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News Update: 20th February 2012 |
Greetings!
Please find enclosed a copy of our weekly news summary. Please feel free to pass this to anyone who could benefit from it.
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Energy Investment | |
The Great Wind Farm Lobby Industry
Britain's 15 biggest wind farm owners will collectively receive almost £850mn in subsidies a year, funded through household electricity bills, according to The Sunday Telegraph. TUNSE/ The Sunday Telegraph, 12th February. Global Energy Advisory Comment: The wind farms are probably being constrained off because the grid cannot take the power: We will soon be offering an energy trading product to unleash the demand side at scale to reward end customers for being flexible in their power consumption at the local level. This could offer a fairer alternative, pay customers for being flexible and help them reduce their increasing bills. Contact me if you want more information aily@globalenergyadvisory.com
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Mitsubishi Has Acquired A 49% Stake in Two German Offshore Connection Projects from Tennet for €240mn
The 2 projects are BorWin1 and BorWin2, which will connect around 1.2GW of offshore projects including the Veja Mate and Global Tech 1 wind farms with a combined capacity of 800MW and located 125km north-west of the island of Borkum. TenneT will continue to own a majority share and operate the connections. Wind Power Monthly, 13th February.
Nigerian Power Rates to Rise 88%
Nigerian power rates are to rise 88% under a programme of reform designed to revive the power sector and attract outside investors. The 18 state run generation, transmission and distribution companies are to be privatised later this year. FT, 13th February.
Russia
The sale of the government's stake in Rosneft carries many risks for the company, and there should be no strict deadlines for divesting the state's biggest oil asset, Energy Minister Sergei Shmatko said....The energy minister cites the risk of higher borrowing costs for Rosneft, which would lose its sovereign-level credit rating if the government reduces its stake to less than a controlling interest. The company would also automatically lose the right to future development of Russia's continental shelf. The Moscow Times, 14th February.
Dollar Value Linked to Shale
The future of the dollar is more likely to be determined in the shale gas and oil fields of Dakota and Texas than in the sovereign wealth funds of Asia and the Middle East. This is because (shale gas is) set to transform America's energy supplies, significantly improving the US balance of payments and the long-term outlook for the greenback, argues Mansoor Mohi-Uddin. FT, 14th February.
Energy Watchdog Tells Big Firms: Cut Prices Or Else
Big Six suppliers could face mandatory price controls, says Ofgem, as public anger mounts over exorbitant fuel bills. A cap on fuel bills could be introduced for the first time in more than a decade amid rising concern that customers are being ripped off by the Big Six energy firms, the regulator Ofgem has told The Independent. The Independent, 17th February.
www.globalenergyadvisory.com . |
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Gas | |
US Ban of LNG Exports
Rep. Ed Markey (D-Mass) on Feb. 14 introduced 2 bills that would ban exports of liquefied natural gas (LNG) from the U.S. The first bill, North America Natural Gas Security and Consumer Protection Act, would prevent the Federal Energy Regulatory Commission (FERC) from approving new LNG export terminals until 2025. The second bill, the Keep American Natural Gas Here Act, would require that gas produced from taxpayer-owned federal lands would have to be resold to U.S. consumers. The bill also stipulates that any gas pipeline for which a right-of-way has been issued to cross federal lands must offer that gas for domestic sale only. Rigzone, 16th February.
New Pipe Works Mean Gas Security for North Wales
A gas pipeline in North Wales is to be replaced. The Energy Minister gave approval for Wales and West Utilities to construct a 22km gas pipeline from Llanwrin in Powys to Dolgellau in Gwynedd, North Wales. The pipeline will replace an existing pipeline which has reached the end of its life. DECC, 13th February.
€300mn Pumped into Irish Pipeline Project
A consortium led by Royal Dutch Shell will invest a further to bring the long delayed Corrib gas field off the West Coast of Ireland into production by 2014. The project which has been dogged by planning delays and local protests will have cost Corrib Gas Partners - Shell, Statoil, Vermilion Energy, €800mn by the time the fist gas is piped ashore. FT, 14th February.
Gazprom
Gazprom, the world's largest natural gas producer, will strive to forge supply deals with India and China this year as it seeks to win customers outside of Europe, where demand is waning. Gazprom will sign a contract in 2012 to supply LNG to India, Alexander Medvedev, the company's deputy chairman, said in an interview in New York yesterday (16th). Moscow-based Gazprom also "optimistically expects" to cut a deal with China this year, though pricing is still an issue, he said. Bloomberg, 17th February.
Golar LNG
Liquefied natural gas carrier Golar LNG announced Tuesday that it will be expanding its fleet in response to a strengthening LNG market. The firm said that its management has considered several options for expanding the company's activities. This has included growth through acquisitions as well as organic growth. Rigzone, 14th February.
www.globalenergyadvisory.com
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Oil | |
Iran
Iran's parliament which has been threatening for the last 2 weeks that it would impose an immediate pre-emptive embargo on selling oil to Europe went into month-long recess without taking any action on the matter. An immediate embargo on shipments to Europe is a two edged sword. It would undoubtedly damage the precarious EU economy and drive world oil prices higher, but it would also cut Iranian oil revenues at that time when China is only buying half of the amount of oil it has been purchasing from the Iranians due to a contract dispute. Most other purchasers of Iranian oil are scrambling around trying to line up other sources or ways to pay Tehran for the oil and are unlikely to be interested in purchasing the oil that would have been going to Europe. In the end Iranian leaders may have decided that an immediate cessation of some or all of the oil going to the EU may not have been a good idea. Reports continue to arrive telling of the economic problems the sanctions on Tehran are already causing. The country imports about half the food eaten by its 78mn people. Most of this food is brought by small merchants who do business through normal commercial and banking channels that are being closed or disrupted by the sanctions. Several major shipping lines have announced that they no longer visit Iranian ports, greatly adding the Tehran's problems in exporting oil and importing food and other goods....Iranian leaders may have decided that an immediate cessation of some or all of the oil going to the EU may not have been a good idea. PO Review, 13th February.
Brazil
Petrobras will pay $76bn to lease 26 drilling rigs it would use over 15yrs in Brazil's offshore pre-salt zone. PO Review, 13th February.
Venezuela
Venezuela plans to send as much oil to China as it does to its traditionally largest buyer, the US, within the next 3yrs. PO Review, 13th February.
China
Chinese imports fell sharply in January, a sign of sluggish domestic demand that will fuel concerns about whether the fragile global economy can count on China as a bastion of growth. PO Review, 13th February.
Israel
Israel is reported to be seeking to deploy fighter aircraft in Cyprus to protect the energy resources. Turkey is seen as one of the main threats. PO Review, 13th February.
Total Organic Investments
Total has set a budget for 'organic investments' this year of $24bn, 80% of which will be dedicated to the upstream segment of the French oil major's business. ... The firm said that the ramping up of its Pazflor field, offshore Angola, and the start-up of several major projects - including Usan in Nigeria, Angola LNG and Bongkot South in Thailand - will contribute both to production growth in 2012 and to achieving its objective of growing production by 2.5%pa between 2010 and 2015. Rigzone, 10th February.
Exxon & Iraq
Baghdad has told Exxon that it is no longer eligible to bid on contracts in Iraq in the wake of the company signing a contract with the semi-independent Kurdish government. Given that Iraq is letting the foreign oil companies earn such little profit for their efforts, Exxon may figure it is better off linking up with the Kurds who have considerable quantities of oil to exploit. PO Notes, 16th February.
Keystone XL
The proposed Keystone XL oil sands pipeline to Texas may be under attack, but Canada's government says it has the political capital to get an alternative pipeline approved to serve Chinese customers. Reuters Insider Summary, 14th February.
Pricing
Oil steadied near $120 on Friday (17th), supported by hopes for a long-awaited Greek bailout deal and tension between OPEC producer Iran and the West. Concerns about potential supply disruptions and optimism over Greece has made oil a star performer this week, with U.S. crude eyeing its biggest weekly gain since late December and Brent headed for its 4th consecutive weekly rise. North Sea Brent slipped 6 cents to $120.05 by 1007 GMT. U.S. crude rose 39 cents to $102.70. Reuters, 17th February.
www.globalenergyadvisory.com
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Nuclear | |
France
Lessons learned from the Fukushima accident have been enshrined in a newly updated French law governing safety and security regulations for nuclear installations. Meanwhile, the country's president has assured workers at the country's oldest operating nuclear plant of his support for its continued operation. World Nuclear News, 10th February.
Canada to Increase Uranium Exports to China
Although Canadian uranium company Cameco has signed long-term uranium supply deals with China in the past, trade restrictions have meant that it has had to source the material from non-Canadian operations. The new protocol is in full accordance with Canadian nuclear non-proliferation policies and obligations, ensuring that uranium supplied by Canada to China will only be used for peaceful, civilian purposes. World Nuclear News, 10th February.
Huhne Successor's Nuclear Somersault
Ed Davey, the new Energy Secretary, has said he would not block plans for a new generation of reactors, a policy approach seemingly at odds to his previous held belief that nuclear power was 'dangerous and expensive.' TUNSE/ Daily Mail, 7th February.
US Approves Two Nuclear Reactors
The US Nuclear Regulatory Commission has approved the first nuclear reactors to be built in the country since 1978. The commission voted 4-1 in favour of Southern Co building 2 nuclear reactors at an existing Georgia plant. TUNSE/ BBC (Web), 9th February. ..........To be successful with its nuclear foray, Southern Co. needs to first fend off some expected lawsuits as well as demonstrate that it can stay on time and on budget -- something that has hampered nuclear construction in this country since 1978 when the NRC last approved such a project. Energy Biz News, 13th February.
Baltic Nuclear Power Station
Engineers are preparing to pour the concrete foundation of the Baltic nuclear power plant in Kaliningrad. Once underway, it will be the 9th power reactor under construction in Europe. The twin VVER-1200 Baltic project is situated in Kaliningrad, an exclave of the Russian Federation that sits between the EU states of Poland and Lithuania. World Nuclear News, 14th February.
Decommissioning in Bulgaria
The European Court of Auditors (ECA) has called for a more "effective, efficient and economical" use of financial contributions from the European Union (EU) towards the decommissioning of power reactors in Bulgaria, Lithuania and Slovakia. As part of their accession agreements to become members of the EU, the 3 countries agreed to the early closure and subsequent decommissioning of 8 Soviet-era "non-upgradeable" reactors. In return, the EU agreed to provide financial contributions to the 3 countries to compensate for the "exceptional social, economic and financial burden" of meeting this demand. World Nuclear News, 14th February.
New South Wales
New South Wales state premier Barry O'Farrell has promised that a likely reversal on a state uranium exploration ban does not equate to a go-ahead to mine. Australian media, including the ABC, reported a decision by the state cabinet to overturn the 25-year-old ban, although the necessary legislation will still need to be approved in parliament. World Nuclear News, 14th February.
www.globalenergyadvisory.com
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Renwable Investment | |
EDF Begins Teesside Construction
EDF Energi Renewables has begun the construction of offshore foundations at the 62MW offshore wind farm it is constructing at Teesside. The project, which uses Siemens turbines, will be commissioned by the end of the year. www.awordaboutwind.com 9th February.
Mitsubishi Acquires Project Stakes
Mitsubishi has announced that it has acquired a 49% holding in two German offshore grid connection projects for €240mn. The Japanese firm will take shares in the BorWin1 and BorWin2 developments, which will connect 1.2GW of offshore wind to the German gird. www.awordaboutwind.com 9th February.
Iberdrola Back Subsidies Squeeze on Renewables
Iberdrola applauded the Spanish Government in freezing subsidies for renewable generation, saying it's a sensible move for a country that has been paying too much for electricity it doesn't need. Two weeks ago the Industry Minister put a temporary halt on subsidies to curb the countries €24bn "tariff deficit". FT, 13th February.
Offshore Wind Farms Could Interfere With Nuclear Subs
Plans to construct hundreds of wind turbines off the west coast of Scotland could pose a risk to Britain's nuclear submarine fleet, defence chiefs have warned. The giant offshore wind farms to be constructed will limit access to the submarine base on the Clyde and increase the risks of subs running aground or colliding with other vessels. TUNSE/ The Daily Telegraph, 6th February.
One Million Jobs Mark
The European renewable energy industry now maintains more than 1mn jobs as the latest official figures (EU) show employment figures in the sector have increased by a quarter in a year. And according to the new data, the booming green-energy sector has a combined turnover of more than €125bn, an increase of 15% on the previous year, with sales in the solar PV market overtaking wind power for the first time. Click Green, 13th February.
Goldwind Secures $5.6bn Foreign Loan Deal
Goldwind has secured a credit agreement with a key Chinese bank to finance the company's ongoing expansion overseas. Under the terms of the five year, £5.6bn deal, Goldwind will work with the bank on mid to long term development planning as the manufacturer expands its international manufacturing footprint. www.Awordaboutwind.com 13th February.
Trump Tantrum at Scottish wind
Donald Trump, has stepped up his campaign against Scottish wind farms. In and outspoken video, the tycoon has pledged to call a halt to his £750mn golf course development if the proposed 11 turbine European Offshore Wind Deployment Centre (EOWDC) is given the green light. Mr Trump is understood to have participated in a telephone link between his representatives in New York and Vattenfall management team late last week. www.Awordaboutwind.com 13th February.
www.globalenergyadvisory.com
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Coal | |
Mongolian Rail Delayed on Financing Issues
Mongolia's ambitious plan to build a railway network capable of delivering its surging coal output to foreign markets is likely to be delayed as a result of financing difficulties and bureaucratic deadlocks....The government had sought funding for the projects through overseas equity markets, instead of the railway authority's preferred option involving public-private partnerships with investors from Japan and South Korea. Reuters,10th February.
Columbia
MPX Energia SA, expects to start coal output in Colombia as early as 2014, delaying a plan to begin production in the 4th quarter of this year. MPX aims to produce 1mm metric tons of coal in the first 12 months after production begins and mine 35mn tons within 9yrs. Bloomberg Business Week, 9th February.
AEP Rate Increase to Keep Sandy 2 Operating
American Electric Power Co. (AEP) reduced by 13% the amount of coal-fired power generation it will shut, saying customers in the state of Kentucky may provide the $940mn it needs to keep one of the plants operating. The company plans to close electricity plants with about 5,138MW of capacity.... The Columbus, Ohio-based company said in June that new U.S. Environmental Protection Agency rules would force it to retire as much as 5,909MW of capacity. The difference stems from the company's decision in December to seek a 31% rate increase to pay for environmental equipment needed to keep its Big Sandy Unit 2 in Kentucky operating.
Expensive coal takes a heavy toll on Tata Power
India's largest private power producer saw its profits plummet by 40% mainly as a result of surging coal prices. Analysts said the substantial profit fall was caused by the more expensive cost of coal for Tata Power's 4GW power project and to a change in accounting standards. Tata Power is in the process of building power projects that will add 4.729 GW to its generating capacity. In September 2011, Indonesia passed a law prohibiting Indonesian coal producers from selling coal, even to affiliate companies, below a reference price linked to international rates and needs adjustments every year. The law has made coal imports from Indonesia significantly more expensive. Asian Power, 15th February.
www.globalenergyadvisory.com |
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Energy Trading Dynamics | |
Electricity Price Gyration Boost Energy Trading 
One afternoon this week, an electric utility could buy wholesale power in Pennsylvania for $30MWh. Just 200 miles South in Virginia, electrons cost 10 times more. This kind of disparity happens all the time in the US power markets, creating trading opportunities. A decade after the collapse of Enron, electricity has become the stamping-ground not only of utilities, merchants but hedge funds, proprietary trading groups and Wall Street Banks. Trading electricity has become more tempting as America's natural gas boom drains excitement from that market. Gas delivered at Henry Hub has never moved up or down by more than 10% since January. By contrast wholesale electricity in PJM Western Hub, a popular power market, stretching from Pennsylvania to Washington, routinely moves 10% in an hour. FT, 9th February. Global Energy Advisory Comment: Traders need vol to make money but power is the most volatile commodity in the world and you have to be very careful about credit risk. Trading intra day is safe but longer term positions in volatile markets can result in credit risk.
www.globalenergyadvisiory.com/center
Cruise Ship Fall Out Hits Oil & Gas Producers
Italy's oil and gas industry - including large international companies- has been an unexpected casualty of the sinking of the Costa Concordia cruise liner... The Government has caved into pressure from environmental lobbies worried about a serious spill from the ship by withdrawing planned legislation that would have eased restriction on oil and gas production in Italy. FT, 9th February.
Emissions Trading: Cheap and Dirty
The linchpin of Europe's effort to curb global warming is at risk of collapse. When the European Union, decided last month to press ahead with a plan to force foreign airlines to pay for their carbon pollution on each flight landing at its European airports, Brussels justified their action as the only way to forge a global solution to one of the fastest growing sources of global emissions. The policy has indeed succeeded in uniting the world - against the EU. ..... Next week the US and China will gather more than 20 other nations in Moscow to plot a counter strategy...some fear a trade war. FT, 14th February.
Electronic Oil Market Trades Resumed After Halt
A technical glitch shut down CME Group Inc.'s (CME) electronic oil-trading platform for more than an hour on Monday (13th), throwing end-of-day trading into disarray and sending traders scrambling to place trades on the New York Mercantile Exchange floor. The shutdown shortly after 2 p.m. EST halted electronic trading of the world's biggest benchmark oil contract and roiled what had been a relatively a quiet, low-volume session. Prices rose 50 cents a barrel from levels earlier. The shutdown was caused by "technical issues," according to CME. The Globex trading platform resumed at 3:15 p.m. EST. Fox Business, 14th February.
A Timely Discussion by the ETC of Credit Risk
In the first meeting of the European Treasurers Council (ETC) focused on counterparty risk. A pertinent topic at the moment with a second downturn looming on the horizon in Europe the subject could not have been timelier. How to measure counterparty risk exposure, the usefulness or otherwise of credit rating agencies and other market risk indicators such as credit default swaps, were all discussed at the ETC alongside the best ways to mitigate risk via netting arrangements, collateralisation or hedging. One treasurer said what was keeping them awake at night was the high cost of re-financing, with others citing the need to look to the bond markets and the euro zone crisis as concerns. GT News, 14th February.
UK Carbon Market Expertise in Demand Ahead of Aussie Trading Scheme
Australia is targeting UK companies' expertise to help launch its first carbon trading system and make the most of the significant commercial opportunities the scheme offers. The country's top 500 polluters will have to pay for their carbon emissions from the beginning of July this year after Prime Minister Julia Gillard finally won approval for the controversial scheme after five years of heated debate. Energy Trader Daily News, Environmental Expert, 16th February.
www.globalenergyadvisory.com
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Our news update comments are provided by our Advisory CEO, Aily Armour-Biggs, any comments then contact her on aily@globalenergyadvisory.com or +44 207 692 0888.
Sincerely,
Anthony Francis
Global Energy Advisory |
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