TURKMENISTAN: Oil industry prepares to boost crude and products output

(EnergyAsia, November 22 2012, Thursday) — Turkmenistan is investing heavily to expand the domestic production of its crude and refined products. At a conference last week, government and industry officials revealed on-going investments to boost exploration and production in new fields. Russia’s Itera, Germany’s RWE and Cyprus’ Buried Hill are looking to invest billions of…

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ASIA: Region is world’s fastest growing for sales of natural gas vehicles, says Pike Research

(EnergyAsia, November 22 2012, Thursday) — The Asia Pacific region has raced ahead of the rest of the world to rapidly become the largest market for natural gas vehicles (NGVs), thanks to strong demand growth in Thailand, India and China, said US-based consulting firm Pike Research.

The Boulder, Colorado firm said prospects vary widely across the globe for light-duty NGVs, which produce fewer greenhouse gas emissions than conventional gasoline engines and run on fuel that is much cheaper than gasoline.

Its latest report found that markets in the Americas and Europe continue to struggle with developing refuelling infrastructure to meet the needs of both consumers and fleets.

Pike Research, a part of Navigant’s Energy Practice, said North America continues to lag in this sector.

Although sales of NGVs in the region will grow at a healthy 10.2% compound annual growth rate from 2012 to 2019, the report predicts that annual sales will reach only 37,000 by 2019, or just over one percent of projected world sales of 3.2 million units.

“Sales of NGVs will grow strongly in the next several years in North America, but the market is starting from a very small base of about 16,000 vehicles a year,” said senior research analyst Dave Hurst.

“The lack of widely available refueling stations, the absence of government incentives for purchasers, and low consumer awareness of NGVs will keep the North American market to just a fraction of the total world market.”

“The lack of widely available refueling stations, the absence of government incentives for purchasers, and low consumer awareness of NGVs will keep the North American market to just a fraction of the total world market.”

The report, “Light Duty Natural Gas Vehicles”, analyses the global market opportunity for NGVs in the passenger car and light duty truck markets. It examines the current market, fuel availability, demand drivers, policy factors and technology issues associated with the growth of NGVs for the consumer and fleet markets.

In a separate report, Pike Research said electric vehicle sales in China will fall far short of government targets despite its development and adoption being a strategic priority for the country.

The government has set a target for the production of 500,000 PEVs per year by 2015 as part of its long-term goal to make China the world leader in plug-in electric vehicle (PEV) sales.

But Pike Research said annual sales of PEVs in China will reach only 45,000 units by 2015, rising to 152,000 vehicles in 2017. That figure represents less than one percent of the total light duty vehicle market in China.

“Indeed, evidence is emerging to suggest that Chinese EV manufacturers have yet to develop proven technology that can propel the market. Even though it is unlikely to reach its targets, however, China’s EV ambitions will provide a huge boost to electric car development worldwide in the long run, said research director John Gartner

“As of early 2012, only a few domestically produced EV models were available to China’s general public. Indeed, evidence is emerging to suggest that Chinese EV manufacturers have yet to develop proven technology that can propel the market. Even though it is unlikely to reach its targets, however, China’s EV ambitions will provide a huge boost to electric car development worldwide in the long run.”

Since 2003, Chinese automakers have released or announced the production of 40 battery electric vehicles and 31 plug-in hybrid electric vehicles that will be on the market by 2015.



MARKETS: IEA again slashed oil demand forecasts for 2012 and 2013

(EnergyAsia, November 22 2012, Thursday) — The International Energy Agency (IEA) has again reduced its forecasts for world oil demand for 2012 and 2013, reflecting its downbeat outlook on the economy. In its latest November monthly report, the Paris-based agency said world oil demand will grow by 700,000 b/d to 89.6 million b/d for 2012,…

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CHINA: Sinopec acquires 20% stake in Nigerian oil field for US$2.5 billion

(EnergyAsia, November 21 2012, Wednesday) — A subsidiary of China Petrochemical Corp, or Sinopec Group, has agreed to acquire a 20% stake in an offshore Nigerian field from French major Total SA (FP) for about US$2.5 billion, the two companies have announced.

The OML 138 block contains the Usan field which is on course to produce 140,000 b/d by year-end after starting up in February, said Total.

The Nigerian National Petroleum Corporation (NNPC) is the block’s concession holder. Its partners include Chevron Petroleum Nigeria Ltd. (30%), Esso E&P Nigeria (Offshore East) Ltd. (30%) and Nexen Petroleum Nigeria Ltd. (20%).

Sinopec Group is expected to gain access to about 36,000 b/d of light crude oil production with the expected completion of the transaction by end-2012 once it receives the approval of the Nigerian authorities.

Describing it as an alignment of its portfolio, Yves-Louis Darricarrère, Total’s upstream president, said:

“Usan accounts for less than 10% of the group’s equity production in Nigeria. This sale of an asset operated from a minority position will allow us to focus our resources on the material growth opportunities in Total’s portfolio.”

Total, which produced 287,000 b/d in Nigeria last year, aims to sell off up to US$20 billion in assets between 2012 and 2014.


CHINA: Oil and gas reserves up last year, says ministry

(EnergyAsia, November 21 2012, Wednesday) — China’s recoverable oil and gas reserves, a closely guarded secret, rose last year, according the China Mining Resources Report citing an anonymous source from the Ministry of Land and Resources. The report said China’s recoverable oil reserves edged up 2.1% to 3.24 billion tonnes last year while its natural…

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MARKETS: Non-OPEC oil supply outages remain above year-ago level, says EIA

(EnergyAsia, November 21 2012, Wednesday) — Unplanned oil supply outages outside the Organisation of the Petroleum Exporting Countries (OPEC) cartel during the first 10 months of this year were almost twice the amount experienced in the last three months of 2011, reported the US Energy Information Administration (EIA).

The volume of unplanned non-OPEC oil production disruptions is one of several key measurements of global oil supply security that has been providing strong support for oil prices.

At two million b/d in October, global surplus capacity, another key metric of global oil supply security, remains tight by historical standards, said the EIA. This estimate does not include additional capacity that may be available in Iran made unavailable as a result of the US and European Union (EU) sanctions on trade with the Islamic regime.

Tighter global surplus capacity, coupled with an elevated volume of non-OPEC supply disruptions, has placed upward price pressure this year on global Brent benchmark crude, said the EIA.

The other supportive factors this year include conflict, tariff disputes, worker strikes, natural disasters and maintenance-related problems that caused several countries to reduce or shut in oil production.

Recent unplanned non-OPEC supply outages have declined from an average of about 1.1 million b/d in both August and September to 900,000 b/d in October. This is mainly due to the return of US production in the Gulf of Mexico, which was temporarily curtailed by Hurricane Isaac in August and September 2012.

Nonetheless, the EIA reported that an above-normal volume of non-OPEC production remains offline due to large outages in Syria and South Sudan, which together accounted for almost two-thirds of the total non-OPEC unplanned outages in October. Non-OPEC supply outages represented nearly 2% of the total non-OPEC supply, which averaged 52.7 million b/d in October.

The situation in Syria continues to deteriorate, and its impact on oil prices arguably transcends disrupted volumes in that country, as concerns grow about the risk of regional spillover effects from the conflict. The government of South Sudan ordered oil companies to restart production last month, and production is expected to gradually resume within the next few months.

South Sudan has signed an agreement with Sudan on oil export fees and security arrangements. However, some post-independence issues such as border demarcation, rights to the disputed Abyei region, and claims for compensation of seized assets still remain unresolved.



ASIA: Russia to focus on LNG amid deadlock over planned pipeline projects targeting China and Korea

(EnergyAsia, November 21 2012, Wednesday) — Russia is switching its attention to exporting liquefied natural gas (LNG) as negotiations to develop gas sales to China and South Korea through pipelines remain deadlocked, according to consulting firm GlobalData. In its latest report, GlobalData said China and Russia have once again failed to reach agreement on gas…

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COMPANY: Law firm Herbert Smith Freehills adds to Greater China energy and natural resources team

(EnergyAsia, November 20 2012, Tuesday) — Law firm
Herbert Smith Freehills said it has strengthened its Greater China energy and natural resources practice with the addition of David Clinch, a senior partner from the firm’s global energy and natural resources practice.

Hong Kong-based Clinch will work with partners Anna Howell and Hilary Lau, and China corporate partner Tom Chau to continue developing its market-leading Greater China energy and natural resources practice, which already advises some of the world’s biggest companies in the sector including CNOOC, CNPC, Sinopec, State Grid and Shenhua.

Mr Clinch has worked with the firm for almost 19 years, of which over 14 years have been spent in our Asia offices. He has been based in the firm’s Hong Kong, Bangkok, London, Singapore and Tokyo offices.

Widely recognised as a leading energy lawyer, his practice includes acquisitions and disposals, project development, project finance, joint ventures and offtake arrangements within the oil and gas, mining, power, refining, chemical and infrastructure sectors. He has advised on projects and acquisitions in Africa, Asia, Australia, Canada, the Middle East, Europe, the former Soviet Union and South America as well as on a number of restructurings in Asia.

Mark Johnson, the firm’s Asia managing partner, said:

“We are delighted to have David rejoin our Asia team. His leading experience in working with Asian and international clients will be instrumental for us as we further develop our leading energy and natural resources practice.”

With more than 2,800 top-flight lawyers, operating from over 20 offices across Asia Pacific, Europe, Middle East, Africa and North America, Herbert Smith Freehills provides premium full-service legal advice.


UPSTREAM: Consultant predicts global investments in FLNG to exceed US$47 billion between 2013 and 2019

(EnergyAsia, November 20 2012, Tuesday) — Asia will account for about 35% of US47.4 billion in global investment in floating liquefied natural gas (LNG) systems between 2013 and 2019, said UK upstream consultant Douglas Westwood.

Of this amount, Douglas Westwood predicts that over US$28 billion will be spent on liquefaction and US$19.1 billion on import terminals.

Economic growth is driving electricity demand occurring in the developing world and Asia will be a focus region for both liquefaction and regasification terminals this decade, accounting for 35% of global capex.

Australia and the surrounding market will account for 22% of the market, largely due to a number of liquefaction projects. Latin America will represent 17% of global FLNG expenditure over the period, with projects involving both offshore liquefaction and regasification vessels, said Douglas Westwood.

Murray Dormer, author of the company’s new World FLNG Market Forecast report, said:

“Economic growth is driving electricity demand in the developing world and Asia will be a focus region for both liquefaction and regasification terminals between 2013 and 2019; accounting for 35% of global capex. Australasia will account for 22% of the market, largely due to a number of liquefaction projects. Latin America will represent 17% of global FLNG expenditure, with projects involving both offshore liquefaction and regasification vessels.

“Increasing long-term demand is driving the value of gas reserves. However, in some places a lack of infrastructure makes the monetisation of reserves challenging. Interruption of gas supplies either via political or security-related risks are an on-going issue in the exploration and production business.

“Boundary disputes, threats of civil unrest and war and terrorism are all ever-present challenges that the oil and gas industry is well used to encountering.

“By siting infrastructure offshore, FLNG could help mitigate some proportion of risk in regions where these issues are apparent.

“Furthermore, developing new onshore infrastructure can also be difficult due to local opposition (the ‘Not In My Back Yard’ or NIMBY effect). The use of offshore regasification facilities, placed in relative proximity to existing gas markets, connected to shore by pipeline, is one method to alleviate such concerns.

“Finally, escalating costs of labour and raw materials and the tight contractor market have led to large increases in the cost of new onshore terminals in recent years with some costs equating to around $1,500 per tonnes/year.”

With declining onshore hydrocarbon production, offshore exploration increasingly offers a solution where vast offshore conventional reserves exist and continue to be found. Historically, relatively little offshore natural gas exploration has occurred, the industry has instead focused on oil.

Douglas-Westwood director, Steve Robertson, said:

“In recent years it has become clear that the vast resources of both conventional and unconventional natural gas reserves in place will see it dominate the energy mix over the next century as these reserves are brought into production. The drive to develop these reserves is coming from a substitution effect as a result of high oil prices and a move away from the use of both coal and nuclear energy.

“Whilst the development of unconventional natural gas has proceeded at an extraordinary pace in the US, it should be remembered that it has the largest volume of land drilling equipment and services available domestically compared to any other country in the world. With the possible exception of China, it is difficult to see how the US unconventional gas development could be replicated elsewhere in the world within the next ten years.

“Furthermore, major factors such as uncertainty over long-term production levels, supply chain restraints and political issues could impede the development of unconventional gas markets.

“We are seeing the emergence of vast offshore conventional gas resources, which will offer a more predictable long-term source of supply. In excess of 100 trillion cubic feet has been discovered in Mozambique and Tanzania alone – equivalent volumes to the world’s current annual natural gas consumption.

“Whilst the conventional reserves in place are vast, development will be technically complex as the finds are in water depths ranging from 800m to over 2,000m. However, with the progression of FLNG projects in Australasia, floating liquefaction is becoming an increasingly viable option for the production and export of natural gas in East Africa.

“It is also important to note that theoretically, FLNG would be the most economical strategy with a lower cost per tonnes/year.

Mr Dormer concluded: “The challenge of how to access the substantial volumes of conventional offshore natural gas reserves is bringing new technology to the fore. Floating LNG is the current favoured option for export from Israel’s Tamar project and follows commitments by both Shell and Petronas to proceed with construction of FLNG vessels.

“With the commencement of construction of Shell’s first FLNG unit, we can consider the technology now an accepted solution. For more than 30 years FLNG export has been an ambition of the offshore industry, but it is now well on the way to reality. 2012 has been a real milestone for the industry with steel cut on the first project. The sector is now buoyant with the prospect of over US$47 billion to be spent 2013-2019.”



PAPUA NEW GUINEA: ExxonMobil ups PNG LNG project costs by 21% to US$19 billion

(EnergyAsia, November 20 2012, Tuesday) — Esso Highlands Limited, a subsidiary of the US major, has informed its consortium partners that it has raised the cost of their liquefied natural gas (LNG) project in Papua New Guinea by more than 21% to US$19 billion.

Esso Highlands, which is leading the PNG LNG consortium to build the project to export LNG to Asia, attributed the sharp rise in costs to the weaker US dollar, domestic labour problems and shortages, on-going disputes with landowners and rising material costs.

While the project is 70% completed and remains on schedule to start producing gas in 2014, Esso Highlands, a 33.2% stakeholder, also increased its annual production capacity by 5% to 6.9 million tons.

“Foreign exchange is the largest single contributor of the increase and to a lesser extent, delays from work stoppages due to community disruptions and land access led to increased construction and drilling costs. Extraordinary logistics and weather challenges also increased costs. In particular, rainfall exceeded historic norms for most of the last two years,” said Esso Highlands.

The US dollar has fallen from a high of 2.2 Papua New Guinean kina in 2010 to around 2 today. Against the Australian dollar, the dominant currency in the southern Pacific Asian region, the greenback has fallen from 0.95 to $1.05 over the past year.

Esso Highlands’ partners are Oil Search Limited (29%), the PNG government’s Independent Public Business Corporation (16.6%), Santos Limited (13.5%), Nippon Oil Exploration (4.7%), PNG landowners’ Mineral Resources Development Company (2.8%) and Petromin PNG Holdings Limited (0.2%).

The PNG project includes the development of gas reserves in PNG’s Southern Highlands and Western Provinces to be delivered through 700km of pipeline to liquefaction and storage facilities located northwest of Port Moresby. Over its 30-year life, PNG LNG is expected to produce over nine trillion cubic feet of gas.

Putting the best spin on the shock announcement, Decie Autin, PNG LNG project executive, said:

“ExxonMobil successfully operates world-class projects around the world in a broad range of technical, operational and financial conditions. The project team was able to overcome significant delays and still maintain overall schedule through re-sequencing work under unique and very challenging circumstances.

“Despite the cost increase, project economics are helped by the 5% increase in plant capacity and approximately 30% increase in commodity pricing since project funding in 2009.”

But its partners are clearly worried, with shares of Australian partners Oil Search and Santos both taking an immediate hit when news of the cost overrun was released.

Describing the cost increase as “considerably beyond the upper end” of its expectations Oil Search said it would fully review the revised estimates while seeking to work with the operator “to mitigate these estimated cost increases.

While stating it is well positioned to manage the impact of a strong Australian dollar on project capital costs, Santos said its share of the revised budget will increase by US$450 million to over US$2.11 billion.

Despite its need for foreign investment to lift the bulk of its seven million people from poverty, Papua New Guinea has earned a reputation as being one of the most hostile places in Asia for businesses.

Five years ago, Exxon Mobil abandoned a long-drawn attempt to build a pipeline to deliver natural gas from PNG to Australia after failing to tame the twin issues of rising cost and land disputes.


CHINA: Growing dependence on oil from the Mid East, especially Iraq and Saudi Arabia

(EnergyAsia, November 20 2012, Tuesday) — China is becoming increasingly dependent on oil from the Middle East, with Iraq and Saudi Arabia the big winners. To fuel its fast-growing economy, China is expected to raise its refining capacity by one million b/d this year and by 2.9 million b/d at the end of 2017, said…

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SAUDI ARABIA: Aramco signs EPC deals to build 400,000 b/d Jazan refinery and oil terminal

(EnergyAsia, November 19 2012, Monday) — Saudi Aramco, the world’s biggest oil producing company, has signed engineering, procurement and construction (EPC) contracts with eight companies to build a 400,000 b/d refinery and an oil terminal on the country’s west coast. At a ceremony last week, Aramco signed the contracts for the construction of the Jazan…

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CHINA: Officials predict crude oil demand, imports to rise sharply

(EnergyAsia, November 19 2012, Monday) — China’s crude oil demand and imports are set to rise sharply over the next few years, said government officials and industry analysts. The Energy Research Institute, an affiliate of the top policy-making National Development and Reform Commission (NDRC), expects the country’s crude oil demand to rise from 450 million…

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PAPUA NEW GUINEA: Prime Minister announced approval for Interoil’s Gulf LNG project

(EnergyAsia, November 19 2012, Monday) — Houston, US-based InterOil Corporation (IOC) has achieved a major breakthrough in its difficult attempt to build a liquefied natural gas (LNG) project in Papua New Guinea (PNG) that at one point had looked to be in danger of being cancelled.

After months of intense negotiations, the company was able to release a good-news statement that PNG’s Prime Minister Peter O’Neill had announced the country’s National Executive Council (NEC) had approved InterOil’s LNG project in the Gulf Province.

“The decision clears the way to proceed with our plans for an LNG plant in the Gulf Province with initial output of a minimum of 3.8 million tonnes per annum,” it said.

“As the Prime Minister has announced, the decision also approves the acquisition by the state of an additional 27.5% equity interest in the Elk/Antelope gas fields, over and above the 22.5% interest to which it is entitled under the Oil & Gas Act, on terms to be negotiated with InterOil.”

As a condition for giving its approval, the NEC has insisted that the project developers will appoint an “internationally recognised” to operate the facilities. InterOil said it is ready to participate in these discussions, which it expects will commence shortly.

The NYSE-listed company said the PNG government intends to take its gas entitlement from the project to provide fuel for domestic power generation and feedstock for industries to help stimulate economic growth.

According to InterOil, the Prime Minister’s announcement also mentioned that the NEC has approved the establishment of a state negotiating team to discuss and agree to the necessary amendments to the 2009 project agreement between the government and Liquid Niugini Gas Limited. The talks will focus on firming up the NEC decision and the market terms on which the government will acquire the additional equity interest.

The PNG Cabinet has also approved the establishment of the Ministerial Gas Committee comprising key economic ministers to fast track commercialisation of the county’s second LNG project.

With the government’s position now clarified, InterOil said it expects to conclude an agreement for a sale of an interest in the Elk and Antelope resource in Petroleum Retention Licence 15 and the first 3.8 million tonnes per annum LNG train to a partner or partners in the coming weeks.

It said potential investors include major oil companies, national oil companies, and Asian utilities.

The proposed US$6 billion project had encountered major political opposition amid reports earlier this year that it had been or was about to be cancelled by PNG’s Department of Petroleum and Energy (DPE).

Despite denials by Energy Minister William Duma, Interoil said it had learnt the DPE intended to cancel the 2009 agreement establishing the project between its joint venture firm, Liquid Niugini Gas Limited, and the PNG government. Pacific LNG is InterOil’s partner in the joint venture.

Located beside an oil refinery owned and operated by Interoil, the proposed complex is designed to export LNG to Asia when it starts up in 2015.


ASIA: Region offers vital outlet for western Canada’s LNG as exports to US decline sharply

(EnergyAsia, November 19 2012, Monday) — Asia offers a “viable and attractive” market for western Canada’s natural gas exports which look set to lose further ground in the increasingly glutted US after plunging 80% since 2008, said energy consulting firm Wood Mackenzie. Its upstream and global gas consultants estimate that western Canadian producers have lost…

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DUBAI: First phase of 13MW solar power plant to start up by next October

(EnergyAsia, November 16 2012, Friday) —Dubai expects to start up its first major solar power plant by next October, said Dubai Electricity and Water Authority (DEWA) which awarded the contract for the construction of the 13MW project’s first phase.

Located in the Mohammed Bin Rashid Al Maktoum Solar Park, the project kick-starts Dubai’s plan to produce 1% of its electricity from renewable energy sources by 2020 and 5% by 2030.

The emirate’s Supreme Council of Energy has appointed DEWA to manage and execute the 124-million-dirham project, which will be linked to the national grid. (US$1=3.67 dirham).

DEWA said it has awarded the contract to M/S First Solar Inc to construct the project’s first phase that includes a 33KV substation and connection to the grid. DEWA received six bids in response to the open tender issued on June 26 2012.

“The PV plant installation is a key step in the implementation of the energy diversification strategy adopted by the Supreme Council of Energy, in which solar energy is set to become part of Dubai’s energy portfolio. The strategy is based on Dubai’s growing energy requirements and aims to maintain security of supply in the emirate of Dubai,” said Saeed Mohammed Al Tayer, DEWA’s managing director and CEO.

DEWA is targeting to expand the park’s solar power capacity to 1,000MW on completion.


CHINA: Saudi Aramco opens head office in Beijing

(EnergyAsia, November 16 2012, Friday) — Saudi Arabian Oil Co, or Aramco, has opened a new head office in Beijing as it continues to expand ties with the world’s second largest oil consumer.

Aramco Asia, a wholly owned subsidiary of the world’s largest oil company according to a PIW ranking, adds to the company’s two existing branch offices in Shanghai and Xiamen.

The new office will provide services of crude oil and chemicals marketing, joint venture coordination, procurement, inspection, research and development, project management, human resources development and communications in the region.

At Aramco Asia’s inauguration ceremony on Monday, November 12, Abdulrahman F. Al-Wuhaib, Aramco’s senior vice president (downstream), said:

“Our new Asia office here in Beijing will be a hub for facilitating our joint activities in general and in particular investment and other business opportunities arising from the capital projects in Saudi Arabia and Asia. The kingdom is ‘open for business’ for Chinese and other Asian companies, as there are abundant opportunities across many sectors.”

Dawood M. Dawood, Aramco’s vice president for Marketing, Supply and Joint Venture Coordination (MSJVC), who led in establishing Aramco Asia, said:

“Aramco Asia brings together our business operations in this fast-growing region under one entity and be unified in carrying out Saudi Aramco’s vision and strategy for Asia. Aramco Asia will play an important role and be part of the building blocks that will contribute to Saudi Aramco’s corporate transformation to become a global leader in energy and chemicals by 2020.”

More than 300 guests including Chinese government officials, foreign diplomats, senior executives of energy companies, energy experts and researchers from Chinese academia and institutions attended the event.

Aramco is already invested in China, namely through two joint ventures with Sinopec Group and ExxonMobil Corp in Fujian province. It holds a 22.5% stake in retail oil products distributor Sinopec SenMei Petroleum Company, and a 25% stake in the Fujian Refining & Petrochemical Company (FRPC), which operates a 240,000 b/d refinery, which also counts province of Fuji as a 25% partner.

Aramco and Sinopec are also jointly developing a 400,000 b/d refinery in Yanbu on the Saudi Red Sea coast.


COMPANIES: Germany’s BASF, Russia’s Gazprom to swap oil, gas assets

(EnergyAsia, November 16 2012, Friday) — German chemical company BASF SE said it will raise its oil and gas production, and exit the gas trading and storage business following an agreement to swap assets with Russia’s Gazprom OAO.

As part of the agreement, BASF subsidiary Wintershall will receive an equity of 25% plus one share in Blocks IV and V in the Achimov formation of the Urengoi field in western Siberia.

Citing the Russian mining authority, BASF said the two blocks hold reserves totaling of 274 billion cubic meters of natural gas and 74 million metric tons of condensate, equivalent to 2.4 billion barrels of oil.

BASF expects the two blocks to produce a total of at least eight billion cubic meters of natural gas, with start-up planned for 2016.

Gazprom will also completely take over their current jointly run natural gas trading and storage business as well as 50% of Wintershall Noordzee BV, which is active in the exploration and production of oil and gas in the southern North Sea. The stakes include the 50% shares in the gas trading companies Wingas, Wintershall Erdgashandelshaus Berlin and Wintershall Erdgashandelshaus Zug, and shares in the natural gas storage facilities in Rehden and Jemgum, Germany, as well as Haidach, Austria, and the gas storage operator Astora.

The agreement was signed by the chief executives of BASF, Kurt Bock, and Gazprom, Alexej Miller, on behalf of their companies. Subject to the approval by the relevant authorities, the transaction is to expected be completed by the end of 2013 and financially retroactive to April 1, 2013.

Dr Brock said: “The asset swap is consistent with our strategy to expand the exploration and production of crude oil and natural gas – through organic growth and targeted acquisitions.

“With this step, we are further developing our more than 20 year partnership: Gazprom will become more active in the natural gas trading and storage business and we will jointly expand the production at the source.”

Mr Miller said: “Through the agreement, Gazprom and BASF are confirming their strategic partnership on the international energy market. By increasing our share in the gas trading and storage business, we are continuing our successful activities to secure the supply of gas for Europe. The agreement on exploration and production extends the geographic dimension of our cooperation, which has already successfully started with production projects in Russia.”

Based in Kassel, Germany, Wintershall has been the preferred partner of Gazprom for many years in the production of natural gas in Yuzhno Russkoye and Achimgaz in Russia.

The natural gas field Yuzhno Russkoye was commissioned in 2007 while Yuzhno Russkoye in western Siberia has recoverable reserves of more than 600 billion cubic meters of natural gas.


MYANMAR: Norway to help update electricity law through US$850,000 grant to ADB

(EnergyAsia, November 16 2012, Friday) — The Norwegian government will provide a US$850,000 technical assistance (TA) grant to the Asian Development Bank (ADB) to help Myanmar update its 1984 Electricity Law. According to the bank, the grant will enable the Southeast Asian country to bring forward its laws to reflect current international standards that would…

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AUSTRALIA: India’s GVK Group and Hancock commit to opening up Galilee Basin’s coal deposits

(EnergyAsia, November 15 2012, Thursday) — The partners developing what could well be Australia’s largest coal deposits said they are pushing ahead with their multi-billion-dollar project dismissing reports that it faces significant delay from financing difficulties.

India’s GVK Group, the majority owner in the Alpha coal project in Queensland state, said it has approved more than A$100 million to develop associated rail and port infrastructure. (US$1=A$0.97). In 2011, GVK acquired its 79% stake from Australia’s Hancock Prospecting Pty, which retains the remaining 21% share.

In affirming its commitment to start production in 2016, the company said:

“As we line up the many milestones over the coming 12 months to bring this project into reality, approvals and permitting continue to remain our focus. We see the project receiving State Development Area approval for the railway in late Q3 2013.

“We have reviewed our project timeframes and believe that a realistic date for financial close is in the latter part of 2013.”

In a show of its “unwavering support” for the project, GVK said it is focusing on engineering, procurement and construction (EPC) commercial terms and conditions with shortlisted contractors.

“We will continue to work with those contractors already shortlisted, appointed or with a preferred status to ensure that deadlines will be met.

“We are well placed with our financial advisors ANZ, Société Générale, Macquarie and Citi to achieve Financial Close next year whereby all material construction, operation and off-take contracts will be executed. We are ramping up our concurrent activities to meet the market demands for our coal in the latter half of 2016.”

Alpha, the most important thermal coal deposit in the Galilee Basin, is being developed as a 30 million tonnes/year open-cut mine with an expected production life of over 30 years.


US: EIA predicts coal production to decline in 2012 and 2013

(EnergyAsia, November 15 2012, Thursday) — In response to weak domestic demand, US coal production will decline over the next two years from 1,095 million short tons (mmst) in 2011, said the Energy Information Administration (EIA). The agency sees US coal production falling by 6.2% to 1,027 mmst in 2012 and by a further one…

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THAILAND: Banpu’s third quarter profit down 46% on falling coal price

(EnergyAsia, November 15 2012, Thursday) — Slammed by lower coal prices, Thailand’s largest coal miner Banpu Plc has reported a third-quarter profit of 2.26 billion baht, down 46% from year-ago level and 17% lower from the previous quarter. (US$1=30 baht).

The Bangkok-listed company, which produces coal in Thailand, Indonesia, Australia and China, expects no relief in sight for next year as its third-quarter sales revenue fell 5% to 29.22 billion year-on-year. Coal accounted for 94% of its total revenue, with the rest coming from electricity and other businesses.

In a statement to the Stock Exchange of Thailand, Banpu chief executive Chanin Vongkusolkit, said higher production and slower demand growth in Asia combined to drive coal prices lower.

“The average coal selling price was US$79.74 per tonne, down 12% from the same period last year, due to the unfavourable global coal market,” he said.

Banpu said it averaged a sale price of US$88.05 per tonne for its Indonesian coal, down 11% from year-ago levels, while its Australian coal sold for 1% less at A$68.56 per tonne.

“Coal operations in Indonesia and Australia have increased their sales volume with lower production cost in this quarter, which lessened the impact on the profit margin,” the company said.

“China coal business generated equity income of 22 million baht with a greater selling price compared to the second quarter. The Gaohe mine started commercial operation in late September this year after receiving production licence from the Coal Industry Bureau of Shanxi province.”



MARKETS: IEA predicts global coal demand to remain leading power-generation fuel for two decades

(EnergyAsia, November 15 2012, Thursday) — Coal will remain the world’s leading fuel for power generation before declining by three percentage points to under 25% by 2035, said the International Energy Agency (IEA). In its latest World Energy Outlook report, the Paris-based agency predicts coal’s share in the global energy mix will drop in favour…

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INDIA: Peak power supply shortage to reach 10.6% this year, predicts Central Electricity Authority

(EnergyAsia, November 14 2012, Tuesday) — India’s power supply crisis will worsen, with the shortfall in generation capacity at peak electricity consumption reaching a record of nearly 15,000 MW or 10.6% this fiscal year, predicts the Central Electricity Authority (CEA). For the previous year ending March 31 2012, India’s peak power shortage was 9.6%, the…

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INDIA: Surge in diesel demand as national power grid failed, farmers step up irrigation

(EnergyAsia, November 14 2012, Tuesday) — India’s power crisis culminating in the massive blackout of July 31-August 2 and increased irrigation activities by farmers sharply boosted the country’s diesel demand, said the Organisation of Petroleum Exporting Countries (OPEC). In its September market report, OPEC said the world-record blackout left 600 million people without electricity, and…

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