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  • Oil & Gas
19 October 2018

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  • Myanmar

As the scramble for more power sources intensifies, focus has centered on tapping Myanmar’s gas fields to meet demand. But can the country afford its own gas?

Myanmar is under pressure to double its power production capacity to 6000 megawatts (MW) within the next two years, in order to meet rising demand. Several power generation projects, the most recent of which is the 225MW Sembcorp Myingyan combined-cycle gas plant, have commenced operations. Next month, a 40MW solar plant in Minbu is expected to come onstream.

The government is also negotiating terms for several power purchase agreements under which it will buy liquefied natural gas (LNG) to meet the bulk of Myanmar’s energy requirements. While official announcements have yet to be made on this front, insiders and analysts warn that the LNG option, which will involve costly infrastructure and complex logistical requirements, is unlikely to come cheap.

As the need to develop new sources of power becomes more urgent, focus has centered on tapping Myanmar’s own fields for gas to meet the country’s growing demand. Now, insiders say the government should take into account domestic needs when it opens up new gas fields next year.

Last month, a 40 metre column of gas was discovered at a depth of 4,820m at the Shwe Yee Htun-2 appraisal well in the A-6 gas block in southern Rakhine. The Shwe Yee Htun-2 discovery adds to the Shwe Yee Htun-1 and Pyi Thit-1 discoveries made in 2016 and 2017.

While France’s Total and Australia’s Woodside are also partners in block A-6 together with Myanmar’s MPRL E&P, “all of the gas produced at A-6 should be taken up by Myanmar for domestic use. We need to make arrangements to be able to buy the gas so that our economy can develop further,” said U Kyaw Kyaw Hlaing, chair of the Smart Group of Companies.

Myanmar is expected to produce 653,300 million standard cubic feet (MMscf) of gas from its four gas fields – Shwe, Zawtika, Yetagun and Yadana – in 2018-19, according to the Ministry of Planning and Finance. The fields are operated by international oil companies including France’s Total, South Korea’s Daewoo, Malaysia’s Petronas and PTTEP from Thailand.

However, most of the gas produced is immediately exported to Myanmar’s neighbours at an agreed price. For example, gas produced at the offshore Shwe and Zawtika fields is exported to China and Thailand under 30-year contracts.

This is because most of Myanmar’s gas contracts date back to the late 1990s, when the country was under US sanctions. At the time, cheap gas produced onshore was sufficient for domestic consumption, so the country resorted to selling the additional gas produced under long-term contracts for income.

But the country’s electricity requirements have since spiked, buoyed by demand from investors and businesses. Now, policy makers are considering channeling more Myanmar gas for domestic use.

Too costly

Yet, Myanmar lacks the funds and infrastructure needed to produce its own gas. According to the Ministry of Electricity and Energy (MOEE), each offshore drilling project is estimated to cost around K2 billion, a sum the country can ill-afford. It will also take years for gas to be commercially produced after it is discvoered.

Meanwhile, buying more of its own gas will involve complex negotiations. “The present arrangement of selling gas to foreign countries can be halted and the gas redistributed within the domestic sector. Renegotiations will of course have to be made with the contracted nations. All resources produced by our nation can be utilised. But how are we going to purchase it?” said U Zaw Aung, director general of the Department of Oil and Gas Planning, which is under the MOEE.

Moreover, gas is sold at a fixed price. If the government or private businesses want to purchase natural gas, they are obliged to pay the agreed price for the duration of the contract, failing which fines will be implemented. The length of the contract depends on the size of the field.

But that’s not the only issue. Myanmar derives a large proportion of its income from gas exports. In fact, most of the funds needed to build Nay Pyi Taw came from gas export revenues. In the future, the country will also need additional funds in areas such as education and healthcare.

“The country needs the money from gas exports. Moreover, income from other sectors is not as lucrative. If we start selling less gas to foreign countries and purchase more for domestic use, we would not have enough funds for the country,” U Zaw Aung said.

In 2017-18, Myanmar received more than US$3 billion for gas exports. During the six month interim period between April and September this year, gas export income amounted to more than US$1 billion, according to the Ministry of Commerce.

Domestic needs

Still, it is becoming increasingly obvious that Myanmar should harness more of its own gas for domestic consumption. “The international market price is fair. But domestically, the price can be reduced to some extent as there are less logistics costs involved,” said U Myat Thin Aung, chair for Hlaing Tharyar Industrial Zone.

U Than Tun, a retired director of the Myanmar Oil and Gas Enterprise (MOGE), agreed that the government should look into prioritising domestic needs. “If the current volume of electricity generated domestically cannot fulfill local demand, we need to take as much as we need from our national gas reserves,” he said, adding that exporting gas while importing other forms of energy to meet local demand is not an efficient use of state revenues.

Despite the country’s shortage of power, just a fraction of the gas produced is allocated for domestic consumption. Of the 1.7 billion cubic feet of natural gas it produces daily, Myanmar exports around 1.5 billion cubic feet, U Kyaw Thura, a geologist at MOGE, told the media in August. However, Myanmar also imports around 50,000 barrels of oil to meet demand, he said.

As such, the government should negotiate for a larger share of the gas produced when it invites international tenders for exploration and production at up to 31 new oil and gas fields next year.

  • Energy Cooperation
  • Oil & Gas
19 October 2018

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  • Philippines

MANILA — Energy Secretary Alfonso G. Cusi witnessed on Wednesday the ceremonial signing of the Petroleum Service Contract (PSC) for Area 4 (East Palawan Basin) of the Fifth Philippine Energy Contracting Round (PECR5) at the Presidents’ Hall of Malacanan Palace.

President Rodrigo R. Duterte signed the PSC on behalf of the Philippine government with Sec. Cusi as witness, while Mr. Itay Raphael Tabibzada, company President and CEO, signed for the Israeli firm, Ratio Petroleum Ltd.

Cusi said the event bodes well for Philippine-Israel economic relations, as well as the country’s upstream petroleum industry.

“The President has been very clear – our country needs to attain energy security and sustainability at the soonest possible time. We are currently experiencing how our dependence on importation has left us at the mercy of price movements in the global oil markets. We need to boost the exploration and development of our own energy resources and the awarding of the petroleum service contract to Ratio Petroleum is a step in the right direction,” he said.

The awarded PSC is part of PECR5, which was launched in May 2014. The PECR was established as a transparent and competitive system of awarding service or operating contracts for prospective petroleum or coal areas within the country.

Ratio Petroleum will now be able to explore Area 4, covering 416,000 hectares across the East Palawan Basin for potential oil and gas resources. Projected minimum total expenditure is valued at USD34.35 million to be derived from studies, data gathering and drilling activities over the initial seven-year contract duration.

Established in 1992, Ratio Petroleum has a number of large-scale operations at the Levant Basin in the Eastern Mediterranean Sea, off the coast of Israel, as well as off-shore operations in the Republic of Malta and the Co-operative Republic of Guyana.

“This is the first petroleum service contract signed under the Duterte administration. In fact, the last service contract awarded was with PXP Energy Corporation. This was almost five years ago in 2013,” Cusi said. (PR)

  • Renewables
19 October 2018

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  • Malaysia

KUALA LUMPUR (Oct 17): Sustainable Energy Development Authority (SEDA) Malaysia today launched the first national solar photovoltaic monitoring system (PVMS).

This PVMS will generate leads to performance database which monitors selected grid-connected solar PV systems for performance and reliability.

The performance and reliability of the key components of the solar PV systems such as PV modules and inverters will be monitored.

The PVMS also acts as an information platform for solar PV in the country, with the monitoring system available for subscription.

The launch of the PVMS was officiated by Minister of Energy, Science, Technology, Environment and Climate Change, Yeo Bee Yin, at the opening of the International Greentech and Eco Products Exhibition (IGEM) 2018.

“Currently, we already have 120 grid-connected solar PV systems (up to 1MV in capacity) throughout Malaysia that are being monitored on a real-time basis.

“We target to have up to 150 grid-connected PV areas by the year-end, hence providing a huge data base.”

The database will become the reference for designing national energy policies and programmes in the future.

Also present at the launch was SEDA Malaysia acting chief executive, Dr Wei Nee Chen.

The PVMS is funded by the Malaysian Electricity Supply Industries Trust Account (MESITA) under the Ministry. The authority has been actively developing the platform ever since the idea was mooted in 2015.

At today’s event, SEDA also launched the country’s first-of-its kind All Risks Solar PV Insurance as an initiative to ensure the investors’ assets are well protected.

The innovative insurance product is by Allianz Malaysia Bhd via Anora Agency Sdn Bhd in collaboration with the Malaysian Photovoltaic Industry Association.

“We are aware that the industry players face various risks as anything can happen to the solar panels.

“Therefore, we welcome more insurance companies to offer their services as at least we will have more choices,” said Yeo.

The Solar PV Insurance addresses the post-installation gaps which are typically lacking in the market.

  • Energy Cooperation
19 October 2018

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  • Malaysia

KUALA LUMPUR (Oct 17): Sustainable Energy Development Authority (SEDA) Malaysia signed a total of three memorandums of understanding (MoU) involving the Asian Development Bank (ADB), the Japanese Business Alliance for Smart Energy Worldwide (JASE-W) and APX Inc today.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin said under the the MoU with ADB, the bank will provide three energy experts to thoroughly study the Renewable Energy Transition Roadmap (RETR) 2035 action plan.

“Besides this, the MoU between SEDA and JASE-W will give both parties the opportunity to exchange knowledge on energy conservation and efficiency, especially in the development of Zero Energy Building in Malaysia,” she told reporters after witnessing the MoU signing ceremony, here, today.

The MoU with APX Inc will recognise SEDA as the Qualified Reporting Entity (QRE) for the registration of Tradable Instrument for Global Renewables Registry (TIGRs) which provides a platform for the trading of Renewable Energy Certificates (REC).

“We believe the certificate is very important, especially for international markets, and multinational companies here,” added Yeo.

In the meantime, Yeo also announced the revocation of non-performing Feed-in Tariff (FiT) projects of 155MW, and the release of new quotas of 114MW involving 74MW of small hydro category, 30MW of biogas and 10MW of biomass for eligible applicants.

“SEDA will also conduct e-bidding for the biogas quota to create a better pricing efficiency for electricity,” she said.

Yeo added that the e-bidding will take place on Nov 19, and those interested can submit their application through the e-FiT online system (http://efit.seda.gov.my). — Bernama

  • Energy Efficiency
19 October 2018

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  • Malaysia

KUALA LUMPUR: The government will be introducing building energy intensity (BEI) labelling for buildings as part of its efforts to promote voluntary adoption of energy efficiency in the building sector. It is likely to start with government buildings for starters.

The initiative will be launched at the energy efficiency town hall session to be held on Saturday.

Energy, Science, Technology and Climate Change Minister Yeo Bee Yin said during her speech at the International Greentech & Eco Products Exhibition & Conference Malaysia (IGEM) that the initiative will entail the rating of buildings with between 1-5 stars for energy efficiency.

“This is the first step where we want government buildings to be labelled between 1-5stars for energy efficiency,” she added.

In addition, Yeo said the government will also be aggressively stepping up the adoption of energy performance contracting (EPC) for government buildings next year. The initiative was initiated in 2013.

“There are about 5,000 government buildings in Malaysia. Just imagine how much money we can save by retro-fitting (these) buildings by making the building electricity efficient,” she noted.

Malaysia’s energy consumption in buildings comprised 14% of total energy consumption and 52.4% of electricity consumption in 2016.

Internationally, the building sector is regarded as one of the most cost-effective sectors to reduce energy consumption.

  • Oil & Gas
19 October 2018

 – 

  • Malaysia

KUALA LUMPUR (Oct 17): Gas Malaysia Bhd announced today the successful commissioning of its second gas engine co-generation plant operated with its joint venture partner Tokyo Gas Engineering Solutions Corp.

The joint venture company, Gas Malaysia Energy Advance Sdn Bhd (GMEA), is owned 66% by Gas Malaysia and 34% by Tokyo Gas.

In a stock exchange filing, Gas Malaysia said the plant has officially started supplying electricity and hot water to a manufacturing plant belonging to air conditioner company Panasonic Appliances Air-Conditioning Malaysia Sdn Bhd.

“Currently, Panasonic and Tokyo Gas have commenced their operation of power generator and air conditioning system in combination with energy service by gas co-generation and non-Freon air conditioner, at Panasonic’s manufacturing plant in Malaysia.

“GMEA installed two megaWatt co-generation, fuelled by natural gas, on the manufacturing plant of Panasonic Appliances Air-Conditioning. GMEA will also provide comprehensive services for each phase of the project, from system design, construction, procurement of fuel to facility, maintenance, and to electricity and hot water supply,” said Gas Malaysia.

GMEA was set up to generate and sell electricity and steam through the combined heat and power (CHP) system to the industrial sector.

The system is a simultaneous production of electricity and usable thermal energy from one single fuel source, which is said to be more efficient unlike the conventional electricity generation that wastes vast amounts of heat.

GMEA had in January 2017 successfully completed and commissioned its first CHP plant for a manufacturing company in Prai, Penang.

Gas Malaysia said that with the system, Panasonic’s plant could reduce energy inputs by about 3% and carbon dioxide emissions by some 11%.

“The system is expected to continue contributing to highly-efficient and environmentally-friendly energy supply with natural gas as a clean energy source. The commencement of operation of the project is expected to contribute positively to earnings of the group,” it added.

Shares of Gas Malaysia were unchanged at RM2.83 at market close today. The gas and energy solutions provider has a market capitalisation of RM3.63 billion.

  • Bioenergy
19 October 2018

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  • Malaysia
KUALA LUMPUR: Malaysian biodiesel production is likely to hit record levels this year and next, with 2018 exports on track to double from 2017, pushed up as higher oil prices boost the appeal of biofuels, the head of an industry association said on Wednesday.

The Southeast Asian nation is the world’s No.2 producer of palm oil, which can be used as feedstock to make the bio components of biodiesel.

“I believe Malaysian (biodiesel) production might hit 900,000 tonnes and exports 475,000 tonnes if the current price differential between crude palm oil and gasoil remains,” U.R.
Unnithan (pic), president of the Malaysian Biodiesel Association, told Reuters by text message.

“These would be record high (output and export) levels for Malaysia,” he said.

Malaysia churned out 720,410 tonnes of biodiesel in 2017 and exported 235,291 tonnes, according to local data.

The country said in July that it would raise its so-called biodiesel mandate next year to 10 percent from the current 7 percent. The mandate refers to the percentage of bio-content that must be contained in biodiesel.

If the government goes through with that plan and crude prices hold, Malaysia could produce up to 1.2 million tonnes of biodiesel in 2019, said Unnithan.

Diesel’s premium over palm oil has widened in recent months amid stronger crude prices and weaker palm markets. Its spread over palm hit $219 per tonne in early October, its widest in four years, and was around $178 on Wednesday.

Unnithan’s latest outlook marks an upward revision to estimates he made in April, when he said Malaysian biodiesel production could decline to 500,000 tonnes in the face of competitive shipments from Indonesia. Diesel’s spread over palm was about $20 a tonne at that time. – Reuters

  • Bioenergy
19 October 2018

 – 

  • Malaysia

KUALA LUMPUR (Oct 17): Malaysia maintained its export tax on crude palm oil for November at zero percent, according to a circular on the Malaysian Palm Oil Board’s website on Wednesday, citing the national customs department.

The export tax was at zero percent in October.

Malaysia is the world’s second-largest producer of palm oil.

The Southeast Asian nation calculated a palm oil reference price of 2,073.97 ringgit (US$499.51) per tonne for November. Any price above 2,250 ringgit incurs a tax.

Malaysian benchmark palm oil futures were last up 0.3% at 2,250 ringgit a tonne in early trade on Wednesday.

(US$1 = 4.1520 ringgit)

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