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Energy Cooperation

Yeo to lead Malaysian delegation to 37th AMEM

4 September 2019

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Malaysia

YEO Bee Yin (picture) will be leading the Malaysian delegation to the 37th Asean Ministers on Energy Meeting and Associated Meetings (AMEM) in Bangkok, Thailand, to increase the country’s visibility in the regional energy landscape.

In a statement, the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) said Minister Yeo will exchange views with her counterparts — namely the Asean energy ministers, East Asia Summit energy ministers and Asean Plus Three energy ministers — at the three-day meeting, which is being held from today, Sept 4.

Among areas to be discussed are regional energy (RE) cooperation and renewable energy action plan to boost Malaysia’s partnership with other Asean member countries towards a sustainable energy future, it said yesterday.

MESTECC said the meeting also serves as an important platform for Yeo to further strengthen the international collaboration with key international energy-related organisations such as the International Energy Agency and International Renewable Energy Agency.

“Asean’s progress towards achieving its targets as outlined in the Asean Plan of Action for Energy Cooperation 2016-2025 (APAEC) Phase 1 (2016-2020), including the aspirational target of achieving 23% of RE in the total primary energy supply by 2025, will be discussed at the meeting.

“In addition, Malaysia will also share its success stories, as well as the challenges faced in increasing the RE targets in the country’s electricity mix to 20% in 2025,” it said.

The ministry also noted that among other topics to be discussed is the way forward for the APAEC Phase 2 (2021-2025).

This would allow Malaysia to streamline the action plan with the 12th Malaysia Plan (12MP) since the 12MP period coincides with the APAEC Phase 2 implementation, it added.

MESTECC is also expected to issue a joint statement with other corresponding ministries to reaffirm the country’s commitment in supporting the Asean Power Grid initiative.

According to the statement, Yeo will hold bilateral meetings with her Asean counterparts from Thailand, Singapore and Indonesia to deepen cooperation and explore new opportunities that will benefit Malaysia.

“An engagement session will also be held with the Malaysian diaspora in Bangkok to update on Malaysia’s electricity supply industry,” it said.

Oil & Gas

Asia’s naphtha crack rises

4 September 2019

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Malaysia

Asia’s naphtha crack rose to $13.80 a tonne on Monday after falling to its lowest since June 18 late last week. Still, the intermonth spread, the difference between prices for second-half October and second-half November, remained in a contango structure for the second straight session after flipping into negative territory for the first time since June 18.

A contango structure typically reflects oversupply.

Malaysia’s Pengerang Refining and Petrochemical (PrefChem), which in June had imported naphtha for its new 1.2 million tonnes per year cracker, is now exporting the fuel.

It has exported at least two naphtha cargoes, one of which was for late August loading to a trading house. Another cargo for early September loading was sold to oil major BP at discounts in the high teens a tonne level to Japan quotes on a free-on-board (FOB) basis. It may continue to offer naphtha given that its 300,000 bpd refinery is in operational mode, but the status of its cracker is not immediately clear.

Petronas, co-owner of PrefChem with Saudi Aramco, did not immediately respond to a request for comment. India’s HPCL sold 30,000 tonnes of naphtha for September 13-15 loading from Vizag at premiums close to $10 a tonne to its own price formula on a FOB basis. Nayara Energy has sold up to 35,000 tonnes of the fuel for September 24-28 loading from Vadinar at premiums of $12 to $13 a tonne to Middle East quotes on a FOB basis.

Bapco has sold up to 75,000 tonnes of naphtha for first-half November loading from Sitra at levels around the mid-teens a tonne premium to Middle East quotes on a FOB basis.

Others

Malaysia needs RM33b to achieve 2025 green energy target

4 September 2019

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Malaysia

KUALA LUMPUR: Malaysia will need RM33 billion worth of investments to boost the renewable energy (RE) part of the country’s energy generation mix from the 2% recorded in 2018 to 20% by 2025, according to Energy, Technology, Science, Climate Change and Environment Minister Yeo Bee Yin (pic).

The investment needed to reach the RE target, which excludes power generated from large hydropower generators of more than 100 megawatts (mw), will not come solely from the government, but also from public-private partnerships as well as private financing.

“We are looking at how to incentivise more RE investments. One of the things we are focusing on, besides regulatory framework [and] policies, is financing. That is why the government has come up with this green financing plan… The RM33 billion of investments cannot purely rely on government funds, we need to incentivise private financing.

“The Securities Commission has already done a six-month study on green financing. They formed a green financing task force and gave a report on 21 action items to facilitate the RM33 billion investments in RE. The government will look through all the action items and implement [them] accordingly,” Yeo said.

Part of the government’s efforts to incentivise private financing include institutional reforms, besides continuing with existing government incentives like the Green Technology Financing Scheme, Green Investment Tax Allowance and Green Income Tax Exemption, to help RE players, she added.

Yeo was speaking to reporters after officiating the inaugural 5-in-1 Power and Energy Series here yesterday, where she shared updates about the third cycle of the large-scale solar (LSS3) scheme, which is currently under technical evaluation, following the completed price ranking process undertaken by the Energy Commission.

She said Malaysia’s energy industry will start seeing a more competitive and diversified power generation mix as bidding under the LSS3 scheme showed that solar-based electricity generation is cheaper than gas-based power production.

“The first four projects, which amount to 365mw out of the 500mw, were bid at prices lower than the gas[-based power] generation cost, which is 23.22 sen [per kilowatt hour (kWh)] right now, with the lowest being 17.77 sen per kWh.

“The 500mw will likely close below 24 sen [per kWh], pending the technical evaluation, which is a very sharp reduction and good improvement compared to LSS2,” Yeo said, adding that the reference price from LSS2 was 32 sen per kWh.

The lower prices can be attributed to technological advancements as well as open bidding, said Yeo. “It is important the government does open bidding and tender for projects, so that [prices] can be competitive.”

In February, the Malaysian government called for bids for an estimated RM2 billion worth of projects under the LSS3 scheme to increase electricity generation from renewable sources. Yeo was quoted as saying then the competitive bidding process, involving 500mw of electricity, would be opened for six months till August, and that the outcome was expected by year end.

When asked if the LSS3 scheme will translate into cheaper electricity for consumers, Yeo said final electricity prices also depend on factors other than generation cost.

She also said the 500mw solar capacity under LSS3 is only a small fraction of the country’s total installed capacity of 24 gigawatts. However, the increased usage of RE will make Malaysia less reliant on fuel prices for electricity generation, she said.

“Malaysia is still taking its baby steps, but now is a good time for us to increase our solar energy use since prices are more competitive than before. Previously, prices were not as competitive and therefore to use solar on a large scale back then would have affected our tariffs.

“As solar is intermittent, how we can use solar during the daytime and gas by night will be under the government’s planning. The most important thing for the government now is transparency, as this is what the industry and consumers want,” she added.

Eco Friendly Vehicle

Electric vehicles to gain traction in Indonesia: BPPT

4 September 2019

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Indonesia

Jakarta (ANTARA) – The Agency for Technology Assessment and Application (BPPT) affirmed that electric vehicles will pick up steam in Indonesia, with more charging stations being set up nationwide.

The agency has organized the Indonesia Electric Motor Show (IEMS) 2019 on Sept 4-7 in Jakarta to promote the use of electric vehicles in the country.

“The IEMS 2019 is initiated by BPPT to offer a broader understanding to the public in Indonesia on electric vehicles as a new form of disruptive technology,” BPPT Head Hammam Riza remarked at the opening of the exhibition here on Wednesday.

The BPPT is ready to foray into the era of electric-based vehicles in Indonesia, particularly in the face of the deteriorating air quality owing to pollution.

Riza stated that the exhibition is projected to sway people into using environment-friendly electric vehicles.

The closing of the exhibition will be marked with a convoy of electric vehicles starting from the BPPT’s head office on Thamrin Street, Central Jakarta, to the Center of Research, Science and Technology in Serpong, South Tangerang.

State-owned electricity company PT PLN had earlier affirmed its support to the development of Electric Vehicle Charging Stations (SPKLU) following the issuance of Presidential Decree No. 5 of 2019 on electric vehicles.

“We will facilitate all parties keen on developing electric vehicles,” PLN Acting President Director Sripeni Inten Cahyani stated, adding that the company will offer two business schemes: Company Owned Company Operated or COCO and Partner Owned Partner Operated or POPO.

Furthermore, PT PLN will offer a 75 percent discount for electric motorcycle owners and free charge for electric car users to augment power capacity, so they will have sufficient electricity to charge their vehicles at home.

On a separate occasion, Energy and Mineral Resource Minister Ignasius Jonan had appealed to the local government to facilitate the development of SPKLU in their respective regions. Related news: Indonesian-made electric cars can be competitively priced: President

Others

Indonesia’s new capital will be an environmental disaster – and yet another protected rainforest will be destroyed

4 September 2019

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Indonesia

Building a new capital city from scratch in a jungle-covered area with little to no infrastructure and moving nearly 1 million civil servants to the city within 5 years is definitely a mammoth and expensive undertaking.

And yet, it’s what the government of Indonesia has decided to do. President Joko Widodo recently announced that the country’s capital will be relocated from Jakarta to a yet-to-be-built city in the east of Borneo island, more than 1,000km away.

The Indonesian government reasoned that the country’s capital needed to be moved as the current capital, Jakarta, is rapidly sinking and is suffering from chronic traffic jams and choking air pollution.

Furthermore, the government also justified its decision by arguing that the relocation will open up new opportunities to develop the economy of the Indonesian part of Borneo island, called Kalimantan, and shift away the focus of the development from Java island. Java has been the economic and political center of Indonesia for decades, accounting for 65 percent of the country’s economy.

Despite the challenges that come from designing new capital cities from scratch, more than 30 other countries have succeeded in relocating their capital cities to newly built ones. And thus, relocating the capital of Indonesia might not be that far fetched of an idea.

The government said there’s enough land available for the new capital, which will occupy 180,000 hectares of areas, and that it’s confident that it would be able to secure the 466 trillion rupiah ($33bn) needed for the relocation.

Construction is expected to begin as early as 2021, pending approval by the parliament, and last until 2024, when Widodo’s second and last term in office ends.

Moving the capital will give a second chance for the government to start from scratch. A lack of proper urban planning and rapid urbanization have made Jakarta inhospitable. It is currently one of the fastest sinking cities in the world as households, mega malls and luxury hotels drain the crowded city’s aquifers resulting in the ground caving in.

Jakarta is currently sinking by up to 6.7 inches per year and by 2050, 95 percent of North Jakarta will be submerged.

Will the government learn from its past mistakes in mismanaging Jakarta? Or will it repeat the same mistakes in the new yet-to-be-named capital city?

At first, it looks like the government is hell-bent on not repeating the same mistakes by touting that the infrastructure of the new capital city will be developed in a sustainable and environmentally-friendly way.

The government brands the new capital as a “smart and forest city”. Various officials have also repeatedly reassured that the construction of the new city will not harm the environment, despite the fact that parts of the city will be located in a protected forest area.

Instead, the government promised that the protected forest area would be reforested and that the unique ecosystems of East Kalimantan will be protected.

The government is currently conducting a strategic environmental study, expected to be finished in November, to make sure that the construction of the new city doesn’t entail the destruction of rainforests.

But experts have pointed out that there are still many questions that needed to be answered by the government for the construction of the new capital city to be truly considered “green”.

For instance, could deforestation be truly avoided when building the new capital city? A recent study evaluating ongoing and planned large-scale road-building projects in the Indonesian part of Borneo island shows that they will lead to further fragmentation of forests resulting in a drastic reduction of forest habitat accessible to wildlife, including critically endangered species such as Bornean orangutans.

That study hasn’t taken into account the capital relocation project and thus it’s possible that the projected forest fragmentation is even greater with more roads planned in the future to support the new capital city. The government, however, hasn’t shared details on how the project will avoid deforestation.

Oil & Gas

DOE highlights role of transport sector in reducing oil consumption

3 September 2019

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Philippines

CEBU CITY, Philippines — The Department of Energy (DOE) projects that the transport sector would contribute 70% of the total reduction in oil consumption by 2040.

This was revealed by Michael Sinocruz, chief of DOE Energy Policy and Planning Bureau planning division, during the public consultation on the Philippine Energy Plan held at Hotel Elizabeth in Archbishop Reyes Ave., Cebu City on Tuesday, September 3.

Sinocruz explained that this projection is based on DOE’s Clean Energy Scenario (CES) assumptions.

The CES assumptions include 10,000 megawatts additional renewable energy; the entry of coal and natural technologies; and additional 5,500 megawatts from other emerging technologies by 2040.

The DOE also projected an increase of 20% each for biodiesel and bioethanol blending also by 2040.

If this would be achieved, Sinocruz said the transport sector would contribute 70 percent of the total reduction in oil consumption by 2040.

CES assumes that oil products will account for only 25.8 percent of total energy supply mix by 2040.

Natural gas will account for 15.2% while renewables and other technologies will account for 34.3% and 5.9%, respectively.

On the other hand, coal will contribute 18.7% to the power generation mix.

From 2009 to December 2018, DOE has awarded 909 renewable energy projects with a potential capacity of 31,635 megawatts.

So far, Sinocruz said the installed capacity has reached 4,701 megawatts.

Hydropower and solar comprise the bulk of approved renewable energy projects at 474 and 263 projects, respectively.

The other approved projects include wind (73); biomass (60); geothermal (38); and ocean (1).

Meanwhile, 11 biodiesel producers are estimated to produce 574.9 million liters annually. Bioethanol production is estimated at 380.5 million liters each year. / celr

Energy Cooperation

First Gen picks Japanese firm as EPC contractor for LNG terminal

3 September 2019

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Philippines

FIRST GEN Corp. has chosen Japan’s JGC Corp. to handle the engineering, procurement and construction (EPC) of its liquefied natural gas (LNG) terminal project in Batangas City, the Lopez-led company said on Monday.

“This marks the conclusion of an extensive EPC tendering phase which commenced in 2014, during which around 22 companies were invited and 18 expressed an interest to participate in the tender process and work on the [FGEN Batangas LNG Terminal] Project,” it told the stock exchange.

First Gen is developing the project through its subsidiary FGEN LNG Corp., which completed pre-development work to make the site construction-ready. The unit held a groundbreaking ceremony in May this year at the First Gen Clean Energy Complex in barangays Sta. Clara, Sta. Rita Aplaya and Bolbok, Batangas City.

Jonathan C. Russell, First Gen executive vice-president and chief commercial officer, said the group was looking forward to working with JGC on the project, which the Department of Energy (DoE) certified last month as an “Energy Project of National Significance.” The certificate allows a faster permitting process, among other perks.

Mr. Russell said the LNG terminal is crucial to ensure the continued operations of the country’s 3.2-gigawatt existing natural gas-fired plants “given the expected and continuing reduction in gas supply from the Malampaya field up to the expiration of the contracts by 2024.”

Ahead of 2024, First Gen said its immediate focus, along with JGC, is to complete a detailed study on modifications that can be made to the group’s existing jetty that would allow the facility to receive large- and small-scale LNG vessels, and to continue to receive liquid fuel.

First Gen will then look to start building the modified jetty “as soon as possible.” The early completion of this work will allow bringing in a floating storage regasification unit (FSRU) on an interim basis during the Duterte administration.

“This would reduce the strain on Malampaya as its reliability continues to decline up to 2024, increasing the energy security of the Philippines and reducing the number of times that FGEN will be requested to run on liquid fuel when Malampaya gas is unavailable,” Mr. Russell said.

The FSRU will allow First Gen to receive LNG as early as 2021, or before the expiration of the Malampaya gas contracts. The LNG storage ship has an onboard regasification plant capable of returning the liquefied fuel back into a gaseous state. The gas can then be supplied directly to some or all of the company’s existing power plants.

Mr. Russell said the early completion of the facility would also enable LNG “to immediately become a fuel choice for any developer that is considering the building of new gas-fired power plants with a lower carbon footprint.”

The move will support the entry of more intermittent renewables as an alternative to building new coal-fired power plants and also offer a potential means for the Ilijan project to receive gas after its contract with Malampaya ends in 2022, he added.

First Gen described the project as possibly “the most significant energy infrastructure project to be undertaken in the Philippines in more than two decades.”

In March 2019, FGEN LNG received the formal approval of its application for a “notice to proceed” (NTP) from the DoE as defined in and required by the Philippine downstream natural gas regulation. The unit has requested the agency to extend its NTP by a further six months.

The entry of JGC comes after First Gen in December 2018 signed a joint development agreement with Tokyo Gas Co., Ltd., which is taking a 20% participating interest in the project. The signing is a preliminary agreement between the parties to jointly pursue development of the LNG terminal.

First Gen described JGC, as focusing on consulting, planning, basic and detailed design, materials and equipment procurement, construction, commissioning, operation and maintenance services for various process plant and facilities, as well as power generation investment and operation, and technology development services.

Established in 1928 in Yokohama, Japan, JGC is listed on the Tokyo Stock Exchange and has built more than 20,000 projects in more than 80 countries, it added.

“These projects have centered on the oil and gas sector, including oil, natural gas, petrochemicals, and gas chemicals, as well as a variety of other business sectors including energy infrastructure,” First Gen said.

On Monday, shares in First Gen rose by 1.14% to P26.70 each.

Others

Cebu LGUs urged to create energy plan

3 September 2019

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Philippines

CEBU CITY — The Department of Energy (DOE) on Tuesday urged local government units (LGU) in Cebu to create their own energy plans to secure their respective energy supply as well as help steer the country closer towards sustainable prosperity.

Michael Sinocruz, Planning Division chief of DOE’s Energy Policy and Planning Bureau, made the exhortation during the public consultation and information, education and communication campaign on the Philippine Energy Plan 2018-2040 at Hotel Elizabeth here in Cebu City.

Sinocruz said local energy planning is very important as this would help execute projects and programs cited under the Philippine Energy Plan (PEP).

“The LGUs must include their energy plans in their local development planning as these are essential in our exploration of potential energy sources. The programs and plans under the PEP must be highlighted in the local development plan of the LGUs,” Sinocruz said in Tagalog.

Energy Power Industry Management Bureau assistant director Irma Exconde also said LGUs have a very important role in development planning.

“Vital information and inputs from the LGUs’ energy plan will help us determine how much power supply will be needed for the arrival of new industries in their locality,” Exconde said in Tagalog.

She said the local energy plan will also help power utilities determine if they have enough supply to meet the requirement or demand of consumers.

DOE Visayas OIC-Director Jose Rey Maleza said Bohol has already formulated its local energy plan years earlier, but it hasn’t been strengthened yet.

Maleza said the municipality of Alegria, Cebu has also organized its local energy group and, with the help of DOE, will be officially activated in December.

“We are encouraging other LGUs to do the same. Although the Visayas Regional Energy Plan has already been scheduled to be held next year, we are still encouraging the LGUs to have their own energy plan,” Maleza said.

He said local energy plans must include not only power, but also other aspects of the energy sector, like utilization of renewable energies and the use of alternative fuels and energy technologies.

The public consultation aimed to inform stakeholders of the country’s energy demand and supply outlook for the planning horizon as well as the roadmaps of the energy sector towards the fulfillment of its overall objectives by 2040.

It was attended by officials of other government agencies, representatives of electric cooperatives, and power and energy stakeholders in the Visayas. (PNA)

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