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Coal ,
Energy Economy

Indonesia’s coal price reference set at $91.8 per ton in February

7 February 2019

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Indonesia

The government has set Indonesia’s coal price reference (HBA) for February at US$91.8 per ton, 0.6 percent lower than the reference in January of $92.41 per ton, in response to China and India’s ongoing protection policies.

“Both countries will intensify the use of domestic coal,” Energy and Mineral Resources Ministry’s spokesperson Agung Pribadi said in a press statement on Wednesday.

Other factors include the price movement of the Indonesia Coal Index (ICI), the Newcastle Export Index (NEX), the Globalcoal Newcastle Index (GCNC) and January’s Platss 5900.

February’s HBA is stipulated under Energy and Mineral Resources Ministerial Decree No.18 K/30/MEM/2019 and will be used as the calculation basis for February’s direct sales of coal.

The government has projected that this year’s production target will not be much different from 2018’s total coal production of 485 million tons — 25 percent of which is allocated for domestic market obligation (DMO).

The government has also continued its policy to cap the coal price for electricity purposes at $70 dollar per ton, with the aim of maintaining the electricity price at the current level. (bbn)

Energy Economy ,
Renewables

Indonesian institutions struggle to get funding for green energy projects

7 February 2019

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Indonesia

Securing funding for environmentally friendly projects has not been a straightforward process for Indonesian companies and organizations, many of which are unaware that certain standards need to be fulfilled before applying for funding for green energy projects at international and multilateral organizations.

The standards are considered basic: Write a clear proposal and comply with the principles of equal opportunity for all genders and minority groups.

The United Nations through its Green Climate Fund (GCF), for example, requires proposals to be aligned with national development priorities and gender equality standards and accommodate the needs of vulnerable groups.

In Indonesia, the GCF has been working with Finance Ministry’s Fiscal Policy Office and intergovernmental organization Global Green Growth Institute (GGGI) since 2017.

Thus far, only PT Sarana Multi Infrastruktur, a government-backed infrastructure financing firm, has met GCF requirements. Working with GCF are two other Indonesian institutions: private infrastructure company Indonesia Infrastructure Finance (IIF) and civil society group Partnership for Governance Reform (Kemitraan).

One of the GCF’s gender equality requirements was to ensure a balanced amount and equal opportunities for both men and women employees, said Meirini Sutjahjo, head of communications for Indonesia at the GGGI.

“It [meeting the gender requirement] is one of our challenges to find entities eligible for GCF funding,” she said.

Acting as a pool fund for public and private investment since 2014, the GCF’s total portfolio value is US$16.4 billion, comprising pledged, committed and implementing funds worth $10.3 billion, $4.6 billion and $1.8 billion, respectively, according to its website.

The GCF will give accreditation for eligible applicants, which can ask for funds ranging from less than $1 million to more than $250 million for each project.

The government acknowledged that having access to alternative sources of funding to finance green projects would help reduce the problem of inadequate investment in the renewable energy sector, which is growing at a snail’s pace.

“Aside from helping us in terms of grants or soft loans, they [foreign institutions] are also [helpful] in capacity building, such as project preparation,” said Harris, director for new and renewable energy at the Energy and Mineral Resources Ministry.

“We need good-quality proposals [to apply for international funding].”

The national goal is to cut greenhouse gas emissions to around 800 million tons of carbon dioxide by 2030, with 39.25 percent coming from the energy sector, which still heavily relies on coal and fossil fuel.

As of 2018, Indonesia has been reducing greenhouse gas emissions at a rate of 43.8 million tons of CO2 per year, only 13.9 percent of the targeted 314 million tons of CO2 per year until 2030.

The reliance on traditional energy resources is evident in the country’s use of coal-based electricity, which will continue to account for more than half of power generation until 2027. Renewable energy, meanwhile, makes up 12 percent, as of 2018.

Although there has been an increased use of renewable energy over the past few years, Harris noted that there was little progress in green projects, which were struggling to seek financing amid a high reliance on fossil fuels.

Data from the ministry show that 30 out of the total 75 power purchase agreements in renewable energy with a total capacity of 1,581 megawatts have yet to obtain financing. Most of the agreements were signed in 2017.

Harris said small-scale green energy projects were the most difficult to fund. “As a solution to this, we are connecting them with the National Development Planning Agency’s [Bappenas] Center of Private Investment [PINA].”

The PINA division is tasked with searching for alternative sources of funding for various infrastructure projects outside the state budget.

Oil & Gas

Petrovietnam reports 26 percent hike in revenues last year

6 February 2019

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Vietnam

The state-run giant (Petrovietnam or PVN) reported revenues of VND626.8 trillion ($26.92 billion), 18 percent higher than the target and a year-on-year rise of 26 percent.

As of December 10 it had achieved its domestic crude oil production target of 11.31 million tons. Total oil and gas output reached 23.98 million tons (gas converted into oil equivalent).

The group contributed VND121.3 trillion ($5.22 billion) to the state coffers, exceeding the target by 64.3 percent and 24.3 percent more than the previous year.

“These achievements came at a time when global oil price movements were difficult to predict, production in mature fields were in rapid decline while new fields brought on stream were small and marginal and there was pressure to minimize costs per barrel,” CEO Nguyen Vu Truong Son said in the company’s 2018 business performance report.

Tổng giám đốc Nguyễn Vũ Trường Sơn nhấn mạnh những dấu ấn nổi bật của PVN trong năm 2018.

Petrovietnam’s CEO Nguyen Vu Truong Son

Last year the group wrapped up equitization of three of its subsidiaries: PetroVietnam Power Corporation (PV Power), Vietnam Oil Corporation (PVOIL) and Binh Son Refinery and Petrochemical Joint Stock Company (BSR).

These are large enterprises with the state equity estimated at VND89 trillion ($3.83 billion), according to auditors’ conclusion.

The proceeds from their IPOs reached VND16.5 trillion ($710 million). Petrovietnam managed to raise VND18.6 trillion ($801 million) from the three firms’ equitization and state divestments.

Nghi Son Refinery and Petrochemical Complex is one of Vietnam’s national key oil and gas projects.

In late last year, the $9 billion Nghi Son Refinery and Petrochemical Complex, one of the key national oil and gas projects, began commercial operation.

With a capacity to process 200,000 barrels of crude a day, it, along with Dung Quat, can meet more than 80 percent of the country’s petroleum demand, reducing dependence on imports.

Situated in the Nghi Son Economic Zone, 200 km south of Hanoi in the central province of Thanh Hoa, Nghi Son is invested by Idemitsu Kosan Co, Kuwait Petroleum, Petrovietnam and Mitsui Chemicals Inc.

Oil & Gas

Angkor Pursuing Oil and Gas Opportunities In Cambodia

6 February 2019

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Cambodia

TORONTO, Feb. 06, 2019 (GLOBE NEWSWIRE) — Angkor Gold Corp. (TSXV: ANK and OTC:ANKOF) (“Angkor” or “the Company”) CEO Stephen Burega is pleased to announce that Angkor is actively pursuing oil and gas opportunities in Cambodia in addition to its ongoing mineral exploration projects.

“Angkor is currently in discussions with Cambodia’s oil and gas authorities regarding pursuing oil and gas concessions and available licenses,” reported Angkor CEO Stephen Burega. “We have been looking at the potential of oil and gas in Cambodia for the last 5 years.”

Cambodia has traditionally been viewed primarily as a country with mining and mineral resource opportunities, however, sizeable oil and gas reserves have been developed on three sides of the country – in the Gulf of Thailand to the west, the Khorat Plateau of Thailand to the north, and in the Vietnamese Cuu Long Basin of the South China Sea to the south.

“The sedimentary basins inland in Cambodia have never been systematically explored,” said Angkor Executive Chairman Mike Weeks, “partially because of previous historical regional instability and a poor understanding of local geology as it relates to hydrocarbons. We see the potential for petroleum accumulations in Cambodia indicated by onshore natural oil seepages, the presence of sedimentary rocks and geological structures that may trap and hold oil and gas, and the similarity of geology of areas adjacent to Cambodia where oil and gas has been found and is being produced.”

To assist in this expansion of Angkor’s resource focus, Angkor will be working with recognized oil and gas exploration expert Dr. Lorne Rosenthal, who has worked in oil and gas exploration in the Western Canadian Sedimentary Basin for over 40 years.

Lorne Rosenthal has a PhD in geology from the University of Manitoba. He worked in a number of different staff and consultant positions, including Well Site Geologist, Exploration Geologist, Area Manager, Senior Research Scientist, VP Exploration, and finally President and CEO. He has been either employed or retained under contract by many oil companies in Calgary including Unocal, Sceptre, Murphy, Chevron, PanCanadian, and PetroCanada.

“I have been reviewing all available data and the geological setting for several years,” said Rosenthal, “I would say that parts of Cambodia have similar geology to some of the world’s important oil-bearing basins.”

In addition to mineral exploration, Angkor Executive Chairman Mike Weeks has a long and successful career in the oil and gas industry with 25 years’ experience in project management of petroleum-related industries. He also spent over 14 years negotiating with foreign governments in developing and implementing natural resource concessions.

Angkor continues to explore and develop its five exploration licenses in the Kingdom of Cambodia that cover approximately 983 km², with the support of the Cambodian government, local communities and earn-in exploration funding partners such as Japan’s JOGMEC, Australia’s Emerald Resources NL and Canada’s Hommy 5 Resources Inc.

“We are very excited about the possibility of adding oil and gas prospects to Angkor’s portfolio of exploration properties,” said Angkor CEO Stephen Burega. “Cambodia continues to offer exceptional opportunities as an underexplored region and Angkor is well-placed to lead the way in new discoveries.”

ABOUT ANGKOR GOLD CORP.

ANGKOR Gold Corp. is a public company listed on the TSX-Venture Exchange and is a leading mineral explorer in Cambodia with a large land package and a first-mover advantage building strong relationships with all levels of government and stakeholders.

Energy Economy ,
Others

ADB, IFC invest in Ayala energy unit’s green bonds

6 February 2019

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Philippines

AC Energy, Inc. has attracted two of the world’s biggest development lenders International Finance Corp. (IFC) and the Asian Development Bank (ADB) to the Ayala-led company’s multi-million dollar green bond offering that will fund regional renewable energy projects, company officials said.

“In total now, we have $410 million from the green bond offer,” Eric T. Francia, AC Energy president and chief executive officer, told reporters in a briefing on Monday.

The principal amount of AC Energy’s green bonds was initially at $225 million, with a five-year maturity and a coupon of 4.75% per annum, the company said on Jan. 25.

IFC, a sister organization of the World Bank, provided an anchor investment of $75 million, completing the public placement and supporting the raising of a total $300 million from Philippine and international investors.

Separate 10-year bonds amounting to $100 million with a 5.25% coupon were issued through private placement, with ADB as one of the main investors with $20 million.

The initial offering was listed on the Singapore Stock Exchange on Jan. 30. The additional bonds will also be listed on that bourse. The bonds were issued through the company’s wholly owned subsidiary, AC Energy Finance International Ltd., and guaranteed by AC Energy.

“We’re excited about this because this is the first climate bond-certified publicly listed, US-dollar green bond in Southeast Asia. So it’s a first of its kind,” Mr. Francia said.

“Obviously, this will go to fund our renewables expansion both onshore in the Philippines as well as around the region,” he said.

AC Energy aims to install 5 gigawatts (GW) of energy capacity by 2025, with renewables accounting for at least 50% of its total energy output. It has generated 2,800 GWh of attributable energy last year, of which 48% was from renewable resources.

“[The bond issuance] is particularly meaningful to us because of the strong support of these multilateral development institutions. It shows the confidence in our ability to really develop renewables across the region,” Mr. Francia said.

In a statement, AC Energy quoted IFC Director for East Asia and the Pacific Vivek Pathak as saying that the group was proud to support Ayala “in greening its power generation portfolio by helping fund its aggressive growth in renewable energy.”

“We are delighted that our partnership, leveraging IFC’s extensive global experience in green bonds, successfully mobilized substantial international investment in the public placement of the company’s” five-year bond, he said.

“This demonstrates the excellent potential of the green bond asset class as a tool for mobilizing international institutional capital into infrastructure assets, and we look forward to expanding our support of such issuances across Asia, advancing the integration of regional power and financial markets,” he added.

Michael Barrow, director general of ADB’s private sector operations department, said the green bond will “contribute to ASEAN’s target of drawing 23% of its energy mix from modern, clean, and sustainable renewable sources by 2025.”

AC Energy has been selling some of its thermal assets, while increasing its investments in renewable energy.

In April 2017, the company and its joint venture partners completed the acquisition of Chevron Corp.’s geothermal assets and operations in Indonesia, further boosting AC Energy’s renewable energy portfolio in that country after earlier investing in a wind farm.

In September last year, it announced Aboitiz Power Corp.’s acquisition of a 49% voting stake and 60% economic stake in AA Thermal, Inc., AC Energy’s thermal platform in the Philippines.

In November, its international unit invested in Singapore-based renewable energy company The Blue Circle Pte. Ltd. through a 25% ownership acquisition as well as co-investment rights in the latter’s projects. They are to jointly develop around 1,500 megawatts (MW) of wind projects across Southeast Asia, including about 700 MW in Vietnam.

In January this year, AC Energy said it was investing in Phinma Energy Corp. through a “mutually strategic agreement” that gives the Ayala energy arm a 51.48% stake in the listed energy company with ownership stake in solar, wind and geothermal energy projects.

Others

PM targets diesel cars, factories

6 February 2019

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Thailand

BANNING the use of diesel vehicles, promoting the use of electric cars, and suspending the operations of polluting factories were among the measures to tackle Bangkok’s dangerous air pollution that were considered by the Cabinet yesterday.

Prime Minister Prayut Chan-o-cha told a press conference after the meeting that all related official agencies were cooperating to solve the air pollution problem in the capital and nearby provinces for the short-, medium-, and long-term.

The main focus will be on the transport sector, which has been fingered as the largest source of Greater Bangkok’s air pollution.

Up to 50 per cent of the very fine particulate matter smaller than 2.5 microns, or PM2.5, was from the traffic and transport sector, said General Prayut. Stakeholders must choose measures to reduce that to 35 per cent of PM2.5 particulates, he said.

“We need to closely examine automobile engines, whether they are properly equipped with a pollution filtering system and whether the engines are in good condition,” he said.

“I have ordered the Transport Ministry to find a solution, including measures to assist those who use diesel vehicles to switch to alternative cleaner fuels. The government has also already lowered the tax on electric cars as an incentive to promote the use of electric vehicles.”

He admitted that batteries for electric cars were expensive. With many Asean countries having already invested in electric vehicles, it is important for Thailand to have advanced electric-car technology to cope with future competition, he said.

Prime Minister Prayut Chan-o-cha (R) looks at a sprinkler device as he is shown initiatives to combat pollution, before a weekly cabinet meeting at the Government House in Bangkok, Thailand, 05 February 2019. EPA-EFE

Polluting factories to be inspected

Regarding the polluting emissions from industry, Prayut said an inspection of around 100,000 factories resulted in 1,700 being put on a watch list, and operations at 600 had already been suspended and the factories told to improve their emissions.

He also asked that people not see the official operation to mitigate the smog problem by spraying water into the air as a joke, because it can at least reduce the level of larger dust particles in the air.

“The people also should avoid outdoor burning and help each other in preventing health risks from air pollution,” Prayut added.

Dr Somchai Cheungmeechok, the Medical Services Department director for Bangkok Metropolitan Administration, revealed that 909 people showed up for health inspections last weekend to receive medical treatment for illnesses resulting from exposure to Bangkok’s air.

Somchai said 172 of them were diagnosed with respiratory tract infections, 32 with allergies, six with skin irritation, four with eye irritation, three with asthma, and 115 with other conditions.

A team of doctors from the Medical Services Department will continue their inspections in Bangkok every weekend for the rest of February and March.

Renewables

Egat to ‘soon’ propose floating solar plants to Cabinet

6 February 2019

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Thailand

Thepparat Theppitak, Egat deputy governor for power-plant development and renewable energy, said if approved, Egat will call bids for the engineering, procurement and construction (EPC) of the project within 1-2 months for commencement of commercial operation in 2020.

The project, a part of Thailand’s new power development plan (PDP) 2018-2037, will launch international bids due to the small number of floating solar producers, requirements for advanced technology and a constraint on the electricity cost at no higher than Bt2.44 per unit.

Once completed, the Sirindhorn hydro-floating solar hybrid project will be the world’s largest.

Egat has the capacity to invest in hydro-floating solar hybrid farms with 2,725 megawatts as stated in the new PDP, thanks to its being well prepared in both people and infrastructure, Thepparat said.

Its hydro-floating solar hybrid investment plan calls for 16 projects with 2,725 megawatts combined in nine dams – Sirindhorn Dam, Ubonrat Dam, Bhumibol Dam, Srinagarind Dam, Vajiralongkorn Dam, Chulabhorn Dam, Bang Lang Dam, Rajjaprabha Dam and Sirikit Dam.

Power from these projects will be gradually fed into the system from 2020 to 2037, starting with Sirindhorn Dam and the next investment is expected to then come on-line.

“In the new PDP renewable energy plan, Egat has the rights to proceed with only floating solar projects in dams. Once combined with new power plants in the PDP, Egat’s share in [the country’s] power production will lower to 24 per cent in 2037. Currently, its share is 34 per cent, which is regarded as small for supervision in the power system’s security,” Thepparat said.

He said that Egat has also prepared for the main power system to deal with more power to be produced by renewable energy, with private-sector solar farm projects, power trade through blockchain and eventually, peer-to-peer.

Egat is also developing the Egat Micro-Energy Management System (Egat Micro-EMS), software for microgrid management.

“Next, a number of microgrids will arise and every microgrid will be advertised to be self-dependent. If every system thinks like this and spring outs of the main [power] system at the time of a power problem, the main system will not be able to run. Therefore, Egat Micro-EMS will help monitor the overall power picture and maintain the main system’s security,” Thepparat said.

The study, under the Bt50-Bt60-million research and development budget, is expected to finish within 1-2 months after last year’s test with two buildings at the Egat head office at Bang Kruai of Nonthaburi province.

If efficient, Egat will drive for the public sector to extend the study result to National Energy Trading Platform (NETP), in which Egat, Provincial Electricity Authority and Metropolitan Electricity Authority have joined to develop the platform.

Renewables

Vietnam’s renewables industry looking rosy

5 February 2019

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Vietnam

This opens up golden opportunities for the private sector to tap into the growing demand, but several bottlenecks must first be solved.

The energy industry is now looking to the private sector as a financial, source in order to develop, according to the World Bank

In 2018, the Vietnamese renewable power sector fared well, with solar and wind ventures being registered and starting construction.

This was helped along by a big push in incentives via government policy in a bid to spur development in one of the most promising sectors, which remains largely untapped.

According to the latest report of state-owned Electricity of Vietnam (EVN), 332 solar projects registered to the power master plan with capital of 22,300 megawatts (MW), in which 121 projects have been approved with 6,000MW before June 2019. Meanwhile wind projects had been approved with 4,000MW registered.

“The developments in both wind and solar power show Vietnam’s efforts to meet the targets set in the Revised Power Development Master Plan VII to produce 10.7 per cent of its electricity from renewable sources by 2030, as well as reflect positively the recent government policy for renewable energy,” said Tran Viet Anh, director of EVN’s Strategy Department at the Vietnam Power Summit 2019 last week.

The big incentives include Decision No.11/2017/QD-TTg on encouraging the development of solar power projects that set feed-in-tariffs (FiTs) for solar projects at 9.35 US cents; Decision No.39/2018/QD-TTg to revise mechanisms supporting the development of wind power projects; and Resolution No.115/NQ-CP, extending the application of an FiT of 9.35 US cents for solar power projects in the south-central province of Ninh Thuan by a year.

Renewable energy investment professional Andrew Affleck said, “Vietnam is in the midst of a solar rush, and is now watching the wind rush start.”

He added the Vietnamese wind market did not take off after the government first released incentives for projects in 2011 because many ventures had been postponed as regulated prices were below production costs.

How many of these registered projects will come back to life remains a question as currently, power projects are facing bottlenecks, especially in power purchase agreements (PPAs) playing an important role by providing the basic framework for investment within the sector.

Meanwhile, the country’s electricity demand is expected to see an increase of more than 10 per cent per annum in the coming years due to the rising population and accelerating economic growth.

Southern Vietnam, the country’s largest economic hub which includes Ho Chi Minh City, faces a particularly critical situation with the current imbalance between the existing supply and the increasing demand for electricity.

There is therefore an urgent need for the development of power generation infrastructure in the region.

Deputy Minister of Industry and Trade Dang Hoang An stressed at a recent forum that Vietnam has and will continue paying due heed to these measures in the future to achieve its targets of energy security and sustainable development.

In the revised Power Master Plan VII, Vietnam is poised to require $148 billion worth of investment in generation and distribution capacity through to 2030, as the country needs to boost its installed capacity to 61 gigawatts (GW), 97GW, and 127.7GW by 2020, 2025, and 2030, respectively.

“Among the necessary measures, first it should attract investment from the private sector into the energy sector. The question remains how the private sector can take a more integral part in power sector financing? Previously, only state-owned companies such as EVN, PetroVietnam or Vinacomin made investments into the power sector,” said An.

Getting the deals done

New financial sources, particularly from the private sector, will help Vietnam further develop its energy industry, according to a new World Bank report on maximising finance for Vietnam’s energy development.

Tran Tuan Phong, a senior partner at law firm Vilaf who has experience in negotiating PPA projects in Vietnam, said that financial arrangement is not an easy task for power projects that require a huge capital and that have environmental concerns.

Looking back on the progress from the release of bidding documents of BOT Nghi Son 2, it took 10 years for the thermal power project to complete all procedures to reach financial closure.

In renewable energy, despite high FiT and investment incentives, only a few projects have made it to construction stage and are in operation so far.

Meanwhile, the majority of renewable energy projects in Vietnam are still at the pre-investment stage due to many issues arising from approval, financing, and PPA to implementation.

Renewable energy developers have encountered many challenges in getting projects to the operations phase, including the questionable bankability of the PPA, the lack of credit rating of the off-taker, and the operational risks that the project faces.

Lack of comprehensive information is one of the greatest challenges for investors and developers to manoeuvre renewable opportunities.

Even though information about projects in Vietnam has been floating around the market, there is no clear information on the number of projects, development status, and other factors, creating confusion and uncertainty for investors, developers, and other stakeholders.

“The project developer is responsible for grid connection costs and risks. However, the PPA does not factor in project capacity, distance from existing transmission lines, and higher costs of installing transmission lines over longer distances,” noted the Vietnam Business Forum’s (VBF) Energy Sub-Working Group.

The VBF previously said that quality and sources of data for renewable energy sub-sectors have to improve to ensure clarity for investors about available locations, infrastructure capabilities, and governmental targets.

As the renewable energy sector picks up the pace in the coming decade, the government should continue to focus on developing human resources capabilities.

The VBF went on to say that supporting industries play a crucial role in development and quicker adoption of renewable energy technologies.

The government should promote domestic companies through capital subsidy and incentives, such as tax breaks and preferential loans.

A competitive supporting industry would help in reducing the tariff and investment costs for renewable projects, which are cost-intensive.

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