Exelon & Constellation Merger

The Federal Energy Regulatory Commission (FERC) today approved the proposed merger of Exelon Corporation and Constellation Energy. Exelon and Constellation plan to complete the merger on March 12....The companies have committed to divesting 3 Constellation Energy generating stations in Maryland totalling 2.6GW of generating capacity. They also agreed to sell 500 MW of base-load energy under contracts that will extend until 2015. 4 Traders, 11th March.

Saudi Arabia

ABB has secured orders worth over $70mn from the state controlled Saudi Electricity Company (SEC) to build 5 new substations in Saudi Arabia. In Q4 2011, ABB received orders from SEC totalling more than $250mn. Gas to Power Journal, 9th March.

LCPD Closes Kingsnorth

The GMB union said the closure of the Kingsnorth power plant was "absolutely devastating" for the local community and warned that suppliers and contractors would be affected as well as the E.ON employees. TUNSE/The Daily Telegraph (Business), 9th March. Global Energy Advisory comment: this plant is being withdrawn under the LCPD (Large Combustion Plant Directive). This means plant that has "opted out" (of the Directive) has an obligation that it will have to close by the end of 2015 or after 20,000 hours of operation from 1 January 2008, whichever is the sooner. This affects some 12 GW of coal and oil-fired generating plant which will therefore now close by 1st January 2016. There was an initial worry that at that time the lights would go out in the UK, but with the existing nuclear fleet gaining life extension there could be a reprieve. Gas prices could be really high at the same time though through a tight global LNG market. We have an uncertain energy future, so we all need to keep on top of our risk management and update our registers.    

Myanmar Hydro

China Power Investment Corp. is in "active talks" with the Myanmar Government to resume development of a $3.6bn hydroelectric dam that was halted last year due to environmental and human-rights concerns. PO Review, 12th March.

ENEL Targets Renewables in Latin America to Counter Italian Slump

ENEL SpA (ENEL), Italy's largest utility, will steer investments into Latin America and renewable energy as recession dampens electricity demand in its biggest market.   "Growth has to come from renewables and from Latin America, as well as Eastern Europe and Russia," said Luigi Ferraris, CFO. ENEL is planning to add about 4.5GW of renewable capacity to 2016 through its' ENEL Green Power unit.   Bloomberg, 14th March.

India to Enhance Cross Border Transmission Lines to Nepal

India's Ministry of External Affairs and Powergrid have inked the agreement for strengthening cross-border transmission lines to Nepal. The draft agreement had been repeatedly revised to accommodate Powergrid's amendments for months now. Issues such operation and maintenance, issuance of relevant sales tax forms by state utilities, and forest clearances were some of the proposed changes. Asian Power, 14th March.

www.globalenergyadvisory.com

In the US, Republican efforts to force the administration to start building the Keystone pipeline failed in the Senate. The weekly stocks report shows crude inventories rising by 800,000 barrels but with Cushing inventories hitting the highest level in 8 months and keeping pressure on US gasoline prices. The pipeline reversal which is due to drain some of the Cushing crude inventory away to Gulf Coast refineries is still a few months away. TransCanada is planning to go ahead with the section of the Keystone pipeline that runs from Cushing to the Gulf Coast. Within a couple of years there could be 2 pipelines draining Cushing of the oil glut which should increase oil prices in the Midwest. PO Review, 12th March.

Evidence continues to build that the sanctions are starting to have an effect on Iranian oil sales. Some analysts are saying that Tehran's oil shipments are already down by 300,000 to 400,000 b/d with the worst yet to come. A combination of political pressure on importers, reluctance to become dependent on Tehran and restrictions on tankers, insurance and money transfers appears to cutting into the Iranian economy. Iranian currency has already fallen by 75% and the situation will only get worse for the Iranians....The US, Russia, China, the UK, France, and Germany agreed to reopen stalled talks with Iran on the whole nuclear question. That Tehran asked for a resumption of these talks is another indication that the sanctions are taking a toll. While Paris expressed its belief that the agreement was little more than another Iranian ploy to buy time; diplomats on all sides expressed optimism that an agreement could be reached. PO Review, 12th March. Global Energy Advisory comment: by the time you read this newsletter, Iran's central bank will have been cut off from the swift payment system which transfers money to different countries. 

Thousands of Libyans are protesting a move by eastern tribal leaders and militia commanders to create a self-ruled region in the oil-rich eastern part of the country. PO Review, 12th March.

The Iran-driven run in oil prices to the highest since 2008 masks the Middle East producer's diminishing importance to global oil supplies as record spending on drilling unearths reserves from Argentina to Angola. New fields will ease pressure on prices. Futures show investors expect benchmark Brent crude to drop to less than $100/b in 2015 from $125 today. Global exploration spending, led by Exxon Mobil Corp. and Royal Dutch Shell Plc, will jump 20% to at least $90bn, Bloomberg, 13th March.

www.globalenergyadvisory.com  
 

No Room at the Repository

A repository for used fuel from TVO and Fortum's reactors could not safely be expanded to accommodate used fuel from Fennovoima's planned plant, the companies have said, despite government pressure to make a deal. World Nuclear News, 9th March.

Baltic PMs Pledge Nuclear Support

The prime ministers of Estonia, Latvia and Lithuania have reaffirmed their commitment to build a new nuclear power plant serving the Baltic states and have promised to work together to make sure progress is maintained.....Three energy companies (are) involved in the project - Eesti Energia, Latvenergo and Visagino Atominė Elektrinė (VAE). The ministers said they would be encouraging the companies to finalise negotiations in a "timely manner" to ensure that the next milestone for the project - approval of a nuclear plant concession agreement by the Lithuanian parliament - is met by June 2012. World Nuclear News, 13th March.

Jordan Receives Reactor Offer

Russia has offered Jordan a deal under which it will construct 4 nuclear power reactors. The proposal - similar to that offered to Turkey - is separate to the tender to supply the country's first power reactor, the winner of which is set to be selected by the end of this month. Rosatom's reactor export subsidiary AtomStroyExport (ASE) approached the Jordan Atomic Energy Commission (JAEC) in January with a proposal to build 4 1200 MWe VVER units... If all of the units are built, 4000 MWe of generating capacity would be added to the grid, more than doubling Jordan's current generating capacity. This would transform the country from an energy importer to an energy exporter. World Nuclear News, 13th March.

Australia Radioactive Waste Bill Passed

Australia has taken a step nearer to setting up a national facility for the management of its radioactive waste with the passage of new legislation by the country's senate. The National Radioactive Waste Management Bill 2010 aims to establish a single-site facility for managing the waste arising from Australian use of radioactive material in medicine, industry and research. Such material is currently stored at numerous sites at Australian universities, hospitals and laboratories. World Nuclear News, 13th March.

www.globalenergyadvisory.com 

Talisman Energy  

Treading along with its divesture plan, Talisman Energy Inc. has agreed to sell its Sukunka coal property to Australia-based Xstrata Coal for $500mn in cash. The transaction is stated to be completed in March. Located in the Northeast British Columbia, the coal holding is about 37.3m south of Chetwynd, along the Peace River coalfield. Talisman controls 100% working interest in the licenses that spans across 20,000 acres and has a deposit of about 236mn tons of hard coking coal. Daily Markets, 11th March.

China Coal

One of the most fascinating stories of the fossil fuel age is the growth of China's coal production during the last 50yrs. Starting with an annual production of some 400mn tons in 1960, production has grown, slowly at first and then after 2000 more rapidly until it 3.88bn tons in 2011 - nearly 3 times what the US consumes. For the last decade, consumption has been growing in the vicinity of 9% pa, which is in line with GDP growth, but is impressive considering the size of the increase in annual production which must be achieved to maintain this growth....Coal seams are becoming narrower and deeper and the open-pit mines are further away in Mongolia requiring long hauls to bring the coal to regions where it can be used. In 2010, the government, perhaps worried about pollution, said that its aim was to keep coal consumption below 3.8bn tons per year....Last week Beijing announced that coal output for 2012 is expected to rise by only 3.7% this year, a sharp drop from the ~ 9% annual increase we have seen in the last decade.... If we are indeed seeing the peaking of Chinese coal production there are numerous implications for the global economy......The mainstay of China's growth will continue to be coal, imported oil and LNG. (There is) a suggestion that increased imports of coal and oil are in the offing if these spectacular rates of growth are to be maintained. PO Review, 12th March.

Columbian Coal

While it rarely grabs coal market headlines, Colombia is a major coal player globally. With reserve estimates ranging between 12-60bn tons, Colombia exports more than 90% of its production annually, sending more than 75MT abroad in 2011. The Colombian government believes the country will play an even bigger role in coming years, with exports projected to hit 100MT by 2015. Located on both the Atlantic and Pacific oceans, Colombia is the number one thermal coal exporter to the US, representing 75% of US thermal coal imports in 2010....But growing Chinese and Indian coal demand has also brought Colombian coal to the attention of producers looking to supply growing Asian markets. Resource Investing News, 12th March.

Newcastle Coal Exports Fall for 2nd Week

Coal shipments from Australia's Newcastle port declined 5.4% to 2.34mn mt in the seven-day period ended 7 am Sydney time Monday (2000 GMT Sunday 12th March), compared with 2.47mn mt shipped in the (previous) week, Newcastle Port Corp. said. ...The slight decrease indicated that coal producers had been able to side-step the worst effects of the recent heavy rainfall in New South Wales. With 29 ships calling at Newcastle port in the seven-day reporting period to Monday, flat from the week before, it was just short of a recent high of 30 ship arrivals in the week ended February 27 when Newcastle exported 2.53 mn mt of coal... There were 12 ships queuing offshore Newcastle port on Monday, the same number as a week ago, indicating that vessel congestion had not gone up...A further 54 ships were steaming toward the port with a seven-day notified arrival time, Newcastle Port Corp. said. Platts, 12th March.

Mozambique

Tete is at the heart of the Mozambique's nascent coal rush, with the region endowed with one of the richest undeveloped coal reserves. Investment (in coal) could bring in $10bn over the coming years, to a country with a GDP of $10bn. FT, 13th March.

Daw Mill

UK Coal announced plans to restructure the business and to start consultation over the future of its Daw Mill mine. The principal objectives of the restructuring plan are to ensure a financial framework that is capable of supporting ongoing investment in each deep mine over its remaining economic life and to address the risks and volatility inherent in the mining industry. The plan is intended to isolate the operating risk of each deep mine from the group as a whole and mitigate future financial uncertainty arising from operations at Daw Mill. UK Coal, 14th March.

India

India's endemic coal shortage seems to be getting worse with numerous generating stations down to a few days' fuel supply. It is not yet summer and it looks as if hundreds of thousands will soon be facing rolling blackouts. PO Notes, 15th March.

 www.globalenergyadvisory.com