GE Power Services unveils growth plan amid global headwinds

In his new starring role at GE Power Services, football fan Martin O’Neill sees the hugely competitive English Premier League providing a few management lessons.

“We can’t afford to buy a Neymar yet, nor would we want to pursue a strategy of splurging on players and projects like Manchester City,” said the general manager of the company’s newly established Cross-fleet Service Solutions unit.

It’s less than a month before the World Cup tournament kicks off in Russia. The interview over dinner at a lovely restaurant in the bustling industrial city of Baden in Switzerland quickly takes on football references.

Brazilian superstar Neymar became the world’s most expensive football player when he joined France’s Paris Saint-Germain for US$250 million last year. English champions Manchester City, backed by the Abu Dhabi government, has invested heavily in players and infrastructure over the past decade to become a global force in the sport.

“Our strategy would be to grow the business organically. We favour a more modest approach like Burnley or Leicester,” Mr O’Neill said. Both are smaller English clubs that have been punching above their weight in recent years. Leicester won the championship in 2016 while Burnley finished in a creditable seventh position last season.

Mr O’Neill, who shares the same name with the manager of the Republic of Ireland national squad, said he is focused on building a team that will win matches and progress up the table with each season.

“The immediate goal is to win credibility, gain the confidence of customers, and strike fear in the hearts of rival teams,” he said.

The reference to mid-table performers seems incongruously modest for a global conglomerate that reported a total revenue of US$122 billion in 2017. But these are difficult times, not just for the company but the world economy too. GE is undergoing life-changing surgery under John Flannery who took over as chairman and CEO in August 2017. To revitalise the underperforming 126-year-old symbol of industrial America, he is selling off a number of businesses so that the future slimmer GE will focus only on its Power, Aviation and Renewable Energy divisions.

As part of that message roll-out, GE Power Services, a unit within the power division, hosted a group of international journalists at its Baden headquarters from May 14 to 15. The company’s senior executives, led by CEO and President Scott Strazik, presented its global strategy with details and codenames like cross-fleet service solutions, advanced gas path (AGP), and additive manufacturing.

Cross-fleet Service Solutions
The power-generation business experienced a period of rapid global capacity expansion In the 1980s and 1990s. This golden period coincided with strong economic growth in many developing countries such as China, India and Southeast Asia that were emerging from a low income base. Electricity consumption grew rapidly, leading to orders for the construction of large power generation plants, including many that operate on gas-fired turbines.

Many of these plants, built by GE as well as its rivals, Germany’s Siemens and Japan’s Mitsubishi Heavy Industries, are nearing the end of their normal shelf lives. Their owners are faced with big decisions to upgrade the plants and extend their operating years as they face new pressures from rising energy costs and environmental standards.

GE Power Services, which supports more than 2,800 customers worldwide, sees opportunities from boosting the performance and reliability of existing gas turbine fleets, especially those manufactured by its competitors. This will form part of its business to provide services for more than 28,000 power generation equipment assets owned by its customers.

At the Baden event, the company announced the launch of its Cross-Fleet Service Solutions unit that supports a range of technologies including those used by Siemens’ SGT-800 and Mitsubishi’s 501F units. The goal is to take market share from its competitors.

GE said the injection of its advanced capabilities and technology into these fleets will help gas plant operators gain more flexibility, reliability and efficiency while extending maintenance intervals. Ultimately, it is aimed at helping customers boost their profits.

The company said its technology inputs have boosted the performance of gas turbines manufactured by its competitors by six percent, and extended their operating time by an average of 40,000 hours.

Already, it has snared more than US$200 million worth of orders in Latin America, Europe and Russia. The cross-fleet solutions will also be offered to the owners of the 7,500 GE gas turbines located around the world.

“We’re executing projects on multiple continents, with a healthy pipeline to follow,” said Mr Strazik, who was chief financial officer until his promotion last October.

“Cross-fleet is not about servicing somebody else’s machines. That’s boring. It’s about taking those machines and making them our own,” he said.

“It’s about adopting those machines, inserting our technology, our coatings, our alloys, our engineering depth. That then allows us to do things with the machines, with our technology that the customers need, that we don’t necessarily think our competitors can do.”

Just as important, GE Power Services is well-positioned to provide long-term services support for a wide range of gas turbines following the expansion of its cross-fleet capabilities, said Mr O’Neill.

The company said customers are supported by its global network of 40 service centres that inspect and analyse cross-fleet hardware, as well as develop repair solutions to keep power and steam producers operating and improving.

Advanced Gas Path (AGP)
“When I arrived as the engineering leader in 2003, there was no advanced gas path (AGP). So now there is, and we talk about all the cool stuff that has allowed our customers to be better at their business,” said Steven Hartman, GE Power Services’ chief technology officer.

AGP combines hardware upgrades, software packages, or a customised mix of both, to enable customers to extract more value from all major gas turbine components. The solutions include applying design innovations, materials advancements and control software to boost the output and efficiency of gas turbines as well as extend their maintenance intervals and maintain low emissions.

As a result of AGP upgrades to existing gas turbines, the company said it has added a total of seven gigawatts of power capacity around the world. AGP-enabled plants are generating an additional total of nearly 19.4 million additional megawatt-hours (MWh) of power a year, sufficient to meet the electricity needs of two million homes.

“Advanced Gas Path is a huge deal for us,” said Mr Hartman, an American who lives in Baden and speaks German.

At the Baden event, GE Power Services announced that it had secured three new AGP orders from different companies in Saudi Arabia, Dubai and Japan.

State-owned Saudi Cement will apply the AGP solution at its three GE 6B gas turbines at Hofuf. Saudi Cement, which became the first in the cement industry to adopt the solution,  expects to boost power output by up to 16.9%.

Next, Dubai Electricity and Water Authority (DEWA) signed a US$52 million agreement to install the AGP technology in three GE 9E gas turbines at the Jebel Ali Power & Desalination Station. The upgrade, to be completed next year, will increase energy production, improve efficiency and reduce carbon emissions, as well as extend the life cycle of the gas turbines for an additional 12 years.

GE also secured a first AGP project in Japan, from Ohgishma Power Co Ltd, a joint-venture company between Tokyo Gas Co. Ltd and Showa Shell Sekiyu. As part of the agreement, Ohgishima’s three GE 9F gas turbines in Kanagawa will be upgraded to improve efficiency by 2.5 percent. Its emissions level will be reduced to 15 ppm nitrous oxide to help Tokyo Gas remain competitive in Japan’s struggling power industry.

Since 2010, our revolutionary AGP technology has been installed in 435 units across four GE gas turbine fleets in 39 countries on five continents,” said Mr Strazik.

“We are expanding our AGP solution to GE 6B gas turbines to increase output and availability on our fifth gas turbine type. In certain industrial applications, the need for more megawatts, efficiency and flexibility is paramount, and our AGP technology can help cement companies like Saudi Cement’s increase their power capacity.”

Additive Manufacturing (AM)
Steven Hartman’s enthusiasm for additive manufacturing (AM) gushes over when he starts expounding on the subject.

According to, AM describes the technologies that build 3D objects by adding layer-upon-layer of material including plastic, metal, concrete or possibly even human tissue in the future.

The range of AM technologies today include 3D printing, rapid prototyping, direct digital manufacturing (DDM), layered manufacturing and additive fabrication in the making of a three-dimensional object.

AM is increasingly crucial to the power industry which is under pressure to supply electricity at low cost while remaining profitable, or to at least stay afloat in the case of many developing countries. Power companies must keep cost down while raising plant performance.

“We’ve been doing additive manufacturing for 20 years,” said Mr Hartman. Instead of replacing entire sections in an ageing gas turbine, a plant operator is able to focus on the defective or underperforming parts using AM technologies.

“In AM repairs, you take out the old part, you cut out a section, you put in a new printed version. It’s a novel application that allows customers not to change their whole unit, but just change that one part and they get 15% cooling flow improvement which improves their performance and save fuel,” he said.

A key ingredient in 3D printing is the choice of the material used in the making of the replacement part.

GE Power Services has a distinct advantage because it is able to draw on “the accumulated massive amounts of data on material characteristics” to design and produce the part needed in the gas turbine, said Mr Hartman.

The material’s characteristics are critical to the plant’s performance.

“What’s in the metal? Will it last for 10 years or longer? We have all that information and can use that to print those parts.”

Would a contractor using generic AM technology be able to print those parts and install it in a power plant at a much lower cost than GE Power Services?

Mr Hartman acknowledges that possibility  amid the growing popularity of 3D printing but he challenges any contractor to have the material knowledge required to design and produce quality parts to enhance the plant’s performance. It is unlikely that they will have the depth and extent of the material database and knowledge found in Advanced Manufacturing Works (AMW), the research arm of additive for GE’s power business.

AMW, located in South Carolina’s Greenville in the US, undertakes research and analysis to improve on the materials and their design and application for use in power plants. 

Geopolitics, trade tensions and rising energy prices
While global electricity consumption continues to grow, the demand for new investments in large power plants is unlikely to match its pace.

Amid rising global trade tensions, surging debt levels and increasing geopolitical tensions, most countries are bracing for slower economic growth in the coming years.

Amid the sober outlook for the world economy and GE’s own recent setbacks, Mr Strazik is taking the long view with a firm eye on growth.

“You can’t talk about this business in the context of quarters or in the context of years. You have to look at a business like this over five-year trends because projects are very lumpy, complicated and hard to finance,” he said.

“The longer term trends still show a real need for gas. And that’s why we’re continuing to invest hundreds of millions of dollars in a year in services to meet those solutions.”

Mr Strazik sees long-term sustainable growth in GE Power Services’ AGP business along with its digital, core parts, repairs and services solutions.

“So in the first quarter, we reported core parts repairs and service revenue growth of about 30%, which is the first time in almost a year that we reported growth in that segment of the business,” he said.

“There are much better days ahead for this business financially.”

China has emerged as a major challenge for GE and other American firms, especially since the 2016 election of Donald Trump as US President. GE’s focus on building a strong long-term presence in China comes at a time of rising tensions between Beijing and Washington, DC. American firms have complained about the difficult operating environment in China. At the same time, President Trump wants to stop the transfer of American technology to Chinese firms.

Mr Strazik is resolute that GE has a long-term role in China, especially given the country’s demand for natural gas to fuel its power plants. To clean up its heavily-polluted cities, China wants to reduce its dependence on coal in favour of natural gas and renewable energy.

“Whether China gets along with Trump, GE wants to be in this market. At the end of the day, China is a massive market,” he said. Continuing from when he was GE Power Services’ CFO and commercial leader, Mr Strazik revealed he still visits China every quarter, underlining his commitment to strengthen the company’s position in the country.

GE’s outlook could also be bolstered by the continuing recovery in oil and gas prices on account of strong global demand and rising geopolitical tensions. Some analysts are forecasting that crude prices, now hovering around US$70 a barrel, could return to US$100 a barrel or more over the coming year.

Asked about the impact of high oil and gas prices, Cross-fleet Service Solutions’ Mr O’Neill said without hesitation that it would be a boon for GE Power Services’ prospects.

Pinched by rising fuel prices as a major component of operating cost, power companies will look for ways to keep cost down while maintaining or boosting electricity output at the same time.

“You’re sharpening the economic argument for a Cross-fleet offering with every dollar of the oil price increase. Our solutions are putting true value on the table that will only be amplified by higher oil prices,” he said.

Relegated for the first time from the Dow Jones Industrial Index in June, GE will be like a prized football club with a new squad of ambitious players fighting for a quick return to the Champions’ League.


INDIA: Gathering of energy leaders underline country’s growing importance

(EnergyAsia, October 20 2017, Friday) — India’s growing importance to the global energy markets was underlined by the attendance of senior officials of international firms and organisations including Saudi Aramco’s president and CEO Amin H. Nasser at an energy forum in New Delhi last week.

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JAPAN: Saudi Aramco confirmed to increase crude oil storage on Okinawa from 2017

(EnergyAsia, October 11 2016, Tuesday) — Saudi Arabia’s state-owned oil giant Aramco will increase the amount of crude oil it currently stores on Japan’s Okinawa Island from 6.3 million barrels to around 8.3 million barrels from next year.

The new three-year agreement with Japan Oil, Gas and Metals National Corporation (JOGMEC) will enhance energy security for both countries as part of their push for expanded bilateral ties. Japan will have first call on the stored oil in the event of any supply disruption while Saudi Arabia will boost its crude stockpile outside of the volatile Middle East to supply its customers in Asia.

The expanded deal was announced during the visit to Japan by Deputy Crown Prince Mohammed bin Salman who led a high-level Saudi delegation that included Energy Minister Khalid al-Falih, other ministers, and Saudi Aramco CEO Amin Nasser. Price Salman met Japanese Prime Minister Shinzo Abe and Emperor Akihito during his four-day trip.

Japan initiated the unique crude oil storage agreement in 2010 when it offered Saud Arabia free stockpiling services in exchange for security of supply. At that time, Brent crude was trading at more than US$100 a barrel amid fears over the stability of global supply.

As part of its 2030 vision to reduce dependency on oil, Saudi Arabia is looking to enlist Japan’s help to develop the other sectors of its economy. Aramco would consider listing its shares on the Tokyo Stock Exchange, Mr Nasser told the Nikkei newspaper.

In a separate but similar deal, state-owned Abu Dhabi National Oil Co (ADNOC) has also agreed with JOGMEC to expand its stockpile of crude on Okinawa by two million barrels to around 8.3 million barrels.


ASIA: Region’s economic outlook remains resilient despite tough environment, says ADB

(EnergyAsia, September 30 2016, Friday) — Asia’s developing economies remain on course for another two years of strong growth despite the headwinds of tough global conditions, predicts the Asian Development Bank (ADB).
In its latest survey of the region, the bank said it expects the 45 developing economies to grow by a collective 5.7% in 2016 and 2017, down slightly from last year’s 5.9%. The survey covered some of the region’s smallest economies like the Cook Islands, Fiji, Kiribati and the Marshall Islands to giants like China, India and South Korea.
China’s nearly US$11-trillion economy, the world’s second largest, is expected to grow by 6.6% in 2016 and 6.4% in 2017, down from last year’s 6.9%. With export growth weakening and external demand for its products slowing, China will rely on a combination of strong fiscal measures and monetary stimulus to keep its economy expanding, said the bank.
The Indian economy will continue to outperform China’s over the next two years, boosted by expanded private consumption as a result of rising wages and pensions, and improving rural incomes. The ADB expects India’s economy to grow by 7.4% in 2016 and 7.8% in 2017, compared with 7.6% last year.
The ADB said Asia’s mostly net-energy importers will benefit from the subdued inflationary outlook on account of oil prices likely staying near low levels for another year. Barring any new major supply disruptions, the bank expects the Brent crude price to average US$43 per barrel in 2016 and US$50 next year.
Regional inflation is hovering well below the 10-year average of about 4%, the bank said. Consumer prices are seen rising by 2.6% in 2016 and 2.9% in 2017.
On the other hand, the region’s net energy exporters will continue to feel the impact of weak oil prices now entering its third year since crashing in mid-2014.
“While many energy exporters have sovereign wealth funds to allow early windfalls to be applied to later contingencies, prolonged low energy prices will require reviews on how the funds should be managed and used,” said the ADB.
The region’s net energy exporters include Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Mongolia, Brunei, Indonesia, Malaysia, Myanmar, Vietnam, and Papua New Guinea.

ASIA: Oil and gas import dependence to rise as refiners missed chance to add capacity, says Bain

(EnergyAsia, September 22 2016, Thursday) – Asia’s import dependence on oil and gas products is set to rise further as the region’s refiners have largely failed to add or upgrade production capacity to take advantage of low feedstock cost over the last two years, said Bain & Company.

As a result, the consulting firm predicts that “significant challenges” will force out the industry’s laggards for failing to prepare for the challenges of increased global competition, the expanded flows of new crude grades, tightened regulations and higher environmental standards.

“While these global trends will affect the entire refining sector, some countries are better positioned than others to thrive over the next decade,” said Dale Hardcastle, leader of Bain’s Southeast Asia oil and gas practice.

Market, operating conditions and quality of asset portfolio will be key to the refiners’ ability to compete as spelt out in detail in the firm’s latest report, “Full Potential for Oil Refiners in a Challenging Environment”.

The report found that the region has largely failed to reduce oil and gas product imports as its refining capacity expansion have not kept pace with demand growth.

On a global scale, Bain’s analysts found that independent refiners in the Asia-Pacific region, Middle East national oil companies (NOCs), and the Commonwealth of Independent States are among the most competitive while African and Latin America state firms and independents in the European Union are lagging behind.

“As oil costs stabilize, refineries are in for tough times,” said Mr Hardcastle.  “It’s important for refiners around the world to tackle competitiveness in a structured way, which is where a full potential agenda can create a strategic advantage.”

State-owned firms in China and other parts of Asia are expected to benefit from the region’s rising oil demand.

“Refiners in the Asia-Pacific are well positioned to withstand the shift in the flows of crude feedstock and refined products around the world, but we anticipate continued pressure amid ongoing changes in the sector,” said Mr Hardcastle.

“This means that even the most favoured players will have to work hard to maintain their full potential.”

The consulting firm recommends that refiners focus on competing in four strategic areas:

– Access to large and growing markets, especially in the Asia-Pacific region;

– Maintain high-level operating conditions including feedstock strategy, operational efficiency and capital expenditure project excellence;

– Managing portfolio strategy that balances scale, complexity and location

– Having a robust operating model and organizational framework that reduces costs and raises effectiveness. Refiners must know how to manage regulators and stakeholders and have a vision that captures the promise of digitalisation.

MIDDLE EAST: Region’s market for protecting oil and gas industry worth US$13 billion by 2018

(EnergyAsia, September 19 2016, Monday) — The market for protecting oil and gas infrastructure in the Middle East is worth US$18 billion by 2018, with cybersecurity spending in the global industry expected to reach US$1.87 billion, according to an Abu Dhabi event organiser citing separate studies.

The Middle East study was undertaken by MarketsandMarkets while US-based ABIresearch provided the forecast for the global cybersecurity spending on oil and gas infrastructure.

For the first time, security for energy infrastructure will be a topic all on its own at the upcoming Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC 2016), said organiser dmg events.

Former NATO Commander General Sir Richard Shirreff will deliver the keynote address at the inaugural ‘Security in Energy’ exhibition and conference to be held at the Abu Dhabi National Exhibition Centre on November 7 to 10.

The programme will feature technical sessions and panel discussions on disaster prevention, emergency readiness, event recovery, security solutions and risk mitigation for the energy sector.

“The promise of emerging technology brings with it a growing concern of data and infrastructure protection within the industry, which has proven to be a persistent challenge that needs to be immediately addressed in the region and across the world,” said a dmg events statement.

The market to protect government, energy and critical infrastructure in the Middle East will grow to US$34 billion by 2020, the statement said, citing a recent Frost & Sullivan report.

Cyber threats and attacks against the oil and gas industry are becoming increasingly common and sophisticated, forcing organisations to continuously improve cybersecurity safeguards and protocols to protect information, equipment and processes.

“In 2016, there is an urgency for nations to adopt national integrated cyber/physical security frameworks to pre-empt the growing external threats that are now constantly exploring vulnerabilities in energy facilities across the supply chain,” said Sally Leivesley, managing director of UK-based risk management firm Newrisk Limited.

“Global advances in technology have allowed us to connect with others in a way we never have before. In the energy sector, it has propelled stakeholder collaboration and the sharing of knowledge and information, enabling real-time interaction between experts, professionals, and those working on the field,” said Hamad Obaid Al Mansoori, director general of the UAE Telecommunications Regulatory Authority (TRA).

“However, with greater interconnectivity comes greater challenges within information security, making it crucial that we are always one step ahead when it comes to protecting sensitive data. This means organisations need to develop a consolidated, multi-layered strategy for safeguarding critical industry information.”

TRA and the Critical Infrastructure and Coastal Protection Authority (CICPA) are supporting the “Security in Energy” event, said dmg events. The conference and exhibition will address both the physical and virtual threats to critical infrastructure.

CHINA: Russian nuclear energy firm Rosatom opens regional office in Beijing

(EnergyAsia, April 19 2016, Tuesday) — Russian nuclear energy provider Rosatom has announced the opening of a regional office in Beijing to serve the Chinese market.

Rosatom said the new office will enhance its collaboration with Chinese firms as well as develop opportunities for international expansion. The company has similar regional representative offices in Latin America, Europe, Central Asia, Southeast Asia, the Middle East and North Africa.

The operator of the Tianwan nuclear power plant in Lianyungang in Jiangsu province installed two Russian VVER-design units during the plant’s first phase in 2007 and are building another two in the current second phase, said Alexander Merten, President of Rosatom International Network.

“China has been traditionally among our key foreign partners. The office in Beijing will make it possible to join the efforts and improve efficiency of the nuclear enterprises in Eastern Asia,” he said in a statement released at the Nuclear Industry China 2016 event in Beijing last week.

Liu Qi, deputy general director of China’s National Energy Administration (NEA), and Sun Qin, chairman of the China National Nuclear Corporation (CNNC), visited Rosatom’s booth the exhibition.


ASIA: Turkmenistan, Afghanistan, Pakistan and India sign investment agreement to build gas pipeline

(EnergyAsia, April 19 2016, Tuesday) — Officials of Turkmenistan, Afghanistan, Pakistan and India, and the Asian Development Bank (ADB) have signed an investment agreement for the construction of a proposed US$10-billlion pipeline to deliver natural gas from Central to South Asia.

The agreement will pave the way for the TAPI Pipeline Company Limited (TPCL), owned by the four countries, to update the feasibility study and the pipeline route linking natural gas fields in Turkmenistan to Afghanistan.

The agreement provides an initial budget of over $200 million to fund the next phase of the development of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) natural gas pipeline, said the ADB. This includes funding for detailed engineering and route surveys, environmental and social safeguard studies, and procurement and financing activities, to enable a final investment decision, after which construction can begin. Construction is estimated to take up to three years.

TPCL will build, own and operate the pipeline, which is envisaged to transport up to 33 billion cubic meters of natural gas annually from Turkmenistan to Afghanistan, Pakistan and India over 30 years. The pipeline stretches about 1,600 kilometers from the Afghan/Turkmen border to the Pakistan-Indian border.

“The financial support committed by the shareholders of TAPI under this investment agreement is a true testament of their intention to get this historic project off the ground and running,” said Yagshygeldi Kakayev, deputy chairman of the Cabinet of Ministers of Turkmenistan. The agreement was signed in Ashgabat, Turkmenistan.

“TAPI exemplifies ADB’s key role in promoting regional cooperation and integration over the past 20 years,” said Sean O’Sullivan, ADB’s Director General for the Central and West Asia Department.  “TAPI will unlock economic opportunities, transform infrastructure, diversify the energy market for Turkmenistan, and enhance energy security for the region.”

Acting as TAPI secretariat since 2003 and as transaction advisor since 2013, ADB has played a key role in pushing for TAPI’s development. The bank helped establish TPCL, select Turkmengaz as consortium leader and finalise the shareholders’ and investment agreements.

SOUTH KOREA: GE and LSIS to collaborate in developing and implementing smart energy solutions

(EnergyAsia, April 18 2016, Monday— US industrial giant GE and South Korea’s LSIS said they have agreed to undertake “comprehensive cooperation” in developing and implementing smart energy solutions.

The companies have signed a memorandum of understanding (MoU) to collaborate extensively on manufacturing innovation, as well as on smart grid solutions such as energy storage systems (ESS) and microgrids including eco-friendly power products.

GE chairman Jeff Immelt and LSIS chairman Koo Ja-Kyun, who witnessed the MoU’s signing, discussed opportunities and long-term cooperation between their companies.

According to the MoU, GE and LSIS will work together across the power and energy businesses including eco-friendly power products, power transmission and distribution solutions, smart energy as well as smart factories to realise the next phase in manufacturing with the Internet of Things (IoT).

The companies will jointly develop SF6 free power equipment specifically in the area of 400 kV Gas Insulated Busducts (GIB) and 170 kV Gas Insulated Substations (GIS). Grid Solutions, a GE and Alstom joint venture, has jointly developed with 3M™, a clean alternative, Green Gas for Grid (g3).

LSIS said it expects its cooperation with GE to accelerate the development of eco-friendly switchgear fit for domestic power systems.

“Both parties plan to continue cooperation for the Smart Grid segment in general, including ESS (recently certified by UL<>) and microgrids,” said GE.

Using LSIS’s automation technology and GE’s digital and industrial Internet solutions, the Korean firm plans to develop advanced manufacturing innovation and implement smart factory technologies. Following last year’s global agreement on climate change in Paris, countries and companies are under pressure to reduce greenhouse gas emissions.

LSIS chief technology officer Hahk Sung Lee said:

“In light of the Paris Agreement and the implementation of the emissions trading scheme, this is a great opportunity to cooperatively target the world’s eco-friendly energy segment with a global company like GE. We will strive to maintain our active and close cooperation so that it will lead to strengthening our competitiveness.”

GE Korea President and CEO Chris Khang said:

“The collaboration with LSIS is a part of GE’s strategy which pursues growth with Korean companies. GE, by providing advanced technologies and global networks in the energy and power industries, expects to create synergies along with LSIS in the energy industry.”

LSIS, a South Korean provider of electric power system, automation and smart grid solutions, aims to contribute to the reduction of the world’s carbon output.

GE, the world’s leading digital industrial company, aims to serve the world with its technology solutions. GE Energy Connections designs and deploys technology to transport, convert, automate and optimise energy to ensure the safe, efficient and reliable supply of electrical power.

SINGAPORE: REC to invest S$250 million to boost solar modules efficiency, develop new type of panel

(EnergyAsia, April 4 2016, Monday) — REC, a global provider of solar energy solutions, has announced it will invest a total of S$250 million in automation, technology upgrade and research and development (R&D) efforts to bolster its operations in Singapore. (US$1=S$1.37).

Eighty percent of that investment will go towards increasing productivity and efficiency at the company’s 1.3 GW of solar modules production capacity. The plant, located in Tuas in western Singapore, produces panels that are more energy efficient than common multi-crystalline panels.

REC said the other S$50 million will be invested in developing a “novel” solar panel with 350 watt power over the next five years. The Norwegian firm will partner with the Solar Energy Research Institute of Singapore (SERIS) to develop the panel that will generate 1.35 times more energy at a comparable cost and size to standard multi-crystalline modules.

REC made its announcement at a ceremony at the Tuas plant earlier this week that was attended by company officials and Singapore’s Minister for Trade and Industry (Industry), S. Iswaran.

“With such a strong commitment to cleantech innovation, Singapore is the ideal location for REC to channel new innovations and push the boundaries for solar solutions. We are very excited to share our roadmap for advancements in solar energy production as we dedicate resources for research and development into our game-changing TwinPeak solar panels,” said Steve O’Neil, REC’s CEO.

US: Proposed LNG projects to start well ahead of Canada’s, says Wood Mackenzie

(EnergyAsia, June 1 2015, Monday) — The US is well ahead of its resource-rich northern neighbour in developing projects to liquefy and export natural gas projects to Asia, said consultant Wood Mackenzie.

“While North America’s huge gas resource base offers significant potential for LNG exports, 50 million tonnes per annum (mmtpa) of LNG production capacity is now under construction in the US, compared to none in Canada,” it said.

Canada’s slow pace of development is due largely to the high cost of building expensive infrastructure in remote, pristine parts of the country to support LNG projects. Investors also face fierce opposition from aboriginal and environmental groups, making it difficult for the projects to yield viable commercial returns.

By contrast, in the US, LNG developers are focused on low-cost brownfield expansion. Wood Mackenzie said the only incremental expenditure for many US projects is the price of adding  liquefaction trains and making some modifications to existing facilities.

While US costs are rising, particularl in the active Gulf Coast area, LNG projects close to sanction like Corpus Christi will likely proceed with a second wave of investment expected to follow.

“The availability of cheap gas feedstock has created a resurgence in gas industry developments, pushing up demand for craft labour and leading to wage pressures. We believe it could be 18-24 months before capital costs for new LNG developments return to the level they were prior to the gas-fed construction boom,” it noted.

Meanwhile in Canada, the oil price collapse offers the potential for a lowering of LNG-related costs. Oil companies are slowing down investment in Alberta, freeing up capital and labour to the emerging LNG sector.

Wood Mackenzie believes Malaysia’s Petronas will sanction its 62%-held Pacific North West LNG project in 2015 after squeezing contractors of discounts of at least 15%.

“It remains to be seen whether contractors will oblige. If they do not, then the worry will be that a rising oil price will push the costs of Canadian LNG back up,” it said.


IEA dampens expectations for major oil price rise despite call for slower supply growth

(EnergyAsia, March 9 2015, Monday) — Forget about oil prices overshooting to the upside and making a strong recovery even as the growth in global oil supply slows sharply from mid-year, predicts the IEA.

With the drastically changed market conditions, the agency said it expects the crude oil price to average US$55 per barrel for 2015 and to gradually rise to US$73 in 2020.

In its medium-term market report to 2020, it said the 50% plunge in oil prices since last June will not be sufficient to derail supply growth which will continue to outpace the projected demand increase.

“These prices suggest that participants expect the market to recover somewhat as it rebalances following cuts in upstream investment,” it said.

Despite the recent improvement in fundamentals, “the market does not seem to be expecting prices to revisit earlier highs any time soon. Not only have prompt prices collapsed, even price expectations for the back end of the curve have been significantly downgraded.”

The report affirmed the continuing role of North America and Iraq, the world’s two leading sources of recent capacity growth, in maintaining the global oil glut through the end of the decade.

The recent price correction will merely cause the North American supply “party” to pause, not bring it to an end.

“By the beginning of the next decade, the region’s non-conventional production will account for an even larger share of the supply mix than earlier forecast,” said the Paris-based agency which represents 29 major energy consuming nations.

In the medium term, the IEA said the real issue of the price collapse is how the accompanying supply-demand rebalancing and price recovery might be different from those that followed similar price drops in the past.

It noted that sharp corrections have rocked the market roughly every decade since the price shocks of the 1970s: in 1986, in 1998, and again in 2008.

The IEA said several major trends contributed to the price collapse: the successful mass application of fracking technology in the US to access tight oil reserves, a slowdown in demand growth in China and other emerging economies, and the growing role of natural gas and renewable energy sources in meeting global energy needs.


North America and Iraq to continue lead production growth

Despite projecting prolonged oil price weakness, the IEA said it expects global production capacity to grow by more than 5.3% from 98 million b/d in 2014 to 103.2 million b/d by the end of the decade. Two thirds of this growth will come from non-OPEC producers.

Led by North America, non-OPEC supply will reach 60 million b/d by 2020, with growth projected at an average annual 570,000 b/d, down from the average annual rate of one million b/d in 2008-13.

Last year’s non-OPEC supply surged by a record 1.9 million b/d.

It expects North America’s non-conventional production to account for an even larger share of the supply mix than earlier forecast at the start the next decade.

Despite slowing production growth, the region will surge ahead with forecast gains of three million b/d by 2020.

The IEA expects North America’s production increase to continue to offset declines in other non-OPEC jurisdictions — none more so than Russia, now projected to swing into contraction of more than 500,000 b/d by 2020, down from an earlier projection of small growth.

Despite OPEC’s stated policy of defending market share, the IEA expects the cartel to boost its combined crude production capacity by 1.2 million b/d for an average annual increase of 200,000 b/d. Almost all of this gain will be provided by Iraq.

Notwithstanding the threats of the Islamic State (ISIS) insurgency, Iraq succeeded in raising production to a 35-year high of 3.7 million   b/d last December.



Demand growth slowdown

Meanwhile, China, a leading engine for global oil demand growth, and other emerging economies have entered a new, less oil-intensive stage of development.

The IEA expects the combined annual oil demand of the emerging economies to grow by 1.19 million b/d through 2020, far less than in the past.

“The global economy, reshaped by the information technology revolution, has generally become less fuel intensive,” it said.

“China’s reorientation away from heavy manufacturing and exports towards a more consumer-driven economy puts a crimp on what had been the leading engine of global oil demand growth for the last 15 years.”

Concerns over climate change are recasting energy policies as have the globalisation of the natural gas market and declining cost and availability of renewable energy.

After years of sustained record-high prices, oil has been floored by a severe “inevitable correction,” said the IEA.

Changed trading conditions will contribute to the market’s subdued outlook as “non-OPEC supply has become far more price elastic than in the past, while demand has at the same time become significantly more price inelastic on the downside.”

“The result is that the market rebalancing will likely occur relatively swiftly but will be comparatively limited in scope, with prices stabilising at levels higher than recent lows but substantially below the highs of the last three years,” it said.


Lower oil prices could reduce geopolitical risks

The IEA countered the conventional view that low oil prices could heighten geopolitical risks in hydrocarbon-rich countries that are dependent on resource revenues to maintain high level of social spending to placate their restive populations.

The agency states that in some cases lower prices can offer upside risk to supply.

“For producer countries, lower export and fiscal revenues provide an incentive to maximise output and stimulate production growth, in a bid to make up in volume for per-barrel losses,” it said.

“Down cycles typically lead producer countries to tone down resource-nationalistic policies and thus can in some ways at least ease above-ground hurdles to supply,” it said.

“Iran also may be in a position to increase production and exports rapidly if it reached agreement over its nuclear programme with the West.”


ASIA: TMF Group sees sustained cheap oil boosting region’s GDP by up to 0.5%

(EnergyAsia, March 6 2015, Friday) — Asia’s collective GDP could be boosted by between 0.25% and 0.5% for 2015 if crude oil prices remain at current levels, said global business services provider TMF Group.

For China, the US$50 per barrel plunge in oil price is generating an immediate stimulus worth US$112 billion or the equivalent of 1.1% of the country’s GDP.

Discounted oil is helping China offset the negative impact of the global economic outlook on its export-led sectors. TMF also noted that the benefit of weak oil in helping subdue inflation and increase consumer purchasing power as the Chinese economy heads for a prolonged period of economic slowdown.

“It has provided the country a great opportunity to shift towards a consumption-driven development model,” said author Paolo Tavolato. At the start of the year, Beijing gave its 40 million civil servants a salary increment of at least 31% in an effort to stimulate domestic consumption.

Japan, the world’s third largest net oil importer after the US and China, is positioned to save more than US$80 billion a year. According to TMF, Japan’s total energy import expense last year of more than US$200 billion  claimed 5% of its GDP.

“Although the yen has depreciated almost 14% in the past six months, crude oil still cost 30% less for Japan and helped the country save US$37 billion (equivalent to 0.8% of its GDP),” it said.

Thanks largely to the sharp fall in oil and gas prices, Japan reported a 60% decrease in its trade deficit in January.

The beleaguered domestic economy has also been given breathing room, enabling the country’s GDP to top US$4.2 trillion for the first time in eight years, said TMF. Japanese industries are enjoying better profits while households have more disposable income as lower energy prices are starting to offset the effects of the depreciated yen over the last two years.

India expects to reduce its annual import bill by US$650 million for every US$1 slide in the crude oil price, said TMF. Energy purchases accounted for 34.5% of the country’s total import bill last year.

India’s current account deficit and fiscal deficit could be pared down by 0.5% and 0.1% of GDP respectively for every US$10 per barrel fall in the fuel price.

Thanks largely to plunging energy prices, TMF said India’s 2015 current account could be in surplus, albeit by a miniscule 0.3%, for the first time in 10 years.

“The substantial improvement in the country’s books will give room for the Reserve Bank of India to implement a more assertive and development-oriented monetary policy,” said TMF.

Taking advantage of the oil price collapse, the government of Prime Minister Narendra Modi was able to partly reduce the country’s fiscally-draining energy subsidies of over 600 billion rupees. His predecessor was unable to push through economic reforms partly because most voters opposed any move to slash the subsidies that otherwise would have been invested in improving India’s inadequate and ageing infrastructure.

TMF noted that the Modi government was able to drop the diesel subsidy that had cost India 0.3% of its GDP. Energy accounts for a quarter of India’s total 2.6-trillion-rupee expense on subsidies. (US$1=61 rupees).

Mr Modi was elected to power last May to revive India’s slowing economy that analysts said was due partly to the failed energy policies of the previous government.

MARKETS: Most developing countries will benefit from oil price slump, says World Bank

(EnergyAsia, January 16 2015, Friday) –— Most oil-importing developing countries are positioned to reap “substantial” benefits benefit from the collapse in crude prices, now expected to hit six-year lows, said the World Bank.

In an analysis in its latest edition of Global Economic Prospects, the bank said it expects oil prices to remain weak through with “significant” real income transfers from oil-exporting to importing countries. For many oil-importing countries, lower prices contribute to growth and reduce inflationary, external and fiscal pressures.

“The decline in oil prices reflects a confluence of factors, including several years of upward surprises in oil supply and downward surprises in demand, receding geopolitical risks in some areas of the world, a significant change in policy objectives of the Organisation of the Petroleum Exporting Countries (OPEC), and appreciation of the US dollar,” the bank said.

Although the relative strength of the forces driving the recent plunge in prices remains uncertain, supply related factors appear to have played a dominant role.

“For policymakers in oil-importing developing countries, the fall in oil prices provides a window of opportunity to undertake fiscal policy and structural reforms as well as fund social programmes, said Ayhan Kose, the bank’s director of development prospects.

However, the bank also warned that weak oil prices present significant challenges for major oil-exporting countries, which will be adversely impacted by weakening growth prospects, and fiscal and external positions.

“If lower oil prices persist, they could also undermine investment in new exploration or development. This would especially put at risk investment in some low-income countries, or in unconventional sources such as shale oil, tar sands and deep sea oil fields,” it said.

It observed that global trade grew by less than 3.5% in 2012 and 2013, well below the pre-crisis average annual rate of 7%, holding back developing country growth in recent years.

“Weak demand, mainly in investment but also in consumer demand, is one of the main causes of the deceleration in trade growth. With high-income countries accounting for some 65% of global imports, the lingering weakness of their economies five years after the crisis suggests that weak demand continues to adversely impact the recovery in global trade,” it said.

However, long-term trends have also slowed trade growth including the changing relationship between trade and income.

Specifically, the bank said trade has become less responsive to changes in global income because of slower expansions of global supply chains and a shift in demand from trade-intensive investment to less trade-intensive private and public consumption.

ASIA: Chinese, Malaysian state firms interested in TAPI gas pipeline

(EnergyAsia, January 15 2015, Thursday) — Chinese and Malaysian state-owned firms along with France’s Total are believed to have expressed interest in participating in the development of a proposed US$10 billion pipeline to deliver natural gas from Turkmenistan to Afghanistan, Pakistan and India.

International firms will play an important role in planning, designing, building and operating the 1,800-km pipeline, according to the project’s adviser, the Asian Development Bank (ADB). After years of delay, the bank announced last November that the state gas companies of Turkmenistan, Afghanistan, Pakistan and India had jointly set up a company to build, own and operate the pipeline.

The Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline will be equally owned by state-owned Turkmengas, Afghan Gas Enterprise, Pakistan’s Inter State Gas Systems (Private) Limited, and GAIL (India) Limited.

The issue of identifying and selecting a consortium to build and operate the pipeline was discussed at the project’s 19th steering committee in Turkmenistan last November.

India is interested to invite a Chinese state firm to lead the consortium to build the pipeline given the enormous political and financial risks involved, and China’s experience in building and operating gas infrastructure.

Malaysia’s state energy firm Petronas is reported to be in contention for a role in the project through a joint venture with French major Total SA to produce gas from onshore fields in Turkmenistan. According to the ADB, the consortium leader must be a technically capable and financially sound company as it will be tasked to help design, finance, construct, own and operate the gas pipeline.

Total is eyeing a lead role, but it will need to scrap or water down its pre-condition for a stake in Turkmenistan’s gas reserves. Chevron and ExxonMobil have dropped out after learning that they will not be allowed to own a stake in TAPI.

Through the pipeline, Turkmenistan will export up to 33 billion cubic metres of natural gas a year from its giant Galkynysh field to the other three countries for 30 years. With a proposed long-term capacity to deliver 90 million cubic metres a day (cm/d) of gas, the pipeline is expected to begin operating in 2018, although this could be delayed by negotiations among the various stakeholders. The current slump in oil and gas prices along with the ongoing political turmoil in Afghanistan and Pakistan has also cast a pall over how quickly companies would respond to the call for investment in the region.

India and Pakistan have indicated they each are ready to commit to buying 38 million cm/d of TAPI’s capacity with Afghanistan the remaining 14 million cm/day. From the Galkynysh field which is said to hold some 16 trillion cubic feet of natural gas, the pipeline will run through the Afghan provinces of Herat and Kandahar, Pakistan’s Multan and Quetta before ending at Fazilka, in India’s Punjab state.

The issue of identifying and selecting a consortium to build and operate the pipeline was discussed at the project’s 19th steering committee in Turkmenistan last November.

India is interested to invite a Chinese state firm to lead the consortium to build the pipeline given the enormous political and financial risks involved, and China’s experience in building and operating gas infrastructure.

French major Total SA has also expressed interest to play a lead role, but it will need to drop its pre-condition for an equity stake in Turkmenistan’s gas reserves. Chevron and ExxonMobil have also dropped out after learning that they will not be allowed to own a stake in TAPI.

Malaysia’s state energy firm Petronas is also reported to be in contention for a role in the project through a joint venture with Total to produce gas from onshore fields in Turkmenistan. According to the ADB, the consortium leader must be a technically capable and financially sound company as it will be tasked to help design, finance, construct, own and operate the pipeline.

The ADB did not say when the pipeline’s construction will begin and complete, and how much the project will cost.

In 2008, Turkmenistan, Afghanistan, Pakistan, and India signed a framework agreement to start work on TAPI, but there was no progress the following two years until the governments and the UN were able to resolve basic security issues. As the pipeline will pass through deserted mountainous areas, the four governments and the UN will have to provide guarantee of security. Taliban and Al Qaeda militia as well as local tribesmen have warned that they will attack the pipeline.


ASIA: ABB and Alstom sign power solutions agreements in Japan and Singapore

(EnergyAsia, January 13 2015, Tuesday) — In separate announcements, European power solutions providers ABB and Alstom have signed agreements to supply their technology and services in Japan and Singapore.

ABB said it is partnering Hitachi Limited to supply high voltage direct current (HVDC) technology services to meet Japan’s energy demand while Alstom will work with Singapore’s Nanyang Technological University (NTU) to design, develop and deploy microgrid power management solutions to support the country’s renewable energy initiative.

The ABB-Hitachi venture will provide design, engineering, supply and after-sales services related to the DC system of HVDC projects featuring ABB’s technology with the Japanese firm acting as the main prime contractor and 51% shareholder.

HVDC technology enables the smooth transmission of electricity between two grid systems by converting alternating current (AC) from the supply side to direct current (DC) before transmission. Power is re-converted to AC in the receiving system for use.

ABB said its system is ideal for long-distance transmission as the technology minimises electricity losses, is inexpensive to instal, and is well-suited for interconnections between two different frequencies.

Global demand for the use of HVDC technology to connect renewable energy sources has been rising rapidly, expanding the demand for voltage source converter (VSC) HVDC systems to facilitate grid-stabilisation. It is ideal for long-distance underground and underwater power links and interconnections for land-based and offshore wind farms, offshore oil and gas platforms, city center in-feeds where space is a major constraint, and cross-border interconnections that often require subsea links. Its ability to comply with grid codes ensures robust network connections regardless of application, said ABB..

It is ideal for long-distance underground and underwater power links and interconnections, and is increasingly deployed for the integration of renewable energy from land-based and offshore wind farms, the mainland power supply to islands and offshore oil and gas platforms, city center in-feeds where space is a major constraint, and cross-border interconnections that often require subsea links. Its ability to comply with grid codes ensures robust network connections regardless of application, said ABB.

With the increasing introduction of renewable energy and innovation in electric power systems, Japan’s demand for voltage source converter (VSC) HVDC systems is expected to increase to support applications such as wide-area power transmission grids and connection of offshore wind farms.

“Since the first development in the 1970s, Hitachi has participated in every HVDC project in Japan and has continued to underpin the stabilisation of the electricity grid. The establishment of a new company combining the strengths of Hitachi and ABB will provide a framework for the timely provision of the new technologies required by the Japanese HVDC market,” said Hiroaki Nakanishi, Hitachi’s chairman and CEO.

“By enhancing and expanding the HVDC business through its partnership with ABB, Hitachi will continue to contribute to the stabilisation of Japan’s electric power grid.”

Ulrich Spiesshofer, ABB’s CEO, said:

“ABB pioneered HVDC 60 years ago and has continually pushed the boundaries of this technology. Our presence across half the world’s installed base and our capability to develop and manufacture all major components of the HVDC value chain inhouse have put us in a leading position in the industry.”

In Singapore, Alstom has begun collaborating with the Nanyang Technological University (NTU) to design, develop and deploy MicroGrid Power Mix Management (MPMM) solution as part of the country’s Renewable Energy Integration Demonstrator (REIDS) initiative.

Announced last October, REIDS is a pioneering effort to construct and operate a microgrid to manage and integrate electricity generated from multiple sources including solar, wind, tidal and diesel as well as provide energy storage and power-to-gas solutions.

The partners said they will jointly develop their unique MicroGrid Power Mix Management solution, based on Alstom’s Digital Automation Platform (DAP), to manage power exchanges within a microgrid whether it is connected to or separated from the main grid.

The solution will be implemented at NTU’s EcoCampus and later on the Semakau Landfill, an offshore landfill between the islands Pulau Semakau and Pulau Sakeng, located south of the main island of Singapore.

NTU said EcoCampus’s deployment will enable it to enhance the energy efficiency on its premises while integrating a mix of distributed energy resources. The Semakau Landfill project will demonstrate the ability to manage new energy mix based on high penetration of renewable sources in an off-the-grid environment.

“The main objective of this project is to ensure a greener and stable supply of energy through the integration of smart energy management and energy storage systems,” the partners said.

“The microgrid solution in Semakau Landfill can also be used to power small islands and rural communities off the national grid. It may also function as a back-up solution during emergencies within urban areas.”

Hervé Amossé, Alstom’s vice president for substation automation solutions, said:

“We are delighted with this opportunity to bring our experience, technology and expertise to support Singapore’s, ever growing energy requirements. This landmark project sets the country on a strategic path of integrating and fully utilising multiple sources of energy for long term sustainability.”

Lam Khin Yong, NTU’s chief of staff and research vice president, said:

“Renewable and sustainable energy is a key pillar of NTU’s research efforts. NTU’s collaboration with a global corporation such as Alstom underpins the university’s strength in transforming its engineering expertise into practical industry applications.  Micro-grids will play an ever-growing role in the rapidly expanding electric energy technologies and systems in the Southeast Asian region and NTU is well-placed to contribute to this growth. The systemic integration of renewable energies and energy storage based on the micro-grid technology presents many collaboration opportunities between NTU and the industry.”

Goh Chee Kiong, executive director for cleantech and cities, infrastructure & industrial solutions at Singapore Economic Development Board (EDB) said:

“Singapore aims to be the leading clean energy hub in Asia where companies can develop and commercialise energy management solutions able to effectively integrate multiple energy sources. Singapore has set up innovation platforms such as REIDS to foster co-innovation among complementary companies in the energy industry ecosystem. We are pleased to partner with Alstom, a global leader in power engineering, to use Singapore as a springboard to grow the markets in Asia.”

The project will largely be delivered by Alstom’s engineering teams in Singapore, France and the UK.

MARKETS: OPEC edges up global oil demand forecast for 2013 and 2014 on better outlook for the US and Europe

(EnergyAsia, December 2 2013, Monday) — Citing improving economic conditions in the US and Europe, the Organisation of Petroleum Exporting Countries (OPEC) has slightly raised its November forecast for global oil consumption for 2013 and 2014.

It now expects this year’s global oil demand to rise by 860,000 b/d, up from last month’s call for 820,000 b/d, to reach 89.78 million b/d.

For 2014, the cartel said it sees oil demand rising 1.04 million b/d to 90.82 million b/d, compared with its previous forecast of 90.78 million b/d.

It attributed the positive revision to improving prospects out of the developed economies in the US and Europe, which will more than offset a slowdown in the developing economies, particularly in Africa where oil demand growth forecast has been trimmed by 10,000 b/d from the October report.

OPEC kept unchanged its forecast for the world economy to grow by 2.9% in 2013 and 3.5% next year.

The developed economies are expected to grow by a collective 1.9% in 2014, up sharply from this year’s projected 1.2%.

India’s expected growth has been slashed to 4.7% for 2013 from 5% in the October report, and to 5.6% in 2014 compared with 5.8% previously.

“China’s recent stimulus efforts and rising exports have led to upwardly revised growth of 7.8% this year, from 7.6% previously, and 7.8% next year, from 7.7%. Although the global economy continues to improve, the pace of growth remains sluggish and near-term developments will need close monitoring,” said OPEC.

OPEC: World Oil Demand in million b/d
2012     2013     % change     2014      2014/13 change
November     88.92    89.78    0.97%          90.82     1.16%
October         88.92     89.74   0.92%           90.78     1.16%
September    88.92     89.74     0.92%         90.77     1.15%
August           88.92     89.71     0.89%         90.75     1.01%
July report     88.87     89.64     0.87%       90.68     1.01%

OPEC: Forecast for world economic growth, %
World    OECD     US     Japan     Euro    China     India
2013            2.9      1.2          1.6         1.9        -0.3        7.8       4.7
2014            3.5      1.9          2.5         1.5         0.7        7.8        5.6

MALAYSIA: UK’s Petrofac secures US$120 million contract to provide “world-class” training capabilities for state Petronas

(EnergyAsia, September 18 2013, Wednesday) — UK-based oil and gas services provider Petrofac said it has secured a US$120 million agreement from Malaysian state energy firm Petronas to build, operate and manage two high-specification training facilities as part of its programme to enhance the capabilities of the local workforce.

The operations and management components of the agreement represents the largest contract win in the history of the UK firm’s subsidiary, Petrofac Training Services (PTS).

Petrofac said it is constructing two “live” upstream plant training facilities, and a “live” downstream facility to supplement existing facilities at the Institut Teknologi Petroleum Petronas (INSTEP) training academy.

Petrofac will continue to manage and operate the two upstream facilities, which are capable of training 500 delegates each year, for the next five years with an option to extend for another two years.

The agreement follows an earlier memorandum of understanding signed by the two companies aimed at exploring collaboration in competency development and capability building.

Andy Inglis, chief executive of Petrofac Integrated Energy Services, said:

“We are delighted that we are continuing to build on the existing relationship with our long-term customer Petronas to support its goal of enhancing Malaysian workforce capability in the oil and gas sector. Training is a core part of the offer and the award of our biggest training contract to date demonstrates our growing scale in an area which international and national oil companies have high on their agendas.

“The creation of this regional centre of excellence will enable Petronas to ensure the development of a highly-skilled resource pool to meet its own and industry needs now and in the decades ahead.”

SINGAPORE: Qatargas to provide first LNG cargo to new terminal opening next year

(EnergyAsia, December 6 2012, Thursday) —- Qatargas Operating Company Ltd said it will deliver the first cargo of liquefied natural gas (LNG) to Singapore’s new terminal due to open in the first quarter of next year.

The cargo, to be delivered on either a Q-Flex or a Q-Max LNG vessel, will be used to commission Singapore LNG Corporation (SLNG) Pte Ltd’s import terminal being built on Jurong Island.

Qatargas said this will be the second LNG terminal in Southeast Asia commissioned with its help. In June 2011, Qatargas delivered a commissioning cargo to Thailand’s Map Ta Phut LNG terminal.

Khalid bin Khalifa Al Thani, Qatargas’s CEO, said:

“Qatari LNG continues to have a key role to play in helping countries around the world improve the diversity of their energy supplies. We are pleased with this development which will help to meet the growing demand for energy in Singapore and help us build our relationship with a new customer.

“Qatargas is at the forefront of commissioning new LNG terminals and is confident of its continuing ability to maintain safe, long-term reliable supplies of clean LNG energy to countries where it is needed the most.”

Qatargas has developed considerable expertise in supporting the commissioning of new LNG terminals around the world wide. To date, the company has provided commissioning cargoes to eight LNG terminals.

The Singapore facility will be the first open-access, multi-user LNG terminal in Asia.


AUSTRALIA: India’s Adani says Carmichael mine holds up to 10 billion tonnes of coal reserves

(EnergyAsia, December 6 2012, Thursday) — Adani Group, an India-based global infrastructure company, said it has mapped out Australia’s largest mining exploration programme in Queensland state’s Carmichael mine which it claims holds up to 10 billion tonnes of coal reserves.

As part of the programme, the company said it has deployed a record number of drill rigs to speed up exploration of the mine in the Galilee Basin. The programme form a part of its proposed A$10 billion investment to develop a world class mine, rail and port infrastructure.

Company chairman Gautam Adani said:

“Our partnership with Australia and Queensland has been one of exceptional trust, transparency and understanding. Australian and Indian corporates like the Adani Group have distinctive synergies, which will prove to be of mutual benefit to all in the long run. The Adani Group stands committed to setting up world class infrastructure facilities such as a mine, railway and port in Australia.”

Senior Australia officials including energy minister Martin Ferguson and Queensland Premier Campbell Newman are leading delegations of high-level political and business officials to India this week to promote bilateral trade and investment ties.

“As India’s industries continue to grow, so do the opportunities for partnerships between our regions. India has become more to Queensland than a mere trading partner. We are now trading allies,” said Mr Newman.

Apart from creating thousands of skilled jobs in Australia, Adani said it is also developing logistics infrastructure for its mine. It has completed the basic engineering for its proposed 400 km railway line connecting Carmichael to the Abbot Point port’s coal terminal.

“We have recently submitted a statement to state and federal authorities about the potential environmental, social and economic impacts of its proposed mine and rail projects, including its commitment to protect the environment,” said Mr Adani.

To date, the Adani Group has invested A$3 billion in cash in its Queensland projects, with plans to pump in another A$7 billion over the next few years. (US$1=A$0.96).



SINGAPORE: Week of contrasting fortunes for rig builders SembCorp and Keppel

(EnergyAsia, December 6 2012, Thursday) — This was a week of contrasting fortunes for Singapore’s two world-leading oil rig builders.

On Monday, Sembcorp Marine suffered one of its worst industrial accidents in recent years while Keppel Corp announced it had signed a US$1.2 billion contract to build two rigs.

Sembcorp Marine, a subsidiary of Sembcorp Industries, said a jack-up rig under construction at its Jurong Shipyard tilted and injured 89 workers, 22 of them seriously. The company said the braking system on one of the rig’s three movable legs had failed, causing the structure to tilt at 17 degrees.

SembCorp Marine President Wong Weng Sun told a media briefing that the brakes had been used successfully in previous projects.

Jurong Shipyard was the site of Singapore’s worst industrial accident when 76 workers were killed in an explosion while working on the Greek tanker Spyros in October 1978.

Meanwhile, Keppel FELS Limited, a wholly owned subsidiary of Keppel Offshore & Marine Ltd, said it secured a contract from Ukraine’s National Joint-Stock Company (Naftogaz) to construct two semisubmersible drilling rigs worth a total of US$1.2 billion. The contract will be effective upon final corporate approvals.

The rigs will be built to Keppel FELS’ proprietary DSSTM 38U design which is customised for the Black Sea environment. The harsh weather conditions of the Black Sea include extreme freezing temperatures, storms with strong winds and heavy seas.

Durable grades of steel with increased thickness will form the basis of the structural design of the hull and pontoons of the rigs. They will have winterisation features such as machinery cladding, advanced heating systems to prevent equipment and pipe freezing as well as enhanced air conditioning for the living quarters.

Wong Kok Seng, managing director (offshore) of Keppel O&M and managing director of Keppel FELS, said:

“We are pleased to be chosen by Naftogaz to work on these two complex projects for the Black Sea. Having delivered two jackup rigs for the Black Sea, we understand the specifications necessary for rigs to work in such extreme conditions.

“We have a suite of proprietary semisubmersible designs capable of operating in all frontiers. Coupled with our experience in building harsh environment rigs and the strong partnership we have built up with Naftogaz, we are confident of delivering robust, high quality rigs that will excel in operations in the Black Sea.”

According to Ukraine’s official estimates in 2011, the country holds proven reserves of 1.2 trillion cubic meters of natural gas and 220 million tons of oil and gas condensate.

Evgen Bakulin, Naftogaz chairman, said:

“The addition of these rigs to our fleet is part of our extensive programme to modernise our offshore exploration and production facilities. This will allow us to reach a new level of shelf development in the Black and Azov Seas, rapidly boost our oil and gas production and reduce our imports of natural gas.

“We selected Keppel FELS because they best met our tender requirements and they are a proven partner, having delivered two world class jackup rigs to us. The DSSTM 38U design is for us a new generation and cost effective rig with high specifications. We look forward to continuing this win-win partnership with Keppel as we grow our offshore capabilities.”

Jointly developed and owned by Keppel’s Deepwater Technology Group and Marine Structure Consultants, the DSSTM 38U design features the latest safety and environmental features. It will have double-skin columns for additional protection to machinery spaces in the event of a ship collision.

The rigs will be equipped with a 2000 kips drilling derrick suitable for 30,000 feet drilling depth.


SINGAPORE: Offshore oil and gas event OSEA2012 sets record attendance with over 26,000 visitors

(EnergyAsia, December 5 2012, Wednesday) — A record of more than 26,700 people attended OSEA2012 in Singapore last week to make it Asia’s largest oil and gas business event.

According to organiser Singapore Exhibition Services (SES), the participants from 75 countries and regions attended the event from November 27 to 30.

As the premier sourcing platform in Asia for the oil and gas industry, OSEA2012 attracted energy professionals to check out the latest products, technologies and services on offer at the 31,720-square metre show floor.

Several companies exhibiting at the event took the opportunity to make vital announcements.

MENCK GmbH, part of Acteon Group of companies, announced the launch of its Singapore branch office at Tuas from mid-2013.

Kiswire announced the opening of their wire rope factory in Johor state in Malaysia on November 28.

Leeden demonstrated the full range of its specialised welding, cutting and pipe-handling equipment for offshore, subsea and pipeline activities on the show floor.

Following its recent acquisition of Fire Sentry, Honeywell showcased the FS24X product for the first time.

S. Iswaran, Singapore’s Minister in the Prime Minister’s Office and Second Minister for Home Affairs and Trade & Industry, who was guest-of-honour at opening ceremony, commented that “OSEA’s success mirrors the evolution and growth of Singapore’s marine and offshore industry.”

Chua Buck Cheng, SES’s Project Director for Engineering Events, said:

“Asia is raising the demand for energy, especially in the offshore sector. This, coupled with the discovery of many energy spots off Asia’s coastlines, has generated strong interest from visitors at the event, prompting exhibitors and visiting companies to express interest to participate in the next edition. Some have booked their booth space at OSEA2014.”

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

(EnergyAsia, October 1 2012, Monday) — For the third consecutive month, the Organisation of Petroleum Exporting Countries (OPEC) has maintained its forecasts for global oil demand to grow by 900,000 b/d to 88.74 million b/d in 2012 and by 800,000 b/d to 89.55 million b/d next year.

The cartel’s outlook contrasts that of the US Energy Information Administration’s which expects global oil demand to grow at a faster rate in 2013 than 2012.

In its September report, OPEC focused on downside risks to the oil markets from the slowing global economy, adding that it could slash its 2013 demand growth forecast by 20% on the potentially bearish impact of “variables” like GDP, retail petroleum prices and weather.

In recent weeks, it noted the combined impact of soaring fuel demand from India and Japan.

Indian diesel demand for emergency power generation rose sharply following the two-day massive power blackout in the northern half of the country on July 31 and August 1. Even before the blackout, OPEC said Indian diesel use had surged by 170,000 b/d or 13% in July.

The shut-down of most of Japan’s nuclear power plants has led to excess use of crude and fuel oil burning during the summer, said OPEC.

The cartel also held unchanged its forecasts for the world economy to grow by 3.3% in 2012 and 3.2% next year.

It expects the US economy to grow by 2.3% in 2012 and 2% in 2013, and Japan’s to come in at 2.7% this year and 1.2% in 2013.

The Euro-zone is seen returning to growth of 0.1%, following a contraction of 0.4% in 2012. Growth expectations for China stand at 8.1% and 8%, while India’s expansion is forecast at 6.3% and 6.6%.


SINGAPORE: Singapore Power to invest S$2 billion in cross-island tunnels for electrical cables

(EnergyAsia, September 26 2012, Wednesday) — Singapore Power said it is investing S$2 billion to build two tunnels to hold and protect cross-island extra-high voltage transmission cables to ensure the supply of reliable, secure and quality power to 1.3 million consumers. (US$1=S$1.23).

To be constructed between 2012 and 2018, the North-South and East-West cable tunnels will be located 60 metres underground to facilitate continuous upgrading, renewal and maintenance of the country’s power cable grid infrastructure.

In a statement, Singapore Power said the tunnels measuring a total length of 35 km are designed to overcome existing congestion of underground space and utility services in Singapore.

“They will facilitate faster and more efficient maintenance and replacement of cables, thereby reducing the frequency of road-digging works and thus minimising inconvenience to the public in the long run,” it said.

The tunnels will be located under major public roads and will not encroach into any private properties.

As part of the project, 14 utility buildings built to house ventilation facilities and equipment, and provide access to the tunnels.

Singapore Power has promised to will work closely with government agencies and community partners to minimise inconvenience to the public with steps taken to control noise, minimise dust, dirt and congestion, and to maintain environmental safety.

Singapore Power said it awarded six contracts to five companies — Hyundai Engineering, a joint venture between Nishimatsu Construction & KTC Civil Engineering and Construction, Obayashi Corp, Samsung C & T Corp and SK Engineering & Construction — for what will be its largest project to date.

Wong Kim Yin, Singapore Power’s Group CEO, said:

“Singapore’s power supply is among the most reliable in the world. With the city’s rapid growth and the corresponding increase in power demand, we are challenged to sustain this level of reliability and cost-effectiveness in achieving this performance.

“The deep cable tunnels will form the backbone of Singapore’s power supply, serving future generations effectively, securely and with minimum inconvenience. It will translate to improved standards of living and performance for our residential, industrial and commercial consumers.”

Singapore Power Limited, a leading energy utility company in the Asia Pacific region, owns and operates electricity and gas transmission and distribution businesses in Singapore and Australia.

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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