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News Update: 7th May 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 | |
Centrica Considered Qatar Gas Deal
Centrica, the owner of British gas, was prepared to give Qatar a stake in its business and a Board seat in return for a 20 year gas deal worth up to £30bn. .... In a sign of the challenges utilities face in securing LNG supplies. FT, 30th April.
Clean Energy Targets Drift Out of Reach as Cash Dries Up
A report from Bloomberg New Energy Finance shows that the UK is set to miss its 2020 green energy generation commitments by as much as 15%. The report found that RWE Npower, SSE and Scottish Power had invested a total of £9.7 bn in green energy, compared with the £4.5 bn invested by Centrica, EDF and E.ON. TUNSE/The Times, 23rd April.
Power of Iceland's Volcanoes Could Help Solve Energy Crisis
The UK is in active discussions with the Icelandic government with regards tapping into the geothermal energy produced by the Island's volcanoes. Low-carbon electricity could soon be shipped into the UK under government-backed plans for thousands of kilometres of high-voltage cables across the ocean floor. The Energy Minister, Charles Hendry, is to visit Iceland in May to discuss the proposals. TUNSE/Guardian Weekly, 20th April.
UK, Denmark Study Power Cable to Swap Wind Energy
Britain's National Grid and Denmark's Energinet.DK will publish an initial interconnector study by the end of this year, detailing potential landing points, capacity and how a cable could integrate into a North Sea super grid to connect offshore wind power. An interconnector could help the two countries manage the flow of intermittent renewable energy by sending electricity from a region producing excess power to one that has a shortfall at any given moment, also smoothing out price differences. Reuters, 30th April.
Chinese Groups Eye UK Nuclear Program
The Chinese Government could end up with a stake in the UK's nuclear programme, with two Beijing backed groups involved in talks to buy the Horizon consortium from its German owners, the FT learned. 4th May.
India Set to Become World's Third Largest Energy User
Economic growth will drive India into becoming a massive user of all kinds of energy...Indian Minister of Power Sushilkumar Shinde said India is expected to become the world's third-largest energy consumer by 2020 after the USA and China...The fast-growing Indian economy is struggling against persistent and acute power shortages. Estimates show that to achieve an economic growth of 9%, India has to increase its energy supplies by 6.5% a year. Asia Power News, 2nd May.
Saudi Arabia to Invest US$300 mn to Enhance National Power Grid
Massive energy-related infrastructure investments worth US$300 mn are on the cards in Saudi Arabia with the aim of linking new economic cities to the national power grid. The Saudi Kingdom is undergoing a phase of massive industrial development with electricity demand is expected to reach up to 67,000 MW by 2020. Gas to Power Journal, 4th May.
UK Lawmaker: Electricity Market Reform Bill Delays "Very Serious"
Delays to a UK bill to reform the electricity market are "very serious" and could affect much needed investment in the country's energy infrastructure, Tim Yeo, U.K. lawmaker and head of an influential parliamentary committee on energy and climate change, said... At stake is the estimated GBP200 bn investments needed over the next decade to replace retiring nuclear and coal plants and keep the lights on while meeting binding climate change targets. Dow Jones, 4th May.
www.globalenergyadvisory.com
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Gas | |
Egypt
Egypt's decision to cut off natural gas supplies to Israel threatens the countries' historic 1979 peace treaty and could crank up simmering tensions over disputed offshore gas fields in the eastern Mediterranean. PO Review, 30th April.
Hydraulic Fracturing in Nova Scotia
The Nova Scotia government said it needs 2 more years to study hydraulic fracturing. No fracking will be approved until the extended review is completed. PO Review, 30th April.
Woodside Sells LNG Stake for $2bn
Woodside plans to sell a stake in Browse LNG project for A$2bn (15%) to Mitsui and Mitsubishi. Japan Australia LNG will also agree to buy 1.5mn tonnes of LNG per year at prices in line with Asian pricing for conventional LNG projects. FT, 2nd May. Global Energy Advisory Comment: This gives Japan a long term secure supply of LNG given its long term move away from nuclear power generation.
Barclays Increase Gas Price Forecast
Barclays have raised their forecast for UK natural gas prices by 4%, citing unexpectedly large reductions in LNG shipments to Britain and low inventories across Europe. Proactive Investors, 2nd May.
Chinese Shale
The U.S. is prioritizing China's development of shale gas in discussions relating to energy at an upcoming bilateral summit, as it views the unconventional fuel as vital for securing China's energy security, reducing carbon emissions and freeing up gas for global markets, the head of the U.S. Energy Resources Bureau said. Rigzone, 2nd May.
Origin Announces Major Gas Sales Agreement with GLNG
Origin Energy Limited has announced the signing of a binding Heads of Agreement for gas supply with GLNG partners (GLNG), providing Origin with a pathway to monetise its portfolio of fuel resources in line with international oil-linked pricing. Power Engineering, 2nd May.
Operation to Stop Gas Release from Elgin Well Given Environmental Go-Ahead
The Department of Energy and Climate Change has granted TOTAL environmental permits to undertake a dynamic kill operation to try to stop the gas release from the Elgin well. The operation will use heavy drilling mud pumped into the G4 well from the wellhead to stop the gas release. DECC, 4th May.
www.globalenergyadvisory.com |
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Oil | |
U.S. Awash In Oil, But Global Demand Drives Prices
Hauling oil to Valdez -a remote town that still supplies a big portion of the West Coast's oil is carrying the proverbial coal to Newcastle. It is a sign that the American oil industry is in a very un-accustomed place. Government statistics show gasoline isn't selling the way it used to, and on any given day crude oil could be backed up in storage tanks ranging from Valdez to the San Francisco Bay to Long Beach......The profitable oil production industry benefits from the fact that it operates within a global market. Fuel conservation in the United States cannot overcome the rising hydrocarbon demand in emerging markets like China and India. Rigzone, 30th April.
US Demand
The US weekly stocks report showed the US crude inventory climbing to a 22 year high. Weak jobs reports in the US and EU added to the pressure. Inventories at Cushing, Okla. climbed to a record 43 mn barrels as producers pushed more oil into the storage complex in anticipation of the reversal of the Seaway pipeline. This will provide cheaper oil to Gulf Coast refiners and reduce the demand for imported oil at the higher Brent prices. US crude production hit 6.1 mn b/d last week, the highest since November 1999. PO Review Notes, 3rd May.
The Iranian Confrontation
....On Wednesday ...Tehran's ambassador to Moscow said that Iran is considering a Russian proposal to halt the expansion of its nuclear program in order to avoid further sanctions. Under the Russian proposal Iran would stop building centrifuges, mothball the ones not yet in use, and agree to more inspections. Washington's reaction to the proposal was that the Ambassador is not part of the negotiations and that it will be Tehran's actions that count. Israel stirred the confrontation pot last week when the IDF's Chief of the Staff told a newspaper that he did not believe that Tehran had as yet made the decision to build a bomb. (Also last week)....Cyberwar flared when someone attacked the computers of Iran's oil ministry. The ministry was reported to have all its facilities disconnected from the Internet in order to prevent viruses from spreading. While outwardly calm, some oil ministry officials are saying off the record that the attacks are a major problem. The fussing over the effectiveness of the sanctions continued last week with India saying that the US has not yet threatened the country with sanctions and it will continue to buy as much Iranian oil as it needs. The position of China in all this is becoming more interesting. Beijing has cut back significantly on its purchases of Iranian crude. The question is whether it is trying to help with the sanctions or is simply trying to extract price concessions from Tehran as the Iranians become more desperate? PO Review, 30th April.
Iraq Forecast Production
Iraqexpects oil production to reach 10 mn barrels per day within the next six years. PO Review, 30th April.
Asia Belts-Up for Orinoco Race
Venezuela has seen a string of Asian investors commit large expenditure in the hope of securing crude oil supplies from its prolific Orinoco belt. In addition to $32 bn in loans from China, South Korea has notably granted $11.14 bn in funding, while Japan has agreed to lend $1 bn. As greater future volumes from the Orinoco belt are committed for export, Asian countries will be much fiercer when attempting to outbid each other for access to these volumes...After several years of decline, Venezuelan oil output seems to have stabilised, with an estimated 2.42 mn bpd produced in 2011. Thanks to numerous heavy oil projects in the Orinoco belt, output is now expected to grow at a healthy pace, reaching 3.27 mn bpd by 2016 and 4.07 mn bpd by 2021, according to BMI's estimates. Rigzone, 3rd May.
www.globalenergyadvisory.com |
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Nuclear | |
TVA Presses Ahead With Watts Bar 2 Completion
The construction of Watts Bar 2 started in 1973, but was stopped in 1985 when it was about 55% completed. TVA decided in 2007 to resume the job, expecting it to cost $2.5 bn and to be completed under Bechtel's management by 2012. However, by August 2011 TVA had taken back control of the work and set a new completion target of 2013. By February 2012, some 81% of the overall project had been done, with instrumentation and electrical work slightly ahead of schedule and mechanical work slightly behind. World Nuclear News, 27th April.
Government Says UK Firms Could Assist Fukushima Clean Up
The UK and Japan have agreed a framework on civil nuclear cooperation, establishing the opportunity for UK companies to bid for multi-bn pound decommissioning contracts in Japan. TUNSE/New Civil Engineer, 19th April.
Jellyfish Plague Brings Nuclear Reactor to a Halt
A reactor at California's Diablo Canyon nuclear power plant has been shutdown after salp- jellyfish-like creatures clogged its seawater intakes. TUNSE, 28th April.
Nuclear Developments in Jordan
Jordan's first nuclear power plant will be supplied by either AtomStroyExport of Russia or the Areva-Mitsubishi Heavy Industries joint venture, Atmea. The past three years have seen the Jordan Atomic Energy Commission (JAEC) whittle down a list of seven offers from four reactor vendors to (these) two. World Nuclear News Weekly, 1st May.
Chernobyl
Work to assemble the giant arched structure that will protect the ruined Chernobyl unit 4 and enable its dismantling has officially begun on the 26th anniversary of the accident. World Nuclear News Weekly, 1st May.
Wlfa 2 Closes
The penultimate Magnox reactor has generated its last electricity after 41 years of service. The closure of Wylfa 2 leaves its twin, unit 1, as the sole operational representative of the type. World Nuclear News Weekly, 1st May.
www.globalenergyadvisory.com |
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Renewable Investment | |
Bad Weather Shuts Down Wind Turbines
This week's storms have led to the shut-down of hundreds of wind turbines. The National Grid said the amount of electricity generated by wind dropped from around 4GW to 1.2GW on Wednesday (25th April) afternoon. A spokesman for the National Grid said: "In very high winds over 60 miles per hour, wind turbines shut down for their own protection." TUNSE/The Daily Telegraph, 27th April.
Goldwind Developing 10MW Wind Turbine
Technically, this makes Goldwind the second manufacturer to be working on a 10MW turbine. Last year Sinovel also said it was developing one although it is believed this was largely based on AMSC's SeaTitan design. Goldwind's plan follows guidelines set out in China's five-year economic plan for 2011 to 2015 published last year. The government has already set out its intention of prioritizing the development of 3MW to 5MW onshore and 5MW to 10MW offshore wind turbines. Windpower Monthly, 30th April.
Aqua Caliente
Set to become the world's largest photovoltaic power plant, the Aqua Caliente project in Arizona reached the 100 MW milestone. PO Review, 30th April.
The Crown Estate, Deep Water Test Sites
The Crown Estate, which controls the UK's territorial waters, is to announce plans to open up test sites in deeper waters in the North Sea (announcing) details of the demonstration sites in September as part of the UK's study into lowering the cost of energy for offshore wind. The move would mean the development of floating platforms, which are being trialed by companies including Siemens and Statoil (Hywind), and Vestas and EDP (WindFloat). Windpower Monthly, 2nd May.
Origin Seals Its Largest Ever Wind Off Take Agreement With Trust Power
Origin Energy Limited (Origin) and New Zealand's Trust Power today announced the signing of Origin's largest ever wind power purchase agreement in which it will be supplied the renewable energy generated by Trust Power's planned Snowtown II Wind Farm in South Australia. Snowtown II Wind Farm, which will comprise 90 turbines with an installed capacity of 270 MW, will be located adjacent to Trust Power's 100 MW Snowtown Wind Farm, with which Origin holds an existing power purchase agreement. Under the terms of the new 15-year agreement, Origin will be supplied with 100% of the output and Renewable Energy Certificates (RECs) from Snowtown II, which is expected to commence operations in 2014. Power Engineering, 3rd May.
www.globalenergyadvisory.com |
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Coal | |
Chinese Coal Demand
Coal consumption by China's four major coal-consuming sectors grew at a higher rate that the country's coal output in the first quarter. PO Review, 30th April.
China Carbon Blockage Begins To Ease: Energy Markets
China is starting to approve emission credits after a seven-month freeze, stoking speculation a glut that's contributed to an unprecedented decline in European carbon prices will keep growing. Bloomberg, 27th April.
European Coal Price Pressure
A generic thermal coal cargo with US optionality for May delivery sold into Europe Tuesday (1st May) at near two-year lows, extending the bearishness in the European delivered spot market. The deal was for a 50,000 mt coal shipment for May Rotterdam-only delivery at $86.25/mt through the global COAL trading platform with exchange of futures for physical (EFP) terms attached, involving two north European utilities. Platts, 1st May.
Newcastle Coal Shipments to Japan Touch 11-Month Low in April
There was a sharp reversal in Newcastle port's exports of thermal and coking coal to Japan in April, while China increased its percentage of the Australian port's coal exports to a six-month high last month, according to a report from Port Waratah Coal Services: Japan was the destination for 44.95% of its coal shipments last month, or about 4.46 mn mt. Platts, 1st May.
www.globalenergyadvisory.com |
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Energy Trading & Market Dynamics | |
Collective Switching Will Not Fix the UK's Broken Energy Market
Group purchasing might work well for some consumer sectors, but a better solution is to improve competition. Energy bills are soaring and UK consumers are feeling the pinch. Leading politicians and consumer groups are rushing in with a new solution: collective switching. But they should beware. Done wrong, collective switching will take money from the poor and the old and put it in the pockets of the middle classes while undermining competition between energy suppliers.... The concern with these schemes is that we know a problem already exists in the market, where suppliers give major discounts to some customers only to recoup the money by overcharging others. The Guardian, 27th April.
Calpine to Add 550 MW in Texas as Reserve Shrinks
Calpine Corp will add more than 500MW in Texas by the summer of 2014 to help the power-hungry state avoid rolling outages. .. Calpine, which operates 7,200 MW in Texas, said recent action by state regulators and the grid operator to improve wholesale price signals when supplies run short led Calpine to decide to add new natural gas-fired turbines at two existing Houston-area power plants (at Deer Park Energy Center and at the Channel Energy Center, both near Houston))....With gas prices the lowest in a decade, thanks to a supply glut, Calpine's power plants produced a record 29 bn kilowatt-hours of electricity in the first quarter, up 52 % from the year-earlier period, as utilities could buy power from Calpine more economically than running their coal-fired plants. Reuters, 29th April.
Big Six Energy Companies Face Calls for Tougher Regulation
The Institute for Public Policy Research (IPPR) argues that tougher regulation is needed by the industry watchdog, Ofgem, to improve competition and ensure pricing is fairer for consumers. This follows Ofgem findings that in 2010 the least efficient energy company spent more than twice as much on its operations per customer as the most efficient....The IPPR report, The True Cost of Energy, shows that annual efficiency savings of 2.5% in the UK's energy market could deliver £1.9bn in savings for consumers in 2020. As well as easing the squeeze on living standards, this would more than offset the cost of green policies for affected consumers, it argues. The Guardian, 30th April.
El Nino
The possibility of an El Nino, a warming of the mid-Pacific Ocean, has forecasters predicting lower temperatures across the US this summer, which may mean less electricity, will be needed to run air conditioners. PO Review, 30th April.
Trafigura Plans Drive for Trading Funds
Trafigura plans to tap investors such as sovereign wealth funds and insurers directly to fund its trading activity, as Europe's debt crisis forces traders to look beyond traditional sources. FT 2nd May. Global Energy Advisory Comment: our white paper entitled the ratings game highlights the possibility of the European Banking sector not being able to support the commodity industries as it once did hence: Center.
South Korea Approves Carbon Emissions Cap and Trade System
South Korea approved a cap-and-trade system to cut carbon emissions. Korea's decision follows an agreement at climate talks in December among about 200 countries including the U.S. and China to wait until 2015 to sign a global accord on emission reductions that would take effect as late as 2020. ..South Korea is the world's eighth-largest carbon emitter, based on 2009 figures from the International Energy Agency. The country's greenhouse-gas emissions jumped to about 640 mn metric tons in 2011 from 350 mn tons in 1990, making it the fastest-growing emissions source among 34 nations in the Organization for Economic Cooperation and Development. Bloomberg, 3rd May.
www.globalenergyadvisory.com |
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Our news update comments are provided by our Advisory CEO, Aily Armour-Biggs, if you want to talk to her then contact her on +44 207 692 0888 or aily@globalenergyadvisory.com.
Sincerely,
Anthony Francis
Global Energy Advisory |
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