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News Update: 14th 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 | |
Ofgem Takes Next Step Towards New Transmission Charging Structure
Ofgem is taking the next step toward a new approach to transmission charging. It is requiring industry to develop changes to the current charging approach which will better reflect the costs placed on the system by all forms of generation, particularly renewable generators, which operate intermittently. The aim of the changes is to facilitate Britain's transition to a low carbon energy sector at the lowest cost to consumers. The existing methodology, known as Investment Cost Related Pricing (ICRP), charges generators more the further they are located from demand. The new approach will retain this locational element but update it to take into account the type of generator and how much it uses the network to transmit power. In doing this, Ofgem considers that an improved form of ICRP would better reflect the costs placed on the high voltage system by all forms of generation, including new kinds of generators such as wind farms. Ofgem, 4th May.
Bolivia
President Evo Morales has announced that his government is completing the nationalization of Bolivia's electricity sector by seizing control of its main power grid from a Spanish-owned company. PO Review, 7th May.
Power Shortages Expected in Japan
The Japanese government expects electricity shortages in Tokyo as well as in two other regions this summer. In a preliminary report Wednesday, the government's national policy unit projected a 5% shortage for Tokyo and 4% shortages for Kansai and Kyushu. TUNSE/The Wall Street Journal (Europe), 3rd May.
Lights Could Go Out Across UK By 2030
......Price Waterhouse Coopers identify in a report a greater risk of the UK being hit by power blackouts by 2030 as the economic crisis hampers efforts to upgrade the electricity infrastructure. TUNSE/The Scotsman, 4th May.
Transmission Capital Partners Appointed As Preferred Bidder for High Voltage Link to Lincs Offshore Wind Farm
Ofgem have appointed the preferred bidder for the first project in the second round of tenders to own and operate offshore links for the Lincs project. This is the second largest offshore transmission project to have reached this stage. It is Transmission Capital Partners LLP and the estimated value of the investment in £282mn. Ofgem, 9th May.
Siemens to Service 16 SGT-400 Industrial Gas Turbines at Santos GLNG
Siemens Energy has been awarded a contract to provide long-term maintenance services for 16 SGT-400 industrial gas turbines at the Santos GLNG Project in Queensland, Australia. The multi-million dollar service order is Siemens' largest ever for its small gas turbine (SGT) product line. Gas to Power Journal, 10th May.
www.globalenergyadvisory.com |
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Gas | |
Romanian Gas Shale Moratorium
Romania's new government will seek a moratorium on shale gas drilling, putting on hold plans by Chevron Corp. to tap reserves in eastern and southern Romania. Companies including Chevron, Canada's Sterling Resources Ltd. and Hungary's MOL plan to tap the reserves....Chevron has a concession on 600,000 hectares in the eastern Barlad area and three others in the southeast Dobroudja region, near the Bulgarian border. Rigzone, 7th May.
US Gas Prices
US natural gas futures spent most of the week trading in the vicinity of $2.30 per mn BTU's, up from $1.90 in mid-April. The increase was sparked by a government report showing a small drop in US production in February. Drilling for gas-only now is down by 30% from last year. The EIA reported that residential gas use in February hit a 22-year low of 23 bn cu. ft. per day. There has been a considerable shift towards using natural gas in place of coal among power producers-US coal production is down 13% from last year. Most analysts, however, believe that US natural gas storage facilities will reach capacity before next winter resulting in another price drop. PO Review, 7th May.
Russian Pipeline to Japan
Japanese and Russian officials are exploring the possibility of building a natural gas pipeline to ensure Japan's energy security. They also discussed shipping liquefied natural gas from the Sakhalin plant on the east coast of Russia. PO Review, 7th May.
Egypt's Petroleum Ministry Is Struggling To Keep Its Spending Under Tabs
Now overspending threatens one of the most important projects in the nation: the contract for natural gas. Having made significant gas discoveries over the past decade, Egypt has the 16th-largest proven natural-gas reserves in the world at 78 tn cubic feet, or 1.6%f the world's total known gas reserves. Yet despite the country's immense known and possible gas reserves, debts owed to international oil and gas companies by the Egyptian government are said to be at least $4 bn (Dh14.69bn), potentially hindering further production, analysts and industry experts say. Rigzone, 8th May.
www.globalenergyadvisory.com |
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Oil | |
The Iranian Confrontation
With only two weeks to go before resumption of the talks over Iran's nuclear program, optimism that some sort of deal can be struck seems to be increasing. Washington and Tehran are saying the chances of war have significantly decreased..... As the July 1st deadline for many aspects of the West's sanctions program to come into effect approaches, it is beginning to appear that they will have a significant impact on Tehran's economy. Most major importers of Iranian crude appear to be making some sort of cutback in face of the secondary Western sanctions. Although there has been no public announcement, even Beijing clearly does not want to see hostilities in the Gulf may be adding to the pressure. With such a wide range of sanctions coming into effect, Tehran, which has a fairly modern economy and relies heavily on foreign investment and imports, would be in considerable trouble if the sanctions were to become a protracted affair. PO Review, 7th May.
Nigeria
Nigeria plans to increase crude oil production to 4 mn barrels per day by 2020. In addition, the East African country also plans to boost liquefied gas production by an additional 20 mn metric tons a year from the present 26 mn tons. PO Review, 7th May.
Australia Awards Offshore Permits
Australia's government on Sunday said it has awarded 12 new
petroleum exploration permits for off the coast of Western Australia and Victoria state. Among the eight companies to win the permits--the tender process received 46 bids--are BHP Billiton, Bass Strait Oil Company, WHL Energy and Woodside Petroleum. "Liquefied natural gas exports are forecast to significantly expand in Australia over the next two decades," said Martin Ferguson, resources minister in a release. The new permits are expected to spark some A$303 mn in investment over the next three years, according to the government. Rigzone, 7th May.
Iran Accepts Renminbi for Crude
Iran is accepting Renminbi for some of its crude oil supplies to China, executives in Beijing, Kuwait and Dubai based bankers said, partly as a consequence of US sanctions....Tehran is spending the money, which is not freely convertible on goods and services imported from China. FT, 7th May.
Argentinean Nationalization
Spain's Repsol may halt the delivery of nine ships carrying LNG to Argentina in retaliation for the South American government's pending nationalization of its YPF unit. PO Review, 7th May.
End of Week Pricing
In the wake of the steep decline in oil prices that took place last week in anticipation of the French and Greek election results, Brent crude has been relatively stable this week, opening and closing in the vicinity of $113 a barrel. NY crude continued to fall on reports of an unexpectedly large buildup in US crude stocks. June futures closed at $95.81 Wednesday, down about $10 a barrel from where it was trading last week. PO Notes, 10th May.
www.globalenergyadvisory.com |
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Nuclear | |
Horizon Scanning
Realistic potential players are being linked to Horizon Nuclear Power, with US utility Exelon the latest to be named in the media. A wide range of firms can be expected to show interest in the UK new nuclear project company. World Nuclear News, 4th May.
Japan is Switching Off Its Last Working Nuclear Reactor
The third reactor at the Tomari plant, in Hokkaido prefecture, is shutting down for routine maintenance. It leaves Japan without energy from atomic power for the first time for more than 40 years. PO Review, 7th May.
Texas Waste Facility Gets to Work
The Texas Compact Facility in Andrews County is the only facility in the USA to be licensed within the last 30 years that is authorised to dispose of all classes of low-level radioactive waste (LLW) materials considered suitable for near-surface burial. It accepts waste from the nuclear medicine, research, and power sectors and will help keep down the price of these vital technologies. World Nuclear News, 8th May.
Investigations Continues into Tube Wear at SONGS
More than 1300 steam generator tubes have now been plugged at Southern California Edison's (SCE's) San Onofre Nuclear Generating Station (SONGS) in California as the utility continues to investigate the cause of excessive wear in some of the tubes. It is not yet known when the two-unit plant will resume operation. World Nuclear News, 9th May.
www.globalenergyadvisory.com |
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Renewable Investment | |
Government Figures Reveal the Contribution the Wind Sector Has Made To UK Economy
Onshore wind farms contributed over £500mn to the UK economy and supported almost 9,000 jobs last year. ...A report funded by trade body Renewable UK and the DECC finds each megawatt (MW) of installed capacity adds close to £700,000 to GDP with over £100,000 of that staying in the Local Authority area. Business Green, 7th May.
Alstom Sees Sales Up Over Next 3 Yrs
In partnership with state-owned utility EDF Alstom has won the bulk of France's first offshore wind farm tender, which is designed to kick-start the sector in the country and reduce its dependence on nuclear power. TUNSE/Reuters UK, 4th May.
New Foundry Could Make Scotland World Leader in Supply of Turbine Parts
Scottish and Southern Energy and Burntisland Fabrications are about to invest in plan for "game-changing new technology" that aims make Scotland a worldwide exporter of offshore wind turbines. TUNSE/Glasgow Sunday Herald, 6th May.
Iberdrola Proposes €1.8 bn Greek 'Aegean Link'
Iberdrola has presented to the Greek authorities a €1.8 bn proposal to build 706MW of wind capacity across two islands, together with submarine power lines linking it all to the mainland, according to a Spanish economy ministry document.... Over 40% of the planned investment will go to building the submarine interconnection between the mainland and the Aegean islands of Lesbos and Chios, says the document, authored by the ministry's Economic and Commercial Office in Greece. Rokas aims to start building that network in 2014, "ready for operations in 2017. Wind Power Monthly, 9th May.
China Slashes Solar Subsidy
A cut in the subsidy for demonstration sun-power projects threatens the viability of future solar projects in China. China reduced the subsidy for demonstration sun-power projects approved this year by 21% as the prices of components continues to fall. This means the current incentive of US$1.11 per watt set in February is now down to US$0.87 per watt. The cut, however, applies only to projects whose developers will consume the power for their own use under the Golden Sun program. China began offering financial assistance for projects under the program in 2009 to boost the use of renewable energy and cut reliance on fossil fuels. Some 100 developers will be affected by the lower subsidy. Asia Power News, 9th May.
www.globalenergyadvisory.com |
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Coal | |
Idian Steel Industry Imports
The Indian steel industry would have to import 36.8-mn tons of coking coal in 2012 to meet an estimated steel demand of 58.7-mn tons. This import would increase to some 43.3-mn tons in 2013 against a steel demand of 65-mn tons, Gujarat NRE Coke Chairperson Arun Kumar Jagatramka said. "When Queensland catches a cold, the Indian steel industry starts sneezing. Steady and secured supplies of coking coal have become one of the prime challenges of the Indian steel industry," The domestic production of coking coal has declined since 2004, but coke production has increased steadily during the same period and hence the future of Indian coking coal would be imports," Indian coking coal production in 2008 was pegged at 23-mn tons, slipped to 22-mn tons in 2011 and 21.7-mn tons was forecast at best in 2013. This compared with steel production of 55-mn tons in 2008, which rose to 65-mn tons in 2011. Coking coal sourced from Australia accounted for 84.88% of total imports into India, followed by 10.36% from Indonesia and 3.45% from New Zealand. Platts, 8th May.
S.Africa Coal Miner Sets Up Marketing JV with Trasteel
South African coal miner Strategic Natural Resources Plc (SNR) has formed a joint venture marketing company to sell its anthracite coal with Swiss-based trader Trasteel.....The joint venture, EliTra, will be owned in equal parts by Trasteel and SNR's 74 %-owned subsidiary Elitheni Coal Ltd. EliTra, which has sold its first cargo of anthracite to a major Brazilian importer for delivery in December, will focus on the Brazilian and Indian markets....The anthracite to be sold by EliTra will form part of the 2 mn tonnes of coal under the current Trasteel-SNR off take agreement. Reuters, 9th May.
www.globalenergyadvisory.com |
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Energy Trading & Market Dynamics | |
EU Carbon Market
Supply of soon-to-be banned emission credits in the European Union's carbon market may fall short of expectations, boosting this year's prices relative to 2013, according to Bloomberg New Energy Finance. The EU has banned the use of United Nations credits from some hydro fluorocarbon 23-producing chemical factories and adipic-acid manufacturers from its trading system from next May, saying these credits generate excessive profits. Those credits make up more than half of supply in the Clean Development Mechanism; the world's biggest offsetting market. Many of these credits are held by sovereign governments, which may use them for compliance with targets through this year under the 1997 Kyoto Protocol. (New Energy Finance) forecast use of banned credits in 2012, the final year they're allowed, will fall 24 % to 135 mn tons. Bloomberg, 5th May.
Nordic Power Forwards Down As Rainy Period Approaches
Forward Nordic power prices fell on Tuesday due to weather forecasts predicting more precipitation over the hydropower-reliant region and bearish coal prices. Reuters, 8th May.
European Energy Exchange EEX Is Developing Its Transparency Platform To Handle More Information From Its Participants
Under the EU's Regulation on Energy Market Integrity and Transparency (REMIT), which took effect at the end of last year, energy traders have to disclose insider information that could impact power and gas wholesale prices. This includes data on the capacity, use and availability of facilities for the production, consumption, storage and transport of electricity and natural gas. Platts, 8th May.
Australia Predicts A$24.7 Bn Carbon Revenue
Australiaexpects to raise A$24.7 bn ($24.8 bn) in four years from the carbon tax coming into effect July 1, as the government seeks to reduce emissions and spur investment in cleaner energy. The levy on Australia's biggest polluters starts at A$23 per ton of carbon and rises by 2.5 % in real terms in each of the following two fiscal years. Treasury predicts they will reach A$29 in 2015-16, when the mechanism moves to a price set by the marke. The tax is expected to increase consumer pricesby 0.7% in the 12 months starting July 1. Bloomberg, 9th May.
Oil Traders Fear New Regulations Will Lead to Higher Costs
The oil market is bracing itself for a wave of change as contentious regulations begin to come into effect this year, just as soaring oil prices shine a spotlight on the issue of market oversight....Proposed regulatory changes, some of which have already been passed into law, include restrictions on the size of investors' commodity holdings, tougher rules on transparency and insider trading and a push for more products not traded on exchanges to go through central clearing houses. These identify the obligations both sides of a trade have to a contract and also take on the credit risk. Rigzone, 11th May. Global Energy Advisory comment: There is a cost to good risk management this is true but there is also a cost to bad risk management. One of the cost issues described above is that the new regulations will force traders to post margin capital to mitiagte credit risk. We have a cost effective solution for this. It's called: Center.
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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