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  • Oil & Gas
18 January 2019

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  • Indonesia

Indonesia’s state-run Pertamina has started increasing its purchases of domestic crude produced by private operators like Chevron from January onwards, as the government tries to narrow its trade deficit and cut down on its import bills.

The move is in line with a regulation on crude sales issued last year by Energy and Mineral Resources Minister Ignasius Jonan under which Pertamina and other refineries with crude processing licenses are obliged to prioritize buying domestic crudes before imports.

The new policy will result in Indonesia’s crude exports shrinking further, lower spot availability of Indonesian grades in the Asian market and prompt its customers to find substitutes, most likely from Middle Eastern oil producers.

Indonesia shipped out less than 500,000 mt of crude oil in November, down 19% from October, and the smallest monthly shipment since S&P Global Platts started tracking the data in June 2015, official data showed Wednesday.

The Southeast Asian country is a net oil importer, but still exports due to logistical issues and to maintain its market presence.

Pertamina already uses a large portion of domestically produced crude grades as feedstock, but equity partners are allowed to sell their share of output without restrictions.

Oil producers are now obliged to offer their crude production to Pertamina and other licensed refineries first, three months ahead of planned exports, before selling them on the market. This also helps the government stem losses from a weak currency.

Pertamina has been negotiating with various oil companies, such as Energi Mega Persada, PetroChina, Petronas and SAKA Energy, over the possibility of buying more of their share of domestic crude output.

MORE CHEVRON CRUDE

Pertamina said it will process more of Chevron’s Sumatran Light Crude or Minas Crude and Duri Crude at its refineries, and bought around 2.5 million barrels/month of Minas for the January-June period this year, a senior official said Tuesday.

The first lifting was carried out on January 15, the national oil company’s president director Nicke Widyawati said in a statement on Tuesday. Chevron is expected to produce 190,000 b/d in Indonesia this year, down from from 209,478 b/d in 2018. It produced 223,885 b/d in 2017.

“We refer to the government’s guidance and have proposed our interest to all oil companies to buy their crude portion. The purchase will be on a business to business basis,” Widyawati said.

Pertamina can process Minas and Duri Crude at most of its refineries, except the Kasim refinery in Papua. They are compatible with the configuration of their refineries and will increase the yield of valuable products, Widyawati said.

Pertamina is able to cut its crude imports by at least 3 million barrels/month by boosting domestic grades, including 2.5 million barrels/month from Chevron, Pertamina’s senior vice president for integrated supply chain Hasto Wibowo said.

He said Pertamina usually imports about 11 million barrels/month of crude. Pertamina owns and operates seven oil refineries with a total installed capacity of 1.05 million b/d.

  • Electricity/Power Grid
  • Others
18 January 2019

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  • Philippines

MANILA, Philippines — Manila Electric Company’s (Meralco) electric vehicle subsidiary eSakay has launched a fleet of electric jeepneys (e-jeepneys) for the Makati-Mandaluyong route, the Department of Transportation (DOTr) said Friday.

In a Facebook post, the DOTr said eSakay would be deploying 15 units of e-jeepneys to ply the Buendia MRT Station – Mandaluyong City Hall route via Jupiter Street, with fares ranging from P9 to P15.

“These environment-friendly e-Jeeps are compliant with euro-4 emission standards and PUVMP (PUV Modernization Program) specifications. They run on electricity and are emission-free,” the DOTr said in a statement.

The DOTr added that each vehicle is compliant with the government’s PUVMP, featuring a side entrance, Automated Fare Collection System, GPS tracking system, and CCTV cameras.

The “environment-friendly” e-jeepneys also feature priority seats for senior citizens, and persons with disabilities. These are also equipped with Wi-Fi and USB ports “for passenger convenience and comfort.”

The eSakay Inc. is a registered subsidiary of Meralco which supports the government’s initiative to provide a safer, more sustainable and environmentally-friendly transportation system to the public.

  • Renewables
18 January 2019

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  • Philippines

BACOLOD CITY — A 50-megawatt solar power plant will soon rise in the village of Vista Alegre in this city.
The development of the first large-scale renewable energy project in Bacolod, with an estimated cost of PHP2 billion, kicked off with the signing of the memorandum of understanding (MOU) between the partner-developers held at L’ Fisher Hotel here Thursday night.

Mary Grace Helene Buhain, president and chief executive officer of Amatera Renewable Energy Corp., and Charles Ji, president of TPC Construction Corp., signed the agreement on behalf of their respective companies.

“The vision of Amatera goes beyond business, but the social responsibility to benefit everyone,” Buhain said.

The Bacolod-based company, which is leasing the 74-hectare family-owned land for 25 years to the Korean firm, had secured a clearance from the Department of Energy (DOE) to conduct grid impact studies on the Vista Alegre property in early 2016.

Its project was then included on the agency’s list of awarded solar projects in June that year.

Buhain said the project consultants will come from Korea, but they will also hire locals for the construction, which is expected to start this year.

In his speech, Ji said the signing of the MOU was the start of the beautiful partnership and collaboration between the two companies.

“We are thankful for the trust given to our company, (for us) to work together for this project,” he added.

Engineer Hanshel Layaoen, technical consultant for Amatera, said about 100 employees would be hired for the technical and labor aspects, and at least 300 workers more would be needed to complete the project in six to seven months.

Both companies aim to start the commissioning by 2020, which is also the scheduled completion of the Cebu-Negros-Panay 230-kilovolt Backbone Project of the National Grid Corp. of the Philippines (NGCP).

The influx of solar power plants in Negros Occidental in recent years caused the main line, transmission, and interconnection lines to congest, according to the DOE.

Considering the congestion, Layaoen said the construction of the Bacolod solar farm project cannot proceed without the transmission utility’s backbone project.

Vice Mayor El Cid Familiaran, who attended the signing event, welcomed the development of the renewable energy project in Bacolod as he recognized that solar is now at the center of local energy transformation.

“This is the first large-scale solar energy source in Bacolod and a step towards a greener and more sustainable city,” said Familiaran, who is currently the acting mayor since Mayor Evelio Leonardia flew to the United States to witness the fight of Senator Manny Pacquiao in Las Vegas on Sunday. (PNA)

  • Others
18 January 2019

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  • Thailand

For the second year in a row, some of the planet’s most toxic smog has choked Bangkok.

The Thai capital’s air turned grey and thick in recent days, particularly during mornings, as seasonal weather changes prevented pollutants such as exhaust fumes and factory smoke from dissipating. Periodically, the air was worse than in more infamously polluted cities such as New Delhi or Shanghai.

Thailand’s junta responded by telling people to stay indoors during dangerous pollution spikes and ordering a crackdown on dirty building sites and vehicles. The rainmaking agency flew sorties to try to dissolve the mist. But the haze lingered, signalling a longer-term fight ahead to curb peaks in pollution.

“Bangkok is seeing more and more cars on the road every month,” said Kakuko Nagatani-Yoshida, the United Nations (UN) Environment Programme’s regional coordinator for chemicals, waste and air quality. “Construction cranes dot the city. Bangkok already experiences regular air pollution. What we’ve seen this week is just an extreme of an already unhealthy situation.”

The metropolis of about 10 million people is one of many worldwide facing the scourge of deadly air pollution, which the World Bank estimates caused over US$5 trillion of welfare losses globally in 2013 alone. In Bangkok, the smog threatens to both damage health and repel some of the millions of tourists who are a lifeblood of the Thai economy.

The city received more than 20 million international overnight visitors in 2017, the highest such figure in the world, according to a gauge compiled by Mastercard Inc. Tourists come for gastronomic delights, rooftop bars and infamous nightlife, often before heading to beach resorts such as Phuket.

The Tourism Authority of Thailand, which strives to market the country to holidaymakers, appears to see little threat to the inflow of visitors from the bad publicity sparked by the haze.

“It’s a concern for me personally, but it’s not yet a concern for the tourism industry,” its Deputy Governor Srisuda Wanapinyosak said. “Many tourists spend their time by the beach or on an island which isn’t experiencing the problem.”

The UN’s Nagatani-Yoshida, who is based in Bangkok, isn’t so sure.

“Studies have shown that tourists consider things like air pollution when deciding on a destination,” she said. “Who wants to worry about deadly air pollution on vacation? Bangkok is famous for its rooftop bars and restaurants with incredible views. But what’s the point when you can’t see the skyline?”

On 14 January, the air quality index, or AQI, climbed past 180 in the morning in Bangkok, putting the city among the top 10 most polluted in the world, according to data from AirVisual. Readings below 50 are considered safe, while anything above 300 is considered hazardous.

Apart from vehicle and factory fumes, officials say crop-burning to clear farmland and the practice of setting trash alight both exacerbate the haze. The grey mist includes tiny, toxic PM2.5 particles, which can penetrate deep into the lungs and enter the bloodstream.

As the weather changes and temperatures climb in the weeks ahead, Bangkok’s air quality is expected to improve. But the pattern of dangerous spikes adds pressure for stricter emission controls and a tighter embrace of clean energy.

“Renewable energy is the clear solution to this problem,” said Bundit Sapianchai, president of BCPG Pcl, Thailand’s second-largest renewable energy company. “We can manage the problem by getting rid of contributing factors, like combustion engines and coal or gas power plants.”

While Bangkok waits for long-term solutions, residents and tourists alike are donning pollution masks – so much so that reports of shortages have emerged – and checking how bad the air is, hour by hour.

“We check our phones to look at the AQI rating every day before going out,” said Lu Haijin, a tourist visiting from China. “We’re used to that – we come from Shanghai, where the air is usually even worse.” – Bloomberg

  • Energy Efficiency
  • Renewables
17 January 2019

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  • Vietnam

HÀ NỘI — Increasing energy efficiency together with developing renewable energy is critical for Việt Nam to ensure energy security, according to expert.

This was highlighted at a workshop on energy security in the context of climate change during the Việt Nam Economic Forum held by the Central Economic Commission yesterday in Hà Nội.

Nguyễn Văn Bình, Chairman of the Central Economic Commission, said climate change was a huge challenge for every country, threatening to drag down socio-economic development. Việt Nam is among five countries most exposed to climate change, given its long coastline and large river basins.

Bình said climate change was increasing dependence on energy but was also seriously affecting energy supplies.

Stressing that the development of traditional energy sources was a major cause of greenhouse gas emissions, Bình said it was vital for Việt Nam to improve energy efficiency and develop renewable energy for sustainable development.

“Greening the economy can boost economic growth,” Bruno Angelet, Ambassador, Head of the EU Delegation to Việt Nam said, stressing the role of private investment in the process.

He said Việt Nam had enormous potential for residential and industrial rooftop solar energy which could rapidly increase renewable energy supply into the grid. However, it was important to ensure the grid could absorb this additional supply.

Việt Nam also needed a transitional strategy towards more sustainable energy policies and a shift away from polluting to clean energy. Citizens and industry should be encouraged to produce solar energy on their rooftops.

Still, moving away from coal could only happen step by step and could not entirely be compensated by renewables.

He also stressed the need for an energy efficiency strategy, adding that Việt Nam lacked an appropriate legal framework whereas its lower energy prices simply undermine efforts to reduce energy intensity in consumption and production.

He said regulations and fiscal incentives should be applied to increase energy efficiency.

“Việt Nam needs energy transition. Việt Nam can succeed in this,” he emphasised. “Energy transition can be the second Đổi Mới (Renewal) of Việt Nam.”

According to Lê Công Thành, Deputy Minister of Natural Resources and Environment, besides promoting energy savings and developing renewable energy, Việt Nam needed to seek ways to reduce reliance on energy consumption in economic development.

Thành added Việt Nam would continue to study policies to promote the development of renewable energy.

Experts at the workshop also urged Việt Nam to adopt cleaner fuel technologies and increase the uptake of renewable energy technology to ensure access to affordable energy. — VNS

  • Oil & Gas
17 January 2019

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  • Thailand

SINGAPORE: Thailand‘s state energy firm PTT is planning to start a liquefied natural gas (LNG) desk in Singapore to expand its trading activities of the super-chilled fuel, two sources familiar with the matter said on Thursday.

Thailand is in the midst of liberalising its power sector to boost competition in the domestic market. The southeast Asian country relies mainly on natural gas to generate power but domestic supply is falling behind consumption, requiring the country to import more LNG.

PTT is planning to set up the desk next month by hiring at least one LNG trader and an operations staff, the sources said, declining to be identified as they were not authorised to speak with the media.

The company has hired Daisuke Matsuoka to join its Singapore office, one of the sources said.

  • Oil & Gas
17 January 2019

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  • Indonesia

JAKARTA, Jan 17 (Reuters) – Indonesia’s state-owned energy company, Pertamina, expects to sign a production sharing contract for the Rokan oil block this month, after paying a $784 million signature bonus for its bid in December, a company director said.

Indonesia’s energy ministry announced in July that Pertamina will take over operation of Rokan, the country’s second-biggest oilfield block, once Chevron’s operating contract there expires in 2021.

The Rokan block occupies 6,000 square km (2,300 square miles) on the Indonesian island of Sumatra. It contains 96 oilfields and has been a focus area for Chevron, but a proposal by the U.S. oil major earlier in 2018 for an extension of its Rokan contract beyond 2021 came in far below Pertamina’s offer.

Pertamina has formed a subsidiary named Pertamina Hulu Rokan that will take over operations from Chevron Corp. unit Chevron Pacific Indonesia in 2021, Pertamina upstream director Dharmawan Samsu told reporters on Thursday.

Pertamina is in discussions with Chevron on the transition, and hopes to start drilling in Rokan this year, Samsu said.

The company has been “directed to seek a partner” for Rokan by the state-owned enterprises ministry, he said without elaborating.

Pertamina will open a tender this year to install new pipelines to transport crude from Rokan, as existing pipelines were already 40 years old, and had decided to begin work immediately, Samsu said.

“If we wait until 2021 to replace them, building pipelines takes two years or 18 months, so there would be a period where we’d face high risks that those pipes may not function because they need maintenance.”

Rokan oil output slipped 6 percent in 2018 to 209,400 barrels per day (bpd), from 223,000 bpd in 2017.

Pertamina, which expects production from Rokan to reduce its crude oil import needs by around one-quarter, has been pushed by the government to take over expiring oil contracts to increase its output, a policy that has stoked concern among foreign energy investors about the security of their projects.

The change in operatorship is anticipated to also result in a reduction of Indonesia’s crude exports, as more crude from Rokan is absorbed in domestic refineries.

“Chevron Pacific Indonesia regularly engages with Pertamina,” Cameron Van Ast, a spokesperson for Chevron Asia Pacific, told Reuters by email, declining to provide further detail on the Rokan discussions due to company policy. (Writing by Fergus Jensen; editing by Christian Schmollinger)

  • Electricity/Power Grid
  • Energy Efficiency
  • Others
17 January 2019

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  • Indonesia

Construction of power infrastructure — chiefly coal-fired power plants — will remain the primary driver of growth in Indonesia’s energy and utilities sector for the near future, said Fitch Solutions Macro Research in a Jan 16 report. However, there are risks that power projects may be postponed due to the country’s widening current account deficit and a weakening rupiah, which would then cause a drag on growth.

Power infrastructure’s continued dominance

The power sector accounts for over 85 per cent of the total value of all energy and utilities projects, with a total project value of US$64.1 billion, according to Fitch Solutions’ key projects database. State-owned Perusahaan Listrik Negara is involved in the majority of projects that are in the pre-construction and construction phases, and Fitch Solutions expects the government’s investment in energy projects to grow, expanding electricity capacity to keep pace with rapid economic growth.

Fitch Solutions forecasts real growth of 4.6 per cent for the power infrastructure sector in 2019, to average 5 per cent annually between 2019 and 2027. The sector is expected to be the main pillar supporting growth of the overall energy and utilities sector, ahead of the water and pipeline infrastructure sub-sectors.

Given Indonesia’s established coal industry and substantial coal reserves, coal is likely to be “the cost-competitive fuel of choice for electricity generation over the next decade”, expected to account for 53 per cent of generation in 2028, up from 49 per cent in 2018. Coal-fired power plant projects currently in the pre-construction and construction phases are valued at US$28 billion.

Macroeconomic headwinds

However, power infrastructure construction does face the risk of postponed projects amid macroeconomic pressure. In September 2018, in a bid to lower the current account deficit by reducing imported construction materials, the government announced plans to postpone 15,200 megawatts’ (MW) worth of projects — though further action has yet to be taken. The projects are part of Prime Minister Joko Widodo’s flagship 35,000MW electricity procurement plan.

In 2018, a weakening rupiah increased construction costs and widened the current account deficit. Said Fitch Solutions: “We note that a further depreciation of the rupiah may trigger an actual postponement of key power projects that will consequently slow down growth of the power infrastructure sector.”

Water infrastructure growth to stay steady

In the smaller water infrastructure sub-sector, Fitch Solutions expects moderate growth as Indonesia continues to work toward improving rural access to clean water, while building water treatment facilities and upgrading urban sewerage systems. Their database shows 53 projects worth US$4.5 billion currently under planning and construction.

One key project in the water project pipeline is the massive US$652 million Jakarta Sewerage System (Zone 6), accounting for 14 per cent of the total value of water infrastructure projects. Though the project has suffered numerous delays over the years, authorities are negotiating with Japan International Cooperation Agency over a US$280 million loan that will potentially solve financing issues, noted Fitch Solutions.

Fitch Solutions is maintaining its water infrastructure sector growth forecast of 4.2 per cent in 2019, with average annual growth of 4.8 per cent from 2019 to 2027, but will revise this once the Jakarta Sewerage System (Zone 6) project moves into the construction phase.

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