UZBEKISTAN: Uzbekneftegas, Kogas JV to build gas-to-chemical complex

(EnergyAsia, May 23 2012, Wednesday) — A joint venture between two leading energy companies of South Korea and Uzbekistan said it will build a gas-to-chemicals complex in the Central Asian country by 2016. Based in the capital city of Tashkent, Uz-Kor Gas Chemical Company, the JV firm owned by the Korea Gas Corporation (Kogas) and the…

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CHINA: Ghana secures China Development Bank loan for oil and gas projects

(EnergyAsia, May 23 2012, Wednesday) — Ghana recently secured US$1 billion as part of a bigger US$3 billion loan from China Development Bank Corp to develop its oil and natural gas reserves. Of the initial sum, US$850 million will be invested in a gas project between the Ghana National Gas Co (GNGC) and China Petroleum…

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ASIA: Region must pay focus on clean, sustainable and equitable development, says UNDP

(EnergyAsia, May 23 2012, Wednesday) — Asia Pacific countries have reached a crossroad where they must strike a balance between rising prosperity and focusing on cleaner, sustainable and more equitable growth, said the UN Development Programme (UNDP).

The region’s response to these issues and its success or failure at dealing with the new challenges will have long-term global repercussions worldwide, predicts the agency in a new report.

Growing first and cleaning up later is no longer an option even if the region needs an expanding economy to combat poverty, said the Asia-Pacific Human Development Report 2012 – One Planet to Share: Sustaining Human Progress in a Changing Climate. The publication is aimed at reinvigorating climate change dialogue by bringing people’s concerns into the fore in the lead-up to the Rio+20 conference next month.

“The world’s common future will be hugely affected by the choices that are made in the Asia Pacific on a low carbon growth path,” said Ajay Chhibber, UN Assistant Secretary-General, UNDP Assistant Administrator and Regional Director for Asia and the Pacific.

“The goal is clear: reduce poverty, increase prosperity but leave a smaller carbon footprint.”

What happens in this region, home to more than half the world’s population and half of the planet’s megacities, can make a global difference.

The report said: “Countries of the developing Asia-Pacific are much less locked into the old, carbon-intensive ways of production and consumption. Asia-Pacific not only has the imperative, it also has the opportunity to manage development differently.”

The report argues that in the face of climate change, countries in the region “will need to change the way they manufacture goods, raise crops and livestock, and generate energy.”

This will mean moving to greener, more resilient, lower-emission options that not only sustain the environment but also offer opportunities to the poor for employment and income.

“The report said that now is the time for the Asia-Pacific countries to act while they are experiencing a fast pace of economic growth.

There are some positive indications: China is committed to lower its carbon intensity of GDP by 40-45% by 2020 compared to the 2005 level. India is also committed to reduce emissions intensity of GDP by 20-255 by 2020 compared to the 2005 level while Indonesia said it will cut emissions by 26% by 2020.

Time to change production

Economic growth in the region is primarily dependent on fossil fuel energy. An overwhelming share of the region’s total greenhouse gas emissions comes from energy generation and industrial production, along with agriculture.

The region has emerged as a global workshop for manufacturing to meet consumers’ needs elsewhere.  Countries of developing Asia-Pacific burn more than 80% of the world’s coal directly used by industry. Approximately 85% of the region’s primary energy comes from fossil fuels in the form of coal, natural gas and oil.

Asian countries account for 37% of world emissions from agricultural production, including through growing crops and raising livestock, land use changes and deforestation. The principal greenhouse gas emissions are nitrous oxide from fertilisers, methane from livestock and rice production and CO2 released when soils are ploughed.

Countries across the region are charting ways of moving to lower-carbon production while dealing with the tough challenge of addressing poverty and managing emissions too.

Fair and balanced consumption

The Asia-Pacific region has a vast but unequal consumer market. Some people consume too little: In 17 countries, 10% or more of the population subsists on inadequate diets. The region is home to nearly 900 million of the world’s poor living in extreme poverty (on US$1.25 dollars or less a day).

It is also a region of contrasts where there are more than 2.5 billion mobile phone subscriptions, yet half its population, or almost 1.9 billion people, lacks basic services such as access to flush toilets.

The UNDP report has warned that fulfilling the urgent needs of those in extreme poverty, combined with the higher purchasing power of the region’s new consumers, will increase the demand for food, water, energy, housing and consumer goods. These factors will put even greater pressure on natural resources and will require more balanced consumption patterns that are less energy and resource intensive, especially among the rich and the growing middle classes.

“The important principle of ‘common but differentiated responsibility’ under the UN Framework Convention on Climate Change (UNFCCC) recognises the historical differences in the contributions of developed and developing countries to the earth’s environmental problems, as well as the differences in their capacities to respond effectively,” said the report.

Building greener cities

Of the world’s top 20 megacities – those with populations of 10 million or more – half are located in Asia. The region has some of the world’s fastest growing cities, which must deal with both the causes and consequences of climate change.

Urban areas generate large quantities of greenhouse gas emissions, mainly through energy consumption and local transport. Globally, cities occupy only two percent of land and yet contribute more than two-thirds of greenhouse gas emissions.

Cities are vulnerable to the effects of climate change, in part because they concentrate people and infrastructure along low elevation areas, such as rivers and coasts. The most vulnerable are the urban poor, who occupy marginal areas exposed to climate and environmental hazards.

Yet cities are also centres of finance, politics, dynamism and innovation, which should help them develop in more carbon-efficient ways, and find new and smarter strategies for adapting to a warmer world.

The report urges city governments to encourage climate-friendly energy use, more efficient transport, greener buildings and better waste management.

Raising rural resilience

In the Asia Pacific, nearly 700 million people in rural areas live in extreme poverty and are exposed to a wide range of climate change impacts, from flash floods in mountain areas, to sea-level rises in river delta regions and the Pacific islands.

Rural communities receive relatively little support in terms of funds or services. For example they find it difficult to market goods if they do not have all-weather roads and often do not have reliable and accurate knowledge on climate related issues. The report urges more investment in information and low-cost technologies, such as mobile updates that keep farmers current on weather forecasts and disaster warnings, farm prices and other information that affects their daily lives in a changing environment.

CHINA: Wanxiang acquires stake in GreatPoint Energy, invests US$1.25 billion in “world’s most efficient” coal-to-natural gas plant

(EnergyAsia, May 23 2012, Wednesday) — US-based GreatPoint Energy and China Wanxiang Holdings said they have officially concluded a partnership agreement and joint investment in a large project in the western Chinese region of Xinjiang to convert coal into natural gas for consumption in the eastern provinces.

GreatPoint Energy, which sold an unstated “large” equity stake to its new partner, has raised equity investment and secured project funding of US$1.25 billion from Wanxiang to finance and construct the first phase of the ‘Bluegas’ plant to produce one trillion cubic feet of gas a year.

Using GreatPoint Energy’s proprietary Bluegas(TM) technology, the plant’s first phase is expected to start producing 30 billion cubic feet/day in 2015, rising to 116 billion cubic feet/day within two years.

China Petroleum and Chemical Corp or Sinopec, the country’s largest company by revenue, has agreed to purchase the plant’s gas output for distribution to major consuming centres in the eastern provinces including Guangdong and Zhejiang, and Shanghai city. Sinopec has already announced plans to construct a pipeline to deliver the gas.

The Bluegas project is expected to contribute toward meeting China’s rapid energy demand growth and strong desire to improve environmental quality. It will provide domestic, clean energy derived from a very large and low-cost coal resource base in the western regions of the country.

The project was first highlighted during an official signing ceremony between senior US and Chinese government officials on February 19 this year.

GreatPoint Energy said it developed and owns the Bluegas hydromethanation technology that directly converts coal into pipeline quality natural gas, the cleanest commercial fuel in use. The company said its proprietary technology operates at the highest efficiency with the least environmental impact, and produces natural gas at the lowest cost in the industry while consuming water at the half the rate of competing gasification systems.

Inherent in the technology is the ability to capture nearly all emissions, including carbon dioxide, which can be sequestered and used for oil production through enhanced oil recovery methods. The technology is especially well suited for arid regions and where low-quality, concentrated coal resources are available, such as in Xinjiang.

GreatPoint Energy said that it and Wanxiang are planning to develop large-scale Bluegas projects at other locations in Xinjiang and in other parts of China.

 With the proof of concept, GreatPoint Energy intends to expand to other significant natural gas markets in other parts of the world including Japan, South Korea, India and Europe.

“Wanxiang is pleased to be a major shareholder in GreatPoint Energy,” said Wanxiang Group’s chairman, Lu Guanqiu.

“Wanxiang believes that GreatPoint Energy’s Bluegas technology is the world’s most advanced, lowest cost and most environmentally friendly technology for transforming coal into natural gas. Wanxiang looks forward to seeing GreatPoint Energy become a global leader in the supply of clean energy.”

Gu Jun Yuan, President of China Wanxiang Holdings, said: “This partnership between Wanxiang and GreatPoint Energy represents the beginning of a very significant opportunity to convert some of the world’s most abundant and low cost coal supplies into trillions of cubic feet of clean, valuable natural gas.”

Andrew Perlman, CEO of GreatPoint Energy, said: “We are building a major new global energy producer for the 21st century and focusing on one of the largest, most attractive, and fastest growing natural gas markets in the world. We are extremely pleased that one of the most successful and well-respected companies in China has become a major shareholder in GreatPoint Energy.”

Daniel Goldman, President and Chief Financial Officer of GreatPoint Energy, said:

“We welcome Wanxiang as one of our strategic investors and establish a joint venture with them in China. This agreement provides a tremendous pathway for commercialisation of the Bluegas technology and enables us to develop and finance multi-billion dollar projects and provide large quantities of natural gas that will compete with supplies from neighbouring countries.

“We are particularly excited to contribute toward meeting China’s rapid natural gas demand growth with American technology and engineering of a highly efficient and cost-effective clean energy solution. We are confident that this partnership will create thousands of new high-quality engineering, technical and construction jobs in the US and China as we build-out large-scale, environmentally attractive gas production facilities.”

Founded by Mr Lu in 1969, Wanxiang has grown to become one of China’s largest private companies with operations across the country and in more than 40 countries around the world. Wanxiang is a diversified manufacturing enterprise with interests in equipment and automotive parts manufacturing, where it has become one of the largest global suppliers, clean energy, financial services, agricultural products, natural resources, real estate and investments.

SINGAPORE: Neste Oil using fish waste to produce “NExBTL’ renewable diesel fuel

(EnergyAsia, May 22 2012, Tuesday) — Finland’s Neste Oil said it is using fish waste fat from Southeast Asian farms to produce its ‘NExBTL’ brand of renewable diesel fuel at its controversial biofuel refinery in Singapore.

The company, which started out using palm oil and crop waste, said the fat comes from the processed waste of the freshwater pangasius catfish which is widely farmed in Vietnam and neighbouring countries.

“As with all the other renewable inputs, this batch of waste fish fat complies with the strict sustainability requirements of the European Union’s Renewable Energy Directive. The batch can be traced all the way back to the fish farm,” said a Neste statement.

“Waste fish fat is also accepted as a raw material for renewable fuel in the US. The NExBTL renewable diesel produced from the batch cuts greenhouse gas emissions by approximately 84%* when compared to fossil diesel and calculated over the fuel’s entire life cycle. Using NExBTL diesel also reduces tailpipe and fine particulate emissions significantly.”

Despite much criticism from environmental groups such as Greenpeace, Neste invested 550-milllion euro in the 800,000-tonne/year biofuel plant to process mostly palm oil into diesel for export to Europe. The plant, which opened in late 2010, is struggling to make a profit as palm oil costs have risen sharply.

Most biofuel projects using food crops have also beel slammed for contributing to the rise in food costs that have hurt the poor around the world.

“It makes good ecological sense to use waste and sidestreams to produce advanced, premium-quality renewable fuel, which is why our goal this year is to increase the amount of by-products and waste we use as raw materials by hundreds of thousands of tons compared to 2011,” said Matti Lehmus, Neste Oil’s Executive Vice President, Oil Products and Renewables.

“In addition to focusing on waste and sidestreams, we are continuing R&D on completely new types of raw materials. We are currently building Europe’s first pilot plant to produce microbial oil from waste and residues-based raw materials at our Technology Center in Porvoo, Finland, and expect to complete it during the second half of this year, in line with our previous announcement.”

The company said its NExBTL technology is capable of processing a very wide variety of different bio-based materials including vegetable oils, waste animal fat and by-products from vegetable oil production into renewable diesel.

INDIA: ABB to develop 1,200-kilovolt ultra high voltage circuit breaker

(EnergyAsia, May 22 2012, Tuesday) — ABB, the Switzerland-based power and automation technology group, said it is working engineers in India to develop, design and manufacture a 1,200 kilovolt ( kV ) circuit breaker, the highest AC voltage level in the world.

The innovative circuit breaker will be deployed at a national test station being constructed by India’s transmission utility, Power Grid Corporation (PGCIL), at Bina in the central Indian state of Madhya Pradesh. The circuit breaker will being jointly developed by ABB engineers in Switzerland and India, with the support of PGCIL, and will be manufactured at ABB’s production facility in Vadodara, India.

ABB’s 1,200 kV circuit breaker is safely housed along with the disconnector in a tank filled with insulating gas. This unique design can result in a space saving of up to 60 percent compared with conventional designs.

The configuration also protects critical components from environmental exposure and brings down the center-of-gravity, thereby increasing its ability to withstand seismic events. Other design features include modular ring type current transformers, partial discharge sensors and composite bushings.

“This 1,200 kV circuit breaker is another example of ABB’s commitment to remain at the forefront of technology and innovation,” said Giandomenico Rivetti, head of ABB’s High Voltage business.

“ABB has pioneered many power technologies in India, and we are proud to build on this heritage by supporting PGCIL for this benchmark project.”

India is adding significant power generation capacity to meet growing demand, which in turn requires an efficient and reliable transmission and distribution infrastructure to deliver the electricity to consumers.

Transmitting at higher voltages enables more power to flow through lines with minimal space impact and significantly lower transmission line losses. These factors have prompted India to develop a 1,200 kV transmission system, which will be the highest AC voltage level in the world. The 1,200 kV Bina station will carry out field tests as part of this initiative.


CHINA: Uzbekistan aims to start supplying up to 4 bcm gas this year

(EnergyAsia, May 22 2012, Tuesday) —- Breaking from dependence on the Russian market, Uzbekistan is poised to soon join Turkmenistan in supplying natural gas to China through the Central Asian pipeline network. Launched in 2009, the pipeline starts from Turkmenistan and runs through Uzbekistan and Kazakhstan, which also expects to tap the same infrastructure to export…

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CHINA: Iran accepts yuan for oil trade as sanctions tighten

(EnergyAsia, May 22 2012, Tuesday) — As the noose of trade sanctions tighten, Iran has begun using the yuan as a settlement currency for part of its estimated 550,000 b/d oil trade with China, one of its few remaining allies strong enough to defy the West.Iran has also agreed to partly accept the rupee currency…

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ANGOLA: Oil to boost economic growth to 8% this year, says IMF

(EnergyAsia, May 22 2012, Tuesday) — Angloa’s economy will rebound to grow by 8% this year after expanding by 4% last year while its rate of inflation is declining, said the International Monetary Fund (IMF).

“The pace of economic activity is expected to pick up in 2012, as oil production rebounds. Growth is projected to accelerate to about 8%. Economic activity in several sectors is benefitting from a scaling-up of public investment programs and from the settlement of past government arrears,” said the IMF which issued its assessment of the country after a study visit by a study team to Luanda from May 2 to 17.

Led by Mauro Mecagni as part of the agency’s 2012 Article IV Consultation and First Post-Program Monitoring Mission, the team met Angola’s Cabinet ministers and other senior government officials, and representatives of the banking, business, diplomatic, and academic communities.
The team praised the Angolan authorities for achieving the key objectives specifcied in the 2009-2012 economic stabilisation programme supported by the IMF.

Three years after the abrupt decline in world oil prices that severely affected its economy, Angola has attained an improved fiscal position, a more comfortable level of international reserves, a stable exchange rate, and lower inflation.

According to the IMF, Angola has settled its domestic arrears and made “significant progress” toward improving fiscal transparency and accountability.

It added: “Macroeconomic performance in 2011 was affected by oil production problems. Robust non-oil growth compensated for the oil sector decline, resulting in an overall real growth rate of about 4%.

“Inflation continued its gradual decline, to about 11% at the end of the year. The overall fiscal surplus increased to about 10% of GDP, in part helped by high oil prices. International reserves came to exceed US$27 billion by the end of the year, a level equivalent of 6 months of 2012 imports.”

“Economic prospects over the next few years remain positive given current projections for oil prices and the strong reform momentum envisaged in the authorities’ medium-term plans.”

INDIA: US leaning on UAE, Saudi and Iraq to step up oil supplies

(EnergyAsia, May 21 2012, Monday) — The US government is pushing allies Saudi Arabia, the UAE and Iraq to increase crude oil supplies to India which is under pressure to reduce imports from Iran.India imported more than 350,000 b/d of Iranian crude last year, making it one of the largest customers of the Islamic regime…

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CHINA: Sinopec JV opens Asia’s largest crude oil terminal

(EnergyAsia, May 21 2012, Monday) — A Sinopec joint venture has started up Asia’s largest crude oil storage terminal in the Chinese port of Ningbo in Zhejiang province. With 17 berths to serve tankers up to 450,000 tonnes in weight, the 450,000-tonne terminal of Ningbo Shihua Crude Oil Terminal Co Ltd in Daxie is designed to…

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INDIA: GAIL to start importing natural gas from Turkmenistan from 2018

(EnergyAsia, May 21 2012, Monday) — The Indian government has appointed state  gas firm GAIL India Ltd to begin importing 38 million cubic metres/day (mcm/d) of natural gas from Turkmenistan for 30 years.The plan is dependent on the 2018 completion of the proposed 1,680-km Turkmenistan-Afghanistan-Pakistan-India line (TAPI) with the capacity to carry 90 million mcm/d…

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MALAYSIA: Japan’s Itochu and Thailand’s PTT to invest in Johor state’s refining-petrochemical complex

(EnergyAsia, May 21 2012, Monday) — Japanese trading house Itochu Corp and Thai state-owned PTT Global Chemical Public Company have agreed to invest in petrochemical projects in Malaysia’s southern state of Johor.

In a statement, Malaysian state energy company Petronas said it has signed Heads of Agreement (HOAs) with the two companies to form separate petrochemical joint ventures within the proposed RM60 billion Refinery and Petrochemical Integrated Development (RAPID) complex in Pengerang town. (US$1=RM3.05).

Petronas said it will be the majority equity holder in the proposed joint ventures to own, develop, construct and operate two separate complexes for the production of high value-added downstream chemicals.

At the signing ceremony last week, Petronas was represented by its chief operating officer, Wan Zulkiflee Wan Ariffin, who is also the executive vice president (downstream business). Itochu was represented by the president of its energy and chemicals company, Yuji Fukuda while PTT Global Chemical was represented by CEO Anon Sirisaengtaksin.

With these two new investors, Petronas has signed three heads of agreements to date for the RAPID project. Germany’s BASF was the first signatory with its decision to invest in a specialty chemicals complex.

According to Petronas, RAPID will be Malaysia’s largest oil-petrochemicals downstream undertaking, comprising a 300,000 b/d refinery and a petrochemical complex.


INDIA: Slowing economy faces risks from inflation, high oil prices and global economic crisis

(EnergyAsia, May 21 2012, Monday) — Apart from growing at a projected slower rate of 7% this and next year, the Indian economy will face rising risks from its slow reform efforts, high oil prices, volatile inflation and the global economic crisis, said the business community and the International Monetary Fund.

In its report on the country issued last month, the IMF said that while growth remains high, India could be negatively impacted by the unsettled global outlook, slow government decision-making and poor investment outlook. India’s economy grew by 8% to 9% in the previous two years.

For most of 2012, inflation is projected to stay at around 7%, well above the Indian central bank’s target of 4.5% in the near term and 3% in the medium term.

The IMF has projected India’s current account deficit to widen to 2.8% of GDP on account of lower export earnings and higher import spending brought on by high oil prices.

While external risks are manageable for now, the IMF warned that a protracted downturn in the advanced economies could have “a sizable impact” on India’s growth.

It said a “sudden stop” of capital inflows from the region’s banks would complicate the financing of India’s current account deficit. Also, India’s large corporations present an important potential channel of contagion.

The IMF said energy prices are weighing heavily on the government’s assessment and response to India’s economic challenges.

“In 2008/09, sharply lower oil prices helped bring Indian inflation down, allowing for monetary easing while reducing the trade deficit. These beneficial effects have not occurred during the past year,” it said.

With limited progress on subsidy reforms and oil prices remaining firm, the IMF said India’s 2011/12 deficit target is likely to exceed the target by about 1% of GDP despite a slower pace of capital spending compared with previous years.

A midyear rise in fuel prices mitigated spending pressures, but the subsidy bill is still likely to exceed the budget by a substantial amount.

The situation has deteriorated in recent weeks as Indian businessmen warn of paralysis and a leadership vacuum in New Delhi while US ratings agency Moody’s gave the Indian government a ‘credit negative’ status for projecting a budget deficit of 5.9% for the current financial year.

Last week, the Indian rupee sank to a fresh five-month low of 54 against the greenback despite intervention from the central bank as Indian oil companies bought dollars to pay for rising oil imports.

NEW ZEALAND: Chevron re-opens Timaru storage terminal

(EnergyAsia, May 18 2012, Friday) — Chevron New Zealand has decided to reopen as well as expand its Timaru fuel storage terminal facility, to the relief of customers and businesses operating in the South Canterbury region.Following a review of its terminal and storage facilities around the country, Chevron said it will invest NZ$4 million to…

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ASIA: Regional oil and gas companies more likely to divest than global counterparts, says Ernst & Young

(EnergyAsia, May 18 2012, Friday) — The oil and gas industry is taking a cautious attitude towards mergers and acquisitions despite higher oil prices, improving access to capital, increasing economic optimism and a generally more favourable deal environment, said consultant Ernst & Young.

In its sixth Global Capital Confidence Barometer survey, Ernst & Young said oil and gas respondents expect divestment activity to increase over the next 12 months, with 47% of global respondents in April 2012 expecting to sell assets compared with 20% a year ago.

Companies in the Asia Pacific region were more adventurous than the rest of the world, with 42% respondents stating they are likely to divest, up from 28% six months ago. On a global basis, the survey found that only 31% of companies expect to divest assets in the next year, up from 20% a year ago.

Sanjeev Gupta, Ernst & Young’s Asia-Pacific Transactions Advisory Services Leader for Oil and Gas, said that 78% of the region’s respondents view the global economy as stable or improving.

“They also show a marked upswing in confidence at the global level for corporate earnings, economic growth, employment growth and credit availability from six months ago. They still don’t view these metrics as positively as all global executives, and are still concerned with the regulatory environment,” he said.

He found that 52% of all respondents view the global economy as improving, compared with 29% of Asia’s oil and gas executives. Significantly only 22% expect see the economy to weaken compared with 50% when interviewed six months ago.

Mr Gupta said 48% of the respondents from the region feel the local economy is improving, up from 39% six months ago.

He also found that 89% of the region’s respondents believe the Eurozone crisis has affected their business.
In response, 56% of them are looking to reduce cost or implement supply chain transformation to counter revenue and cost pressures and risks.

Asia’s oil and gas executives also displayed a higher level of confidence towards global credit availability compared with six months ago.

Ernst & Young said: “Today, 89% of Asia-Pacific respondents view credit conditions as stable or improving which brings them on par with their global colleagues, 87% of whom share this view today, and more confident than the global sample (75%).

“Just under half (42%) of Asia-Pacific oil and gas respondents are planning to refinance their debt over the next year.”

MARKETS: Crude fall to their lowest levels in over six months on European economic crisis, US Presidential elections

(EnergyAsia, May 18 2012, Friday) — Battered by Europe’s economic crisis and US threats to release strategic stockpiles, crude oil prices have fallen to their lowest levels in more than six months, with US WTI slipping below US$100 a barrel and North Sea Brent hovering just above US$110 this week.

Trading in the US$90s since May 7, WTI crude dipped below US$92 a barrel yesterday to its lowest level since early November and nearly US$20 off the peak of US$110 reached on March 1.

Brent, on account of its broader international exposure, has held up better at over US$111 a barrel this week after falling through the US$120-support level on April 16.

With the Middle East out of the headlines in recent weeks, the oil markets are focusing on fears that the European Union could collapse and spark a new financial crisis similar to the one that caused a global economic recession in 2008.

In an elections year, US President Obama, who is seeking a second term in office, has also weighed in with threats to act against “speculators” and release oil from international strategic stockpiles.

Oil producers might take some comfort that Brent is expected to be well defended at US$100 to US$110 a barrel as many exploration and production projects around the world will not be viable if crude fell below this level.

Saudi Arabia, which recently raised its crude output to over 10 million b/d, has stated its support for the crude price to hold steady at the equivalent of US$100 Brent as a comfortable mid-point for oil and consuming producing countries.

At an energy conference in Australia early this week, Saudi Oil Minister Ali al-Naimi told reporters: “We need (Brent) oil price at around US$100.”

Meanwhile, OPEC’s spare crude capacity fell further to 2.38 million b/d in April compared with 2.54 million b/d in March, said the International Energy Agency (IEA). This figure, which excludes Iraq, Nigeria, Libya and Iran, is at a four-year low, and could set the stage for oil to rebound if supply disruption occurs in the politically volatile Middle East and Africa.

AUSTRALIA: Caltex hoping to continue oil refining business

(EnergyAsia, May 18 2012, Friday) — Australia’s largest downstream oil company has just declared that it is still too early for the ailing refining industry to die.

After over a year of making funeral arrangements for its two unprofitable ageing refineries, Caltex Australia Limited surprised shareholders last week with CEO Jerry Segal announcing that it is hoping to continue operating at least one of them.

According to the Department of Resources, Energy and Tourism, Caltex’s 131,000 b/d Kurnell plant in Sydney and the 109,000 b/d Lytton plant in Brisbane are the second and third largest of Australia’s seven refineries. Built in the 1960s, the two refineries together employ about 800 people and another 650 contractors.

Oil refiners in Australia and other developed economies are increasingly unable to compete against larger and better capitalised rivals in Asia and the Middle East.

Last February, Caltex, half owned by US major Chevron, said it might have to shut down the refineries after writing down their combined value by A$1.5 billion.

The company may have been forced into a change of heart out of concerns that Australia will become overly dependent on imports for its future fuel requirements.

In announcing a 10.4% decline in first quarter profit at its annual general meeting last week, Mr Segal said the company’s refining business is expected to continue losing money into the future.

Company chairman Elizabeth Bryan added that refining has continued to lose money during the first quarter, with Kurnell responsible for the bulk since last year.

SAUDI ARABIA: Siemens and partner to open large gas turbine manufacturing plant in 2013

(EnergyAsia, May 18 2012, Friday) — German engineering giant Siemens said it has started work on a building a 220,000-sq m plant in Saudi Arabia’s Dammam city to manufacture gas turbines and compressors for the kingdom’s fast-growing energy markets.

Siemens and local partner E.A.Juffali & Brothers expect the facility to also create job opportunities for young Saudis, serving as a knowledge transfer hub for technology and supporting the country’s industrialisation drive when it starts up in late 2013.

Siemens said it and E.A. Juffali & Brothers are jointly investing a “three-digit million US dollar figure” in what it has described as the first of its kind for the German firm in the Middle East.

The plant’s groundbreaking ceremony last week was held under the patronage of Prince Mohammed bin Fahd bin Abdulaziz Al-Saud, governor of the kingdom’s Eastern Region, in the presence of senior government officials, and executives from Siemens, E.A. Juffali & Brothers, Saudi Electricity Company and Saudi Aramco.

Among those present were Saleh Al Awaji, Saudi Deputy Minister of Water and Electricity for Electricity Affairs; Abdulrahman Al-Wuhaib, Saudi Aramco’s Senior Vice President; Ali Al-Barrak, CEO of Saudi Electricity Company; Michael Suess, CEO of Siemen’s Energy Sector and board member; Sheikh Sami Juffali, chairman of Siemens Ltd in Saudi Arabia, and Arja Talakar, CEO of Siemens Saudi Arabia.

Dr Suess said: “With this new facility, Siemens is strengthening its long-term commitment to Saudi Arabia. We will create qualified jobs and train young Saudis in order to achieve a true transfer of our innovative technologies.
Since establishing a presence in Saudi Arabia in the early 1930s, Siemens has built up an operation of around 2,000 employees at five different locations across the country.

MARKETS: Twenty small island nations commit to reduce dependence on fossil fuels

(EnergyAsia, May 17 2012, Thursday) — Supported by the UN and several developed countries, 20 small island developing nations have declared their intention to reduce dependence on fossil fuels, develop the use of renewable energy and develop the economy at the same time.

The Barbados Declaration, named after the venue of last week’s conference organised by the Barbados government and the UN Development Programme (UNDP), was adopted ahead of next month’s UN Conference on Sustainable Development ‘Rio+20’.

The 20 small island states will work on switching to hydro, solar, geothermal or other renewable energy sources to free up to the equivalent of 30% of their GDP being expended on oil imports.

“The savings can be then invested into jobs in sectors such as clean energy, improved health care and education, stronger safety nets for people whose livelihoods will be affected by the phase out of fossil fuels, adaptation to climate change, and other programmes,” said the UNDP.

Barbados, the conference’s host country, announced its plan to increase the share of renewable energy to meet 29% of its electricity consumption by 2029.

Prime Minister Freundel Stuart said:

“By 2029, we expect that total electricity costs would have been cut by US$283.5 million and carbon dioxide emissions would have been reduced by 4.5 million tons. We also envisage an overall 22% reduction in projected electricity consumption based on the use of energy efficiency measures.

Maldives committed to achieve carbon neutrality in the energy sector by 2020, while Marshall Island aim to electrify all urban households and 95% of rural outer a toll households by 2015.

Mauritius committed to increasing the share of renewable energy sources to 35% or more by 2025 while Seychelles said it aims to produce 15% of energy supply from renewable sources by 2030.

The declaration recognises the importance of the UN Secretary General’s Sustainable Energy for All initiative and that energy challenges have to be resolved as a group through open dialogue and cooperation.

The Barbados Declaration emphasises that there are commercially feasible options in many small island states for providing energy such as wind, solar, geothermal, and oceans energy.

“However, these technologies must be made accessible, affordable and adaptable to the needs and particular circumstances of member communities.

“We strongly urge the international community, particularly developed countries, to ensure the provision of financial resources, technology transfer and capacity building to small island developing states (SIDS).

The two-day conference  brought together more than 100 heads of state, ministers, leading development experts, civil society activists, business executives and UN officials from 39 countries from the Caribbean, the Pacific, Indian Ocean, and Africa, that belong to the SIDS group.

“Our global presence, expertise in capacity building, and extensive development finance experience allow us to help small island development states in their transformation toward sustainable energy for all, by supporting them to develop capacities to attract investments,” said Michelle Gyles-McDonnough, UN Resident Coordinator and UNDP Resident Representative for Barbados and the Organisation of Eastern Caribbean States.

MARKETS: Depleting crude oil reserves helping to drive growth of natural gas industry, says GBI

(EnergyAsia, May 17 2012, Thursday) — Worried about the rapid depletion of large mature fields while encountering difficulty accessing new reserves in certain regions, the oil industry is increasingly looking to natural gas for its salvation, said natural resources consultant GBI Research.In a new report, GBI Research said that natural gas has risen in importance…

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CHINA: New leaders aim to raise Sino-Russia trade from last year’s record US$79 billion to US$200 billion by 2020

(EnergyAsia, May 17 2012, Thursday) — China and Russia are targeting to raise their bilateral trade to US$200 billion by 2020 as they build on increasingly close political and economic ties.The momentum was affirmed early this month when the two sides concluded a raft of contracts worth a total of US$15 billion during a visit…

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PEOPLE: PTT names Tevin Vongvanich as President and CEO of upstream subsidiary

(EnergyAsia, May 17 2012, Thursday) — Thai state-owned energy company PTT has reshuffled the CEOs of four subsidiaries.

It has appointed Tevin Vongvanich, PTT’s former CFO, as CEO of upstream company PTTEP, replacing Anon Sirisaengtaksin, who became CEO of PTT Global Chemical (PTTGC). PTTGC’s chief Veerasak Kositpaisal took over at Thaioil Plc whose CEO Surong Bulakul became PTT’s CFO.

Mr Tevin, a 25-year industry veteran, joined PTTEP in 1989 and became its vice-president for corporate planning and new ventures six years later. From 1999 to 2002, he was a senior vice-president in charge of new projects, operations and regional assets divisions.

In 2009, Mr Tevin, a chemical engineer by training, was appointed PTT’s CFO and promoted to its board.


AUSTRALIA: 184 years of natural gas production with reserves estimated at 392 trillion cubic feet

(EnergyAsia, May 17 2012, Thursday) — Drawing on its natural gas reserves of 392 trillion cubic feet (tcf) sufficient to support 184 years of production, Australia could be ready to challenge Qatar’s position as the world’s leading liquefied natural gas (LNG) exporter later this decade, said Energy and Resources Minister Martin Ferguson.

Citing GeoScience Australia’s latest findings, he told an industry conference in Adelaide city this week that the country could double its known gas reserves to 800 tcf with the future inclusion of shale gas. Qatar holds the world’s third largest gas reserves of 900 tcf after Russia and Iran.

Speaking at the Australian Petroleum Production & Exploration Association (APPEA) 2012 event, Mr Ferguson said Australia is now the world’s fourth largest LNG exporter on its way to becoming second behind Qatar as it is soon expected to overtake Indonesia and Malaysia.

Australia has emerged as a global LNG player as a result of major companies investing more than A$175 billion in developing its natural gas reserves over the last five years. For the financial year 2010, Australia exported 20 million tonnes of LNG worth a total of A$10.4 billion. (US$1=A$1).

Mr Ferguson said: “Our exports are forecast to grow by a further 19% in 2012-13 as production from the Pluto facility in Western Australia ramps up. By 2017, based on proposed and committed new projects, Australia’s LNG production capacity is projected to quadruple, potentially making Australia the world’s largest producer of LNG.

“While global economic uncertainty remains a threat to ongoing investment, our trading partners continue to show confidence in Australia’s capacity to meet their energy demands.

“Japan remains our biggest trading partner and accounts for 70% of our LNG exports and post-Fukushima Japan’s appetite for LNG is likely to increase. China is fast making up ground with its demand for LNG growing by almost a third last year, and some analysts predicting another 30% rise this year.

“India also shows impressive potential as a major LNG importer, with import capacity projected to triple by 2015. “

Australia is expected to soon export its first LNG cargo to India from the Gorgon project while preparing the groundwork for new sales Singapore, Thailand, Cambodia and Vietnam, which collectively are projected to import 25 million tonnes by 2017.

Unconventional gas

Mr Ferguson said Australia’s energy exports will also be supported by the development of unconventional gas, particularly coal seam gas and potentially shale and tight gas, which could yield another 400 trillion cubic feet of reserves.

He said the US shale-gas boom is changing the dynamics of its domestic market and has the potential to influence the global LNG trade. China too is actively exploring its own shale gas reserves.

The developments in the US and China could provide competition for Australia’s LNG players in the export markets.

Australia’s coal seam gas (CSG) sector has been an integral part of the natural gas industry in Queensland and eastern Australia since 1996. Between 2006 and 2011, CSG’s share in the country’s total gas production has risen from 2% to 11%.

CSG accounts for more than 30% of the eastern states’ domestic gas production and is a key component of the country’s domestic gas supply. Companies are investing a total of A$50 billion to develop three CSG-to-LNG projects near Gladstone in Queensland.

But the sector must work on increasing its production in a sustainable manner and address environmental, safety and health concerns even as it is a major contributor to the economy, said Mr Ferguson.

He said the Australian government understands these concerns and is helping to formulate a national harmonised regulatory framework for the industry to address issues related to water management and monitoring, well integrity and aquifer protection, and monitoring of hydraulic fracturing and chemical use.

SINGAPORE: Temasek, RRJ to invest US$468 million in US LNG producer Cheniere Energy

(EnergyAsia, May 16 2012, Wednesday) —Cheniere Energy Inc, which is building a liquefied natural gas (LNG) export and trading business in the US, said it has secured a combined US$468 million in new investments from Singapore sovereign wealth fund Temasek Holdings and private equity firm RRJ Capital.

Separately, the three companies have begun discussions to establish a strategic partnership to develop LNG sales, marketing and trading opportunities in Asia, focusing on Cheniere’s proposed liquefaction terminals in Sabine Pass and Corpus Christi.

Cheniere said it will use the proceeds and cash on hand to buy US$500 million of the $2 billion of equity securities to be issued by investment vehicle Cheniere Energy Partners LP that was set up to own and implement the Sabine Pass LNG liquefaction project in Louisiana state. Cheniere Energy owns 88.8% of the Sabine Pass project.

Greg Lanham, Temasek’s Managing Director for Investments, said: “We are pleased to confirm that we have recently agreed to invest in Cheniere alongside RRJ Capital. Cheniere’s established LNG expertise and experience give it the first mover competitive advantage in LNG energy supply.

“This investment helps to expand our longer term interest in the energy and resources sector. We look forward to working with both Cheniere and RRJ Capital and others to tap into opportunities in Asia which are driven by the energy demand of growing middle income populations and continued urbanisation in the decades ahead.”

Richard Ong, chairman and CEO of RRJ Capital, said: “We strongly support Cheniere and their vision to become a world leader in the global LNG industry including the key Asian LNG market.”

Charif Souki, chairman and CEO of Cheniere, said: “Their proposed investment would allow us to increase our equity holdings in Cheniere Partners, which we believe is an attractive long-term opportunity that better aligns us with the Sabine Project and its investors.  Additionally, Temasek and RRJ Capital would enhance the further development of our LNG business through their expertise and experience in investments, marketing and trading in Asian markets.”

Incorporated in 1974, Temasek is an Asian investment company headquartered in Singapore. Supported by 12 affiliates and offices in Asia and Latin America, Temasek owns a S$193 billion portfolio as of March 31, 2011 concentrated principally in Singapore, Asia and growth markets.

Operating from offices in Hong Kong and Singapore, RRJ Capital is a US$2.3 billion Asia-focused private equity firm targeting on key growth sectors such as energy, natural resources, financial institutions, consumer and healthcare.

Cheniere is a Houston-based energy company primarily engaged in LNG related businesses, and owns and operates the Sabine Pass LNG terminal and Creole Trail pipeline in Louisiana.

Last month, the company won approval from the Federal Energy Regulatory Commission (FERC) to build an LNG terminal at Sabine Pass with the capacity to export up to 2.2 billion cubic metres a day, or about 16 million tons a year.

When it starts up in 2015, the terminal will ship LNG to Asia where spot LNG prices have held solidly above US$16 per million BTU compared with US$2 to US$2.50 in the US.