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Energy Economy ,
Oil & Gas

Interview: AIIB allots half of $6 billion loans to energy projects, says no longer China policy tool

2 November 2018

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Myanmar

Singapore — The Asian Infrastructure Investment Bank is no longer a policy tool tied to Beijing’s Belt & Road Initiative and has committed nearly half of its $6 billion loans to energy projects ranging from power plants to natural gas pipelines, Pang Yee Ean, Director General of Investment Operations at AIIB, said in an interview this week.

When the AIIB, a development bank on the lines of the Asian Development Bank and World Bank, was proposed by China several years ago, there were concerns that it could become an extension of Beijing’s foreign policy, and a banker to the country’s Belt and Road Initiative.

“We have gone beyond being funded by China to being a true multilateral bank owned by our 87 members,” Pang told S&P Global Platts at the Singapore International Energy Week. “This shows that as a bank we no longer operate as a policy bank to China but we are supporting the Belt & Road Initiative if any of its projects are aligned with our criteria.”

Pang said AIIB has a target of building a portfolio of $100 billion in infrastructure projects, and it already has over $6 billion committed, spread across 32 projects, out of which 48% is in energy, which is representative of the energy needs in Asia.

Typically energy makes up around 30%-40% of infrastructure needs in most markets, especially in Asia, he said, adding that most of its energy projects are tailored to the specific requirements of member countries.

One of AIIB’s most recent energy projects is a $600-million commitment to the Tuz Golu Gas Storage Expansion Project in Turkey, indicating that the bank has not narrowed down its geographical scope to Asia alone.

The project, with a total cost of $2.74 billion, will expand the country’s Tuz Golu Gas Storage Facility by 4.2 Bcm from 1.2 Bcm by constructing 40 underground salt caverns to help Turkey meet its strategic energy storage capacity target of 20%. Turkey is heavily dependent on energy imports, and gets 90% of its gas imports are from three countries — 58% from Russia, 17% from Iran and 14% from Azerbaijan.

Energy Efficiency

Combating climate change through industrial efficiency

2 November 2018

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Cambodia

The TEST programme, which aims to fight the effects of climate change by helping corporations adopt efficient and environmentally friendly processes, was launched yesterday in Phnom Penh.

‘TEST’ stands for ‘transfer of environmentally sound technology’.

The project, set to run for four years between 2018 and 2021, is a collaboration between the United Nation Industrial Development Organisation (UNIDO), the Ministry of Industry and Handicraft and the Ministry of Environment.

With a budget of $1.8 million, TEST aims to reduce greenhouse gas emissions by 500,000 tonnes through more efficient energy consumption, innovation, technology transfers and environmental management.

Industrial efficiency lies at the heart of the programme, which is based on the incorporation of technologies, best practices, and an integral management approach to address greenhouse emissions and harmful wastewater discharges, UNIDO said.

It added that based on results from a pilot project run between 2011 and 2013, a group of companies have been selected to participate in the programme.

“The project aims to show that through the TEST integrated approach, companies are able to achieve increased productivity and improved economic performance, while at the same time reducing the negative impact on the environment,” it said.

Sok Narin, UNIDO country representative, said a total of fifty factories have been included in the project, and will benefit from the programme’s technical support. They include plants in the garment and food processing industries.

“The project will provide trainings, both collectively and in-house, on the TEST tools, followed by assessments and energy audits of the production facilities, which will be carried out jointly by the factory’s TEST team and project experts,” Mr Narin said.

He said the project was expected to reduce production costs for participating companies, save operating and raw materials and increase their productivity and competitiveness.

“It will also help companies comply with national and international customer requirements, environmental regulations, as well as reduce business risks, minimise the cost of environmental compliance and reduce the footprint on the environment,” Mr Narin said.

It will also help companies strengthen their corporate social responsibility programmes, improve relations with local communities and customers, and create better working conditions, he added.

Sophalleth Eang, Secretary of State at the Ministry of Environment, said the programme is a clear sign that the government is committed to fighting the factors that are contributing to climate change.

“Climate change is an obstacle to economic and social development. We must all work hard to solve this global issue.

“Cambodia is committed to cutting greenhouse emissions by more than 3 million tonnes, or 27 percent, by 2030,” Mr Sophalleth said.

Minister of Industry and Handicraft Cham Prasidh, also present at the event, urged local companies and factories to adopt greener energy sources like solar energy or biomass.

“If we do not take action now, it will have an impact in all industries, including agriculture. The next generation of Cambodians will suffer the consequences of inaction, so we have to move now,” Mr Prasidh said.

Leang Leng, managing director of Leang Leng Fish Sauce Enterprise, one of the companies included in the TEST project, told Khmer Times that they are proud to partake in the programme.

“It is an honour to be chosen by UNIDO and the Ministry of Industry as a model company for the implementation of the programme, which will reduce our impact on the environment,” Mr Leng said. “We are trying to protect the environment so we can at least help the Earth.”

Oil & Gas

China starts exporting petroleum to Laos

2 November 2018

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Lao PDR

BOTEN, Laos, Oct. 31 (Xinhua) — With over 64 ton diesel, handed over from PetroChina to a Lao company at Laos-China border, the first export of Chinese refined oil to Lao market was made on Wednesday.

PetroChina International (Yunnan) Co. Ltd, a subsidiary of PetroChina group, has been studying and preparing for two years to reach the Lao fuel market since 2016.

With the aims to expand its petroleum products sales in southeastern Asia and to seek new routes to market, the PetroChina company with its Lao partner undertook thorough researches in demands, market access, custom clearance and transportation, etc.

Finally, the first tanks of Chinese refined oil products, loaded in Kunming of China’s Yunnan province and travelling for over 700 km, arrived at the importer’s depot in Boten, the Laos-China border town, over 370 km north of Lao capital Vientiane.

Chindasack Nhotmanhkhong, director of the Nationwide Trading Petroleum Public Company of Laos (NTP), the importer, told Xinhua on Wednesday that the deal done is meaningful, since it will enrich Laos with one more petroleum importing source and route.

Laos mostly imported petroleum products from or via Thailand and Vietnam before.

“I am also feeling proud of being engaged in the specific work of national development strategy to convert Laos from a landlocked to a land-linked country, and of the China-proposed Belt and Road Initiative,” said Chindasack.

Energy Cooperation

ExxonMobil Supports New Singapore Energy Center Partnership with US$10 Million Commitment

2 November 2018

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Singapore

INGAPORE–(BUSINESS WIRE)–ExxonMobil said today that it will contribute US$10 million over five years (S$14 million) to become the first industry founding partner in a new Singapore Energy Center partnership led by the Nanyang Technological University and National University of Singapore and designed to advance next-generation technologies.

ExxonMobil signed a memorandum of understanding with the universities in November 2017 to become a founding member of the center, representing the company’s first such research and development partnership outside the United States. As part of the five-year commitment, faculty and students at the two universities will collaborate with ExxonMobil researchers and scientists, as well as other industry contributors. Research and development projects will be based on university and member input.

Both universities are extending invitations to other leading companies to join the center, fostering interdisciplinary research collaborations between academia and industry.

“The Singapore Energy Center will serve as a focal point for close collaboration between universities and industry in exploring solutions for addressing the dual challenge of meeting society’s growing energy needs while addressing the risks of climate change,” Vijay Swarup, vice president of research and development at ExxonMobil Engineering and Research Company, said at a signing ceremony held during Singapore International Energy Week. “With projected energy demand growth across Asia-Pacific, it’s critical that the public and private sectors work together to advance scalable, next-generation energy technologies while reducing the environmental impact of energy production.”

ExxonMobil will support the center’s wide range of early-stage research projects. Potential projects include applying advances in bioscience and additive manufacturing to discover and develop novel materials and process designs that could lead to new low-emission approaches toward fuel and chemical production; exploring technologies to capture and convert existing carbon dioxide emissions from industrial applications to useful products; using advanced life-cycle assessment and energy systems modeling to explore approaches that could reduce the energy and industrial sectors’ environmental footprint; and investigating technologies that could reduce water and energy consumption during manufacturing, as well as plastic waste.

“ExxonMobil’s participation in the Singapore Energy Center further enhances our technological capabilities in the country, and complements our already strong manufacturing and commercial presence,” said Gan Seow Kee, chairman and managing director of ExxonMobil Asia Pacific Pte Ltd. “Our participation in the company’s first energy center outside of the United States builds on our long and thriving relationship with these two leading universities in Asia.”

ExxonMobil’s support for the Singapore Energy Center expands the company’s collaborative efforts with other academic and research institutions that are focused on developing an array of new energy technologies, improving energy efficiency and reducing greenhouse gas emissions. The company currently works with about 80 universities in the United States, Europe and Asia to explore next-generation energy technologies, and is a founding member of the Stanford Strategic Energy Alliance, MIT Energy Initiative, Princeton E-ffiliates Partnership and University of Texas at Austin Energy Institute.

About ExxonMobil

ExxonMobil, the largest publicly traded international oil and gas company, uses technology and innovation to help meet the world’s growing energy needs. ExxonMobil holds an industry-leading inventory of resources, is one of the largest refiners and marketers of petroleum products, and its chemical company is one of the largest in the world. For more information, visit www.exxonmobil.com or follow us on Twitter www.twitter.com/exxonmobil.

Cautionary Statement: Statements of future events or conditions in this release are forward-looking statements. Actual future results, including the development and impact of new technologies, could vary depending on the outcome of further research and testing; the development and competitiveness of alternative technologies; the ability to scale research discoveries and pilot projects to commercial levels on a cost-effective basis; political and regulatory developments; and other factors discussed in this release and under the heading “Factors Affecting Future Results” on the Investors page of ExxonMobil’s website at www.exxonmobil.com.

Energy Cooperation ,
Oil & Gas

Japan’s Osaka Gas looks to Southeast Asia for LNG business

2 November 2018

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ASEAN

SINGAPORE (Reuters) – Japan’s Osaka Gas Co Ltd is considering expanding its Southeast Asia operations, a top executive said, tapping a region where natural gas demand is booming but domestic reserves are dwindling fast.

Osaka Gas, one of the world’s biggest gas utilities and importers of liquefied natural gas (LNG), is increasingly turning abroad as it faces faltering demand at home due to a mature market and shrinking population.

One opportunity is Vietnam, Kazuhisa Yano, Executive Chairman and Chief Asia Representative of Osaka Gas, told the Reuters Commodity Summit interview series.

Vietnam is one of Asia’s fastest-expanding energy markets due to a large population and sharp economic growth, but reserves at its existing oil and gas fields are declining fast.

“We will … study Vietnam’s gas market,” Yano said on Tuesday, talking to Reuters while attending an industry conference in Singapore.

“There are several industry parks in Vietnam, and (there is) demand for gas for such kinds of industrial (purposes).”

Vietnam does not currently import any LNG, but is planning to start in coming years, like other Southeast Asian countries such as Indonesia and the Philippines.

The International Energy Agency (IEA) said this week that Southeast Asia is at the heart of future LNG demand growth, which it expects to increase by a third globally to 500 billion cubic meters (370 million tonnes) by 2023.

While Osaka Gas reviews Vietnam as a potential market, it will also look into expanding its current operations in the region.

The firm already has subsidiaries for operations such as sales and trading in Singapore, Thailand, Indonesia and the Philippines, Yano said.

Like Vietnam, domestic gas reserves are running out in the Philippines, and LNG will soon be needed to meet demand from new power generation projects.

Yano said Osaka Gas was considering entering that market as a supplier.

In Indonesia, which is still an LNG exporter but where dwindling reserves and a lack of investment have also resulted in falling production, Osaka Gas in October announced the launch of a natural gas joint marketing business with Indonesia’s state-owned Pertamina.

Yano said Osaka Gas was also considering investment into LNG receiving terminals and power generation assets in Indonesia.

Bioenergy

Indonesia imposes mandatory use of B20 biodiesel in drive to cut fuel bill: deputy minister

2 November 2018

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Indonesia

SINGAPORE (Reuters) – Indonesia has enforced mandatory use of diesel containing 20 percent locally produced biofuel amid steps to rein in its fuel bill and cushion the impact on its economy of a currency crisis and higher oil prices, a government official told Reuters.

Speaking on the sidelines of the Singapore International Energy Week conference, deputy energy minister Arcandra Tahar said Jakarta in September made use of the fuel, known as B20, mandatory in all diesel machinery in the country in a move to curb gasoil imports.

Major emerging Asian economies including Indonesia have been hit hard this year by rising crude oil prices, which despite declining this month are still up by about 15 percent since the start of 2018, while the rupiah, Indonesia’s currency, has hit a 20-year low this year.

“Is there any impact the rupiah and oil prices will have on our economy? Yes… Do we have a corrective action? Yes, we do,” said Tahar.

While industry watchers have been debating the possibility of Indonesia introducing fuel price controls, as India did this month amid similar troubles, Jakarta has yet to announce any such move.

Although Indonesia is an exporter of crude oil itself, it imports even more refined products, including gasoline and diesel. That is putting huge pressure on the government budget and Pertamina, the country’s state-owned oil company, which is being squeezed between government fuel polices, higher oil prices and the rupiah’s slide.

Tahar said he expected Indonesia’s use of B20 fuel in the farming sector to increase to 6 million kilolitres next year, from the current nearly 4 million kilolitres.

Southeast Asia’s largest economy is also trying to boost the locally sourced fuel content in the oil, gas and mining sectors by giving them a 2-4 percent cut of gross tax revenue if they use at least 30 percent of local content, he said.

“If you have gross revenue of $10 billion and using 35 percent of local content, you are going to get an incentive of 2 percent or around $200 million,” Tahar said. “That’s a huge number compared to the cost saving you may get if you import from another country.”

Last month, Jakarta’s trade ministry issued a requirement to use letters of credit from banks affiliated with Indonesian banks to help shore up the ailing rupiah. This will apply to the mining sector, Tahar said.

A Pertamina official said last week that it is looking to buy crude oil purchases in other currencies to reduce spending of foreign exchange in U.S. dollars.

Tahar said, however, that would be difficult as the main oil market in Singapore trades in U.S. dollars.

In the electricity sector, meanwhile, Indonesia is switching primary sources of power plants from diesel to crude palm oil, he said, also a move to reduce the country’s exposure to high oil prices.

In the longer term, he said Indonesia plans to encourage the use of electric vehicles as it pushes to shake off its dependency on oil imports and boost energy security.

He did not give specific examples of how the government would boost usage of electric vehicles.

But he said oil product demand growth for next year will remain steady at 3-4 percent.

Energy Efficiency

ASEAN Ministers call for stronger institutional ties with the IEA

2 November 2018

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ASEAN

Dr Fatih Birol, the IEA’s Executive Director, was in Singapore for the 36th ASEAN Ministers of Energy Meeting (AMEM), Singapore International Energy Week, and other related engagements.

Dr Birol gave the opening presentation of the AMEM, discussing the various energy challenges facing ASEAN – especially energy security, investment, grid integration and energy efficiency – and how these might be tackled regionally. Dr Birol also set out a plan as to how the IEA might work with ASEAN to assist the region meet its energy priorities.

ASEAN ministers released a Joint Ministerial Statement at the completion of the AMEM that calls for “stronger institutional ties with the IEA”. For the first-time, the statement also outlines specific projects to deepen collaboration between ASEAN and the IEA, designed to be delivered as part of Thailand’s 2019 ASEAN Presidency. These include projects on regional power system integration, renewables integration, energy efficiency for cooling/air conditioning, investment and digitalisation.

While in Singapore, Dr Birol also made the opening address to the annual Singapore International Energy Week (SIEW). His remarks focused on key global trends in energy markets and their implications for Southeast Asia.

On the margins of AMEM and SIEW, Dr Birol met with multiple ministers from Southeast Asia including Indonesia, Malaysia, Thailand, Singapore and the Secretary General of ASEAN to discuss our engagement with the region and with countries bilaterally.
Source: IEA

Oil & Gas

Philippines Hopeful Xi Visit Brings South China Sea Energy Deal

2 November 2018

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Philippines

Philippine Energy Secretary Alfonso Cusi is optimistic that a deal to jointly explore disputed areas of the South China Sea for oil and gas will finally move forward when President Xi Jinping visits next month.

Terms for an agreement between the Philippines and China may be finalized during Xi’s visit, Cusi said in an interview in Singapore. The government is also discussing lifting a ban on exploration in contested waters imposed by President Rodrigo Duterte’s predecessor, which thwarted a potential venture between PXP Energy Corp. and China National Offshore Oil Corp.

“We are discussing lifting the moratorium, and it is proposed that we do joint exploration with China,” Cusi said on Tuesday. “Those two are still being discussed and hopefully that will be resolved during the visit of President Xi Jinping. I would not wish to pre-empt things, but we are hopeful that we will come up with the terms of operations.”

Any deal on joint exploration would mark a major win for China, which has stepped up efforts over the past decade to block Southeast Asian nations from extracting energy resources in disputed seas. The Philippines had previously aligned with Vietnam in rejecting China’s claims to most of the South China Sea as a basis for joint exploration.

President Benigno Aquino, who left office in 2016, had halted exploration work at Reed Bank in the South China Sea after filing an arbitration case disputing Beijing’s claims to the resource-rich waters. An international court based in the Netherlands ruled in favor of Manila in July 2016, barely a month after Duterte took office.

Since his election win, the 73-year-old Philippine leader has pivoted to China. He set aside the ruling and backed the idea of joint exploration, proposing a 60-40 sharing on the proceeds. The U.S. Energy Information Administrated has estimated that 4 trillion cubic feet of gas reserves worth billions of dollars could be found in areas claimed by the Philippines.

Even as Duterte and Xi’s friendship has deepened, talks on a deal have dragged on for months. A meeting between top diplomats from the two countries on Monday failed to produce a breakthrough on the joint exploration plan.

PXP Energy Chairman Manuel Pangilinan struck a bearish tone on Monday, telling reporters he didn’t think the ban on disputed sea exploration would be lifted in time for Xi’s visit in the third week of November. Talks with CNOOC can’t be restarted until the Philippines and China clinch a bilateral agreement, he said.

“We have been talking with China to resolve that issue,” Cusi said. “That is a high priority area for us because we know that there are a lot of reserves that we can explore and exploit.”

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