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  • Energy Cooperation
4 September 2019

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  • Philippines

SHELL Philippines Exploration BV (SPEX), operator of the Malampaya deep water gas-to-power project, said Tuesday there are discussions with the Department of Energy (DOE) on its formal request to extend Service Contract (SC) 38.

SPEX managing counsel Kiril Caral said the letter request was filed in “late 2018” and there has been no formal reply from the DOE since.

“There was a letter that was sent… in late 2018 informing the DOE that we expressed our interest in having SC 38 extended. SC 38 allows us for extension. That’s one of the options available within SC 38,” said Caral during the Powertrends 2019 press conference.

SPEX is part of the Malampaya consortium awarded a license to conduct exploration activities under SC 38, which is set to expire in 2024.

Caral said SC 38 could be extended for a maximum of 15 years but it is up to the DOE to grant its request.

A request for extension was submitted and it’s something for the government to decide.

It’s a matter ultimately for the DOE to discuss and inform the Malampaya consortium on what it intends to do on the extension.

Caral said they will await feedback from the DOE on “what they would want us to do for the extension to be granted. They have not given a specific time frame but of course, we are aware that the contract would expire in 2024. It has to be earlier than that.”

This is the first time that SPEX has admitted that it asked DOE to extend its license. Caral said there is no need to file for another request, saying there were previous discussions with the DOE. “It’s ongoing. It’s under discussion, so no decision yet.”

SPEX had said the Malampaya gas reserves could last between 2027 and 2029, depending on the demand. It is also possible that there could be new gas discovery within SC 38. “Yes, there’s still gas after 2024 but the question is, of course, how much and that will depend on what happens in the next few years. In SC 38, there have been discoveries that are not yet being produced. Those are the logical areas where you might drill the wells,” he said.

The Malampaya project is developed and operated by SPEX with a 45-percent stake on behalf of joint-venture partners Chevron Malampaya Llc., also with a 45-percent stake, and PNOC-EC (Philippine National Oil Co.-Exploration Corp.), which holds the remaining 10 percent.

40 percent of Luzon needs

The gas facility supplies 40 percent of Luzon’s power requirements and 30 percent nationwide.

The gas facility fuels the following gas plants: the 1,000-megawatt Santa Rita, the 500-MW San Lorenzo, the 1,200-MW Ilijan, 97-MW Avion and the 414-MW San Gabriel.

Caral said the government has received a “significant contribution” of $11 billion as of August this year from the Malampaya facility since commercial operations started in 2001.

Last month, Sen. Sherwin Gatchalian, Senate Energy committee chief, said SPEX wants to extend its contract to 2030 so it can explore other potential areas near SC 38 in hopes these could yield more natural gas and extend the life of the Malampaya gas facility until 2030.

“We heard that Shell is willing to explore more around that area. In fact, there are three or four potential areas around SC 38 and that will eventually extend the same quantity. That is only a briefing to us by Shell but we also want to understand how that will affect the LNG [liquefied natural gas] terminal, knowing there are now new prospects. Because if I am the LNG terminal, why would I import if there is still [gas] by 2030. My $2-billion [investment] will be sleeping,” Gatchalian had said.

New advocates’ group

Meanwhile, a group of energy advocates formed the Philippine Energy Independence Council (PEIC) in order to move the government and the private sector to explore new indigenous, renewable, and cleaner energy options for the country.

The PEIC aims to initiate and sustain specific conversations on indigenous energy, renewable energy, energy security, energy independence, and other pertinent concepts with the youth, with rural communities, and with local and national government officials.

PEIC is the first formal association in the country committed mainly to achieving the Philippines’s energy independence. “Our council aims to be at the forefront of initiatives to continuously initiate public discourses in order to move government and private-sector decision-makers to beef up our energy reserves,” noted PEIC Chairman Dr. Tony La Viña. “We hope that these discussions can lead to concrete steps toward the goal of energy independence.”

  • Energy-Climate & Environment
4 September 2019

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  • Singapore

Yesterday, the CEO of Temasek Holdings Ho Ching shared an article published on Today that outlines several measures Singapore can embrace to be active in the fight against climate change. The article, written by Group Chief Executive and Co-Founder of Sindicatum Sustainable Resources, Assaad W Razzouk proposed that the government mandate temperature settings in buildings, ban single-use plastic, embrace electric mobility, and back renewable energy and reforestation among other measures.

Ho Ching, as we know, shares many posts on her Facebook page each day. This one, however, stands out because of her comments on the story and the fact that she engaged with a commenter.

In her post, Mdm Ho countered these strong measures suggested by the author of the Today article, saying “Even if SG completely shuts down, and all of us collectively stops breathing, it won’t stop climate change, unless the whole world acts promptly and together.”

She then proposed three things that Singapore has to do to combat this pressing problem.

First, she says that Singapore has to collect data pertaining to climate change that is relevant to Singapore. Second, she says Singapore has to take measures relevant to its climate change issues – such as reducing greenhouse gas emissions. Everyone has to play their part, she says.

“[Government] is already making a move on carbon tax, which will be increased over time. MEWR has already a multilayer programme in place starting with climate awareness last year, and zero waste this year. Zero waste masterplan has been launched – we can all play a part,” she wrote.

Mdm Ho highlighted that in Singapore, the biggest issues are electronic waste, packaging waste and food waste among others. And in the context of Singapore, water and electricity efficiency should be taken into consideration.

Finally, Mdm Ho notes that the most serious consequence of global warming in Singapore is rising sea levels, which will leave the country “derelict” left unaddressed.

“Again, we need to experiment what works, what makes sense, how it can be done more sustainably and economically,” she explained.

Mdm Ho then emphasised the age-old adage which she says remains relevant: Reduce, Reuse, Recycle.

In her reply to a comment on her post, Mdm Ho reiterated that the challenge of climate change is “real and big” and that everyone has a part to play but concedes that change takes time.

She highlighted, “The S$5 per ton of CO2 emission in SG for key producers is a case in point. The producers take time to improve or change their hardware or processes, or find other solutions to reduce emissions.”

She then explained that the changes being made are “largely invisible to the public” but are meaningful nonetheless. She narrows in on packaging waste specifically, saying “we certainly can do more in terms of facilitating a good recycling culture”.

She added, “Rather than demonise all plastics, we can start with the ones most difficult to recycle – that would be styrofoam disposables for food. Other styrofoam packaging solutions would need to go upstream to the producers eg styrofoam packaging for electronic and electrical goods.”

In his National Day Rally speech this year, Mdm Ho’s husband, PM Lee Hsien Loong raised the issue of climate change. He noted that it was “one of the gravest challenges facing humankind” and acknowledged that Singapore is experiencing the impact of global warming already, warming twice as fast than the global average.

He said in his speech that Singapore would need at least S$100 billion to tackle the issue effectively and that a budget will be put aside for that.

Singapore can and should do more

While that’s commendable on the part of the government, it is ironic that while S$100 billion is being committed to fighting climate change, the Land Transport Authority (LTA) is apparently reluctant to skirt around the Central Catchment Nature Reserve(CCNR) for the new Cross Island Line. The CCNR is Singapore’s last remaining primary forest.

The LTA has released two phases of the Environmental Impact Assessment so far, still studying the matter that has been debated since 2013. The first option of building a tunnel underneath the CCNR has many environmentalists worried about the impact of both construction and operation of a rail line would have on the forest and its inhabitants. The second option which skirts around the CCNR is a longer route and would cost an estimated extra $2 billion. LTA says it is still weighing its options.

Many have argued that Singapore’s efforts on the issue of climate change could be much more aggressive than it currently is. The author of the article on Today, Mr Razzouk, highlighted several serious measures that Singapore can and should take if it wants to be on the frontlines in addressing climate change instead of just reacting to its impact.

Mr Razzouk suggested a government mandate on temperatures at shopping malls and office buildings, keeping it at a minimum of 25°C instead of the freezing cold levels it is are at now which requires more energy and leaves a bigger carbon footprint. He also suggested that building codes mandate that buildings are designed so as not to need much cooling in the first place. Additionally, he proposed a nationwide ban on single-use plastic or at least an introduction of a plastic bag fee.

Shift from fossil to electric mobility

Next, Mr Razzouk suggested that the government make a conscious effort to enhance electric mobility by converting its public transport system from being fossil-fuel-powered to electric as well as by building more bicycle lanes.

“It’s incredible that Singapore’s amazing public transit system is anchored around fossil-fuel-powered buses everywhere, gingerly polluting the air together with diesel-powered school buses and trucks and petrol-guzzling cars,” he lamented.

He noted how Shenzen, China took less than five years to transform all it’s 16,000 buses and 20,000 taxis into electric ones even with China’s GDP per capita being only 15% of Singapore’s.

Mr Razzouk’s exasperation is understandable. Just this year in January, Telsa founder & CEO Elon Musk tweeted that the Singapore government has been unwelcome to Tesla Inc. in a response to a tweet asking why his car company isn’t in Singapore.

In response, the LTA explained that while the Model S doesn’t use petrol, it still requires charging via electricity and in Singapore, electricity is still generated using fossil fuels – so the car isn’t really carbon free. The combination of the Tesla Model S power consumption and the COS emission at power plants puts the car’s emission at 222g/km, which places it in the $15,000 surcharge band of the Carbon Emissions-based Vehicle Scheme instead of a tax break, even though the car itself is carbon-free.

When prompted by another user about Singapore’s reliance on fossil fuels and their stance against electric vehicles, Mr Musk said that Singapore is actually capable of being energy-independent. So the problem here is Singapore, not Tesla.

On top of that, there’s the issue of electric cars being incredibly high. An article by Business Times pointed out in June that the Kia Niro EV in Singapore was priced at S$183,999 with Certificate Of Entitlement (COE). While electric cars themselves are expensive, the high taxes are a massive contributor to the cost.

BT explained that “the Niro EV attracts around S$80,000 in excise duty, additional registration fee and goods and services tax, to say nothing of the COE and the cost of the car itself from Kia.”

The maximum rebate for the cleanest cars under the Vehicular Emissions Scheme is S$20,000. So with pricy technology and high taxes, the car remains on the high end of vehicle prices. Basically, current policies make it difficult for people to make that switch from fossil to electric.

Divest from fossil fuels and invest in clean technology

Next, Mr Razzouk highlighted that Singapore’s wealth funds “should divest from fossil fuels worldwide by exiting investments in non-Singaporean oil, gas and coal companies.”

He suggests they ramp up their investments in clean technologies and renewable energy, and back reforestation initiatives instead, thus paving the way for more investment in green technologies. Mr Razzouk wrote, “Climate change can be solved through a combination of powering the world with renewable energy by 2050 at the latest, combined with reforestation.”

He pointed out the Costa Rican reforestation programme that successfully to rejuvenate the country’s forests, bringing up the forest cover from 26% in 1983 to 52% today.

“This Costa Rican program can be replicated in South-east Asia where Singapore’s financial muscle can, literally, create another lung for the Earth,” he asserted.

Finally, Mr Razzouk urged Singapore to lead by example and “deploy its substantial financial muscle and diplomatic prowess to back domestic and regional renewables as well as grid connectivity among neighbouring countries.”

He argued, “While Singapore’s contribution to global warming is small (its emissions are far less than other, larger economies), the city-state is wealthy and on the frontlines of the suffering that climate change inflicts.

It should, therefore, implement a comprehensive green new deal as well as push for far stronger and better financed regional efforts.”

After all the talk on fighting climate change, it appears that the current policies do not reflect the supposed eagerness displayed by the government to address this issue and set an example for other cities and nations.

  • Others
4 September 2019

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  • Singapore

Abu Dhabi National Oil Company (Adnoc) completed its $600 million (Dh2.2 billion) pipeline infrastructure investment agreement with GIC, Singapore’s sovereign wealth fund, alongside BlackRock, KKR and Abu Dhabi, Retirement Pensions and Benefits Fund (ADRPBF) as co-investors, boosting the total deal value to about Dh18bn.

“The successful final closing of this landmark transaction is a clear vote of confidence by the global investment community in both the UAE and Adnoc as attractive investment destinations,” Ahmed Jasim Al Zaabi, group director of finance and investment at Adnoc said in a statement on Wednesday. “The caliber of these leading global and domestic investors underlines the quality and attractiveness of Adnoc’s infrastructure assets and our ability to efficiently structure and close value-creating investment opportunities for our partners and investors.”

Adnoc has expanded its strategic partnership and co-investment model over the past two years and created new investment opportunities across all areas of its value chain, while proactively managing its portfolio of assets and capital.

In July, GIC, which has more than $100bn in assets in 40 countries, said it is investing $600m in the crude pipeline infrastructure. The follow-on investment will give GIC a 6 per cent stake in a newly formed entity, Adnoc Oil Pipelines. BlackRock and KKR together hold a 40 per cent stake, ADRPBF retains 3 per cent and state-controlled oil and gas major Adnoc owns the remaining 51 per cent.

In June, Adnoc completed a $4bn financing deal with BlackRock, the world’s largest asset manager, and global private equity firm KKR for its pipeline infrastructure. The deal, financed by a group of international banks through the private equity companies, was oversubscribed during syndication. The ADRPBF contributed $300m to the deal.

In exchange for receiving $4bn upfront from BlackRock and KKR, Adnoc is leasing 18 of its pipelines that total 750 kilometres in length and have 13 million barrels per day capacity over 23 years.

Adnoc retains sovereignty and management of the pipelines, which transport stabilised crude and condensate from its onshore and offshore fields to export and refining facilities.

Adnoc Oil Pipelines will receive a tariff from the state-owned company for how much crude and condensate it transports. As part of the framework, minimum volume commitments have been put in place.

New York-based KKR’s investment in Adnoc’s pipeline assets is the first direct investment it has made in the Middle East through its $7.4bn Global Infrastructure Investors Fund, although it has previously acquired pipeline assets in North and Central America. BlackRock, which has almost $6 trillion in assets under management, invested through its third Global Energy & Power Infrastructure Fund.

The agreement marks the first time that leading international financial institutions were able to make investments related to Adnoc’s midstream assets following a competitive selection process by the company.

The UAE accounts for 4 per cent of the world’s crude production, much of it from fields owned and operated by Adnoc.

  • Renewables
4 September 2019

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  • Malaysia

KUALA LUMPUR, Sept 4 — Tenaga Nasional Berhad (TNB) today denied a message that went viral on social media that it partners with an individual to offer solar system installation services in mosques and suraus.

TNB, however, clarified that its subsidiary, GSPARX Sdn Bhd is offering a pre-paid solar installation scheme to all eligible commercial and industrial customers including mosques and houses of worship.

The scheme known as Solar Energy Purchase (SEP) will enable customers to enjoy saving money through rooftop solar power generation, TNB said in a statement here today.

For the record, TNB has a stake in GSPARX through its wholly owned subsidiary, TNB Renewable that has 100 per cent stake in GSPRAX.

 

  • Renewables
4 September 2019

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  • Malaysia

September 4 (Renewables Now) – The third tender under Malaysia’s Large Scale Solar (LSS) programme attracted bids as low as MYR 0.1777 (USD 0.042/EUR 0.038) per kWh, the energy and climate change minister said Tuesday.

The deadline for submissions under the request for proposals (RFP) in the 500-MW tender was August 19. The four lowest bids, with a combined capacity of 365 MW, came below the current cost of gas-fired power generation of MYR 0.2322/kWh, minister Yeo Bee Yin said, as cited by local media, at the 5-in-1 Power & Energy Series.

The reference price in the tender was MYR 0.32/kWh.

The list of winning projects is yet to be disclosed. The plants have to be up and running in 2021, selling their output to Malaysian utility Tenaga Nasional Berhad (TNB) under power purchase agreements (PPAs).

Malaysia has set a 20% renewables target for 2025.

(MYR 10 = USD 2.37/EUR 2.16)

  • Energy Policy
4 September 2019

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  • Malaysia

The chief strategy officer of Malaysia’s largest utility yesterday vowed to reinvent the company to deliver clean energy across the country.

Speaking at POWERGEN Asia in Kuala Lumpur, Datuk Fazlur Rahman of TNB said: “There is an urgent need for a paradigm shift to address the energy dilemma. Business as usual is now longer sustainable.”

He added that TNB aspired to becoming a major renewables player in the ASEAN region and would reimagine itself in the face of the disruptive trends sweeping the energy sector.

Malaysia has set of target to have renewables comprise 20 per cent of its energy mix by 2025 and Rahman said that “this is not impossible with collaboration between public and private entities”.

He said that key to delivering economic benefits across Asia was the electrification of its transport, industrial and building sectors.

For transport, he said there was huge potential for electric vehicles in Malaysia’s cities and added that “the economics of electric vehicles make sense with greater concentration, involving not only private cars but also buses and trucks”.

He said Malaysia’s EV market is in its infancy with less than 300 charging points across the country and urged government intervention to unlock EV growth.

  • Energy Cooperation
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
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.

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