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News Update: 11th June 2012 |
Greetings!
Please find enclosed our weekly news summary. Please feel free to pass this to anyone who could benefit from it. |
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Energy Investment | |
Energy Saving Appliances to Be Subsidized By China
China is setting aside US$4.2 bn to subsidize consumer purchases of energy-saving household appliances. The subsidy for those who buy energy-saving household appliances can be as high as US$63 per unit. In addition, China is prepared to spend US$942 mn to subsidize consumers who buy energy efficient vehicles. Asia Power, 3rd June.
Germany Moves to Bolster Grid
Germany has announced plans to upgrade and expand its electricity grid over the next decade in order to help renewable energy sources fill the gap left by its phase-out of nuclear power. An investment of some €20 bn ($25 bn) will be needed. World Nuclear News, 5th June.
Osborne in Bid to Slash Spending On Wind Farms
The Observer has learned that George Osborne is pushing for cuts of 25% in onshore wind farms subsidies, a reduction the industry says would "kill dead" the development of wind power sites. Tim Yeo, Tory Chairman of the all party Energy and Climate Change Select Committee, said the Treasury and the Department of Energy and Climate Change were following different agendas. TUNSE/The Observer, 3rd June.
Ambitious Rosatom Looks to 'Ambitious' UK
Russia's state atomic energy corporation Rosatom is interested in entering the UK nuclear market and is beginning preliminary work to do so, officials said at AtomExpo. "We are monitoring the development of the British program closely and we will probably take part," said Komarov. "Great Britain has the most ambitious program in Europe and we are of course interested in this market as a company that can provide the technology and also the funds ... But to progress we need to do a lot of preliminary work, including licensing." World Nuclear News, 6th June.
PM Agrees Major Energy Partnership with Norway
Prime Minister David Cameron and the Norwegian Prime Minister Jens Stoltenberg today agreed a landmark energy partnership between the UK and Norway designed to secure affordable and sustainable long term energy supplies. (It) heralds closer collaboration between the two countries across a wide range of energy activities, including safe and environmentally sensitive oil and gas extraction, long term gas supply, renewable energy investment, electricity interconnection and international climate change policy development. DECC, 7th June.
www.globalenergyadvisory.com |
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Gas | |
Gas Demand to Rise 17% by 2017 on Asia, U.S
Natural-gas consumption may rise 17 % by 2017 from last year as demand surges in Asia and the U.S, according to the International Energy Agency. China's use of the fuel will double while Europe's will remain below the level of 2010, it said. Demand worldwide will climb by 576 bn cubic meters to 3.937 tn, the Paris-based adviser to oil-consuming nations said ..in its first Medium-Term Gas Market Report. That's an average increase of 2.7 % a year, which is similar to the growth during the last decade.... Emerging nations will account for 69 % of the gain. Bloomberg, 5th June.
Coal Seam Gas a Hot New Energy Source?
New Zealand's biggest coal company has confirmed Taranaki as the country's hot spot for future development of a new energy source - coal seam gas. State-owned enterprise Solid Energy is now forecasting that the vast coalfields in eastern Taranaki have the potential to produce enough gas to supply a 400-MW power station the size of Huntly for 45 years. The company says an independent assessment of its coal seam gas acreage in Taranaki indicates it has 858 bn cubic feet (24.3 bn cubic meters) of what are known as contingent resources, which could represent as much as 900 PJ of gas - way up on its previous estimate of 190PJ. Rigzone, 5th June.
USA as a Gas Exporter
The Obama administration is telling Japan and other allied countries they will have to wait before moving forward on plans to buy American natural gas. A dramatic increase in U.S. natural-gas production has led several US companies, including Sempra Energy and Dominion Resources to seek permits from the Department of Energy to export gas to countries that lack free-trade agreements with the US. PO Review, 4th June.
Chinese Gas Demand
PetroChina may take five years to figure out ways to unlock the world's largest natural-gas reserves trapped in shale rock, meaning China must keep buying overseas energy assets to fuel the second-biggest economy. PO Review, 4th June.
ExxonMobil to Invest in Australian Coal Seam Gas
ExxonMobil is preparing to open up a new frontier for the coal seam gas industry in Australia. In doing so, it may help reshape the debate around unconventional fuels that has increasingly pitted the energy industry against farmers and prompted legislators to make large tracts of land off limits to exploration and production. Exxon is setting up a joint venture with closely held Ignite Energy Resources to explore and potentially develop coal reserves of methane gas occurring naturally within more than 16 bn tons of brown coal close to the surface in the Gippsland Basin of southeast Victoria, and over 280 bn tons in deeper seams. Deal Journal Australia, 6th June.
www.globalenergyadvisory.com |
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Oil | |
Iran
The Iranians said last week that they will continue to stockpile highly enriched uranium and are refusing access to the suspect Parchin nuclear site. At this point it does not look as if much will happen at the next round of negotiations with Iran in Moscow on June 18th, and that the EU sanctions will go into effect on July 1st. The Iranian nuclear negotiations also are becoming ensnared with the deteriorating Syrian situation, with Moscow, Tehran, and to a lessor extent Beijing still supporting the Assad government. With the death toll rising and the fighting spreading into Lebanon, pressures for outside military intervention continue to grow. With every passing week, the chances of widespread hostilities, with serious implications for Middle Eastern oil exports. PO Review, 4th June.
OPEC Outlook
What (will) OPEC, meaning the Saudis, do if prices fall much below their announced goal of maintaining oil circa $100 a barrel as the ideal price. It is generally thought that most oil producers require on the order of $75-105 a barrel to make their annual budgets. In 2008 OPEC reacted to the price decline at the $65 dollar level, cutting production sharply and driving prices higher again. Last week the Saudi Finance Minister said that his country would probably react if oil were to drop below $80 a barrel, which is a good bit higher than four years ago and only some $18 below current levels. Considering that Brent has dropped some $18 in the past month and that speculative overshoots work on the downside as well, OPEC production cuts are a possibility before the summer is out. PO Review, 4th June.
Athabasca Oil-Sands
Royal Dutch Shell will expand its Athabasca oil-sands project by a third by the end of the decade and Canada will make up a larger share of Shell's energy production over that period. PO Review, 4th June.
Cushing Stockpiles
The stockpiles at Cushing, Okla. climbed by nearly 1 mn barrels last week to an all-time high of 47.8 mn barrels, despite the reversal of the seaway pipeline which is supposed to be draining oil away to Gulf Coast refineries. PO Notes, 7th June.
Prices
With economic growth slowing across most of the world, the prospect for lower oil demand is still the dominant theme in oil trading. Opinions vary as just where prices are going from here. After the recent 20 % drop in prices; some think we are in for a period of retrenchment. Technical analysts, however, foresee further prices declines as numerous support levels have been broken. PO Notes, 7th June.
Korean Buying Spree Boosts Brent
The price of the world's most important benchmark for oil is being boosted by South Korean refiners buying on the back of a tax loophole involving North Sea Oil. ( This is exploiting the EU South Korea free trade agreement signed in December 2011 which waives a 3% tax for imported oil). FT, 7th June.
www.globalenergyadvisory.com |
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Nuclear | |
China to Resume Nuclear Power Program
Despite the dangers from nuclear reactors highlighted by the Fukushima disaster, China will push ahead with plans to build more nuclear power plants. It has indicated that it will lift its year-long moratorium on new nuclear power plants. China is targeting 60GW of nuclear capacity by 2020. Asia Power, 5th June.
Outstanding Issues Delay EPR Certification
Areva's EPR reactor is unlikely to receive design certification by the US nuclear regulator before the end of 2014, the agency has told the reactor vendor. Design certification for the EPR had earlier been targeted for June 2013.....The NRC has issued a new review schedule to allow Areva to respond to outstanding technical issues previously raised by the NRC and to provide additional information related to new post-Fukushima requirements issued by the commission in February. World Nuclear News, 5th June.
Nuclear Legacy Sites Given All Clear Following Stress Tests
An official report published last week by the Office of Nuclear Regulation (ONR) revealed that the UK's non-power generating nuclear sites had "no serious weakness". The stress tests were undertaken in response to issues arising from the earthquake induced accident at Fukushima. TUNSE/New Civil Engineer, 24th May.
www.globalenergyadvisory.com |
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Renewable Investment | |
Dong In Offshore 'Design Flaw' Fight
Some 190 wind turbines owned and operated by Denmark's Dong Energy are alleged to have defective foundations, according to reports in Danish newspaper, Børsen....Those involved include turbines at Denmark's largest wind farm, Horns Rev 2, where a design error has resulted in cracks in the central parts of the foundations. It is estimated that up to 1,000 offshore wind turbines possess such faults, of which 190 are owned and operated by Dong. The cost of the repairs is unknown, although it is expected that Pension Denmark, which has invested billions in Dong's projects, will be monitoring the situation closely. www.wordaboutwind.com, 6th June.
Siemens, Gamesa Exporting U.S. Made Wind Turbines
Siemens and Gamesa plan to export wind turbines from their U.S. factories as domestic demand stagnates before a renewable-energy tax credit expires in December...European wind manufacturers that invested in U.S. factories to meet growing demand for renewable energy are counting on developing markets in the rest of the Americas to weather an expected slump. U.S. sales are already slowing and are expected to plunge next year if the credit lapses. Bloomberg, 5th May.
Finance Vehicle Could Bring 'Billions' Into Renewables
Giving renewable energy developers access to capital markets through the creation of master limited partnerships (MLPs) could bring $3.2 bn-$5.6 bn of new investment into the sector between now and 2021. MLPs are traded on stock exchanges like corporations, but pay no corporate taxes. Instead, income passes through the partnership to individual investors who pay on their personal tax returns. This ability to access stock market investors, combined with the favourable tax treatment, allows MLPs to secure capital at a lower cost. Windpower Monthly, 6th June.
www.globalenergyadvisory.com |
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Coal | |
India's Thermal Plants Reel from Coal Shortage
About 30 of India's thermal power stations have less than a week's coal to fuel plants. The number of power plants reeling under acute fuel shortage of less than a week stock increased to 30 by the end of May from 27 at the start of May and the number of plants with less than 4-day stock rose from 13 to 19. The 1,320 MW thermal power station at Jhajjar in Haryana remained shut almost the entire month due to shortage of fuel. Asia Power, 3rd June.
Australia Delays OK of $9.7 Bn Coal Project by India's GVK
Australia (is delaying) environmental approval for a A$10 bn ($9.72 bn) coal project proposed by India's GVK Power & Infrastructure, a potential setback in the company's bid to tap voracious appetite for coal in its home market. Environment Minister Tony Burke said "GVK must work with national authorities to secure approval for the project, vital to its coal ambitions" Burke said the new state government was "shambolic" and that its approval fell short of national standards....The scheme is the front-runner among several projects in the untapped Galilee Basin in Queensland, where rival Indian group Adani Enterprises is planning an A$10.9 bn coal and rail project. The decision reflects a tougher national approach to projects which could impact on the Great Barrier Reef off the Queensland coast. Reuters, 5th June.
Shanxi Trims Outdated Coking Capacities
Over the next four years, Shanxi will eliminate coking coal production capacities of 40 mn tons in small factories. The number of individual coking companies will be reduced by 75 %, while the annual average production capacity of coking companies will be increased four-fold. By the end of 2013, the province will form four coking industrial parks with three huge companies, each with an annual production capacity of 10 mn tons, and another 10 companies with annual production capacities of 5 mn tons. China Daily, 5th June.
Australia's Gloucester Coal Shareholders Approve Merger with Yancoal
Shareholders of Gloucester Coal have approved the merger with Chinese-owned Yancoal, which the Sydney-based miner believes will help it stay competitive in a period of soft thermal and metallurgical coal prices. At a meeting in Sydney on Monday, 98.4% of Gloucester shareholders voted in favour of the merger, which will create a company producing around 12 mn mt/year of thermal, coking and pulverized coal (PCI) across operations in Australia and China. Following the merger, Chinese parent company Yanzhou Coal Mining Co. will own 78% of Yancoal, while Gloucester will retain a 9% stake and Hong Kong trader Noble Group 13%. Platts, 4th June.
Floodwaters Pour Into Coal Mine but Power Supplies Safe: Minister
The government has assured Victorians there is no threat to power supplies after floodwaters began spilling into the Yallourn open-cut coal mine, forcing the adjoining power station to operate on a reduced capacity. The Yallourn mine has suffered ''significant leakage" since the nearby Morwell River burst its banks, affecting a conveyor system used to transport coal to the Yallourn Power Station, which supplies 22% of the state's electricity supply and 8% of the national electricity market. The Australian, 6th June.
www.globalenergyadvisory.com |
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Energy Trading & Market Dynamics | |
UK Gas Plants Face Profits Squeeze Until 2016
Nomura analysts said that excess capacity and high running costs threaten to squeeze profit margins for the UK's gas-fired power generators until 2016 spurring some to turn to cheaper coal. Britain's Big Six energy firms, namely Centrica, E.ON, EDF, Iberdrola, RWE and SSE, as well as independents such as Drax and Intergen, expect difficult operating conditions for gas-fired power producers in the medium term, but potential improvement from 2016, Nomura said following an industry-wide consultation. TUNSE/Reuters, 30th May.
El Nino
Colorado State University researchers increased their forecast for Atlantic Storms last week based on the lack of signs that an El Nino is forming in the Pacific. If the El Nino does form, it usually generates winds that tear apart hurricanes before they get too big. Some forecasters are still looking for a mild hurricane season in the Caribbean this year. PO Review, 4th June.
Yo-Yo Weather Effect
European prompt power prices firmed on Tuesday on an expected halving of wind and solar power output in Germany on Wednesday. "It's a kind of yo-yo effect on the day-ahead market, yesterday the trend was the opposite for today," one trader said. Wednesday delivery base load gained E3.10 in Germany to 47.90 E/MWh. In France, the same position gained E2.40 to 48.90E/MWh. Weather data showed wind power will likely drop to 2.5 GW on Wednesday and solar to 5 GW, compared with 5GW and 10GW of materialised capacity usage on Tuesday. This will result from low pressure fronts curbing sunshine, accompanied by cool temperatures and rain, which will lift demand. Reuters, 5th June.
E.ON Faces Double-Digit Million Euro Loss On Trader's "Irregularities"
E.ON, is facing a loss in the lower double-digit million euro range on deals of an ex-trader. E.ON did not disclose whether the losses were incurred by traded contracts of natural gas or electricity in the forward market. Dusseldorf-based E.ON Energy Trading had already terminated the trader's employment when the irregularities were discovered. Now, it is trying to downplay the incident as "irregularities of a single trader". The "irregularities" were already discovered last month, an E.ON spokesman confirmed but he declined to specify the exact amount of the losses. The exact loss will only be known next week, German news magazine Focus reported with reference to unnamed sources. Asked to provide further details, the E.ON spokesperson declined with reference to "ongoing investigations". Gas to Power Journal, 7th June.
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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