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News Update: 2nd July 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 | |
Shift in Power Systems to Cost €335bn
Germany needs a master plan that brings together central and local government policy and provides certainty for investors and project firms if it is to find the $420bn needed to fund a radical shift towards green power...HypoVereinsbank (HVB) put the cost of what Germans call the "energy U-turn" - its move to switch off nuclear plants, increase wind and solar power generation and improve power grids - at €335bn ($420bn). Europe's biggest economy needs substantial investment to build up renewable capacity and connect it with the nine countries on its borders. Reuters, 25th June.
More UK Nuclear Could Add 32,000 Jobs-EDF Report
Expanding Britain's nuclear reactor fleet could boost the UK economy by more than five billion pounds and create 32,000 jobs, a report commissioned by atomic plant developer EDF Energy said. Nuclear energy policy in Britain must first provide long-term guarantees to investors before the manufacturing and economic gains can be realised.... EDF Energy said its decision on whether to invest in building four new nuclear plants with combined output of 6.4 GW in Somerset and Suffolk at the end of 2012 will hinge on the evolution of nuclear policy between now and then. Reuters, 26th June.
S&P Says Capital Markets Are Key to Clean Energy Funding Needs
Financing to meet the needs of the renewable energy sector between now and 2030 will exhaust the capacity of banks and utilities, and lead to the involvement of the capital markets, among others, believes Standard & Poor's Ratings Services....To date, however, the small secondary debt markets and the absence of large volumes of liquid, investment-grade securities have limited the involvement of institutional investors in this sector. Reuters, 26th June.
Pakistan's Power Shortfall Rises to 7.6GW
Load-shedding is being implemented in Pakistan after the electricity shortfall jumped to 7.6GW. Pakistan Electric Supply Company is compelled to observe between 14 and 18 hours of load-shedding in urban and rural areas respectively. Asia Power, 26th June.
RWE Wants Compensation over German Offshore Connection Delay
RWE is to ask the German government for compensation over delays to the connection of the 295MW Nordsee Ost wind farm. Speaking to Der Spiegel, RWE's upcoming chief executive Peter Terium said the company had been in discussions with grid operator TenneT over delays connecting the project. It is expected to be connected a year later than planned. He added that German plans to hit its offshore target for 2020 were in danger unless the issue was resolved. Windpower Monthly, 27th June.
Coalition's Plans to Fuel UK with Green Energy at 'High Risk' Of Failing, Says Watchdog
The Coalition's plans to keep Britain's lights on with green electricity have a "high risk" of failing, the Major Projects Authority has warned. Up to six flagship projects have been classified as "high risk" by the spending watchdog, including new nuclear power stations and key reforms of the electricity market. The authority...described the Coalition's plans to encourage more wind farms and nuclear power stations as "feasible". However, the watchdog is "doubtful" that Britain can have a reliable energy supply from green sources and keep energy bills affordable under the current plans. Telegraph, 28th June.
www.globalenergyadvisory.com |
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Gas | |
PAE Warns Striking Workers to Halt Cerro Dragon Gas Supplies
Pan American Energy LLC, the Argentine energy company partly owned by BP Plc, said that its Cerro Dragon oil field will stop supplying gas to two pipelines "within hours" after about 400 workers occupied the plant. The construction workers were blocking roads to the plant as well as occupying the installations. Bloomberg, 24th June.
Mediterranean Gas Bonanza
The natural gas bonanza in the eastern Mediterranean just keeps getting bigger and so do the geopolitical headaches. Israel, whose exploration is the most advanced, is making new strikes. Cyprus is on the cusp of energy riches and Lebanon is hustling to get its act together to launch exploration of its waters. All this has stirred political tensions in the region, exacerbating old rivalries between Israel and Lebanon and between Turkey and Greece. PO Review, 25th June.
Exxon CEO: 'Losing Our Shirts' On Low Natural Gas Prices
Exxon Mobil Corp is making "no money" on U.S. natural gas due to low prices that have fallen below the cost of production, Exxon Chief Executive Rex Tillerson said. U.S. natural-gas prices--which fell below $2 a mn British thermal units earlier this year to the lowest level in a decade--are not sustainable, as energy companies won't be able to continue drilling unless prices rise. The comments ....come amid a massive U.S. gas supply glut that has kept prices depressed and helped to reduce energy costs for many consumers and businesses. In recent months, demand for natural gas from utilities has surged as firms turn to gas instead of more expensive coal to supply electricity...Exxon has been studying the possibility of exporting natural gas from the U.S. Gulf Coast and Canada as new shale drilling has unlocked natural-gas reserves to allow exports. Rigzone, 27th June.
BP Led Consortium Rules out SEEP Pipeline
A scaled down version of the Nabucco pipeline has emerged as one of two final contenders to be come the chief artery for Caspian gas to Europe as a BP led consortium ruled out a rival project. The consortium developing the Shah Deniz 2 field; is expected to make a final decision between Nabucco and Trans-Adriatic Pipeline (TAP) early next year. FT, 29th June.
Petronas Buys Canadian Gas Producer for $5.3bn
Petronas, Malaysia's state owned oil and gas group,.....took a step towards securing North American LNG for the Asian market by agreeing to buy Canada's Progress Energy Resources Corp for C$5.5bn (US 5.3bn). FT, 29th June.
Santos' Gladstone LNG Project Cost Shoots Up to $18.5bn
Australia's Santos said....that the cost of its Gladstone liquefied natural gas (GLNG) project will increase by $16bn to $18.5bn and that it needs to scour for more gas ahead of its planned 2015 start-up. The increase in the project's cost stems from the fact that Santos will bring forward a $2.5bn expenditure which was initially slated to be spent after 2015. The company needs the extra cash to drill an additional 300 wells. Rigzone, 28th June.
www.globalenergyadvisory.com |
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Oil | |
OPEC
The Organization of Petroleum Exporting Countries, which in its heyday could trigger global economic crises by turning off the oil taps, faces an uncertain future as the shale oil revolution transforms the energy business. OPEC's plight is deepened by a growing confrontation between oil price hawks, like Iran and Algeria, and the so-called doves led by Saudi Arabia, long the dominant member of the cartel, over slumping prices. An emerging alliance between Iran and its traditional rival Iraq, now increasingly under the influence of Tehran following the withdrawal of U.S. forces in December, is also jolting OPEC. PO Review, 25th June.
Libya
Oil production in Libya has reached 70% of the level obtained before the country's civil war began in February 2011. Libya is seeking to boost its oil production by a third to 2 mn barrels a day by year-end, surpassing last year's pre-conflict level. PO Review, 25th June.
Japan
Japan's parliament approved government guarantees on insurance for crude oil cargoes from Iran on Wednesday, paving the way for it to become the first of Iran's big Asian oil buyers to get round new European Union sanctions. PO Review, 25th June.
Coryton Oil Refinery
The Coryton oil refinery in the U.K, owned by Petroplus Holdings before it filed for insolvency earlier this year, has been sold to three companies for use as an import terminal...The three companies buying the site are Royal Dutch Shell Plc, Royal Vopak and Greenergy International. Bloomberg, 26th June.
End of Week Pricing
U.S. oil futures tumbled sharply Thursday on renewed fears that this week's euro-zone summit would again fall short of resolving the crisis. Nymex oil futures settled at $77.69 a barrel, down $2.52, or 3.1%. WTI's sister commodity, Brent Futures, was outperforming the U.S. benchmark somewhat. Brent prices were at $91.67 Thursday, down $1.83. The Brent market has picked up some strength amid a strike of Norwegian oil workers that has so far taken about 250,000 barrels a day off line. Rigzone, 29th June.
www.globalenergyadvisory.com |
| Nuclear | |
Need For Air-Con Overcomes Nuclear Fears As Summer Takes Hold in Japan
Fifteen months after the earthquake, tsunami and subsequent meltdown at the Fukushima nuclear facility, Yoshihiko Noda, the Prime Minister, ordered the restart of two nuclear reactors in the town of Oi, in western Japan. It was, he said, an attempt to protect the country's fragile economy from the threat of power cuts. TUNSE/The Times, 18th June.
Western Firms Tap China Cash to Bid for UK Nuclear
Areva and Toshiba-owned Westinghouse have each teamed up with a Chinese nuclear company to bid for the Horizon nuclear new-build venture. Areva has linked up with China Guangdong Nuclear Power Holding Co while Westinghouse has teamed up with China's State Nuclear Power Technology Corporation. Two other groups are also believed to have expressed an interest in Horizon. In a separate project, EDF is working with Areva and junior partner Centrica to build four EPR's in the UK. TUNSE/Reuters 18th June.
Swedish Security Alert
Sweden raised the security alert level at its three nuclear power plants on Thursday after explosives were found on a truck at the Ringhals plant Wednesday. A quantity of suspicious material was found by personnel carrying out normal security checks, and police sent a sample of the material by helicopter to a crime laboratory which confirmed that it was explosive. However, the material had no ignition device. Police are treating the incident as a case of suspected sabotage. PO Review, 25th June.
British Businesses Remain Hungry For Nuclear
The appetite of UK business leaders for new nuclear generating capacity has not diminished, despite the Fukushima accident, a poll conducted by the Institute of Directors (IoD) of its members shows. The IoD has published a report calling nuclear energy a "clean, cheap and safe" way of generating electricity. In April 2012, shortly after the first anniversary of the Fukushima accident in Japan, a survey of 1117 IoD members found that 84% were in favour of new nuclear in Britain, down from 85% in a pre-Fukushima poll. The results suggest the accident "has had little or no effect on business enthusiasm for new nuclear," according to the IoD. The same survey found that, on average, IoD members also thought that nuclear should account for around 30% of the UK's electricity supply, a significant increase from its current 20% share. World Nuclear News, 25th June.
www.globalenergyadvisory.com |
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Renewable Investment | |
Vestas Scraps U.K. Wind-Turbine Plant as Industry Seeks Clarity
Vestas Wind Systems shelved plans to build one of Europe's largest offshore-turbine factories in southeast England as the wind industry calls for clarity on subsidy programs. Vestas and the Port of Sheerness announced the decision to scrap plans for the facility in Kent. The Aarhus, Denmark-based company had intended to develop its biggest offshore turbine, a 7MW machine, at the plant, creating 2,000 jobs. Bloomberg Business Week, 24th June.
India Harnesses Solar Power to Meet Energy Demands
India desperately needs energy. More than 400mn people still lack access to electricity, and the IEA estimates that India's consumption demands are likely to double by 2035. TUNSE/FT 18th June.
Council Swamped By Wind Farm Applications
Fife council has called on SNP ministers to call a temporary halt to the construction of more wind-farms, saying it is being swamped by "opportunistic" planning applications. The National Grid has revealed that it is struggling to cope with the electricity being produced by existing turbines in windy conditions, compelling it to pay producers to switch turbines off. TUNSE/ The Daily Telegraph ,19th June.
K Road Moapa Solar Project
The U.S. Department of Interior has approved the first utility-scale solar energy project for development on American Indian tribal lands. The 350MW K Road Moapa Solar project will be in Clark County, Nev., about 35 miles north of Las Vegas on tribal trust land of the Moapa Band of Paiute Indians. "This trailblazing project is part of the president's commitment to help build strong, sustainable tribal communities by supporting safe and responsible renewable energy development," U.S. Secretary of the Interior Ken Salazar said. PO Review, 25th June.
Vestas Closes 850kW Factory in China
The closure of the Hohhot plant will leave Vestas with two factories in China, at Tianjin and Xuzhou. In all Vestas have 2,600 employees in the country. Although, Vestas is pulling back on the 850kW range, other suppliers such as Enercon and Gamesa continue to back the turbines. Windpower Monthly, 25th June.
Finance Available For UK Waste to Energy but Eurozone Delays Poolbeg
Difficulties in raising finance as a result of the Euro zone crises are largely to blame for the delays to Covanta Energy's proposed 600,000 tonne per annum Poolbeg waste to energy incineration facility in Dublin, but that winning the contract not the finance is the hard part in the UK - according Covanta's CFO. Waste Management World, 26th June.
Welsh Wind Farms Up for Enquiry
A public enquiry will be held into the application for two Welsh wind farms. The Llanbadarn Fynydd project submitted by Vattenfall and the Carnedd Wen backed by RWE, are due to be examined next year. Both mid-Wales projects will be subject to enquiry under Section 36 of the Electricity Act 1989. Under the terms of the Act, if the local planning authority objects to a project, then the Government is obliged to call a public enquiry. In this case, Powys County Council has raised objections to both developments based on environmental and highway impacts. www.awordaboutwind.com, 29th June.
www.globalenergyadvisory.com |
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Coal | |
Arch Coal
Hundreds of eastern Kentucky miners let go by Arch Coal Inc. this week are facing slim prospects as they look for opportunities to replace those high-wage jobs in a region plagued by stubbornly high unemployment....About 1,500 miners have been laid off this year in his 23-county region in the heart of the eastern Kentucky coalfields. Bloomberg Business Week, 24th June.
Miners Hit By Coal Glut as Prices Slide to Lows
US coal miners have to export an increasing share of their output as power producer's switch to gas. GenOn Energy recently declared force majeure on coal purchases. TUNSE/FT 19th June.
US Coal Industry
The coal-fired power industry in the U.S. is facing the biggest plunge in asset values in a decade, risking billions of dollars in pollution-control spending by utilities such as Exelon Corp. (EXC) and American Electric Power Co. (AEP) ... U.S. utilities are switching to burning gas for electricity and preparing to retire 33GW of coal-fired generation after the U.S. Environmental Protection Agency tightened rules for mercury and other toxins. An indication of how much new emissions rules and cheaper natural gas have hammered the value of coal-burning generation will come when Exelon announces the results of the first big sale of U.S. coal-fired power plants in four years. Exelon, the largest U.S. power company, may have to take a 40 $ discount for three Maryland plants it's seeking to sell by the end of August. Bidders including NRG Energy Inc. (NRG) have offered $600 mn to $700 mn for the units, which have a fair value of $1 bn. Bloomberg, 25th June.
How China Will Restructure the Oil Market (No this is really is about coal)
The low increase in China's oil demand mirrors demand for the country's other main source of energy, coal. According to Wood Mackenzie's, there are 9.5 mn tons of coal stockpiled at the Qinhuangdao port this month, surpassing the previous record of 9.3 mn tons of November 2008. Also holding record amounts of the commodity are the next three largest coal depots: Tianjin, Caofeidian, and Lianyungang. At the same time, there are at least 30 large ships hovering off Chinese ports, waiting to deliver their cargoes of coal. According to the China Coal Transport and Distribution Association, last month thermal coal stockpiles at utilities were up 62.5% from a year ago....The stockpiling of coal suggests the country's economy is now contracting. The most reliable indicator of Chinese economic activity is, according to most analysts, the production of electricity, which was up only 2.7% last month. The stockpiling of coal suggests the country's economy is now contracting. The most reliable indicator of Chinese economic activity is, according to most analysts, the production of electricity, which was up only 2.7% last month. Forbes, 25th June.
www.globalenergyadvisory.com |
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Energy Trading & Market Dynamics | |
S&P Affirms AGL Energy 'BBB' Rating
The rating agency said "AGL Energy has raised more than A$1.4bn in the past three months in order to support its planned acquisition of the Loy Yang A (LYA) power station in the State of Victoria...In our view, this amount is sufficient to not only pay all acquisition costs but also to repay the 2012 debt maturity at LYA, thereby removing a potential large liquidity call for AGL Energy. Although there remains approximately A$150mn to be raised through the completion of the book-build of the retail part of the company's A$900mn equity raising, we believe there is limited risks of any significant shortfall that could threaten the company's liquidity position. As a result, we have affirmed the 'BBB' corporate and debt ratings on AGL Energy". Reuters, 25th June.
Japan to Banish Energy-Hungry Incandescent Bulbs
Japan's drive to stave-off a massive power shortfall this summer takes another route. The government will urge major electronics retailers and home appliance makers to voluntarily halt production and sales of energy-hungry incandescent light bulbs to save power this summer. It will urge Japanese to use energy saving LED's (light-emitting diode) light bulbs, instead. LED bulbs use some 80% less energy than incandescent bulbs and last about 40 times longer. They are expensive, however, but are cheaper in the long run. Asia Power, 26th June.
Carbon at Korea Companies in Market Rose 9.1%
Output of greenhouse gases at 467 companies that will probably be in South Korea's proposed carbon market starting in 2015 rose 9.1% in 2010, according to Bloomberg New Energy Finance. Emissions rose to 515.5 mn metric tons of carbon dioxide equivalent from 472.7 mn tons in 2009....Emissions at Posco, the country's largest steel-mill operator and biggest producer of greenhouse gases, jumped 13% to 73.5 mn tons. That compares with 140.1 mn tons last year for RWE, Europe's biggest emitter. Bloomberg, 28th June.
Glencore Ready to Walk from Xstrata Merger
The commodities trader believes that the demanded share ratio overvalues Xstrata and is prepared to walk away from the long sought after deal. FT, 28th June.
U.S. Weather Promises Energy Boost as Temperatures Rise
Ninety to 100-degree temperatures in the large cities and suburbs of the U.S. East Coast will spike energy demand, raising prices in spot electricity markets. The forecasts helped boost natural gas futures to a five-month high yesterday. Bloomberg, 29th June.
Major Firms Urge Removal 1.4bn EU Carbon Permits
Major companies including Royal Dutch Shell, Statoil and commodities giant Bunge have written to top EU officials calling for the urgent withdrawal of 1.4bn carbon permits to support the market and green investment. A huge surplus of permits because of recession has depressed their price, making it cheaper to pollute and cutting the incentive to invest in low-carbon technology. Reuters, 28th 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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