THAILAND: Wood Group GTS extends long-term agreement with power producers to maintain plants

(EnergyAsia, August 31 2012, Friday) — UK’s Wood Group GTS said it has extended long-term agreements to provide maintenance for the power plants of GDF SUEZ Glow Energy Public Company Limited and Glow SPP11 Company Limited (formerly known as Thai National Power Co Ltd).

Wood Group said the extension for the original agreement signed in 2004 will cover maintenance for two additional GE Frame 6B gas turbines located at Glow SPP11 Company’s power plant in the Thai industrial estate of Rayong.

Worth an additional US$20 million, the extension brings the total number of GE Frame 6B gas turbines under contract to 16, with an estimated remaining term of 13 years, expiring in 2025.

The scope of this agreement includes planned and unplanned maintenance services, component repair and supply of new capital parts, performance guarantees, and dedicated project management. Also included is the installation of Wood Group GTS’ proprietary EcoValueTM compressor water wash technology.

Similar systems installed by Wood Group GTS within the region have improved turbine performance, increasing power output by up to 2.1% on a 2×1 power block, resulting in additional annual revenue of approximately US$1 million.

“Our goal is to consolidate maintenance of our generating assets within a flexible, cost-effective support agreement that is reliable and enhances plant efficiency. Wood Group GTS’s excellent service history since the implementation of the original agreement which is due to their first-rate programs, procedures and outstanding technical personnel,” said Pajongwit Pongsivapai of Glow Group.

“Extension of this landmark agreement with GDF SUEZ is testimony to the value our independent maintenance solution brings to gas turbine operators,” said Frank Avery of Wood Group GTS.

“We have a track record of delivering lower life cycle costs through our philosophy of service excellence and the implementation of new technology to increase turbine performance. This award strengthens our position as the leading independent aftermarket service provider in this growing region, where demand for power is increasing.”

Wood Group GTS is a leading independent provider of rotating equipment services and solutions for companies in the power, oil, gas and clean energy markets.


PAPUA NEW GUINEA: Government suspends notice to cancel LNG project, says InterOil

(EnergyAsia, August 31 2012, Friday) — Papua New Guinea government has suspended its May 14 2012 notice of intention to cancel an agreement to jointly develop a liquefied natural gas (LNG) project with Liquid Niugini Gas Limited, said Houston, Texas-based InterOil Corp which owns a 47.5% stake in the company.

The suspension of the 2009 agreement for the US$6-billion project by the Minister of Petroleum and Energy, William Duma triggered a six-month consultation period for the parties to resolve issues brought up by the government.

Last September, Mr Duma criticised InterOil for submitting a “small and fragmented” proposal, rather than what he called a world-class project, to develop the country’s natural gas reserves for export. He had expressed concerns that InterOil did not appoint an “internationally reputable” company to operate the complex.

Since the notice was received, InterOil said it has held “constructive meetings” with PNG officials from the Petroleum and Energy, Treasury and Justice Departments.

“Negotiations between the government and InterOil will continue with a view to finalising detailed specifications of the proposed LNG project satisfactory to the state. The suspension of the notice will remain in place until the National Executive Council has approved the final concept of the project,” said InterOil.

Located beside an oil refinery that Interoil owns and operates, the proposed complex is designed to process natural gas into LNG for export, mostly to Asia, when it starts up in 2015. Pacific LNG Operations Ltd owns the majority 52.5% of Liquid Niugini Gas Limited.


INDIA: GAIL to 12 LNG cargoes from France’s GDF SUEZ in 2013 and 2014

(EnergyAsia, August 31 2012, Friday) — GAIL (India) Limited has signed an agreement to import 12 cargoes of liquefied natural gas (LNG) from France’s GDF SUEZ in 2013 and 2014.

Weighing a total of 800,000 tons, the agreement will contribute to meeting India’s fast-growing energy demand, said GDF SUEZ. Indian natural gas consumption is expected to grow from 58 billion cubic metres in 2012 to 110 billion cubic metres in 2020.

B. C. Tripathi, chairman and managing director of GAIL, India’s leading natural gas company, said:

“This agreement with GDF SUEZ is yet another step by GAIL to bridge the demand supply deficit of the Indian market in the medium term. This is in addition to other initiatives of GAIL towards LNG sourcing, creating LNG regasification infrastructure and augmenting transmission capacity significantly during the next two to three years. With this step, we look forward to strengthen our partnership with GDF SUEZ in the future. GAIL will continue to make assiduous efforts to tie-up affordable LNG in its portfolio to meet the rapidly growing energy demand of the Indian market.”

Jean-Marie Dauger, GDF SUEZ’s executive vice president in charge for global gas and LNG businesses, said:

“Our natural gas portfolio is permanently optimized and thanks to its flexibility we are able to direct LNG volumes to the Asian market in response to its increasing LNG demand. Between 2010 and 2016, GDF SUEZ is planning to deliver about 10.8 million tons to Kogas, CNOOC, Petronas, Petronet, PTT and GAIL. These agreements with key Asian energy players show GDF SUEZ strategic commitment to the region.”

GAIL has been expanding its global presence to secure long term gas supplies. It has  signed a 20-year agreement to import 3.5 million tonnes of LNG per year from Sabine Pass Liquefaction LLC, a unit of US-based Cheniere Energy Partners. GAIL has also agreed to purchase 38 million standard cubic feet/day of LNG from Turkemnistan’s Turkmengaz for 30 years through the proposed TAPI pipeline.

The Indian company has set up a wholly- owned subsidiary, GAIL Global (Singapore) Pte Ltd, in Singapore to source for LNG and petrochemicals, as well as acquired a 20% stake in Carrizo’s Eagle Ford Shale acreage position in the US.

CANADA: Government set to approve Petronas takeover of Progress Energy, but stall on CNOOC’s buy-out of Nexen

(EnergyAsia, August 31 2012, Friday) — The Canadian government looks set to approve the takeover of Progress Energy Resources Corp by Malaysia’s state-owned Petronas, but stall over the application of China’s CNOOC Ltd to acquire Nexen Inc.

The different treatment meted out to two of Asia’s well-known state-owned energy companies reflects Ottawa’s evolving, cautious approach to dealing with the arrival of a new set of investors from across the Pacific Ocean.

Both companies are offering to pay hefty premius for their proposed Calgary, Alberta-based targets who own large hydrocarbons reserves in Canada, and in the case of Nexen, in Asia and Europe as well. Their boards and shareholders are eager to cash out out of their languishing investments as the companies have struggled to secure markets and complete projects amid rising cost.

But Ottawa is worried about national security and political backlash from citizens who fear the tide of Asian money and investors. Despite touting itself as a Pacific nation, Canada has long been tied to the US and is unfamiliar and reluctant to engage Asia.

The political and economic rise of Asia has forced the issue as businesses warn that Canada risks being left behind if it continues to stay aloof of the four billion people who live in the world’s fastest growing economic region.

The government of Prime Minister Stephen Harper is likely to approve Petronas Carigali Limited’s proposed C$22-per-share or C$5.9-billion bid for Progress Energy as the deal is viewed as bringing “net benefit” to Canada. Unlike China, Malaysia is also not as seen as a threat to Canadian national interest. (US$1=C$0.99).

Progress Energy said the sale is not being opposed by the federal government under the Competition Act, which requires major takeover deals to be of net benefit to Canada.

Petronas has received a “no action” letter from the commissioner of competition confirming who had reviewed the arrangement and concluded that “she does not intend to make an application for a remedial order under section 92 of the act,” said Progress, which is focused on natural gas exploration, development and production in British Columbia and Alberta provinces.

Petronas plans to produce natural gas for export as liquefied natural gas (LNG) to Asia through a terminal on Prince Rupert on the west coast of British Columbia.

Separately, Canada’s Industry Ministry said it has begun reviewing CNOOC’s proposed C$15.1-billion acquisition of Nexen Inc.

”I can now confirm that CNOOC has filed an application for review of its proposed acquisition of Nexen under the Investment Canada Act and I am conducting a review of the proposed investment,” said Industry Minister Christian Paradis. The initial review will take 45 days but could be extended by at least 30 days to determine if it is of net benefit to Canada.

INDIA: Despite refiners’ financial losses, government predicts refining capacity to rise 24% by 2016

(EnergyAsia, August 30 2012, Thursday) — Despite the rising tide of red ink, India’s oil refining capacity will rise more than 24% to 265 million tonnes by March 31 2016, predicts the Petroleum and Natural Gas Ministry. The private and state firms which own the country’s 25 oil refineries with a total capacity of 213…

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NEW ZEALAND: Mobil to expand and upgrade fuel storage facility at Mount Maunganui terminal

(EnergyAsia, August 30 2012, Thursday) — Mobil Oil New Zealand Limited said it is expanding and upgrading fuel storage facilities at its Mount Maunganui Terminal to meet the growing demand for marine fuels at the Port of Tauranga.

The ExxonMobil subsidiary will refurbish an existing under-utilised eight-million-litre tank and upgrade the terminal’s boiler, control room and operating systems, lifting its total investment in the country’s network of terminals and service stations since 2007 to NZ$70 million. (US$1=NZ$1.25).

The investment will enable the company to meet rising demand for storage and handling of heavy fuel oil from the growing traffic of cargo vessels and cruise ships at the country’s largest port.

The Mobil-owned and operated terminal supplies gasoline and diesel products to commercial, industrial and retail customers across the central North Island as well as marine fuel oil bunkers for the Port of Tauranga.



AUSTRALIA: Transfield Services awarded A$100 million in contracts for fuel storage projects

(EnergyAsia, August 30 2012, Thursday) — Australian engineering firm Transfield Services recently secured two contracts worth a total of A$100 million for the engineering, design and construction of fuel storage terminals in the country’s mining region of Pilbara. (US$1=A$0.97).

The company will design and construct Rio Tinto’s Parker Point fuels storage terminal in Dampier for A$65 million, and diesel storage facilities and distribution infrastructure to support the development and operations of Fortescue’s Solomon Mine for A$35 million. Both contracts are to be completed by next year.

The Parker Point terminal, which will receive fuel from a 1.8-km jetty, will rail it to support Rio Tinto’s iron ore operations.

Solomon Mine, located near railway and road infrastructure 30 minutes from Port Hedland, is a vital part of Fortescue’s expansion plans in the region.

Transfield Services managing director and CEO, Peter Goode, said:

“These contracts deliver on our strategy to provide higher‐value front‐end services to the resources and energy industry. They also demonstrate the company’s engineering and construction capabilities, which form part of our whole‐of‐life asset management offering.”



MARKETS: Crude oil down on Hurricane Isaac’s miss in US Gulf Coast, possible stockpile release

(EnergyAsia, August 30 2012, Thursday) — Crude oil prices fell on the twin expectations that Hurricane Isaac will not inflict significant damage on crude oil production in the US Gulf of Mexico and the G7 countries might release oil stockpiles to stem the recent rise in prices.

Brent crude oil has fallen to near US$112 while US WTI is hovering around US$95, both down about US$3 at the start of the week when earlier reports suggest Isaac, the worst hurricane since Katrina in 2004, could sharply cut oil production in the US Gulf area.

Isaac hit Louisiana state on Tuesday, drove water over a levee outside New Orleans a day later, but has largely avoided oil rigs, platforms and other energy facilities in the Gulf of Mexico.

In a precautionary move, US Gulf Coast refiners shut in more than 1.3 million b/d of capacity ahead of Hurricane Isaac’s Tuesday landfall, according to consultant GlobalData.

It expects the shut-in to result in the loss of production of 598,000 b/d of gasoline, 325,000 b/d of diesel and 78,000 b/d of natural gas liquids for about three to four days, with minimal impact on fuel supplies.

The refiners began shutting their plants on Monday as then Tropical Storm Isaac veered away from Florida directly towards New Orleans.

In 2004, Hurricane Katrina took the same direction and devastated New Orleans and the surrounding area. Refined product prices soared as refiners experienced major flooding and wind damage. Some refineries recovered quickly, while others were out of service for months. However, this is a much smaller storm and far less damage to a more prepared industry is expected, said GlobalData.

In a warning to traders on Tuesday, finance ministers of the Group of Seven most industrialised nations (G7) said they were ready to release their strategic oil reserves to counter the recent rise in oil prices.

Despite opposition from the International Energy Agency (IEA), the G7 issued a statement favouring the use of the stockpiles:

“We stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied.

“The current rise in oil prices reflects geopolitical concerns and certain supply disruptions. We encourage oil-producing countries to increase their output to meet demand.”


THAILAND: PTT Mining offers S$1.2 billion to acquire Singapore-listed coal miner Sakari Resources

(EnergyAsia, August 29 2012, Wednesday) — PTT Mining Limited, a wholly owned subsidiary of Thai energy firm PTT International Company Limited, said it has offered to acquire the remaining 54.73% stake in Singapore-based Sakari Resources Limited that it does not own for S$1.2 billion. (US$1=S$1.25).

At S$1.90 a share, the offer represents a 27.5% premium over last Friday’s traded price of Sakari Resources which produces and markets thermal coal on Sebuku Island in the southern and eastern part of Indonesia’s Kalimantan provinces. The offer values the company at S$2.2 billion.

In a statement, Sakari, which is now worth S$2.2 billion based on the offer price, said:

“Coal represents an important long-term diversification strategy and growth opportunity for PTT Public Company Limited, which already controls, through PTT Asia Pacific Mining Pty Ltd (PTTAPM), approximately 45.27% of Sakari Resources.

“PTT Mining’s offer is in line with the PTT International’s strategy to increase its presence in the minerals and energy sector and further diversify its resource base and income streams. If completed, the offer will strengthen PTT International’s platform for growth in the Indonesian coal sector.

Chitrapongse Kwangsukstith,  PTT International chairman, said:

“PTT International has been the largest shareholder in Sakari Resources since 2009 and the company is a key platform for our expansion into coal. Through PTT Mining’s offer, we are seeking majority control of Sakari Resources and enabling shareholders to take advantage of the highly attractive premium we have offered.”



AUSTRALIA: Caltex steps up marketing, trading role with Kurnell refinery’s closure in 2014

(EnergyAsia, August 29 2012, Wednesday) — Caltex, Australia’s leading downstream oil company, is expanding its fuel marketing and distribution activities as its refining operations shrink with the planned closure of the Kurnell plant in Sydney in 2014.

In reporting its latest half-year result, the company revealed plans to invest as much as A$$450 million in marketing activities and infrastructure this year, compared with A$242 million in 2011 (US$1=A$0.96).

Earlier, Caltex had announced it will invest A$650 million to convert the 57-year-old 135,000 refinery into a terminal to import and store fuels, but will continue to operate a smaller 109,000 b/d refinery in Lytton in Brisbane.

The decision to shut down Kurnell, which accounts for a fifth of Australia’s refining capacity, has proved deeply unpopular with politicians and consumers who said the company is endangering the country’s energy security while unions are angered by the loss of between 330 and 600 jobs.

The 50%-owned subsidiary of US major Chevron said it made the right decision despite its refining business reporting a A$2 million profit in the first half of 2012 after a recent run of red ink including last year’s loss of more than A$200 million.

The country’s largest blue-collar union has accused the company of “manipulating its finances in order to close its Sydney oil refinery”, according to a Sky News report.

It quoted Australian Workers’ Union (AWU) boss Paul Howes calling Caltex “cynical manipulators and poor corporate citizens” in light of the strong profit figure and better financial performance of the refining division.

Defending company’s decision, Caltex chief executive Julian Segal said it took the long-term view that the ageing plant at Kurnell could not compete against the existing and up-coming massive state-owned refineries.

“We made the Kurnell decision on the basis of the long-term outlook for refining, not short-term results. Caltex’s refineries are relatively small and, in their current configuration, remain disadvantaged when compared to the modern, larger scale, more efficient refineries in the Asia region against which we compete,” he said.

“Restructuring the supply chain over the next two years, and providing the funding flexibility to support growth in our marketing operations, will reduce future earnings volatility and provide a solid platform going forward.”

For the six months to June 30, Caltex said its net after-tax profit fell to A$167 million compared with A$270 million for the same period last year.

It attributed the slump to crude and product inventory losses of A$30 million for 2012 compared with a gain of A$157 million for the same period last year.



NEW ZEALAND: NZ Refining reports first-half loss of NZ$1.49 million

(EnergyAsia, August 29 2012, Wednesday) — New Zealand’s only oil refining company said it suffered a first-half net loss of nearly NZ$1.49 million on shrinking refining margins and a weaker US dollar, compared with a NZ$31.2 million profit for the same period last year.

Revenue fell 28% to NZ$113 million for the six months ending June 30 while operating expenses rose 1.7% to NZ$113.9 million.

The company said refining margins have remained weak throughout the first six months of the year, averaging US$4.36 per barrel compared with US$6.56 for the same period last year. At the same time, the New Zealand dollar rose to around US$0.78 from US$0.80 last year.

“Continuing poor growth in global economies, particularly slowing growth in China and India, has contributed to a falling off in demand for oil products. The impact on the profitability of our competitor refineries is apparent with closures continuing in Europe, the US and Australia,” it said.

CEO Ken Rivers, who will step down next January, said he expects the current uncertain conditions to continue. He will be succeeded by a senior Shell executive Sjoerd Post.

The company’s main shareholders include BP New Zealand Holdings Limited (23.66%), Mobil Oil NZ Limited (19.2%), Z Energy Holdings Limited (17.14%),

Chevron New Zealand (12.69%) and Garlow Management (8.12%). About 3,800 other shareholders own the remaining 19.19% stake.



AUSTRALIA: Science agency CSIRO and Germany’s BASF collaborate to improve coal recovery

(EnergyAsia, August 29 2012, Wednesday) — Australia’’ science agency CSIRO and Germany’s chemical giant BASF have jointly developed a process that improves the recovery of coal particles, thus making coal production more efficient and lucrative.

According to BASF, CSIRO’s coal grain analysis tool had found that particles of some coal types were difficult to recover from flotation methods.

BASF said the introduction of its block copolymers as promoters to the fine coal slurry boosted yields, with the potential to significantly increase the availability of saleable product coal.

According to the results of laboratory studies and plant scale tests, the block copolymers improved recovery for both fine and coarse coal particles.

The new process requires only minor modifications to existing industry methods and BASF is in the process of commercialising the flotation promotion agent.

The research project was supported by the Australian coal industry’s research programme is aimed at developing technology for the sustainable production and utilisation of coal.

“High quality coking coal is a key ingredient for steel production and critical for the development of the emerging economies of Asia,” says Neil Fitzmaurice, head of BASF’s Industry Group Mining Asia Pacific.

“This new coal particle recovery process offers a significant improvement in the recovery of coal, maximising yield and lowering production cost.”

Coal is naturally hydrophobic and froth flotation is a recognised process in recovering fine coal. However, there are significant variations in the reactions of different types of coal.

Bruce Firth, CSIRO’s Research Manager for Coal Preparation, said:

“We can determine the flotation response of specific coal types by the coal grain analysis method. The introduction of BASF’s novel chemical reagent into the process increases the attachment of particular coal particles to the flotation bubbles.”



MARKETS: Seven ‘chokepoints’ handle half of world’s oil production, says US EIA

(EnergyAsia, August 28 2012, Tuesday) — About half of the world’s oil is supplied on maritime routes that could easily be disrupted along seven narrow channels known as chokepoints, said the US Energy Information Administration (EIA). Restrictions have to be placed on the size of vessels passing through these channels, making them the most vulnerable…

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MARKETS: IEA under pressure to release oil stockpile to check price rise with US Presidential elections in November

(EnergyAsia, August 28 2012, Tuesday) — As oil prices continue to climb out of their 18-month lows in June, the International Energy Agency (IEA) is under pressure again to coordinate a release of its members’ crude oil stockpiles. Brent has reached a three-month high of over US$116 a barrel while WTI has crossed US$97 and…

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SINGAPORE: Marine and offshore industry contributed over S$16 billion to economy

(EnergyAsia, August 28 2012, Tuesday) — Buoyed by strong energy demand from emerging economies and the continued outlook for high oil prices, the marine and offshore industry contributed over S$16 billion to Singapore’s economy last year. (US$1=S$1.25).

In addition, the sector provided employment for 18,000 local residents at the end of last year, up 30% a decade ago, said acting Minister for Manpower Tan Chuan-Jin.

The sector is also a source of innovation and productivity, helped by the government’s investments in building up research and development (R&D) capabilities.

“The Singapore Maritime Institute, jointly set up by EDB, A*STAR and Maritime and Port Authority of Singapore, drives research in areas such as green shipping, offshore and subsea systems, and oilfield and down-hole systems. In addition, as announced during Budget 2012, the National Research Foundation is channelling S$150million to EDB and A*STAR to build up R&D capabilities for deepwater oil production,” said Mr Tan.

“These R&D initiatives will lead to the build-up and retention of specialized knowledge, helping Singapore move up the manufacturing and technology value-chain. In particular, for the shipyards, these initiatives will enable them to undertake more design activities and move into higher value-added segments of the industry.”

Singapore’s two leading marine and offshore companies, Keppel Corp and Sembcorp Marine, are on course to deliver another record performance this year.

For the first half, Keppel Corp reported a 82.8% increase in net profit of S$1.27 billion while revenue surged more than 69.3% to nearly S$7.75 billion. Sembcorp Marine’s net profit slipped 5% to S$143 million on revenue of nearly S$1.22, which was 46% higher compared with the same period last year.

The two companies, the world’s leading builders of offshore oil rigs, along with Singapore’s other offshore companies will face increasing competition from China and South Korea.

China, which ventured into the sector early last decade, is expanding its production of jack-up rigs for shallow-water drilling and semi-submersibles for deepwater operations. Apart from serving its own upstream companies, the Chinese companies led by COSCO are aiming to undercut their competition through aggressive pricing and added services.

UPSTREAM: Global oil and gas capital expenditure to exceed US$1 trillion in 2012, says GlobalData

(EnergyAsia, August 28 2012, Tuesday) — Oil and gas companies will invest a record of more than US$1 trillion in exploration and production activities this year, said UK-based consultant GlobalData.

In a new report, the company said exploration and production (E&P) investment spending will rise 13.4% to reach US$1,039 billion compared with last year’s US$916 billion. Most of the new investments will focus on offshore fields in Brazil, the Gulf of Mexico and the Arctic Circle.

Investor confidence in new upstream projects is being driven by the increasing number of oil and gas discoveries — 242 last year —  combined with high oil prices and the application of new technologies enabling companies to access deep offshore reserves that were previously technically and financially unviable.

GlobalData expects North America to lead with capex reaching US$254.3 billion, representing a share of 24.5% of the 2012 global total. Thanks to the boom in unconventional oil and gas, North America’s upstream spending will grow by 15.7% to outpace the global average rate of 13.4%.

“The continuing exploitation of shale oil and gas sites and the development of Canadian oil sands are the major drivers for these investments,” said GlobalData.

The Asia-Pacific region will be a close second, investing more than $253 billion while the Middle East and Africa are forecast to spend a total of US$229.6 billion.

The report expects national oil companies (NOCs) including Malaysia’s Petronas, China Petroleum & Chemical Corporation (Sinopec) and Brazil’s Petrobras, to account for approximately half of the world’s total capex, Integrated oil companies (IOCs) and independents will make up the rest.

Over the 2012–2016 period, Petrobras ranks first globally amongst NOCs, while ExxonMobil Corporation is expected to be the leading IOC. The two companies will invest a total US$409 billion over the next four years.

REFINERIES: Workers killed in Venezuelan plant explosion, injured in Chevron’s US plant fire

(EnergyAsia, August 27 2012, Monday) — Two major refineries in the US and Venezuela with a combined capacity of 890,000 b/d were hit by fires this month which resulted in human casualties. At least 26 people were killed and 50 injured when fire ripped through the 645,000 b/d Amuay plant in Venezuela’s Punto Fijo city…

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VIETNAM: Dung Quat oil refinery back up again, but for how long?

(EnergyAsia, August 27 2012, Monday) — Vietnam’s only oil refinery has resumed operations after experiencing yet another “technical breakdown” early this month but for how long before it goes down again? Operator Binh Son Petro-chemical Refinery Co Ltd said it shut down the 130,000 b/d plant in central Dung Quat province on August 8 for…

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SINGAPORE: Tougher emission standards to affect oil refineries, power plants and chemical facilities

(EnergyAsia, August 27 2012, Monday) — Singapore’s oil refiners, power plant operators, chemical producers and automobile importers will be among the companies most affected by the National Environment Agency’s (NEA) plan to raise emissions standards and improve air quality by 2020.

According to environment minister Vivian Balakrishnan, the agency will be implementing measures to meet World Health Organisation (WHO) air quality standards for particulate matter 10 (PM10), nitrogen dioxide, carbon monoxide, ozone and sulphur dioxide.

The NEA will also increase the reporting frequency of the nation’s pollutant standards index (PSI) which measures PM10, ozone, nitrogen dioxide, carbon monoxide and sulphur dioxide in the ambient air from once a day to three times. For the first time, the daily reports will also include PM2.5, a fine pollutant responsible for causing a range of respiratory and heart illnesses.

Some key measures are being progressively enforced, starting with higher emission standards for off-road diesel engines from July 1 2012, to be followed by Euro V emission standards for new diesel vehicles by January 1 2014, and Euro IV emission standards for new petrol vehicles by April 1 2014.

From July 2013, transportation diesel must contain less than 0.001% sulphur while motor vehicles will only be allowed to use gasoline with sulphur content less than 0.005% by October 1 2013.

By January 1 2014, Singapore will require new diesel vehicles to meet Euro V emissions standards, while new gasoline vehicles will have to comply with Euro IV emission standards three months later.

The NEA said oil refineries and power stations will reduce sulphur dioxide output through use of natural gas and lower-sulphur fuels, while refiners have pledged to improve their processes to reduce emissions by 2020.

“These targets will enable Singapore to achieve a high standard of public health and economic competitiveness,” said Ministry of the Environment and Water Resources (MEWR).

Once regarded as among the world’s best, Singapore’s air quality has deteriorated over the past decade to the point that it has fallen below WHO standards.

“Like many other major cities, air emissions from the industries and motor vehicles are the two key sources of air pollution domestically. Transboundary smoke haze from the land and forest fires in the region is also a problem which affects Singapore’s air quality intermittently during the South West Monsoon period from August to October,” said the NEA.

“Integrated urban and industrial planning, as well as development control have enabled the government to put in place preventive air pollution control measures during the planning stage. In addition, legislation, strict enforcement programme and air quality monitoring have helped to ensure that air quality remains good despite our dense urban development and large industrial base.”

In 2009, the government launched the Sustainable Singapore Blueprint (SSB) to target its sulphur dioxide (CO2) content at an annual mean of 15 micrograms (one-millionth of a gram) per cubic meter air (µg/m3), and 12µg/m3 of PM2.5 by 2020.

The new air quality targets which are pegged to WHO standards will be aligned with the SSB targets. Singapore will adopt the final WHO standards for PM2.5 and sulphur dioxide at its long-term targets.

AUSTRALIA: Shell builds more diesel storage tanks to meet rising demand in Bowen Basin

(EnergyAsia, August 27 2012, Monday) — Shell Australia said it has opened two new tanks with the capacity to hold a combined 38 million litres of diesel at its Mackay Terminal in Queensland state. The tanks will provide extra capacity and supply security to Shell customers in the Bowen Basin and northern Queensland.

The company’s facilities manager, Paul Benjamin, said:

Shell’s investment in the Mackay tanks is the largest investment in its terminal network in Australia for many years. Each holding 19 million litres of diesel, the tanks are the largest in the Shell Australia network.”

Mackay’s Mayor Deirdre Comerford, who launched the tanks, said:

“Mackay is developing at a fast rate. Existing mines in the nearby Bowen Basin are being expanded, new mines are under construction and our rail and port facilities are all expanding which require diesel fuel. The new tanks have been built in Mackay to support our development and help our region continue to grow and prosper.”

Earlier this year, Shell reopened its Miles depot in the heart of the Surat Basin to increase diesel supply to the mining industry.

The company said it will be building new diesel tanks in Newcastle, Kalgoorlie and King Bay, and biodiesel tanks at the Newport terminal in Victoria state.



CHINA: Cabinet approves 2.36-trillion yuan spending to curb energy use, pollution

(EnergyAsia, August 24 2012, Friday) — Chinese’s State Council has approved additional spending of 2.36 trillion yuan to promote energy conservation and reduce pollution through 2016, an implicit acknowledgement that it is falling behind official target to clean up the environment. (US$1=6.36 yuan). More than 40% of that amount will be invested in energy conservation…

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CHINA: Oil demand rebounded in July, but too early to indicate definitive trend, says Platts

(EnergyAsia, August 24 2012, Friday) — China’s apparent oil demand rose 2.4% year on year in July to 38.92 million metric tons (mt), or an average 9.2 million b/d, said US energy media Platts.

This is a rebound from June’s first monthly contraction in more than three years, according to the company’s analysis of recent Chinese government data.

In June, demand fell 1.9% year on year to nine million b/d, as China’s struggling economy was hit by poor exports and slowing manufacturing activity.

Platts attributed July’s gain largely due to the 810,377 b/d rise in oil product imports to 3.09 million mt, which boosted net imports of oil products 53% or 346,181 b/d from June to 1.32 million mt. Net product imports are up 65% from July a year ago.

The July increase may not be indicative of a trend reversal.

According to the Platts analysis, refinery runs and crude imports for the month indicate that fundamental demand growth was “less robust” and two consecutive retail oil product price cuts in June and July have pressured refining margins and likely kept state refiners running at minimum levels.

July’s refinery runs were 37.6 million mt, or 8.89 million b/d, marking a 1.1% year on year. But July’s runs were still the second lowest so far this year, surpassing June levels by 100,000 b/d.

Crude oil imports also showed a slowing from the first half of the year, although still managing double-digit growth compared to last year.

China’s total crude oil imports in July rose 12.4% year on year to 21.83 million mt, or 5.16 million b/d. In June, China imported 21.72 million mt of crude oil, or 5.31 million b/d.

But July’s daily import average was the lowest since October 2011, according to the customs data, and compares with 5.69 million b/d in the first quarter and 5.59 million b/d in the second.

It was in gasoil, which makes up the largest component of China’s oil product mix, where July’s underlying weakness was most readily seen, said Platts.

“Gasoil has been the laggard so far, with apparent demand contracting two months in a row due to the slowdown in industrial activity,” said Song Yen Ling, Platts senior writer for China.

Apparent demand for gasoil in July fell 1.3% year on year to 13.74 million mt, or 3.32 million b/d. In June, demand fell 2.8% year on year to 13.37 million mt, reflecting the weakening industrial sector.

Similar to overall apparent demand for oil, apparent demand for products is calculated by adding domestic output from refineries to net imports.

Gasoil imports fell 75% year on year to 40,000 mt in July, while exports were constant at 180,000 mt, restoring China to net exporter after being a net importer for two consecutive months.

Domestic gasoil production by refineries fell less than one percent to 13.88 million mt, said Platts.

Gasoline and jet/kerosene demand, on the other hand, continued to grow in double digits. Gasoline demand in July rose 13.2% year on year to 7.31 million mt or two million b/d; jet/kerosene demand in July was up more than 17% year on year to 1.63 million mt, surpassing the 400,000 b/d mark at an average 410,157 b/d.

Analysts continue to expect demand and throughput to pick up in the second-half of the year as the government growth incentives take hold.

“The government will be eager to boost economic growth by the time the decennial political leadership transition occurs in the fourth quarter,” said Ms Song.

“We could see oil demand rebounding at the end of the year, which on balance should put growth at 3% to 4% for the full year.”


MARKETS: Ernst & Young says oil glut, natural gas growth is story for rest of 2012

(EnergyAsia, August 24 2012, Friday) — Barring new geo-political threats to supply, oil prices will stay flat for the rest of the year on increased production from Libya, Iraq and the US, predicts consultant Ernst & Young.

At the same time, smaller, independent oil and gas companies will struggle amid tightening credit conditions, resulting in increased transaction as well as merger-and-acquisition activities as smaller players sell equity or project stakes to partners to sustain development.

In its Quarterly Oil and Gas outlook, Dale Nijoka, Ernst & Young’s Global Oil & Gas Leader, said:

“There is a diverse range of international investment opportunities available for well-capitalised national oil companies (NOCs) and international oil companies (IOCs). Continued interest in unconventional resources is one of the areas we see driving a higher level of NOC M&A activity for the remainder of 2012.”

The first half of the year was marked by oil price volatility and shifting fundamentals.

In the first quarter, Brent crude prices surged close to US$130 per barrel on concerns over Iran’s reaction to tightened Western trade sanctions to try stop its nuclear programme, the worsening territorial dispute between Sudan and South Sudan and signs that the US economy could be recovering.

However, prices retreated in the second quarter as demand doubts grew with the rising international economic uncertainty and Iranian supply worries diminished.

Mr Nijoka said: “Early optimism over the health of the global economy proved to be short-lived.  Higher oil prices and weaker than expected economic growth have translated into fears of a slowdown in demand for oil.”

Despite concerns over weakening oil demand, OPEC decided to leave production levels unchanged at its June meeting, causing Brent crude to fall to below US$100 per barrel for the first time since early 2011, and to below US$90 per barrel at the end of June.

Prices have since climbed back up to over US$110 per barrel following the escalation of the conflict in Syria and renewed worries about Iran.

Refiners would find it a relief if crude prices were to remain below US$100 per barrel for a prolonged period. However, over-capacity among European refineries, which are also facing competition from new, more complex refineries in Asia, continues to keep margins under pressure.

For the rest of the year, oil markets should remain well-supplied, said Mr Nijoka.

“We expect additional supplies will be made available to the market through the return of Libyan production to pre-conflict levels, increased production from Iraq and an increase in oil production from shale plays in the US, as producers switch their investment focus from natural gas to liquids,” he said.

“However, any new threat to supply emerges – whether perceived or real – has the potential to shock oil prices.”

Natural gas is the growth story

The shale gas dash in the US has resulted in a supply glut that could turn the country into a net exporter of natural gas, according to Ernst & Young.

Despite the weak gas price outlook in the region, NOCs’ appetite for access to unconventional projects in North America remains undiminished. The main driver of Asian NOCs’ pursuit of these unconventional assets is to gain knowledge of the underlying technology in order to apply that expertise to other areas of the globe, as well as to ensure the security of supply.

However, in Europe, early shale gas exploration results have been disappointing on the whole. Estimates of reserves have been revised down in Poland and the UK.

As a result, companies are re-evaluating and shifting their investment focus to other areas such as the Neuquen Basin in Argentina. The US Department of Energy estimates that Argentina has 774 trillion cubic feet of risked recoverable shale gas resources, of which the Neuquen Basin is home to over half. However the threat of resource nationalization remains a major risk for investors.

A new liquefied natural gas (LNG) frontier is emerging in East Africa after a string of recent gas discoveries in Mozambique and Tanzania. While only initial estimates of reserves have been announced, there could be sufficient gas in place to support several large-scale LNG projects.

East Africa is geographically well placed to meet the LNG demand in Asian markets. The discoveries have sparked investment interest from both IOCs and NOCs. While some LNG projects in these emerging regions will not proceed to final investment decisions immediately, there will be increased global competition for access to gas-hungry markets.

Mr Nijoka said: “Longer-term, LNG from East Africa could become more competitive than unsanctioned Australian LNG projects, causing them to be delayed, re-worked or possibly cancelled. In Australia, the pace of LNG development has resulted in mounting cost pressures for operators.

“There have been cost over-runs on a number of Australian LNG projects due to inflationary pressures in the local market and appreciation of the Australian dollar relative to the US dollar. Cost control on these capital projects is also likely to be a key focus area for oil executives in the next six months.”

MARKETS: IEA’s forecasts for oil demand growth up for 2012, but down for 2013

(EnergyAsia, August 23 2012, Thursday) — The International Energy Agency (IEA) has raised its forecast for world oil demand growth for 2012, but sharply reduced it for 2013. In its latest monthly report, the Paris-based agency said it now expects world oil demand to grow by 830,000 b/d in 2013, down from its previous forecast…

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MARKETS: OPEC maintains forecasts for world oil demand growth for 2012 and 2013

(EnergyAsia, August 23 2012, Thursday) — The Organization of Petroleum Exporting Countries (OPEC) has maintained its forecasts for global oil demand to grow by 900,000 b/d to 88.7 million b/d in 2012 and by 800,000 b/d to 89.5 million b/d next year. OPEC’s latest forecasts contrast the International Energy Agency which raised its forecast for…

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