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Energy industry faces climate and job hurdles: Chan Chun Sing

5 April 2019

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Singapore

SINGAPORE faces the challenge of building a low-carbon world in the coming decades, Minister for Trade and Industry Chan Chun Sing said at an energy and chemicals industry event on Friday morning.

He said the Republic is committed to working with energy and chemicals industry partners on competitiveness and sustainability, such as by fostering the development of next-generation products.

“Singapore will continue to make sure that we stay business-friendly,” he said, pointing to how the world has become “much more competitive for the next investment dollar”.

The minister opened his remarks with a quip about how “whatever happens here may not even make it to the media… because today, many of us take for granted to be able to have such a significant investment”.

Mr Chan cited strategies such as competing on quality and innovation rather than price, and raising productivity with advanced manufacturing. Connectivity, supply chain security and an intellectual property regime were other factors that he brought up.

“We need to have the determination to see this through because these are not projects that will be delivered in one year or two,” he said. “In a world of uncertainty where investors are looking for long-term stability, we need to distinguish ourselves by providing investors with that long-term stability beyond one or two terms of government.”

Despite Singapore’s relatively lower threshold for carbon emissions under international agreements based on its size, “we work within the constraints that we have”, Mr Chan added.

“In fact, if any country is most conscious of this carbon constraint, beyond the land and human resource constraint, it is Singapore,” he said.

Referring to the 2016 Paris Agreement to cap global temperature increases by two degrees Celsius, he added: “Singapore did not have the benefit of a large land mass or humans for us to get a big quota in terms of carbon emissions under the Paris treaty.

“But that is water under the bridge.”

The minister was at the official opening of global petrochemical giant ExxonMobil’s butyl and resins plants at its integrated refining and petrochemical complex on Jurong Island.

The two new facilities, which were completed in 2017, add a resin production capacity of 90,000 tonnes a year and a butyl capacity of 140,000 tonnes a year.

The resin plant, which makes glue used in packaging and diapers, was fired up in December 2017, while the butyl plant, which will make halobutyl rubber for tyres, began production in May 2018 and is expected to start commercial operations in the second half of 2019.

The two plants together add 140 jobs – including engineers, technicians and other supervisory management roles – to ExxonMobil’s headcount in its Singapore manufacturing complex, which is its biggest production plant worldwide. The expansion brings the company’s workforce to more than 4,000 in the Republic in all, with around 1,300 members of that staff in chemicals manufacturing.

Mr Chan, who previously led the National Trades Union Congress, drew a line in his speech between protecting jobs and protecting workers.

“In many countries, businesses make money but workers get left behind. And because workers get left behind, the society fragments and the broad middle starts to ask themselves, why should I continue to support this free trade movement, why should I continue to even adopt technologies?” he warned.

“In fact, we have a recent conference in Singapore, where a major extra-regional country decided to boycott the conference because we promoted the use of technology – because they were protecting jobs. We are protecting workers.”

He did not elaborate on the event or the country in question.

But, touting Singapore’s “strong, stable tripartite labour relationship”, Mr Chan said that companies must continue to emphasise skills training.

“In the past, the unions were about uplifting the rank-and-file workers, as we call them – the lower-wage workers,” he observed. “But today, the labour movement has to work in concert with ExxonMobil management not just to take care of the rank-and-file workers, but also what we call the white-collar workers, the engineers.

“In fact, in today’s world, the ones who are most likely to be disrupted are not necessarily the lower-wage workers. The ones that are most likely to be disrupted, paradoxically, may be the middle-rank workers, the white-collar workers.”

Karen McKee, the newly appointed president of ExxonMobil Chemical Company, said in a statement: “Expansion projects like this enable us to better serve the Asia-Pacific region, the key growth market globally for these speciality chemicals.

“These two new speciality chemical plants will strengthen ExxonMobil’s competitive manufacturing base to help meet market demand for these high-performance products.”

Ms McKee, who was the division’s senior vice-president for basic chemicals, integration and growth until Monday, added: “Our regional growth plans include increasing the number of these types of facilities and providing new opportunities for Singapore employees, further demonstrating our continued commitment to Singapore.”

ExxonMobil had confirmed on Tuesday that it would also expand the Singapore integrated manufacturing complex to convert crude products into higher-value ones, in a project that it said “will significantly increase site downstream and chemical earnings potential”.

Construction of the new project – which will add 20,000 barrels a day to certain base stocks capacity, and increase lower-sulphur fuel capacity by 48,000 barrels a day – is scheduled to begin in the second half of 2019, with operations expected to start in 2023.

Gan Seow Kee, chairman and managing director of ExxonMobil Asia Pacific, said at the opening ceremony: “These plants enhance the competitiveness of our Singapore integrated complex, and they are a testament to ExxonMobil’s commitment to build on our strong manufacturing base in Singapore, for the future growth of the business in the region…

“We continue to be committed to skills upgrading, talent development, and providing opportunities for all our employees to realise their full potential.”

Singapore’s chemicals cluster contributed S$100.4 billion in output in 2018, or about 28 per cent of overall manufacturing output for the year, according to data from the Economic Development Board. The cluster includes petroleum, petrochemicals, and speciality chemicals.

The chemicals cluster also employed about 25,500 people that year, or 6.7 per cent of the manufacturing workforce.

Oil & Gas

Shell sees extension of gas supply up to 2030

5 April 2019

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Philippines

MANILA, Philippines — The local unit of energy giant Royal Dutch Shell wants to conduct further exploration work near the Malampaya deepwater gas-to-power project, which is a potential large gas resource.

With the new prospects, Shell indicated that the gas supply could be extended to 2029 to 2030, said Sen. Sherwin Gatchalian, head of the Senate Committee on energy.

Gatchalian said Shell Philippines Exploration B.V. (SPEX) expressed its interest to explore more potential areas around the Malampaya project.

“It’s new information that came from Shell. There are four potential areas around Service Contract 38 and that will eventually extend the same quantity [of gas],” Gatchalian said.

The license for SC 38 that allows the exploration of the Malampaya gas field in northwest Palawan will expire in 2024, but this can be applied for extension with the DOE.

Given this new development, the Senate Committee on Energy will inquire from the DOE how this will impact its strategy with the liquefied natural gas (LNG) terminal.

Operating since 2001, the Malampaya gas project supplies fuel to around 40 percent of gas-fired plants in Luzon namely the Ilijan, Sta. Rita plant, San Lorenzo, San Gabriel and Avion plants—which supply 3,211 megawatts (MW) to the Luzon grid.

The SC 38 consortium—composed of SPEX with 45 percent, Chevron Malampaya LLC with another 45 percent, and PNOC Exploration Corp. (PNOC EC) with the remaining 10 percent—previously expressed its interest to extend the license to explore for oil and gas in northwest Palawan until 2039 but was stalled due to the tax issue amounting to billions of pesos slapped by the Commission on Audit (COA).

With the Malampaya contract expiring in 2024, the DOE has been pushing for the development of an LNG integrated terminal to replace Malampaya and to develop the country as trading and trans-shipment hub in the Asia Pacific region.

The DOE has issued the Philippine Downstream Natural Gas Regulation (PDNGR), which details the rules and regulations governing the downstream natural gas industry to develop a market and gain energy security and sustainability. The agency had attracted from 13 companies.

Energy World Corp., Tanglawan Philippine LNG Inc. and First Gen Corp.’s wholly-owned subsidiary FGEN LNG Corp. were issued notices to proceed with their respective proposals to construct LNG facilities.

The DOE had also ordered a technical study on the remaining supply Malampaya deep water gas-to-power project as it explores various options for the gas field after its contract expires.

PNOC-EC earlier said it was considering running the Malampaya project even without its current partners.

Energy Efficiency ,
Others

Duterte vows better energy supply in Palawan before yearend

5 April 2019

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Philippines

MANILA, Philippines — Palawan will have better energy supply before the year ends, President Rodrigo Duterte gave this assurance on Thursday night during his visit to the island-province.

“I assure you that before the end of the year there’s a reduced rotation in the number of hours and maybe lessening of the inconvenience,” Duterte said during the Partido Demokratiko Pilipino-Lakas ng Bayan (PDP-Laban) campaign rally.

The President noted that Shanghai Electric is currently conducting a study about the power situation in the province.

“Shanghai Electric will be completing its studies and hopefully by the end of the year,” he added.

Duterte also lamented the slow the government action, saying that red tape hinders the approval of important state projects.

“I must admit that one of the reasons why I am pissed off to no end is really the way government moves. Napakatagal ho talaga (It takes a long time). At minsan napakatagal (Sometimes it takes a long time) because they purposely do it to commit graft and sometimes it is really circuitous thing, a very tedious process of getting the papers to the grid. There is always a monkey wrench,” he said.

In November last year, Duterte visited Palawan and asked its electric cooperative to resolve the frequent power outages.

READ: Power crisis hits Palawan

He even threatened to get a new electricity operator for the province should they fail to address his order. /ee

Oil & Gas

Senate wants Philippine National Oil Co. to focus on oil, gas

5 April 2019

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Philippines

MANILA, Philippines — The Senate Committee on Energy wants to streamline the operations of Philippine National Oil Co. (PNOC) and its subsidiaries to allow the state-run firm to solely focus on oil and gas exploration.

With the streamlining of operations, Sen. Sherwin Gatchalian said PNOC could focus on securing the growing energy needs of the country.

“For instance, PNOC-Alternative Fuels Corp. (AFC) looked into the development of jatropha as an alternative source of fuel after the passage of the Biofuels Law in 2006.

About P1 billion had been allotted for the company to develop the feedstock in 2009. However, the development of jatropha was abandoned in 2011 to look for other alternative sources of fuel.

The committee, which Gatchalian chairs, is currently working on a bill that will be filed once Congress resumes.

“This is something that we learned when we visited Japan. We’ll file it as a law,” Gatchalian said.

Energy Secretary Alfonso Cusi earlier said he wanted PNOC to become like Petronas, Malaysia’s government owned oil and gas company which is ranked among Fortune Global 500’s largest corporations in the world.

While PNOC has the money at its disposal, the state-run company finds it difficult to pursue projects since it has to seek concurrence for its budgetary requirements from Congress.

However, Gatchalian said the proposed law would retain the rule of seeking concurrence for its spending.

“We will tighten the power of Congress over this new entity that we’re thinking,” he said.

In 2017, PNOC’s budget request was deferred because it was asking for funds for a proposed liquefied natural gas (LNG) integrated facility without conducting a feasibility study first.

The DOE had tasked PNOC to develop an integrated LNG hub with storage, liquefaction, regassification and distribution facility, as well as a reserve initial power plant capacity of 200 megawatts (MW).

Last month, the state-run firm signed a memorandum of understanding (MOU) with Phoenix Petroleum Philippines Inc. and CNOOC Gas and Power Group Co. Ltd. to explore and discuss business opportunities and cooperation in Tanglawan Philippine LNG Inc.

The addition of PNOC in the discussions will provide a strategic alliance in further developing the LNG project, with the government-run corporation’s involvement in the areas of pipeline infrastructure and franchise, banked gas, equity, and other marketing opportunities.

Last December, the Department of Energy issued a notice to proceed to Tanglawan Philippine LNG to build an LNG terminal in Batangas.

Tanglawan intends to break ground within the year for the regasification and receiving terminal with a capacity of 2.2 metric tons per annum, with commercial operations targeted to start by 2023.

Read more at https://www.philstar.com/business/2019/04/05/1907338/senate-wants-philippine-national-oil-co-focus-oil-gas#YBXcZY1zyg2TikMK.99

Energy Efficiency

Petronas well positioned to provide LNG to new markets

5 April 2019

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Malaysia

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is well positioned to provide its liquefied natural gas (LNG) to existing and new demand markets, as well as to emerging trading hubs, through its flexible and innovative LNG solutions.

This is made possible due to the national oil company’s growing portfolio of LNG supply sources in Malaysia, Australia, Egypt and soon in Canada, it said in a statement on Friday.

Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin said: “Asia, backed by its growing middle class, needs clean energy to fuel its growth, and LNG is well positioned as the most significant source of clean energy as it is abundant, environmentally-friendly and economically competitive.”

He was speaking at a his plenary session “The new LNG markets” at the recent 19th International Conference & Exhibition on Liquefied Natural Gas (LNG 2019) in Shanghai.

“Since the first LNG cargo in 1964, global demand for LNG has grown to exceed a record of 300 mtpa for the first time in 2018, and is now forecasted to increase by another 100 mtpa in just the next four years.

“This growth trajectory reflects the global aspirations of countries in pursuing prosperity while ensuring sustainability, hence, driving demand for clean energy,” he added.

Wan Zulkiflee said the new LNG demand would come from China’s future energy requirements, limitations in infrastructures of untapped areas in new LNG markets of the Indian subcontinent and Asean and also emerging trading hubs from developed LNG spot markets.

However, he said these demands could only be fully served if the government and industry players would work together to co-create a sustainable market environment.

Petronas had pushed boundaries with the successful construction and operation of the first floating LNG facility, PFLNG Satu, and is on track for the delivery of its second floating facility in 2020.

It said that it had also performed break-bulking ship-to-ship transfer and it was pursuing smaller-scale LNG solutions such as LNG bunkering and virtual pipeline systems via ISO-tanks to transport LNG.

Petronas has a total LNG production capacity of more than 34 mtpa. It was developing both traditional and emerging gas markets with its partners.
Read more at https://www.thestar.com.my/business/business-news/2019/04/05/petronas-well-positioned-to-provide-lng-to-new-markets/#F2GTeQKjpCdKiz6e.99

Energy Efficiency

TNB drums up energy efficiency efforts

5 April 2019

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Malaysia

Tenaga Nasional Bhd (TNB) is launching a campaign aiming to promote energy efficiency with the intention to remind and educate Malaysians on the significance of environmental sustainability through power saving.

The larger purpose of the campaign is to steer transformation towards a future energy ecosystem that delivers a balance between environmental sustainability, secure and reliable energy supply, and optimal economic development.

This message is especially important as temperatures soar. Rising temperatures in the last month has led to increased energy usage as folks ramp up the use of air conditioners, fans or coolers. This will naturally result in higher consumption.

According to Roslan, TNB believes that small steps will bring about eventual mileage

“Given the increasing demand for energy at this time, and even globally, we believe more efficient energy usage is possible with a change in energy consumption behaviour — which possibly necessitates a mindset shift,” said TNB chief corporate officer Datuk Wira Roslan Ab Rahman.

Disparity exists in the adoption of energy saving behavioural patterns among Malaysians and in other parts of the world. Findings indicate that Malaysians are more apathetic towards the conservation of power.

Malaysian scores pale in comparison to certain Western countries like Norway, Switzerland and Sweden, according to the World Economic Forum report entitled “Fostering Effective Energy Transition 2018”.

The study shows that mindfulness of energy efficiency and adoption of power conserving methods — plus readiness for transition for a secure, sustainable, affordable and reliable energy future — is approximately 15% higher in these countries, allowing the economies to make strategic energy investments committed towards environmental stewardship.

Current energy consumption patterns and associated environmental pressures have ignited the Malaysian government’s concerns regarding energy conservation.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin said a regulatory framework, called the Energy Efficiency and Conservation Act (EECA), will be put in place to renew the National Energy Efficiency Action Plan. It is set out to achieve 8% energy efficiency by 2020.

In efforts to set the tone, the ministry has committed to retrofitting 50 government buildings with energy-efficient (EE) LED lightings and high EE value appliances. There is an expectation that this will lead to savings of RM47 billion over 15 years.

“We are at an interesting and important juncture of EE evolution in the country. As the energy industry continues to evolve, TNB has become increasingly aware of the need to meet the global energy challenge and support the transition towards a low-carbon economy.

“With TNB having the ability to play a significant role in much of the ongoing change, it takes upon itself the responsibility to balance this shift, although no single government, industry or institution can address the challenges alone,” said TNB chief strategy and regulatory officer Datuk Fazlur Rahman Zainuddin.

Having contributed to the nat ion’s development, TNB intends to enhance its capabilities and stay abreast of the transition towards a low-carbon economy by promoting renewable energy generation, embracing new technologies throughout the operations and empowering customers to make better use of their power usage through energy efficiency.

“Energy is at the heart of modern economic prosperity. Energy efficiency is believed to be the first leg of a sustainable global energy ecosystem and, as most things, this too begins at home.

“I believe it could be the first step towards mitigation of climate change, better energy security, growing green economies and delivering solid environmental benefits,” he said.

At this juncture, TNB is stressing on the importance of energy efficiency to its 9.1 million customers.

It has introduced product innovations in energy technology, including smart meters Maevi and GSPARX, to Malaysian households.

It recognises these technologies as the first big step of empowering customers towards the sustainable energy industry of the future, beyond instilling environmental consciousness into the minds of Malaysians.

The company also actively adopts efficient technologies and ensures that even the older plants are properly maintained and, where possible, upgraded to maintain their efficiency.

As an example, the company decommissioned inefficient and ageing combined cycle gas turbine (CCGT) plants and replaced them with cutting-edge CCGT technologies, enabling the plants to achieve a generation efficiency of up to 60%.

Additionally, six of TNB’s distribution buildings were selected as models of EE buildings in the country.

Under the Asean Energy Awards, Wisma TNB Jalan Timur was awarded first runner-up under the Energy Management for Buildings and Industries Awards in the Large Building Category for demonstrating excellence, creativity, practicality and dedication in the field of energy efficiency. With this initiative, TNB managed to reduce up to 6% of energy consumption in the building.

According to Roslan, TNB believes that small steps will bring about eventual mileage.

“Sustainability lies at the core of all that we do. It is embedded in our company policies and inextricably linked with our business strategy and decisions.

“Our mission is to continue contributing to the nation’s development by providing Malaysia with safe, secure and reliable energy. Having said this, we anchor our operations on an identified strategy — embracing green initiatives throughout our business — from managing our own carbon footprint, to providing clean energy products and services to customers,” he said.

Electricity/Power Grid

Malaysia’s electricity prices only changes every six months, not sooner

5 April 2019

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Malaysia

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) does not expect electricity tariffs to come down immediately to match international pricing of gas and coal.

This is because the government via the Energy Commission has set the base tariff at 39.45 sen per kWh for the three years of 2018, 2019 and 2020.

TNB, in turn, uses its Imbalance Cost Pass-Through (ICPT) mechanism to determine whether there would be a surcharge or rebate on the base price on a six-month basis.

The next tariff change facilitated by the ICPT is for the six months of July to December 2019.

“From TNB’s point of view, we expect that regulation and rules to be maintained until the next scheduled meeting,” its chairman Tan Sri Leo Moggie told reporters on the sidelines of the Perdana Leadership Foundation CEO Forum 2019 organised by EY here today.

Moggie was responding to Prime Minister Tun Dr Mahathir Mohamad’s recent remarks that the government was considering reducing electricty tariffs in the wake of falling global coal and gas prices.

Of late, spot coal cargo prices for exports from Australia’s Newcastle terminal have fallen by more than 30 per cent from US$118 per tonne as of July 2018, to US$79 per tonne this week.

Asian liquid natural gas (LNG) spot prices for May deliveries reportedly dropped more than 60 per cent from US$11.81 per MMBtu in September 2018 to US$4.40 per mmBtu this week.

Moggie acknowledged that eventhough there is a downtrend pattern in coal and gas pricing, the levels are still above the base tariff of 39.45 sen per kWh, set by Energy Commission, for the three years of 2018, 2019 and 2020.

The base tariff of 39.45 sen per kWh is on the assumption that the international markets pricing of coal averages at US$75 per tonne and piped gas at RM27.20 per mmBtu.

Every six months, the Energy Commission will look at the international pricing structure and compare it to the base price of generating electricity.

TNB, in turn, uses the base price for its ICPT to determine whether there would be a surcharge or a rebate. It works both ways.

“If the overall cost of fuel in the previous six months is higher than the base tariff, then TNB will place a surcharge to the consumers.

“If it is lower, consumers would enjoy rebates in the following six months,” Moggie said.

He reiterated it is up to the government to undertake any revision of the electricity tariff as it is not within TNB’s power to interfere with the government’s decision.

Coal

Coal price set at $88.85 per ton in April, down 0.84 percent

5 April 2019

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Indonesia

The government set on Thursday the coal reference price at US$88.85 per ton in April, a 0.84 percent decrease from the $90.57 per ton set in the previous month.

The change marks a further decrease of the coal price, which stood at $107.83 per ton in August last year.

Energy and Mineral Resources Ministry spokesperson Agung Pribadi said a number of factors could be attributed to the decrease of the coal reference price, including the limitations on coal imports in India, China’s lower demand for Australian coal, a hike in coal production in China for domestic purposes and Russia’s low sales in coal across Europe.

The government set a target to produce 485 million tons in 2019, a similar target to that of 2018, when 25 percent of the coal produced was allocated for the domestic market through the domestic market obligation (DMO) scheme, mostly to supply electricity plants.

Under the DMO scheme, the coal domestic price was set at $70 per ton.

The change to the coal reference price also took into account decreases in the Indonesia Coal Index (2.09 percent), Newcastle Export Index (3.41 percent) and Globalcoal Newcastle Index (2.42 percent) and an increase in the Platss 5900 by 0.84 percent. (bbn)

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