THE Department of Energy (DOE) has certified the power projects of the country’s grid operator, the power state firm and a joint venture between AC Energy Inc. and Aboitiz Power Corp. as energy projects of national significance (EPNS).
GN Power Dinginin Ltd. Co.’s 2 x 668 megawatt (MW) supercritical clean-coal fired power plant in Bataan was issued a EPNS certificate this month by the DOE.
GN Power Dinginin is a joint venture of the power arm of Ayala Corp., AboitizPower subsidiary Therma Power and Power Partners. Construction of the first unit is in full swing and is scheduled for completion this year. The plant uses an Alstom steam turbine generator.
Meanwhile, 32 projects of the National Power Corp. (NPC) were also issued EPNS certificates.
These are the 300-kilowatt Palimbang diesel power plant, 500-kW Ninoy Aquino DPP, 200-kW Sacol DPP, 200-kW Talicud DPP, 1,000-kW Basilan DPP, 300-kW and 2 x 200-kW Balut DPP, 200-kW Hikdop DPP, 300-kW and 2 x 200-kW Balimbing DPP, 1,500-kW Kalamansig DPP, 600-kW Sibutu DPP, 3-MW Dinagat DPP, 100-kW Sibanag DPP, 100-kW Gibusong DPP, 400-kW Manuk Mangkaw DPP, 500-kW Sitangkal DPP, 300-kW and 2 x 100-kW Tandubas DPP, 600-kW Tandubanak DPP, 40-kW Manalipa DPP, 40-kW Tumaloptap DPP, 10-kW Great Sta. Cruz DPP, 200-KW Tausan DPP, 300-kW Saranggani DPP, 90-kW Tictabon DPP, 150-kW Tapiana DPP, 150-kW Taganak DPP, 150-kW Tampakan DPP, 150-kW Lugus DPP, 150-kW Saluping DPP, 10-kW Pangapuyan and 1,000-kW Ninoy Aquino DPP, 1,200-kW West Simunul DPP and 1,200 Mapun DPP. All EPNS-certified projects of NPC are in commercial operation. The certificates were issued last month. The DOE also issued last month EPNS certificates to 29 power transmission projects of the National Grid Corp. of the Philippines (NGCP).
These are San Jose-Angat 115-kiloVolt transmission line upgrading, San Jose-Quezon 230-kV TL, Manila (Navotas) 230-kV substation, Pasay 230-kV substation, Taguig EHV substation, Taguig-Taytay 230-kV TL, Marilao EHV substation, Manila (Navotas)-Dona Imelda 230-kV TL, Bataan 230-kV grid reinforcement, Mariveles-Hermosa 500-kV TL, Pagbilao EHV substation, Hermosa-San Jose 500-kV TL, Tuguegarao-Magapit 230-kV TL, Calaca-Dasmariñas 230-kV TL, Tuy 500/230-kV substation project stage 1, Western 500-kV Backbone (stage 1), Batangas-Mindoro interconnection, Ambuklao-Binga 230-kV TL upgrading, Binga-San Miguel 230k-V TL, San Miguel-Nagsaag 230-kV TL, Pagbilao-Tayabas 500-kV TL, Hermosa-Floridablanca 69-kV TL, Tanuan 230-kV substation, Concepcion-Sta. Ignacia 69-kV TL, Nagsaag-Tumana 69-kV TL, San Simon 230-kV substation and Pinili 230-kV substation. As of February 4, the DOE has issued 74 EPNS certificates. It has also declined seven applications. It said that 253 applications are currently being evaluated.
The 12 other power projects certified by the DOE are the 100-MW Sarangani solar power project of Total Power Inc.; Visayas-Mindanao Interconnection Project of the NGCP; Kalinga geothermal power project of Aragorn Power and Energy Corp., the 151.2-MW Talim wind power project of Island Wind Energy Corp., the 2×600-MW coal project of Atimonan One Energy Inc., the Coal Operating Contracts 185 and 186 of the Philippine National Oil Co.-Exploration Corp.’s, 500-MW pumped storage hydropower project of Coheco Badeo Corp., the 650-MW Pagbilao combined cycle gas turbine power plant of Energy World, 15-MW Masbate coal plant of DMCI Power Corp., 1.2-MW biogas power plant project of First Quezon Biogas Corp. and the 6-MW Pangasinan Green Atom Waste to Energy project of Green Atom Renewable Energy Corp.
The issuance of EPNS certificates is stipulated under Executive Order 30, which states that concerned government agencies shall act upon applications for permits not exceeding within a 30-day period. If no decision is made within the specified processing timeframe, the application is deemed approved by the concerned agency.
MANILA, Philippines — The team-up of businessman Dennis Uy’s Phoenix Petroleum Philippines Inc. and China National Offshore Oil Corp. (CNOOC) plans to forge a partnership with state-run Philippine National Oil Co. (PNOC) for its liquefied natural gas terminal.
In a disclosure to the Philippine Stock Exchange yesterday, Phoenix Petroleum said its officials are in talks with PNOC to secure a strategic alliance for its planned LNG hub project.”
“With PNOC on board, Phoenix has proposed their participation and involvement in the areas of pipeline infrastructure and franchise, banked gas, equity, and other marketing opportunities,” the oil firm said.
This follows the notice to proceed (NTP) issued by the Department of Energy (DOE) to Tanglawan Philippine LNG Inc., the planned joint venture (JV) between Phoenix Petroleum and CNOOC Gas and Power Group Co. Ltd.
Phoenix said the first engagement meeting with PNOC started last week, “with the planned joint venture looking into the signing of the memorandum of understanding with PNOC in the coming weeks.”
After securing the NTP from DOE last December, the Tanglawan project is expected to break ground for its regasification and receiving terminal with a capacity of 2.2 metric tons per annum within the year.
The LNG hub is targeted to start commercial operations by 2023.
Tanglawan Philippine LNG also aims to develop a gas-fired power generation facility with up to 2,000 megawatts (MW) installed capacity. It is initially looking to build a 1,100 MW gas-fired power plant to become the offtaker of the LNG supply.
The Tanglawan facility will help support the demand for a clean, competitive, and environment-friendly energy source in Luzon. It aims to provide energy security for the country.
CNOOC Gas and Power is discussing the Tanglawan joint venture with Phoenix Petroleum. The proposed joint venture with CNOOC has been approved by the board of Phoenix last Jan. 31.
Apart from Tanglawan Philippines, the DOE has granted Energy World Corp., an Australia listed energy company, a permit to construct, own and operate the LNG import terminal and regassification facility in Pagbilao, Quezon.
Since 2011, EWC has been developing the first LNG hub terminal in the Philippines in Pagbilao, Quezon. It consists of two, full containment, onshore LNG tanks with a pumpable capacity of 130,000 cubic meters of LNG each.
Another firm, US-based Excelerate Energy L.P., an LNG company based in Texas, submitted a proposal to build a floating storage and regassification unit offshore Batangas.
Read more at https://www.philstar.com/business/2019/02/15/1893701/phoenix-cnooc-looks-partner-pnoc-build-lng-terminal#VXvghk35L8QRY0zb.99
PUTRAJAYA (Feb 15): The Malaysian government had today called for bids for an estimated RM2 billion worth of projects under the third round of the Large-Scale Solar (LSS3) scheme to increase electricity generation from renewable energy, Energy, Technology, Science, Climate Change and Environment Minister Yeo Bee Yin said today.
Yeo said the competitive bidding process will be opened for a six-month period from February to August 2019. She said the outcome of the exercise is expected by year-end.
“This is an open tender free for all. Whoever that can give us the lowest price for the first 500 megawatts (MW) — having passed all the [required] financial and technical qualifications — will be the winner [of this bidding exercise].
“Ownership can be [up to] 49% foreign, but the contractor for engineering, construction and commissioning must be 100% local as there are enough competitive local players in Malaysia, who however may not have enough financial muscles. We do not limit procurement because we want the best price,” Yeo said at a press conference here today on the LSS3 scheme bidding process.
Yeo said the government has decided that for the LSS3 scheme, the quota offered to each developer will be increased to 100MW from 30MW previously to allow project developers to obtain better financing rates from financial institutions, and therefore lower electricity tariffs.
Additionally, quotas offered to developers will no longer be based on capacity range, in order to allow them to bid for higher capacities, according to her.
Yeo said the government is confident that by 2030, or earlier, electricity tariffs can be lower and competitive against those from other forms of power generation such as gas and coal.
“Tariffs are more stable for renewable energy because they are calculated based on the levelised cost of energy, instead of relying on market prices of fuel which is an issue we are currently faced with.
“While solar tariffs went as low as 33.98 sen per kilowatt hour under LSS2, we believe that tariffs could go lower with this open tender exercise and welcome the lowest prices,” she said.
JAKARTA — Usman’s been glued to the TV news lately. A young fisherman living in Batang, along the northeastern coast of Indonesia’s main island of Java, Usman is closely following this year’s presidential race.
While much of the country has been caught up in the daily trading of barbs between the campaign teams of President Joko Widodo and his challenger, Prabowo Subianto, on a range of issues, the one thing Usman wants them to address is coal.
“We’ve been waiting at every debate and campaign message on TV for a single word about coal-fired power plants,” he said in Jakarta. “We really hope there’s not just a program to develop renewable energy in other places, but also to phase out coal power plants and change them to renewables so that we’re not threatened by coal plants.”
Usman is part of a fishing community in Batang whose livelihoods are under threat from a power plant being built in their area. The 2,000-megawatt facility, billed as the largest project of its kind in Southeast Asia, has faced delays and protests over its potential impact on local and wider ecosystems, but remains on track to be completed by 2020.
Usman (right) holds a picture of a child whose health affected by a coal-fired power plant. Image by Hans Nicholas Jong/Mongabay.
‘Hanging by a thread’
Batang’s marine ecosystem has long supported thriving small-scale fisheries, thanks to the coral reefs and lush mangroves that host a wealth of marine life.
But since construction of the plant commenced in 2017 — delayed from 2010 due to community protests and residents holding out against selling their land for the project — the fishers say they are already feeling its impacts.
Fish catches have declined, and dredging waste pumped out to sea has damaged fishing equipment, they say.
In an effort to bring the issue into the national spotlight, Usman visited the campaign headquarters of the two candidates in Jakarta on Feb. 13. He was joined by farmers from elsewhere around Indonesia, who have lost their lands and livelihoods to coal-fired power plants. Their hope is that the issue will warrant at least a mention in the nationally televised debate scheduled for Feb. 17, where two of the topics for discussion will be energy and the environment.
“We can only hope in this political year there will be a hero who can help us maintain the environment and the ocean in the future for us fishermen as well as our grandchildren who will inherit the ecosystem of the sea,” Usman said.
He added, “It seems like our future is hanging by a thread.”
The group was accompanied by activists from various Indonesian NGOs, all of them concerned about the impact of coal-fired plants on local communities, and all pushing for the candidates to take a stand on phasing out the burning of coal in Indonesia.
Greenpeace activists and fishermen occupy the piling barges which operates in East Roban waters, Batang, Central Java on March 30, 2017. Those activists from Break Free Coalition, consisting of Greenpeace, WALHI and JATAM unfurl a big banner that calls for a termination to the construction of the coal fired power plant. Batang coal power plant is claimed to be the largest in Southeast Asia with a capacity of 2000 megawatts. It will release around 10.8 million tons of carbon into the atmosphere – equals to total carbon emissions of Myanmar in 2009. Image by Micka Bayu Kristiawan/Greenpeace.
Deadline 2030
If there was ever a right time to end coal use, it’s now, said Tata Mustasya, regional climate and energy campaign coordinator at Greenpeace Southeast Asia.
Once a coal-fired power plant is built, he said, it will remain in operation for the next 40 to 50 years. In that time, it will have a devastating impact on local populations and ecosystems, polluting the air and water, and churning huge volumes of carbon dioxide into the atmosphere.
The Batang plant, once up and running, will emit 10.8 million tons of CO2 equivalent every year, along with pollutants that include neurotoxins such as mercury that can have severe repercussions on public health and the environment.
Indonesia is one of the world’s biggest producers of coal, and also one of its biggest consumers. A total of 39 coal-fired power plants are currently under construction. Another 68 have been announced, of which 15 are in the process of obtaining environmental approval, according to data from the research group CoalSwarm.
Many of these projects haven’t secured financing yet, so it’s not too late to cancel them outright, activists say.
“We see this year’s presidential election as a moment of opportunity to put an end to coal-based dirty energy and to start moving toward clean renewable energy,” said Tata, who accompanied the fishers and farmers on their visits to the campaign headquarters.
He said it was imperative for Indonesia to transition to renewable energy sources, given the trend for power generation to account for the biggest share of the country’s greenhouse gas emissions. The power industry is responsible for 34 percent of Indonesia’s total emissions at present, but is on track to hit 58 percent by 2030. (Forest clearing is currently the country’s biggest source of emissions.)
The 2030 milestone is significant. That’s when, according to a landmark report by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), catastrophic climate-driven consequences will start unfolding unless the global temperature rise is kept below 1.5 degrees Celsius (2.7 degrees Fahrenheit).
The report also emphasizes the need to phase out the burning of coal in order to stay within that limit.
President Widodo acknowledged the IPCC report during his now-famous speech at last year’s joint meeting of the International Monetary Fund and World Bank, when he made an analogy to the popular TV series “Game of Thrones.”
He said “the evil winter is coming” as he reminded fellow heads of state of the mounting global issues that required nations to stick together instead of competing against each other.
“The most important thing is the mutual power to defeat the evil winter so that global disaster won’t happen, so that the world doesn’t turn into a wrecked barren land that causes suffering to all of us,” Widodo said at the meeting in Bali.
While the reference was largely to the U.S. trade war against China, Widodo identified climate change as another global threat that called for wider cooperation. He said the window of opportunity to keep global warming below 1.5 degrees Celsius was extremely small, and said global investment in renewables needed to be 400 times greater than at present to reduce carbon emissions and mitigate climate change.
The Celukan Bawang coal-fired power plant has been blamed by advocacy group Greenpeace for damaging the environment, public health and the local economy. Environmental and health damage are a major concern for coal plants in Indonesia. Image by Alit Kertaraharja/Mongabay-Indonesia.
Even more coal
Yet Indonesia’s energy policy remains at odds with not only the country’s commitment to reduce its own emissions by 29 percent by 2030 — it is also out of step with global trends, where renewable energy is overtaking coal.
At least 21 countries have already committed to phasing out coal-fired power plants before 2030. Some financial institutions have also committed to no longer financing coal projects.
But the Widodo administration has gone in the opposite direction, continuing to bet on coal as Indonesia’s main source of electricity. Coal is expected to supply 54.4 percent of the country’s electricity by 2025, according to state-owned utility PLN. Renewables will account for 23 percent of the energy mix, up from 12 percent in 2017. After 2025, coal will get a boost to 58.5 percent of the energy mix.
For good measure, the Ministry of Energy and Mineral Resources says coal will remain Indonesia’s main source of energy until 2050.
Activists say countries like China and Japan, vying for influence in Southeast Asia, are enabling this coal spree by throwing money at coal mining and power plant projects. Both China and Japan are among the biggest investors in coal projects in the world; in Indonesia, they’ve underwritten nearly 4,000 megawatts of coal power plants in the past eight years, according to an analysis by the Association of Ecological Action and People’s Emancipation (PAEER), an NGO. By 2022, that number will more than double to nearly 9,000 megawatts.
“Japanese and Chinese companies’ involvement in coal-fired plants helps to dictate the energy landscape in Indonesia,” PAEER researcher Jasman Simanjuntak said. “In coming years, their involvement in coal will increase. But the destructive impact that goes along with it also needs to be considered.”
The $4 billion Batang project, for instance, is funded by the state-backed Japan Bank for International Cooperation (JBIC), along with several other Asian banks. The plant also has an indirect connection to the election. The developer is a joint venture between two Japanese companies — utility and power plant operator J-Power and the Itochu Corporation — and Adaro Energy, one of Indonesia’s largest coal companies. Sandiaga Uno, the running mate to Prabowo, served until 2015 on Adaro’s board of directors and continues to hold shares in the miner through his investment holding company.
Coal that fell off a barge washes up on a beach. Indonesia will still rely on coal for foreseeable future to generate power, drawing condemnation from environmentalists. Image by Junaidi/Mongabay Indonesia.
No sense of urgency
Activists see the presidential debate on Feb. 17, and to a lesser extent the three more scheduled before the April 17 election, as the perfect chance for both Widodo and Prabowo to commit to an ambitious climate plan, including the phasing out of coal.
But there appears to be little appetite among the rival campaigns to broach the issue, much less tackle it head-on. Widodo’s camp has mentioned environmental issues just 16 times out of the total 865 mentions it raised on social media so far in 2019, according to monitoring site www.iklancapres.id. For Prabowo’s team, the environment warranted just 14 out of 988 mentions. For both candidates, the economy and human rights were much more important talking points.
Both candidates need to take the bold stand of declaring an end to coal burning, said Leonard Simanjuntak, country director of Greenpeace Indonesia. He said this would put Indonesia in the same ranks as countries like Germany, which has pledged to completely stop the operation of coal-fired plants in the country by 2038. Coal provides nearly 40 percent of Germany’s power, compared with 5 percent in the U.K., which plans to phase the fuel out entirely by 2025.
Arif Budimanta, a spokesman for Widodo’s campaign, said it would take a long time for Indonesia as a developing country to shift to renewables as its main source of energy. Industrialized nations like the U.K. have had centuries to wean themselves off coal, he said.
“If you look at the industrial revolution in the U.K., their main energy source was coal,” he said. “But as the U.K. became more developed over 200 years, it was able to reduce its reliance on coal for energy. Yet even now, it still uses fossil fuel.”
Greenpeace’s Leonard said this argument — that developing countries should be allowed to continue using fossil fuels because developed ones got rich doing the same — was a well-worn but invalid point.
“The problem is we don’t have 200 years [to use coal],” he said. “That’s something that we have to accept. We only have 12 years. The science is clear. And that’s not just the responsibility of developed countries.”
Sonny Mumbunan, a senior environmental economist at the World Resources Institute (WRI) Indonesia, said the sense of urgency prompted by the IPCC report and a series of climate change-related disasters across the globe wasn’t shared by Indonesia’s leaders.
“The metaphor of our planet burning hasn’t reached us yet, even though we don’t have the luxury of time,” he said. “We only have 12 years, that’s just three World Cups away. Time will fly [before we know it].”
He said neither candidate had responded to the IPCC report with anything like an ambitious plan to tackle climate change.
“It’s a shame, because the role of this year’s presidential election is very strategic in climate change, unlike previous elections,” Sonny said. “Whoever is elected doesn’t have the luxury of time on his hand [to address climate change].”
Locals who are affected by coal power plants around Indonesia gather during a protest in front of the Ministry of Energy and Mineral Resources office in Jakarta, Indonesia. They’re demanding the government to switch from coal to renewable energy. Image by Hans Nicholas Jong/Mongabay.
Cost and development
The government has long argued that coal is the cheapest and quickest way to generate the electricity needed to fuel Indonesia’s economic growth. When Widodo took office in 2014, he announced an ambitious push to add 35,000 megawatts of power generation to the national grid over the coming years. (The initial target date was 2019, but the government now says it may take until 2024 to get that full capacity on line.)
Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), an NGO, says the government is too focused on the short-term goal of providing cheap energy to households by subsidizing electricity from coal plants, instead of thinking long-term by developing renewables.
The situation is likely to remain unchanged should Widodo, who enjoys a 20-point lead over Prabowo in most polls, wins the election. Campaign spokesman Arif said there were three parts to Widodo’s vision and mission statement for energy. Developing renewable energy is one of them. But Widodo also aims to increase the production and consumption of fossil fuel-based energy to develop the economy, and to increase the availability and accessibility of electricity, Arif said.
“Based on cost, coal is still the cheapest for Indonesia and the most readily available,” he said. “We don’t need to import it.”
He also questioned the global consensus that the burning of coal is the biggest contributor to climate change, calling it simply “an opinion.”
“But we can’t forget that there are also the aspects of affordability and accessibility,” Arif said. “And it’s not just about a matter of availability, but it’s also about willingness to pay.”
A new study by Greenpeace on the economic feasibility of fossil fuel energy and renewable energy in Indonesia shows that while the initial investment costs in coal plants might be cheaper than in renewables such as geothermal, over the long run the operating and maintenance costs for the latter were much lower. And as costs for renewable energy get cheaper with technological developments and scale, the cost of coal-based electricity is expected to surpass them in 2021 in Indonesia.
Arif, though, said the government was looking at developing “green coal” to address concerns about emissions.
Green coal, also known as clean coal, refers to technology that’s meant to improve the efficiency of burning coal, as well as to capture the gases that would otherwise be emitted, including CO2, sulfur dioxide and nitro
gen oxides.
But these technologies remain prohibitively expensive, and could increase the cost or running coal-fired plants in Indonesia by a factor of 15, according to the Greenpeace study. That would blow out any cost savings the government claims it can make by opting for coal utilities over renewables.
“There’s no such thing as cheap energy from coal when you’re using clean coal technology,” said Hindun Mulaika, a climate and energy campaigner at Greenpeace Indonesia.
A 1 billion baht project is under consideration to transform Bangkok into the “Venice of the East” (again?) and help ease the city’s air pollution problems.
The project for electric-powered ferries to ply the Chao Phraya is backed by Energy Absolute, a Thai alternative energy technology provider, which yesterday said it will work with the Marine Department to introduce the service. The partners are hailing the project as a smart transport initiative.
Amorn Sapthaweekul, director and deputy chief executive officer of Energy Absolute, said the electric ferries, under the pilot stage of the project, will be on the river by the end of this year. The service will be operated by EA and its subsidiary Energy Mahanakorn Company, which will be in charge of manufacturing the EA Anywhere-branded charging stations for the vessels.
“We pride ourselves on being Thailand’s leading innovative alternative energy company, focusing on delivering cutting-edge technology and environmental friendly solutions for better living,” said Amorn.
“Today marks a significant milestone as we launch the first 100% Thai electric ferry prototype to be opened by the end of 2019. It aims to transform Thailand into a truly smart transport country, improving the standard of urban living quality and reducing pollution.”
Amorn said that after the introduction of the Thai-owned electric car, badged MINE Mobility in March last year, EA has expanded the use of its battery technology with the planned launch of electric ferries.
The vessels will run from the Nonthaburi Pier to Wat Rajsingkorn Pier. The 20km stretch of river will be covered in less than 40 minutes.
“We plan to build 54 electric vessels at an investment of 1 billion baht. The transport service with the electric boats will start at the end of this year and all 54 boats will be fully operational by February next year,” said Amorn.
“River transport can be used as another jigsaw connecting to the Bangkok Metropolitan Administration’s entire public transportation network of electrical vehicles. The electric ferry project will return a good liveable city to the people of Bangkok, which is one of the most important tourism destinations in the country,” said Amorn.
The ferries, which are designed by EA, are being produced by a local supplier for the company under a subcontracting arrangement.
The ferries will run with electric energy supplied by a battery with a capacity of 800 kilowatt hours. The boats, 24 metres long by 7 metres across, will use battery technology developed by EA. They can hold about 200 passengers.
EA plans to set up a battery manufacturing plant in Chachoengsao for its electric vehicle projects.
Laos is developing a strategic plan to become the network center for a regional electricity transmission system by 2025.
According to local daily Vientiane Times on Thursday, Sichard Boudshakittilath, director of the Energy Management Department under the Lao Ministry of Energy and Mines, recently detailed the plan during a workshop on Business Lessons for Power Industry Improvement.
To move the strategy forward, in 2017 Laos signed a tripartite electricity-trading agreement with Thailand and Malaysia in which Laos would sell 100 MW of electricity to Malaysia using Thailand’s power transmission network.
In 2014, the government of Singapore also expressed interest in buying electricity from Laos via transmission lines in Malaysia and Thailand.
Under this plan, Laos expects to export 14,800 MW of electricity annually to neighboring countries by 2025.
Sichard said within the next six years, Laos aims to export 9,000 MW of electricity to Thailand, 5,000 MW to Vietnam, 500 MW to Myanmar, 200 MW to Cambodia, and to distribute 100 MW to Malaysia.
Laos is currently in the process of setting up policy parameters and guidelines that will help modernize the energy industry.
A high quality, modern power grid that delivers renewable energy will be key to achieving many of its sustainable development goals for Laos.
A Ministry of Energy and Mines’ report said Laos so far has 61 hydropower plants with an installed capacity of 7,207 MW which can collectively generate about 37,366 kWh per year.
An additional 36 hydropower plants are currently at various stages of construction. With an overall installed capacity of 4,184 MW, these plants will add another 20,892 kWh per year to the nation’s power grid.
These projects are expected to be finished by the end of next year, meaning Laos will have about 100 hydropower plants.
Indonesia’s domestic market obligation requirements could impact thermal coal prices throughout 2019 should the country’s government take action against companies that are missing their targets, S&P Global Ratings said Wednesday.
“DMO sales reached only 21.7% of domestic production in 2018, and a number of coal miners could not meet their DMO requirement,” S&P Global Ratings said in a research note.
The DMO policy requires coal mining firms to sell at least 25% of their production into the domestic market and cap the selling price for state-owned electricity firm Perusahaan Listrik Negara, with different applicable caps depending on calorific content.
“Even though the lower-than-expected DMO allocation fulfilled national needs, the Ministry of Energy and Mineral Resources could impose sanctions on these non-compliant companies by reducing their production quota in 2019,” it added.
S&P Global Ratings credit analyst Bertrand Jabouley said that Indonesia’s evolving regulatory and competitive landscape, combined with negative news on the demand side, underpins a current weakness in realized prices for a number of the country’s miners.
The credit ratings agency and a sister company to S&P Global Platts added that fundamentals in the Indonesian market remain strong.
“The Indonesian government has lowered its coal production target for this year to 480 million mt in an effort to stabilize the global coal price. In the longer run, the country aspires to add 35 GW of additional power, two-thirds of which could be coal-fired,” it said.
“To that extent, local demand should grow beyond its current levels of about 90 million mt,” it said.
Singapore — Indonesia’s Minas crude will no longer flow to Hawaii following Island Energy Services’ closure of its 54,000 b/d Kapolei refinery and sale of refining assets to US producer Par Pacific, in a loss of one of the grade’s few export outlets outside of Indonesia, according to sources with knowledge of the matter and S&P Global Platts data Thursday.
Trade sources said Par Pacific does not intend to continue supply of the medium, sweet crude to the former IES refinery after buying over the latter’s crude and vacuum distillation unit in the third quarter of 2018.
Par Pacific could not be immediately contacted for comment.
Platts vessel tracking software cFlow showed the last Minas crude cargo to Hawaii was shipped by vessel Mare Tirrenum from Dumai terminal on October 17 and arrived at Honolulu port on November 8.
The former IES refinery was one of the few regular export outlets for Minas crude before its closure. Around eight cargoes of Minas crude were shipped to Hawaii in 2018, cFlow showed.
The Minas crude cargoes were procured by IES through third-party suppliers who had term offtake agreements with Indonesia’s Pertamina or field operator Chevron.
Apart from Hawaii, Japanese utilities also take Minas crude cargoes occasionally for refining or direct burning purposes.
Otherwise, most Minas crude output is typically used within Pertamina’s network of refineries in Indonesia.
Nonetheless, Indonesian crude exports are becoming increasingly scarce, following a regulation last year under which Pertamina and other refineries with crude processing licenses, are obliged to prioritize buying domestic crudes before imports.
Indonesia shipped out less than 500,000 mt of crude oil in November, according to latest figures from Statistics Indonesia. This is the smallest monthly shipment since Platts started tracking the data in June 2015.
Sources at Indonesian crude term lifters said exports of Indonesian crudes were increasingly uncertain, with offtake of Indonesian crude cargoes not guaranteed every month.
Pertamina said last month that it will process more Minas and Duri crude at its refineries, and bought around 2.5 million barrels/month of Minas crude for the January-June period this year.
The company will take over the Rokan oil block, where Minas and Duri crude is produced from, when Chevron’s production sharing contract expires in August 2021.
Meanwhile, Hawaii’s sole remaining refinery, Par Pacific’s 94,000 b/d refinery, also located at Kapolei, is able to run crudes with higher sulfur content.
Crude oil for Par Pacific’s refinery is mostly sourced from North America, Asia, Africa and the Middle East, with Asia making up 23.1% and the Middle East 28.1% of the feedstock throughput in 2017, Par Pacific’s latest annual report showed.
Sources said the UAE’s Murban crude and Far East Russia’s ESPO and Sokol crude are among the grades that have been fed into the refinery.
