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  • Oil & Gas
2 August 2019

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  • Singapore

SINGAPORE: Traders are starting to make enquiries to book vessels to store or ship liquefied natural gas(LNG) as they bet for winter demand to boost prices for spot cargoes which are trading near record lows, multiple industry sources said on Friday.

Enquiries are trickling in for booking vessels on a spot basis, ranging from a period of one month to several months, which is expected to push shipping rates up, the sources said.

With Asia LNG spot cargoes trading at below $4 per million British thermal units, traders may take the opportunity to buy the cargoes now for later use, especially as demand typically increases during winter for heating which in turn pushes up prices, the sources said.

Storing commodity cargoes on ships to sell at a later date to take advantage of the rising price for later-dated supplies, known as the contango carry trade, is common in oil markets but is considered risky for LNG because of high storage costs and because LNG cargoes evaporate over time.

November LNG spot prices are estimated to be about $1 per million British thermal units (mmBtu) higher than October spot prices while October spot prices are likely about 70 to 90 cents higher than September prices, the sources added. A market structure where later-dated prices are higher than prompt supplies is called a contango.

“At 90 cents contango, floating storage is starting to make sense and at $1.50 people will be jumping on it,” a Singapore-based LNG trader said, adding that the wide price spread signals the temporary storage of LNG on tankers a possibility.

At least one Japanese trader has issued a vessel enquiry for 60 days to charter an Australian cargo loading in September, said a second shipbroker.

Last year, more than 30 vessels globally were flagged as floating storage ahead of winter as traders bet that demand would increase exponentially like it did the year before. But, spot prices subsequently fell amid a mild winter.

This year, an abundance of supply globally from new projects has pushed spot prices to record lows.

Still, some traders are adopting the a more cautious approach given the uncertain economic outlook.

“While the forward curve (suggests floating storage works), I personally do not think (it) works as … the cost of hiring ships will go up when there are too many cargoes,” a second Singapore-based trader said.

  • Coal
2 August 2019

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  • ASEAN

SINGAPORE – As one of the regions with the highest number of coal plants in the pipeline, South-east Asia must work to quickly end its reliance on fossil fuels, with the goal of phasing out all coal plants from 2020, the United Nations (UN) urged on Friday (Aug 2).

Speaking to journalists via a teleconference, Mr Luis Alfonso de Alba, Special Envoy of the UN Secretary-General for an upcoming climate summit, also appealed to nations in the bloc to stop subsidising fossil fuels.

“This is particularly relevant for a region where emissions continue to grow,” he said.

South-east Asia is the region with the third-highest number of coal plants in the pipeline, after China and India, added Ms Rachel Kyte, Special Representative of the UN Secretary-General and chief executive for independent energy organisation Sustainable Energy For All.

The UN representatives were speaking to journalists ahead of a Climate Action Summit to be held on Sept 23 in New York.

The summit will bring together governments from around 200 countries, the private sector, civil society, local authorities and other international organisations.

Convened by UN Secretary-General Antonio Guterres, the meeting is meant to spur greater climate action among nations by encouraging them to ratchet up their climate pledges made under the Paris Agreement, which aims to limit global warming to well under 2 deg C above pre-industrial levels.

Emissions from the burning of fossil fuels for energy are contributing to this warming.

The combustion of extractive fuels, like coal and natural gas release gases, such as carbon dioxide into the atmosphere, where they act like a blanket in trapping heat.

This causes weather patterns to change and increases the likelihood of extreme weather events.

“The climate emergency is quite evident to all of us,” said Mr de Alba, pointing to recent heatwaves experienced in the months of June and July.

Data from the World Meteorological Organisation and its climate centre showed that the month of July at least equalled, if not surpassed, the hottest month in recorded history. This follows the hottest June ever.

Coal, in particular, is considered the dirtiest form of fossil fuel. Its combustion not only releases heat-trapping gases into the air, but also contributes to pollution which could impact the health of people living nearby.

Yet, it has been the energy source of choice for many developing nations because it is considered cheap.

But on Friday, the UN representatives cautioned against this rhetoric, pointing to the emergence of new technologies and the decline in coal investments from financial institutions as ways in which coal may not be financially viable anymore.

They also urged governments to consider externalities to using coal that may not be factored into economic analyses, such as how pollution could impact human health.

What is needed next, Ms Kyte added, is for a boost in investments in clean energy. As she put it: “The spigot is beginning to turn off for investments in coal. But we can’t turn it off unless we turn on the tap for investments in renewable energy.”

Singapore is powered mainly by natural gas, which is a cleaner form of energy but still a fossil fuel nonetheless.

However, the Singapore Government is investing heavily in solar energy, and is trialling the installation of solar panels on water bodies to overcome space constraints.

Environmental concerns aside, renewable energy would also be more effective in providing access to energy for rural communities often isolated by geography, said Ms Kyte.

In archipelagos in the Philippines for example, rural communities located farther away from big cities could gain access to energy via renewable energy sources instead of centrally controlled coal plants.

“This is a more reliable way of providing those communities with the kind of energy they need to participate constructively within the economy. Productive use of energy is not just having enough to power a lamp, but having enough energy to support a small business,” said Ms Kyte.

At a separate briefing on Friday, Mr Guterres reiterated his call for nations to attend the September summit with bolder climate action plans.

He said: “I am telling leaders don’t come to the summit with beautiful speeches. Come with concrete plans – clear steps to enhance nationally determined contributions by 2020 – and strategies for carbon neutrality by 2050.”

Asked if Singapore intends to scale up its climate pledge, a spokesman from the National Climate Change Secretariat (NCCS) referred to the commitment the Republic had made under the Paris Agreement.

Under its 2030 Nationally Determined Contribution (NDC) – the technical name for climate targets set by each country under the Agreement – Singapore pledged to become greener economically and reduce the amount of greenhouse gases emitted to achieve each dollar of gross domestic product by 36 per cent from 2005 levels, come 2030. It also pledged to stop any further increases to its greenhouse gas emissions by the same timeline.

“This is an ambitious target for Singapore given our constraints in accessing alternative energy options such as geothermal, wind or hydroelectric power,” said the NCCS spokesman.

But Singapore is also developing a low emissions strategy for the longer-term, and a public consultation is currently ongoing. “We will review and update our 2030 NDC as part of this process,” she added.

  • Others
2 August 2019

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  • Cambodia

While Cambodia might be pulling out all the stops to develop its smart cities, the lack of an integrated master plan is hampering these efforts.

The ASEAN Smart Cities Framework defines a smart city as one that harnesses technological, digital solutions and innovative, non-technological means to address urban challenges – continuously improving people’s lives and creating new opportunities.

Envisioned in April 2018 as a platform to support the creation of technologically advanced urban areas in the region, the ASEAN Smart Cities Network (ASCN) has three Cambodian cities in its initial list of 26 pilot cities from across Southeast Asia – Phnom Penh, Siem Reap and Battambang.

Despite collaborations with the region’s best tech minds in Vietnam, Singapore, Korea and Japan, Cambodia’s best intentions may go to waste unless it creates coordinated plans and policies and implements proper guidelines and regulations.

Poor planning, few investors

The lack of zoning or building code requirements are among the issues hampering smart city development in Cambodia. Residential and industrial areas are developed in the same neighbourhoods in some parts of Phnom Penh, with factories built next to schools and homes and waterways used as dumping grounds by businesses.

Tous Saphoeun, an architecture professor who also works with the Cambodia Ministry of Land Management, Urban Planning and Construction, told Cambodian media last year that city officials may have thought a smart city program only involves upgrading certain parts of a city as opposed to the city as a whole.

Speaking during a seminar titled ‘Smart Cities and The Future of Urban Development’ in Phnom Penh in June, Guillaume Massin, managing director of DFDL – a law firm which specialises in the Mekong region – noted that there is still ambiguity regarding funding for smart city projects and whether the funding would be led by the government, private sector or public-private partnerships (PPPs).

Pointing out that there were no rules for financing in place, Massin also told local media that lack of regulations and access to finance are keeping most investors away – except the Chinese. 

However, earlier this week the Cambodian government announced it had approved US$5.2 billion worth of investments in the first half of this year, claiming that the 48.5 percent year-on-year increase is a sign of investors’ growing confidence in the country.

Cambodia Smart City

Source: Various

Foreign tech know-how

Meanwhile, a recent meeting between the Phnom Penh Municipal Council and Ho Chi Minh City Party Committee saw urban planners from both cities agreeing to work together to solve shared problems such as traffic congestion, waste management, pollution and crime – the latest in a string of foreign countries offering smart city assistance to Cambodia.

Cambodia and Korea agreed to cooperate and turn the port city of Sihanoukville into a smart city as far back as 2016. Leveraging on Korea’s expertise, the two governments agreed to build state-of-the-art water management, transportation and energy infrastructure in Sihanoukville based on Korean technology.

In March, Singaporean cryptocurrency and blockchain developer Pundi X confirmed it will be working with Cambodia to build a one square kilometre smart city in Phnom Penh which will utilise blockchain to run the electricity grid and road traffic systems.

At an urban development forum in Phnom Penh in February, Japan’s vice-minister of Land, Infrastructure, Transport and Tourism told participants that his country would help Cambodia create smart cities that avoided the mistakes of Japan’s early development in areas such as housing, traffic and environment.

Improved governance, effective institutions

A sustainable environment is one of the three outcomes of the ASCN alongside a competitive economy and high quality of life.

However, as the ASEAN Smart Cities Framework notes, integrated master planning and development is crucial in enabling governments to create and manage the various urban issues affecting the progress of the three outcomes.

Amidst a dynamic political, economic and social environment, the drawing up of long-term plans and blueprints allows cities to meet their needs in a sustainable manner with principles such as adoption of a long-term view; productive decision-making; as well as robust monitoring and evaluation.

The World Bank suggests that Cambodia strengthens its institutions and governance to enable more coordinated and efficient urban development.

In its report titled ‘Urban Development in Phnom Penh’ released in December 2017, the World Bank noted that Phnom Penh and other cities will continue to develop in an uncoordinated and fragmented manner unless there is improved governance and effective institutions.

“Well-planned cities allow the socio-economic benefits of urbanisation to be fully harnessed and can create vibrant, liveable, urban spaces,” said Judy Baker, World Bank Lead Economist and one of the report’s authors.

“This is fully possible for Phnom Penh, but it will be a long-term process and will require a strong commitment from government, citizens and the private sector.”

While the World Bank has recommendations on how to realise the long-term vision of Phnom Penh’s Master Plan 2035, the fact that it has never been released to the public is perhaps the best indication of the challenges that lie ahead.

  • Coal
2 August 2019

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  • Indonesia

State electricity firm PLN has estimated that the coal use for electricity generation in Indonesia will increase by around 12 percent this year due to additional demand from new power plants.

PLN system planning manager Arief Sugiyanto said in Jakarta on Thursday that two new coal-fired power plants (PLTUs), namely the Jawa 7 and Jawa 8 power plants, which have a combined capacity of 2 gigawatts, would start their commercial operation in September, this year.

PLN has estimated that the power sector’s coal use, including power plants operated by the private sector, would increase by 12.37 percent to 109 million tons in 2020.

“Overall, demand for gas will drop next year but demand for coal will increase due to additional demand from new PLTUs,” he said at a gas exhibition event in Jakarta.

The total gas demand is projected to fall by 5.6 percent to 486 billion cubic feet (bcf). However, the demand for LNG is  expected to increase by 22 percent to 221 bcf, while the demand for piped gas will fall by 20 percent to only 262 bcf due to, among other factors, low supply from the South Sumatra-West Java Pipeline. (hen)

  • Electricity/Power Grid
1 August 2019

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  • Malaysia

KUALA LUMPUR: Tenaga Nasional Bhd’s internal restructuring to split its power generation and retail businesses into RetailCo and GenCo could lead to two separate listing entities under the two segments.

Kenanga Research said the restructuring may also pave the way for market reforms that will see new players in the electricity supply industry.

TNB on Monday announced that it would set up two new wholly-owned subsidiaries to house the domestic power generation business (GenCo) and the electricity retail business (RetailCo).

The structure for the remaining businesses such as transmission and distribution network, international business and corporate centre remains unchanged at the group level.

The reorganisation is expected to be completed by September this year.

It was to prepare for the upcoming reforms in the electricity supply industry with the government expected to reveal the Malaysia Electricity Supply Industry 2.0 next month, Kenanga Research said.

“As the retail business is highly anticipated to open up for new comers, RetailCo is prepared to improve efficiency to increase customer collection rate, which is currently slightly less than one sen per kiloWatt hour (kWh).

“At the same time, it will involve rooftop solar generation as well as pushing beyond energy offerings such as multi-utility bundling and billing, Fibre-to-the-Home broadband, or sales of third parties’ products,” the firm said in a report.

Meanwhile, GenCo is aiming to improve renewable energy generation through participation in large scale solar scheme, besides conventional capacity.

Kenanga Research said for assets size indication, the pro-forma financial year 20F18 book value for RetailCo was RM1.84 billion against the group’s book value of RM59.05 billion while GenCo had a book value of RM12.14 billion.

The firm maintained that the fears of open competition against TNB was overplayed given that RetailCo would only contribute less than three per cent to group earnings.

“Contributions from these two entities are fairly small for the moment, with RetailCo’s earnings before interest and taxation (EBIT) of RM200 million only making up less than three per cent of the group’s FY18 EBIT of RM6.7 billion, while GenCo’s RM1.6 billion accounted for 5.4 per cent of group earnings.”

Kenanga Research added that TNB had targeted EBIT of RM13.0 billion by 2025 with RetailCo earnings growing to RM700 million and GenCo to RM2.6 billion.

  • Renewables
1 August 2019

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  • Philippines

President Duterte signed on Wednesday Republic Act No. 11357 granting franchise to Solar Para sa Bayan Corp. despite opposition from major business groups.The approved franchise would entail construction, installation, establishment, operation and maintenance of solar-powered facilities to provide renewable energy to areas without electricity.Owned by 25-year-old Leandro Leviste, the firm “aims to serve Filipino communities with cheap, clean, reliable 24/7 electricity,” according to its website.Some business groups, including Manila Electric Co., have previously urged Duterte to review the franchise.“The grant of the franchise will create an undue competitive edge in favor of SPB Corp. and put at a disadvantage other renewable energy companies now operating in our country,” the business groups said last month in a statement.The statement was issued by the American Chamber of Commerce of the Philippines, Financial Executives Institute of the Philippines, Makati Business Club, Management Association of the Philippines, and Semiconductor and Electronics Industries in the Philippines Inc.

The groups argued that the franchise of the firm is different from the current practice that puts power companies on the wholesale electricity spot market, where the rates are set through daily trading.However, the franchise approved by Duterte states that “the grantee shall charge reasonable and just power rates” as approved by the Energy Regulatory Commission so other business and industries can compete with it.The bill granting the firm a 25-year franchise was approved by the Senate last month, amid objections of Senator Sherwin Gatchalian, the head of the Senate’s energy committee.It also hurdled the House in December 2018. Leviste’s mother, Legarda, abstained from voting.Under the law, Congress has the power to grant franchises to companies providing public services such as water and electricity.

  • Renewables
1 August 2019

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  • Philippines

SOLAR Para Sa Bayan Corp. (SPSB) said Thursday that has been notified that its franchise has been signed by the President, adding that it is willing to work with parties that had opposed its plan to build power microgrids in unserved and underserved areas through.

In a statement, the company said President Rodrigo R. Duterte signed on July 31 Republic Act No. 11357, An Act Granting Solar Para Sa Bayan Corporation a Franchise to Operate Microgrids in the Remote and Unviable, or Unserved or Underserved Areas in Selected Provinces of the Philippines.

The company, led by Leandro L. Leviste, said it was told by Presidential Adviser on Legislative Affairs Secretary Adelino B. Sitoy about the signing.

“We thank President Duterte for giving new choices for electricity to Filipinos in unserved and underserved areas. This is not for us but the Filipino people, and we owe it to the consumers who fought for this to deliver the service they have long deserved,” it said.

The company said electric utilities and power suppliers had claimed the bill “encroached” upon their service areas, and opposed how the bill allows SPSB to enter selected areas that experience regular brownouts, claiming that brownouts are due to many factors that are beyond their control.

“We also wish to extend an olive branch to those who once opposed this bill, for us to support the [Department of Energy’s] goal of achieving 100% electrification and ending energy poverty in the Philippines by 2022. It is time for us to join forces and work together for the common good,” it added.

SPSB said since 2017, it has brought 24/7 power to 12 towns for the first time, benefiting more than 200,000 Filipinos, in regions including Mimaropa (Occidental Mindoro, Oriental Mindoro, Marinduque, Romblon and Palawan), Cagayan Valley, Bicol, Central Visayas, and Davao, without any government subsidy.

The company said it was following Mr. Duterte’s call for the private sector to take the initiative in ending energy poverty in the Philippines by 2022.

The franchise runs for 25 years and authorizes the company to operate in Aklan, Aurora, Bohol, Cagayan, Camiguin, Capiz, Campostela Valley, Davao Oriental, Guimaras, Isabela, Masbate, Misamis Occidental, Occidental Mindoro, Oriental Mindoro, Palawan, and Tawi-Tawi.

The bill was approved by the House of Representatives and the Senate on June 3, 2019.

According to the SPSBC, the final version of the bill included the following amendments: “Limits the scope to unserved or underserved areas in selected provinces; requires the use of renewable energy; subjects SPSBC to regulation by the DoE and Energy Regulatory Commission (ERC); obligates SPSBC to provide accessible and reliable service, and local employment, with financial penalties for failing to meet these obligations; and explicitly states SPSBC ‘shall not be entitled to any government subsidy.’” — Victor V. Saulon, Arjay L. Balinbin

  • Renewables
1 August 2019

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  • Vietnam

Hanoi (VNA) – Households in Vietnam which install rooftop solar power systems by 2021 will receive a maximum of 6 million VND (256 USD) each from the German Government through the German development bank KfW.

This is part of the 14.5-million-EUR renewable energy development project jointly carried out by the Vietnamese Ministry of Industry and Trade (MoIT) and the German Government during 2019-2021.

The project aims at benefiting 50,000-70,000 households across Vietnam.

In addition, Germany will help the country in training human resources and encouraging the private sector and households to participate in rooftop solar power development activities.

The MoIT has recently approved a programme on developing rooftop solar power in the 2019-2025 period, which aims to support the implementation of the national strategy on renewable energy development.

According to the Vietnam Electricity Group (EVN), more than 9,300 rooftop solar power systems, with a total capacity of 193 megawatt-peak, have been installed as of July 18. EVN has installed 204 of the systems in its branches, and the remaining 9,110 systems have been installed on the rooftops of enterprises’ headquarters and households.

Under the Ministry of Industry and Trade’s Decision 2023, Vietnam is targeting installation of solar power systems in 100,000 households between 2019 and 2025.-VNA

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