceed with the introduction of emissions standards or ‘carbon capture and storage ready’ requirements for new coal fired power stations.

“With the legislation of a carbon price, the government has a position that it is best to let the market determine the most efficient investment outcomes within the energy market, carbon price and Renewable Energy Target framework.”

INDIA: Hindustan Petroleum aims to complete underground storage tanks by mid-year

(EnergyAsia, February 22 2012, Wednesday) — India’s Hindustan Petroleum Corporation Limited (HPCL) expects to complete the construction of its delayed underground oil storage terminal in Visakhapatnam port city in Andhra Pradesh state by mid-year, said Oil Minister S. Jaipal Reddy.The 1.33-million-ton terminal was to have been completed at a cost of nearly 10.4 billion rupees…

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IRAN: NIOC says oil embargo could be expanded beyond France and Britain

(EnergyAsia, February 22 2012, Wednesday) — Iran may extend its oil embargo to other European countries, a day after announcing that it had stopped exporting crude to France and Britain.National Iranian Oil Company chief Ahmad Qalehbani said his country would respond to “hostile acts” by the European Union which last month announced it would be…

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ASIA: ToughStuff aims to help up to 33 million people in region and Africa access low-cost solar energy

(EnergyAsia, February 22 2012, Wednesday) — Up to 33 million people living in poverty in Africa and Asia will gain access to low-cost solar energy by 2016, said solar power provider ToughStuff in response to a call from the Business Call to Action (BCtA).

From its headquarters in Mauritius and offices in East, West and Southern Africa, ToughStuff seeks to expand access to low-cost, durable solar panels and solar battery packs to low-income communities in 10 African countries— Burundi, Cote d’Ivoire, Democratic Republic of Congo, Ethiopia, Malawi, Mali, Mozambique, South Sudan,   Zambia and Zimbabwe— and four Asian countries—Bangladesh, India, Pakistan and Nepal in the next four years.

The company expects to help consumers who previously relied on kerosene or biomass fuel to save a combined total of US$520 million on lower energy costs while reducing carbon emissions by up to 1.2 million tonnes by 2016.

The BCtA is a global initiative that encourages private sector efforts to fight poverty, supported by several international organisations including the UN Development Programme (UNDP).

Susan Chaffin, Programme Manager for the BCtA, said:

“Companies like ToughStuff invest in communities by providing cleaner, healthier energy options through core business operations. This commitment will help to boost development and improve social equity in a sustainable way that is good for the environment and good for business.”

According to Toughstuff, nearly half the world’s population lacks reliable access to modern energy services, with more than 20% of the global population, or 1.4 billion people, remain without access to electricity.

Most are in Sub-Saharan Africa and Asia, depending on wood, charcoal, animal waste or biofuels such as kerosene for energy. By 2030, household air pollution from the use of biomass fuel is expected to cause more than 1.5 million deaths a year, according to a recent UNDP report.

ToughStuff said it aims to reduce the impact of lack of energy access for millions of people by bringing its solar-powered products directly to low-income communities through commercial and alternative trade channels including its “Business in a Box” model, which relies on a network of village-level entrepreneurs that are provided with training on how to sell, rent or provide access to affordable solar energy services and products.

Since its launch in 2009, ToughStuff has helped to create thousands of new business opportunities for rural entrepreneurs. Its products have reached over one million people in Madagascar, helping customers save over US$5.85 million in energy costs.

“Today’s ambitious goal underlines ToughStuff’s commitment to produce quality and affordable products that will change the lives of millions of people living off-grid globally,” said Andrew Tanswell, CEO of ToughStuff.

“To make this happen, and at the scale we intend, we are actively building commercial partnerships with large distributors, telecommunications companies, retailers and others with an interest in bringing energy, along with all of its benefits, to those who don’t yet have it.”

COMPANY: US Koch Industries ventures into global LNG trading

(EnergyAsia, February 22 2012, Wednesday) — US conglomerate Koch Industries has started up a liquefied natural gas (LNG) business with an eye to meeting surging demand in Asia.

Koch Supply & Trading Sárl, the company’s Geneva-headquartered energy trading division, recently hired Stephen Cornish to complement existing North American activities in Houston and optimise its global portfolio by building a Europe-wide natural gas business from Geneva and an LNG trading business from Geneva, London and Singapore.

Origination and marketing support locations are also planned for the near future in other cities in East Asia, the Middle East and Latin America.
Mr Cornish said: “This venture into the international gas markets is a way to link its global portfolio to benefit its suppliers and customers. We believe this step into the international gas markets provides a strong counterparty for producers and customers alike.

“We will build out our operations in Asia, Europe and the Americas to the high standard that Koch Supply & Trading has set and look forward to working with our counterparts. This is a very exciting venture for us.”

CHINA: Government aims to raise refining capacity to 12 million b/d by 2015

(EnergyAsia, February 21 2012, Tuesday) — China is targeting to raise its annual refining capacity to 600 million metric tonnes or 12 million b/d under the government’s 12th Five-Year plan ending 2015.According to the Ministry of Industry and Information Technology, the government is also looking to raise China’s annual ethylene production capacity to 27 million…

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ASIA: Ernst & Young survey found most oil and gas deals targeted at securing energy supplies

(EnergyAsya, February 21 2012, Tuesday) — The vibrant oil and gas sector reported 1,322 oil and gas transactions last year for an increase of more than 5% compared to 1,258 in 2010, according to a survey by consultant Ernst & Young.

But in value terms, the global aggregate of these transactions was down 7% to US$317 billion from US$341 billion in 2010 as a result of a lack of mega deals. Last year, the sector reported 71 transactions each valued in excess of US$1 billion, compared to 76 the year before.
Sanjeev Gupta, Asia-Pacific Oil & Gas Leader and a Transaction Advisory Services specialist partner at Ernst & Young, said:

“The oil and gas market has proved that it can adapt to higher levels of uncertainty and keep transacting. The key questions now are how it will cope with the combination of commodity price volatility and structural contraction in global debt capacity.”
The upstream segment reported represented 75% of total Asian deal volumes and 72% globally. Of the US$66 billion shale related transactions, unconventional hydrocarbons are rapidly emerging as the new conventional.

While most of the deal activity has been in North America, the survey found that China is the largest shale gas resource holder in the world, with 19% of global resources. If the potential in this asset base can be unlocked, this could transform the oil and gas landscape in years to come.

Activity in the downstream segment declined modestly during 2011, although overall values were comparable to 2010 levels. Ownership change in refining and retail in mature markets continued, stemming from ongoing portfolio rebalance and capital allocation reviews amongst the majors.

“Downstream activity will continue but may be more concentrated in storage and midstream rather than refining,” said Mr Gupta.

The survey said oilfield services companies, like their customer base, are also globalising and consolidating. Many of the larger players are well-capitalised and opportunistic, and financial players also remain active.

As a result, the segment saw an increase in deal activity in 2011 and a positive outlook for 2012 underpinned by those seeking new geographies, new customers or new technologies.

Outlook for the Asia-Pacific in 2012

M&A activities will continue into 2012 but will be affected by wider economic volatility, said Ernst & Young.

Mr Gupta said winners will have to manage risk, volatility and capital across a global political landscape.

He said: “Despite substantial economic worries in the US and Europe, we expect to see more outbound acquisitions – especially for upstream assets – by the Asian players, notably Chinese and other broader Asian national oil companies (NOCs), and for unconventional gas assets.

“We also expect to see increasing supplies from Iraq and Libya in 2012 to meet the increasing energy demand from Asia-Pacific. We expect continuing portfolio rationalising and optimisation across subsectors, i.e., upstream, downstream and oilfield services and among a mixed set of players (NOCs, oil majors, independents, private equity and service companies).

“We also expect to see declining focus towards the renewable sector, as the industry will continue to see a rise in shale gas and oil sands production.”

Asia-Pacific oil and gas M&A in 2011

Australia’s deal-hungry junior oil and gas companies were starved of opportunity due to tough conditions in equity markets and as a result, the number of deals declined from 73 in 2010 to 58 in 2011, while their value plunged by 37% to US$7.2 billion. About 81% of last year’s transactions came from the upstream sector.

The major transaction focus of 2011 was the de–risking of upcoming LNG developments.

The largest deal involved China Petroleum & Chemical Corporation (Sinopec) taking a 15% stake in the Conoco Phillips/Origin Energy LNG venture (APLNG) for US$1.8 billion. In addition to the 15% equity interest, Sinopec secured off–take rights for 4.3 million tonnes/year of LNG from the proposed CSG-to-LNG project for 20 years.

The Fukushima nuclear disaster in March 2011 boosted gas demand, especially with respect to unconventional gas assets. The higher demand was evidenced in Japan, as well as in China and other Asian economies.

Most of Asia’s major transactions last year were focused on outbound investments as a means to secure energy supplies. These transactions were mainly driven by the Chinese NOCs, with focus on upstream assets in the Americas, especially unconventional Canadian and US shale gas plays, and South American conventional assets (such as in Brazil).

A notable trend emerged in this group to balance and optimise portfolios based on resources, expected economic returns and associated risks.

Other Asian countries also showed momentum for outbound investments in their attempt to provide security of energy supplies in lieu of increasing domestic energy demand.

Oilfield services sector transactions continued their momentum in this highly fragmented subsector, although the magnitude of deals was relatively smaller. Selective sovereign wealth funds and private equity remained focused on further building up their service portfolios, said Ernst & Young.

COMPANY: ABB to partner development of solar power plants in South Africa

(EnergyAsia, February 21 2012, Tuesday) — ABB, the Switzerland-based power and automation technology group, said it has signed an agreement with FG Emvelo, an independent solar power plant company, to develop high efficiency concentrating solar power (CSP) plants at Karoshoek Solar Valley in South Africa’s Northern Cape province.

FG Emvelo,a joint venture between, a German group of companies and Johannesburg-based Emvelo Projects, recently acquired a 340 sq km site with high direct normal irradiance (DNI).

ABB said the plants will use the efficient and cost-effective ABB-Novatec Solar turnkey concept for CSP plants which reduces the need for land by 40% and water consumption by 80%.

Novatec Solar is a German CSP technology company in which ABB recently acquired a 35% investment stake.

The efficiency is achieved through a patented solar boiler for direct steam generation based on innovative linear Fresnel technology. The collectors use flat glass mirrors to reflect solar energy onto a receiver in which water is vaporized directly to produce superheated steam at temperatures of up to 500 degrees Celsius. The direct steam technology operates without thermo oil or any other toxic heat transfer medium.

Differentiating benefits of the concept include the automated mass production of key components in local production facilities, a fast and accurate assembly process, highly efficient land use, and a robotic cleaning system that uses very little water.

Franz-Josef Mengede, head of ABB’s global power generation business within the Power Systems division, said:

“We are delighted to partner in this development. It confirms the growing appeal of our high-efficiency turnkey concept for concentrating solar power plants.”

Florian Fritsch, managing director of FG Emvelo, said:

“We are proud to announce the start of a new strategic partnership with ABB and Novatec Solar. “With their collaboration, and the use of linear Fresnel technology, we will be able to take significant steps towards achieving our goal of a ‘solar Silicon Valley’ at Karoshoek.”

ABB recently completed the turnkey delivery of South Africa’s first photovoltaic power plants for state energy firm, Eskom.

COMPANY: Brazil’s Petrobras appoints Silva Foster as CEO, succeeds Gabrielli

(EnergyAsia, February 21 2012, Tuesday) — Brazil’s state-owned oil and gas major Petrobras has appointed Maria das Graças Silva Foster as CEO, succeeding José Sergio Gabrielli de Azevedo from February 13.

Ms Silva Foster, who has been with Petrobras for 31 years, will also replace Mr Gabrielli in the company’s board of directors. A chemical engineer, she last served as the company’s Director for Gas and Energy and as CEO of Gaspetro – Petrobras Gás SA from 2007.
She was also previously CEO of Petroquisa – Petrobras Química SA, and CEO and CFO of Petrobras Distribuidora SA, as well as Secretary of Oil, Natural Gas and Renewable Fuels at the Brazilian Ministry of Mines and Energy from January 2003 to September 2005.

Ms Silva Foster remains chairwoman of Transportadora Brasileira Gasoduto Bolívia-Brasil SA and Transportadora Associada de Gás SA, and is a member of the board of Transpetro – Petrobras Transporte SA, Petrobras Biocombustível SA, and Braskem SA.

INDONESIA: Pertamina, Saudi Aramco looking to build refinery, petrochemical complex in East Java

(EnergyAsia, February 21 2012, Tuesday) — Saudi Aramco Asia Company Limited (SAAC), a subsidiary of Saudi Aramco, said it and Indonesia’s state-owned PT Pertamina have signed a memorandum of understanding (MOU) to jointly evaluate the economic feasibility to build an integrated oil refining and petrochemical project in Tuban in Indonesia’s East Java province.

The proposed complex will process 300,000 b/d of crude oil, the bulk of it supplied by Saudi Aramco on a long-term basis, into high-quality refined petroleum and petrochemicals products to meet rising demand in Indonesia and the rest of southeast Asia.

The partners have set up a joint project team to undertake market research, configuration studies and economic analysis.

The Saudi firm said the project represents an opportunity for it to partner with Pertamina to invest in Indonesia’s growing economy and downstream industry.

“This MOU is a significant first step in extending our already strong relationship with Pertamina, and is also part of Saudi Aramco’s strategy to enhance its global downstream presence,” said Dawood M. Dawood, Aramco’s Vice President for Marketing, Supply and Joint Venture Coordination.

M. Afdal Bahaudin, Pertamina’s Director for Investment Planning and Risk Management, said:

“This cooperation in investment with Saudi Aramco is of the highest value for both Pertamina and Indonesia to strengthen the fuel and petrochemical supply, to satisfy the huge domestic demand now and for the future.

“Pertamina fully supports our partner to make a successful project that is beneficial to both parties and that further strengthens our cooperation with Saudi Aramco. The Tuban refinery and petrochemicals project is part of Pertamina’s plan to improve Indonesia’s energy security.”


AZERBAIJAN: Kulevi Oil Terminal to develop second railway link

(EnergyAsia, February 20 2012, Monday) — Kulevi Oil Terminal, a subsidiary of the State Oil Company of Azerbaijan (SOCAR), said it is building a second railway link to improve the transportation of oil between the Chaladidi and Kolkheti stations, both located in Georgia.Work on the 5.6 km electrified line is half completed to expand the…

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SINGAPORE: Offshore contractor IEV goes into oil and gas exploration

(EnergyAsia, February 20 2012, Monday) — Singapore-listed offshore contractor IEV Holdings is venturing into oil and gas exploration after being awarded a concession by Indonesian state-owned upstream company Pertamina EP.

Subsidiary IEV Gas accepted the award of an “operation cooperation” programme for the Pabuaran onshore block on February 16, with completion of the terms expected in the second quarter subject to the agreement’s executions.

Covering an area of more than 77 sq km, the block to be explored and developed over a 15-year concession period is located 90 km east of Jakarta in the Subang district in West Java. First production is targeted for the second quarter of 2013.

Christopher Do, IEV’s CEO and President, said:

“This award represents our first step towards implementing IEV’s vision to become a complete energy company with upstream, mid-stream and downstream activities.

Besides oil production, the group will have a secure and competitive source of feed gas supply to grow its mobile natural gas sector and increase the volume of energy supplied in Java Island.

“The volume of gas produced enables IEV to build mini LNG and CNG supply chains to supply natural gas to off-pipeline power and industrial customers, as well as help to fulfil the emerging needs of the transport sector as the government of Indonesia is committed to develop its natural gas vehicle programme throughout Indonesia in the coming years.”


JAPAN: JX Nippon signed 17-year agreement to buy LNG from Shell

(EnergyAsia, February 20 2012, Monday) — JX Nippon Oil & Energy Corp, Japan’s largest oil refiner, said it has agreed to buy 200,000 metric tons of liquefied natural gas (LNG) a year over 17 years from Royal Dutch Shell Plc starting 2015.

Singapore-based Shell Eastern Trading Ltd will deliver the LNG in three shipments a year on a delivered basis to terminals in the Japanese ports of Hachinohe and Mizushima.

The Hachinohe terminal is under construction and due to start up in April 2015 while the Mizushima terminal, owned by Mizushima LNG Company Limited, is already in operation.

JX Nippon Oil & Energy Corp said the Hachinohe terminal will redistribute the natural gas and LNG to the northern part of Tohoku region, and the eastern part of Hokkaido through the Kushiro satellite terminal also scheduled to start up in April 2015.

JAPAN: Mitsubishi Corp pays C$2.9 billion for shale gas partnership with Canada’s Encana

(EnergyAsia, February 20 2012, Monday) — Japan’s Mitsubishi Corp has agreed to invest C$2.9 billion for a 40% interest in a venture to jointly own and develop Calgary-based Encana Corp’s natural gas lands in the Cutbank Ridge resource play in Canada’s British Columbia province. (US$1=C$0.99).

Holding the majority 60% stake, Encana said it will be the operator and managing partner of the Cutbank Ridge Partnership which holds about 409,000 net acres of Encana’s Montney-formation land in northeastern British Columbia.

Encana said the assets which include the Cadomin and Doig geological formations have total proved undeveloped reserves of approximately 900 billion cubic feet of natural gas equivalent, with initial ‘in place’ reserves of about 130 trillion cubic feet.

The partners plan to undertake long-term development and production of these huge reserves into liquefied natural gas (LNG), mostly for export to Asia.

Encana said the agreement excludes its current Cutbank Ridge production of about 600 million cubic feet of natural gas per day, processing plants, gathering systems and Alberta landholdings.

Mitsubishi Corp will pay C$1.45 billion on closing expected later this month, and will invest a further C$1.45 billion.

It has also agreed to provide 40% of the partnership’s capital investment for an expected five-year period that will reduce Encana’s funding commitments to 30% of the period’s total projected capital investment.

Encana said it has been assembling its expansive Cutbank Ridge lands along the foothills of the Canadian Rockies, straddling the British Columbia-Alberta border for over a decade.

Randy Eresman, Encana’s President and CEO, said:

“This transaction represents the next step towards the long-term development and value recognition of our undeveloped Cutbank Ridge lands in British Columbia — a major natural gas resource capable of delivering long-term, affordable energy supplies to domestic and export markets.
“Cutbank Ridge ranks among the most prolific and lowest-cost resource plays in North America and Mitsubishi’s financial commitment recognises the significant value contained in a portion of our enormous resource opportunity.

“The alignment we’ve already established with Mitsubishi will greatly enhance our plans to maintain Cutbank Ridge’s leadership position among the most cost competitive resource plays on the continent. Despite an increased capital spending profile on these natural gas assets resulting from this transaction, Encana plans to more than offset the near term impact on North American natural gas production oversupply by capital spending reductions elsewhere in its natural gas portfolio.”

Jun Yanai, Mitsubishi Corp’s CEO for its Energy Business Group, said:

“We are excited to join Encana — a first-rate unconventional producer that has pioneered low-cost, continuous improvement and technical innovation across its premium portfolio of North American resource plays. Mitsubishi looks forward to tapping new natural gas supplies for the long-term development and eventual delivery to world markets.”




AUSTRALIA: Woodside studying possibility of selling small Browse Basin LNG stake

(EnergyAsia, February 20 2012, Monday) — Faced with rising cost, Australian upstream company Woodside said it is assessing the possibility of selling a small portion of its 50% stake in a proposed liquefied natural gas (LNG) project off Western Australia state.

In a statement to the Australian Securities Exchange (ASX), Woodside said it has not made any decision to reduce its equity in the project but it “is conducting a limited process to assess the potential sale of a minority portion of the company’s equity in the development.”

The company had earlier announced that it would be postponing its final investment decision on the project, originally due mid-2012, till next year. Amid rising material and labour costs as well as environmental hurdles, the cost of developing Browse has risen to over A$40 billion from A$30 billion last year.

According to Western Australia’s Department of State Development, Browse Basin holds reserves of 34.6 trillion cubic feet of natural gas and 600 million barrels of condensate.

CHINA: Sinopec starts up 20-million barrel crude oil storage terminal in Hebei

(EnergyAsia, February 17 2012, Friday) — Sinopec Group has started operations at its 20-million-barrel strategic crude oil storage base in Hebei province in northern China.Built at a cost of 2.62 billion yuan, the new terminal in Caofeidian comprises 32 tanks each capable of storing up to 100,000 cubic metres of crude. (US$1=6.3 yuan).  …

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SRI LANKA: Lanka IOC to invest US$300 million to upgrade Trincomalee fuel terminal

(EnergyAsia, February 17 2012, Friday) — The Lanka India Oil Company said it plans to invest US$300 million by 2016 to upgrade its Trincomalee terminal to serve Sri Lanka’s growing fuel demand.Managing director K.R. Suresh Kumar said that in preparation for the project on the country’s east coast, the company has begun a year-long engineering…

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SAUDI ARABIA: Singapore’s Rotary Engineering secures US$34m contract to build storage tanks for power plant

(EnergyAsia, February 17 2012, Friday) — Singapore’s Rotary Engineering Limited said its 51%-owned joint venture company, Petrol Steel Co Ltd, has secured a US$34 million engineering, procurement and construction (EPC) contract to build 17 field storage tanks in Saudi Arabia.

The contract, Rotary’s fourth in the kingdom now worth a total of US$848 million, relates to the US$1.23 billion Shoaiba II Combined Cycle Power Plant Project in Shoaiba located 120 km south of the Red Sea city of Jeddah.

The contract was awarded by South Korea’s Daelim Group, the main contractor for the 1,238MW combined-cycle plant owned by the Saudi Electricity Co.

Rotary, whose partner is Saudi Arabia’s Rafid Group, will start work on the fuel oil tanks in June, targeting completion around the middle of 2013.

Chia Kim Piow, Rotary’s chairman and managing director, said:

“This is a strategic win for us and is another affirmation that our strategy to capitalise on our presence in Saudi Arabia is bearing fruit. We are hopeful and optimistic that more opportunities will open to us as we continue to fortify our presence in Saudi Arabia.”

The company is gunning for another major contract to build storage tanks for Saudi Arabia’s 400,000 b/d export-oriented refinery in Jizan.

Rotary, a leading provider of engineering, procurement, construction and maintenance services serving the oil, gas and petrochemical industries, entered the Middle East market in 2006. It secured its biggest contract in 2009 when it was awarded a US$745 million EPC contract to build a refinery tank farm in Saudi Arabia for Saudi Aramco

Total Refining and Petrochemical Company (SATORP), a joint venture between Saudi Aramco and France’s Total for its Jubail refinery.

KAZAKHSTAN: Canada’s Tethys Petroleum starts up oil storage and rail loading facility

(EnergyAsia, February 17 2012, Friday) — Canada’s Tethys Petroleum expects to boost its profit margins with the start up of a vital oil storage and rail-loading facility linking its Doris oilfield in Kazakhstan to the nation’s main rail system.

The new Aral Oil Terminal (AOT) infrastructure will allow the company to initially double Doris’s production to around 4,000 b/d as it has halved the distance needed to deliver the oil, which previously had to be trucked, said Tethys Petroleum.

Located 230 km from Doris, AOT will be used exclusively by Tethys as opposed to the previous rail loading point at Emba often suffered from congestion as it was used by several companies.

Tethys, which equally owns AOT with its Kazakh oil trading partner’s company, Olisol Investment, is focused on finding and producing oil and gas in Central Asia, with activities currently in Kazakhstan, Tajikistan and Uzbekistan.

Tethys said it plans to expand the terminal to handle 12,000 b/d of crude in the year ahead by adding an offloading point for refined oil products as well as equipment and materials to support the Doris exploration and appraisal programme.

AUSTRALIA: Caltex may shut both refineries after A$1.5 billion write-down

(EnergyAsia, February 17 2012, Friday) — Battered by Asian competition and a strong local currency, Australia’s largest downstream oil company said it could decide to shut down its two refineries later this year after writing down their combined value by A$1.5 billion. (US$1=A$0.94).

Caltex Australia Ltd, half-owned by US major Chevron Corp, said the fate of its two plants which accounts for more than a third of the country’s total capacity of 660,000 b/d now rests on the outcome of an operational review due in six months. The outlook is grim as Australia’s small ageing refineries can no longer compete against the modern export-oriented plants in Asia and the Middle East which vary between 400,000 and 600,000 b/d in size.

According to the Department of Resources, Energy and Tourism, the 131,000 b/d Kurnell plant in Sydney and the 109,000 b/d Lytton plant in Brisbane are the country’s second and third largest refineries among seven. The Caltex refineries together employ about 800 people and another 650 contractors.

Royal Dutch Shell is converting its 90,000 b/d Clyde refinery in Sydney into a fuel import terminal, while ExxonMobil Corp could be next to shut down its 80,000 b/d Altona refinery in Melbourne.

The remaining three belong to Shell (110,000 b/d in Geelong, Melbourne) and BP (140,000 b/d Kwinana near Perth and 90,000 b/d Brisbane).

In a statement, Caltex said that despite efforts to improve operations, its small refineries in their current configuration are unable to compete against Asia’s modern, larger scale and more efficient refineries.

“This disadvantage has been exacerbated by the impact of the ongoing strength of the Australian dollar, lower refiner margins and increasing costs on the refining business,” it said.
The company’s managing director and CEO, Julian Segal, said the review is aimed at optimising shareholder value that will include evaluating all options including closing down the refineries “if we are able to import product at a competitive price.”
He said Caltex, which has over a third of the country’s transport fuels, will honour its commitment to maintain reliable supply to customers whatever the outcome of the review.

MALAYSIA: Penang state government wants Esso and Shell to relocate fuel depots

(EnergyAsia, February 16 2012, Thursday) — Calling them a “disaster waiting to happen”, the government of Malaysia’s Penang state wants Esso and Shell to move their fuel depots from a heavily trafficked location near a ferry terminal and a bus centre. The government and the companies are in talks to find a long-term solution after…

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INDONESIA: Pertamina to invest 18-trillion rupiah by 2014 on domestic natural gas infrastructure

(EnergyAsia, February 16 2012, Thursday) — Indonesian state oil and gas firm Pertamina said it plans to invest 18-trillion rupiah through 2014 to build infrastructure to boost natural gas supply and encourage domestic consumption. (US$1=9,200 rupiah). Nearly 59% of that will be invested in building an import-oriented floating storage regasification unit (FRSU) in Central Java…

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INDONESIA: Jakarta to invest nearly 78 trillion rupiah to meet rising gas demand

(EnergyAsia, February 16 2012, Thursday) — The Indonesian government is planning to invest nearly 78 trillion rupiah in nine major nationwide projects to boost natural gas supply to meet rising domestic consumption. (US$1=9,200 rupiah). The projects are expected to be completed by 2018 to help offset the country’s declining energy self-sufficiency, according to regulator BPH…

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AUSTRALIA: ExxonMobil study could worsen case for survival of ageing Altona refinery

(EnergyAsia, February 16 2012, Thursday) — ExxonMobil has begun a technical study into upgrading the power supply system at its ageing 80,000 b/d Altona refinery in Australia’s Victoria state. The company suffered unspecified financial losses when the 63-year-old plant located near Melbourne city was disabled for at least a day after it was struck by…

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SINGAPORE: DNB Bank calls offshore stocks at “beginnings of sector up cycle”

(EnergyAsia, February 16 2012, Thursday) — Norway’s DNB Bank said Asia’s offshore oil and gas stocks are at the start of a sector up-cycle, naming Singapore-listed Keppel E&P, Sembcorp Marine, STX OSV, Ezion and Jaya as its top picks.

In a report last week, authors Kay Lim and Simon Jong also recommended buying Swiber, Ezra, ASL Marine, CH Offshore, KS Energy and Kreuz.

“We believe we are in the initial phase of what could be the next sector bull cycle. In our view, current market dynamics favour vessel owners, with a tighter market and lower pace of newbuild orders,” said the report.

“We are forecasting 6% incremental demand growth in 2012, versus 5% global fleet growth. Despite a strong share price performance this year, we argue that the sector risk/reward remains attractive, at a 25% discount to net asset value (NAV) and 8.7x 2012 estimated price/earnings ratio.”

Otto Marine was the only stock to be given a sell rating while EOC of Norway was rated ‘hold’, and Malaysia’s Kencana and SapuraCrest are both under review.

The report said there will be demand for another 202 offshore support vessels (OSVs) for a 6% rise in the global fleet in 2012 to follow on 2011’s growth of 5%.

“We view this as a contributing factor to a tighter demand/supply balance,” it said.

Reviewing last year’s performance, the authors said there were 561 long-term OSV fixtures, which made up 19% of the world’s OSV fleet. Term fixtures rose 38% over 2010.

“In 2011, the market continued to absorb the excess tonnage, with improving demand dynamics.

Utilisation levels stabilised at an average 76–79%, and started to tick up in Q4 2011 and early-2012, supporting our thesis that 2012 could be the turning point for the OSV market.”

The authors observed that the global financial crisis has not slowed down the pace of newbuild OSV ordering “for now”, with a “prolific” 21 orders placed in Q4, of which six were in December.

Compared with rigs, OSV ordering pace has slowed down.

“Newbuild orders placed in 2010 and 2011 represented just 1.6% and 2.3% growth respectively in the global OSV fleet. Compared to ‘demand’, i.e. the total number of rig orders in 2011 of 60 jack-ups and 36 UDW floaters, the ratio of OSVs to one demand unit was 0.74, well below the three-year average of 2.55.

“Therefore, we believe there is pent-up demand for OSVs.”