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News Update: 25th 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 | |
New Nuclear Plant in the Balance
EDF chief executive Vincent de Rivaz warned the Energy and Climate Change select committee.."I think it's very clear that we will not be able to make our final investment decision as we expect to make it at the end of the year without a contract for difference and without a robust legal framework for this contract" he said. TUNSE/East Anglian Daily Times 13th June.
Chinese Ignore Cost of Oil to Lead Emerging Nations' Grab for Power
China accounted for 71% of growth in energy demand during 2011, according to BP's annual Statistical Review of World Energy. Bob Dudley, the BP chief executive, sought to quell fears that the world was running short of fossil fuels. "At today's consumption rates, the world has proved reserves sufficient to meet current production for 54 years for oil and 64 years for gas." TUNSE/The Times, 14th June.
"CCGT's Projects with Less Than 50% Efficiency Will Get No Financing" - Garanti Bank
Financing for new gas-fired power plants is getting tight in Turkey and fewer projects will come to fruition. "Combined-cycle gas turbine (CCGTs) plants with less than 50% operational efficiency will not get financed" Emre Hatem of Garanti Bank said at a conference....He forecast a reduction of the share of gas in Turkey's energy mix from currently 45% to 25% by 2020. Gas to Power Journal, 21st June.
July 3 Deadline For Funding Under £1bn UK CCS Competition Scheme
Plant operators in the UK are requested to apply for funding under the UK's carbon capture and storage (CCS) competition by July 3, DECC confirmed. Designed to develop commercial-scale CCS facilities, the competition will make available £1bn in funding to up to four coal or gas-fired CCS projects. Gas to Power Journal, 21st June.
Tennet To Set Up New Norway Link
The Dutch-German transmission operator TenneT and Norway's grid operator Statnett have announced plans to set up a new HDVC link via the North Sea. The connection is expected to be operational in 2018. The link will allow for the transport of wind energy from North Germany to Norway, and is the second connection between the two countries following the commission of NorNed in 2008. www.awordaboutwind.com, 21st June.
Latest Smart Meter Consultation
OFGEM, the UK's energy regulator, acknowledged yesterday that smart meters do indeed pose a potential threat to the privacy of energy customers. In a consultation document request released on 19 June, OFGEM conceded that others "may be able to access information that is personal" to smart meter customers - including when customers are at home, how they spend their free time and even if they have any medical conditions. EnergyLinx, 21st June.
www.globalenergyadvisory.com |
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Gas | |
Indian Farmers Strike It Rich Amid America's New Oil Boom
It is India's driest state, but now farmers in the poverty-stricken deserts of Rajasthan are reaping an unexpected bonanza - surging demand for guar beans from American oil companies that need them to produce shale gas. The multi-billion-dollar industry in the United States relies heavily on guar gum powder. This year, the American oil industry is expected to import 300,000 tonnes of guar gum - 75% of the India's export total. TUNSE/The Times,11th June.
To Bring More LNG To Japan Takes On New Urgency
Inpex is constructing an LNG terminal on Japan's western coast, which is less prone to earthquake damage, as LNG meets power demand in place of nuclear energy. TUNSE/FT, 11th June.
ExxonMobil Ends Shale Gas Tests in Poland
Poland's hope of hitting a shale gas bonanza has hit a blow as ExxonMobil ended exploration for the unconventional fuel after tests failed to find gas in commercial quantities. FT, 19th June.
Korea Gas to Invest $3Bn in AU LNG Projects
Korea Gas Corp. is eying shale-gas assets in the U.S. and expects to invest in a LNG project there that will enable it to import at least another 3 mn metric tons a year, a company executive said.....Kogas also plans to invest an estimated $1 bn in Royal Dutch Shell's Prelude LNG project and at least $2 bn in the Gladstone LNG project, both in Australia, Mr. Park said. Each project is expected to provide the company with around 3.5 mn tons of LNG annually. Rigzone, 18th June.
New Middle East Pipeline
The Iraqi and Jordanian governments plan to meet in July to discuss construction of a natural gas pipeline. PO Review, 18th June.
Apache Find
Houston's Apache Corp. has announced what it calls the "best unconventional gas reservoir in North America." Apache, the second-largest US independent producer, says the find in the Liard Basin in northeast British Columbia contains enough gas to match Canada's entire current output for almost a decade. PO Review, 18th June.
Total Expects to Keep Same Shtokman Stake
Total expects to retain its 25% stake in the Russian Shtokman project once the partners, including state-owned company OAO Gazprom, renegotiate its original terms, said Total's Chief Executive Christophe de Margerie. The complexity of Shtokman and the emergence of the U.S. as a potential gas exporter, prompted many analysts to question the financial viability of the development, fuelling rumours that the whole project is now endangered. Rigzone, 22nd June.
www.globalenergyadvisory.com |
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Oil | |
The Iranian Confrontation
The West is demanding that Iran's enrichment of uranium be reduced and inspected to the point where it is unlikely that Tehran would be able to quickly build a stock of nuclear weapons. The Iranians seem to want the sanctions to be lifted and their inalienable right to enrich uranium be guaranteed in return for increases in inspections. Indications are that the sanctions on Iran are already having an effect with the IEA reporting that Tehran's exports are already down by 1 mn b/d from the 2.5 mn b/d it was shipping out at the end of 2011. Last week the US announced that seven countries including India and South Korea had been exempted from harsh US economic sanctions as they have been making a good-faith effort to reduce their consumption of Iranian oil. Notably, China was not among the exempted nations, but there are already indications that the Chinese have reduced or plan to reduce their imports from Iran while ostensibly opposing the US and EU unilateral sanctions. Beijing obviously recognizes the danger to its economy that would result from hostilities in the region and sees sanctions as a better alternative.... With the threat of a unilateral Israeli strike on Iranian nuclear facilities looming in the background, the West is unlikely to give to lift any sanctions without clear movement on the Iranian side. Moscow would love the prestige of brokering a settlement, but is currently bogged down with untenable support for the Assad government in Syria, and really does not have much leverage with Tehran in the matter. PO Review, 18th June.
An IEA Appraisal
The Agency believes that thanks largely to a 1.4 mn b/d increase in OPEC output since last winter, global oil production is running about 2 mn b/d above demand in the current quarter. It appears that in addition to steadily increasing OECD stocks, China has started to build its strategic reserves. This is likely out of fear that the various problems simmering in the Middle East could develop into export shortages in the months ahead. PO Review, 18th June.
China Stockpiles
China is hoarding crude at the fastest rate since the Beijing Olympics four years ago as the slump in international prices prompts it to import unprecedented volumes even as refining slows. The world's second-biggest oil consumer built up a surplus of about 90 mn barrels of crude in the first five months of the year. PO Review, 18th June.
Irish Well's Permeabilities Exceed Expectations
Irish oil and gas explorer Providence Resources announced Thursday that it has completed the core analysis of the reservoir at its Barryroe discovery, which is located some 30 miles off the south coast of Ireland. The firm said that permeabilities in the basal oil-bearing reservoir interval have exceeded expectations, while good permeabilities have also been confirmed in secondary logged hydrocarbon-bearing sand. Rigzone, 21st June.
End of Week Prices
Brent crude oil slid nearly 4 % in heavy trading on Thursday, dropping below $90 a barrel for the first time in 18 months as weak economic data from China, the United States and Europe pointed to prospects for slower oil demand. A technical breakdown in crude futures on both sides of the Atlantic spurred further selling, with no bottom in sight, analysts said. Brent has fallen by nearly $40 a barrel since hitting $128.40 in early March, as increased production from Saudi Arabiahas led to a rise in stockpiles. Reuters, 21st June.
www.globalenergyadvisory.com |
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Nuclear | |
Ohi Reactors Cleared for Restart
Permission to restart the first two of Japan's idled fleet of nuclear power reactors has been given by the prime minister following approvals from local municipal and prefectural authorities. Units 3 and 4 of the Ohi plant are both expected to be back at full power by the end of next month. World Nuclear News, 18th June.
Plans Advance for US Reactors in India
Westinghouse and GE-Hitachi are working towards reaching agreements with Nuclear Power Corporation of India Ltd (NPCIL) for preliminary licensing and site development work for the proposed construction of AP1000 and ESBWR reactors in India. Westinghouse announced that it had signed a memorandum of understanding (MoU) with NPCIL agreeing to negotiate an early works agreement (EWA) for the construction of up to six AP1000 units at the Mithi Virdi site in the Saurashtra region of Gujarat. Westinghouse said that the MoU "represents significant progress toward the realization of the India-US Civil Nuclear Agreement signed in 2008." World Nuclear News, 14th June.
Hoax Images of Ukrainian Plant 'Irresponsible'
Ukraine's nuclear energy operator EnergoAtom has confirmed that the Khmelnitsky nuclear power plant is operating normally and has branded the publication of falsified reports and images of the plant a deliberate act to undermine the country's energy security. Central to the misinformation is a video montage allegedly showing an explosion at the plant which has been published on a social networking site, EnergoAtom said. Images and videos from the plant's official web site have been used "in a distorted form" with false textual information apparently to spread rumours about a non-existent fire and explosion at the site, where operations are in fact continuing normally and all radiation levels both on site and in surrounding areas remain at normal background levels. World Nuclear News, 21st June.
www.globalenergyadvisory.com |
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Renewable Investment | |
UK Solar Industry Sidesteps Tariff Cut to Build Biggest Plants
Solar-energy companies are applying to build the U.K.'s biggest projects, sidestepping a cut in state subsidies aimed at limiting new power plants by relying on a decade-old incentive program and tumbling panel prices. The market for utility-scale projects, stymied since the U.K. lowered feed-in tariffs paid to generators in August, may as a result see as much as 600MW of plants built through April, the Solar Trade Association said. That's about four times the level of such installations now operating in the country. Inazin Power Ltd. and Hive Energy Ltd.are among companies proposing plants using Renewable Obligation Certificates first introduced in 2002 and previously only employed in generation such as wind farms. Their use of the incentive program, which gives lower returns compared with the tariffs they used to get, encourages developers to build bigger for economies of scale. The ROCs, which only make sense for solar companies because prices of panels have fallen by half, also aren't limited to facilities of 5MW or less like the feed-in tariffs. Bloomberg, 19th June. Global Energy Advisory Comment: Under the proposed Electricity Market Reform draft legislation, renewable plants coming on line between 2014 and 2017 can choose to have a ROC contract or a new "Feed in Tariff" Contract for Differences (FIT CFD). It's our view that the FIT CFD could put renewable developers into the front line energy trading and introduce significant forecasting risk on to the system. For more information call Aily on 44 207 692 0888.
Vattenfall to Invest €4.2bn Until 2016
Vattenfall has announced that it will invest a further €4.2bn from 2012-2016 to improve and expand its wind power portfolio in Germany, Sweden, the Netherlands, Denmark and the UK. The company also added that local procurement will start work on the Pen y Cymoedd onshore wind farm in Wales this month. www.awordaboutwind.com, 18th June.
Solar Boom Heads to Japan Creating $9.6 Bn Market
Japanis poised to overtake Germany and Italy to become the world's second-biggest market for solar power as incentives starting July 1 drive sales for equipment makers from Yingli Green Energy Holdings Co. to Kyocera Corp. (6971).....Industry Minister Yukio Edano set today a premium price for solar electricity that's about triple what industrial users now pay for conventional power. That may spur at least $9.6 bn in new installations with 3.2 GW of capacity. Bloomberg, 18th June.
www.globalenergyadvisory.com |
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Coal | |
Australian Consolidation
The Australian coal industry underwent a record year of consolidation in 2011, with $19.5 bn worth of completed or pending deals at year's end. And this year, the industry could undergo further consolidation driven by bargain hunters hoping to take advantage of beaten-down shares. Australia is the leading global exporter of coal, and roughly 88 % of the demand for this key commodity derives from five Asian countries. Based on 2010 data furnished by the Australian Coal Association, Japan consumes nearly 40 % of Australia's coal exports, while China (14.5 %), South Korea (13.9 %), India (10.9 %) and Taiwan (9 %) account for most of the balance....Global coal shares have dropped due to a slow down in Chinese demand, as well as fear that an abundance of cheap natural gas will supplant the use of thermal coal for power generation in the US....The relatively strong Australian dollar has also hurt overseas demand for this important export commodity. Additionally, the industry faces two new taxes that could impair miners' ability to invest in new projects and expand existing ones amid an already weak macro environment. An AUD23 per tonne carbon tax as well as a 30 % tax on profits that exceed AUD75 mn will be imposed on select firms in the energy and basic materials sectors starting July 1. Investing Daily, 15th June.
GE Launches New Carbon Capture Technology
General Electric of the US and Sargas of Norway have launched a new technology for capturing carbon dioxide from power plants that they say will be much cheaper than rival processes and commercially viable without government subsidy. (They expect to capture 90% of the CO2 from gas plants)....which can then be injected into oil fields to squeeze out more crude. They expect to be able to supply CO2 at below $30/tonne, the price paid by the oil industry in Texas. FT, 19th June.
Australian Newcastle Port Coal Terminals Face Congestion with 42 Ships in Queue
The number of vessels queuing to load coal exports at Port Waratah Coal Services' two terminals in eastern Australia's Newcastle port jumped to 42 on Monday from 34 a week ago, according to the Coordinator for the Hunter Valley Coal Chain website. The coordinator has forecast that the number of vessels waiting in queue at the terminals will grow to 50 by next week, as traders and coal exporters in the Newcastle thermal coal market wrestle with the rising tide of cargo defaults by buyers in China. Market participants said that up to 10 Australian thermal coal cargoes from Newcastle port may be at risk because customers in China were declining to accept responsibility for the shipments despite agreeing to buy them. Sellers would then have to find alternative buyers and this could result in shipping delays, traders said. Platts, 19th June.
www.globalenergyadvisory.com |
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Energy Trading & Market Dynamics | |
Gazprom Leads the Field in Bids for EdF Power Station
Gazprom is understood to be among the front-runners to buy Sutton Bridge power station in Lincolnshire, which is being sold by EDF. A successful buy would provide Gazprom with a UK production base and is seen by some analysts as a prelude to a more aggressive attempt to consolidate its position in the UK market. At one time the Kremlin-controlled energy giant was seen as a prospective bidder for Centrica. The EDF sale is part of a disposal deal agreed with the EU commissioners in Brussels. TUNSE/ The Daily Telegraph 11th June.
UK Prompt Gas Rises on Norway Import Dip
British prompt gas prices rose on Monday (18th June) following a drop in imports from Norway, but demand remained well below seasonal norms due to ongoing maintenance on the main pipeline for exporting gas to continental Europe. Gas for within-day delivery rose 1.40 pence to 55.40 pence per therm, a five-day high, as the gas market was undersupplied, while day-ahead gas added 0.10 pence to 54.60 pence....Flows on the UK-Norway Langeled pipeline nearly halved overnight to around 25 mn cubic metres per day (mcm/d), National Grid data showed. The drop in imports could be related to reduced output from Norway's Aasgard gas field, which feeds the country's Kaarstoe gas processing plant which sends some of its gas to Britain. Reuters, 18th June.
UK Winter Gas Hits 14-Month Low as Oil Slumps
British gas for delivery this winter hit a 14-month low on Tuesday as Euro debt fears dragged crude oil prices to matching lows and dented demand for natural gas. Gas delivering in winter 2012 slumped to levels last seen in the first-quarter 2011 at 63.85 pence, losing about 15 % since the latest down trend began in March. Long-term gas prices lag movements in the price of oil by up to six months, but sharp drops in oil markets often feed more directly into the forward gas curve. Reuters, 19th June.
Baker Hughes Norway Strike Called Off
The strike involving Baker Hughes staff in Norway has been called off, according to the Norwegian Oil Industry Association (OLF) and SAFE - the Norwegian union for energy sector workers. Rigzone, 19th June.
European Power Spot Eases On Ample Wind, Solar Power
European spot power prices fell on Thursday (21st) on the back of forecasts showing sharply higher wind and solar output in Germany. The German day-ahead base-load position fell by 5.50 €s at 41.50 €s ($52.32)/MWh while the corresponding contract in France fell by 4.50 €s to 41.75. Renewable energy output was expected to reach 20 GW on Friday in Germany, including 9 GW of wind power, up from a total of 12 GW on Thursday. The summer price trend was lower, with no sign of a heat wave that would boost power consumption. Along the forward curve, front-year power contracts eased slightly, tracking oil hitting 18-month low near $90 on weak data. Reuters, 21st 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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