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Coal

Indonesia hauling ban could paralyse South Sumatra coal mining : Assoc

15 November 2018

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Indonesia

Indonesia is the world’s top thermal coal exporter, and South Sumatra’s total output of the fuel this year was expected to be 48.5 million tonnes, the Indonesian Independent Power Producers Association (APLSI) said in an emailed statement.

New Delhi: Indonesia’s South Sumatra province plans to ban coal transporters from using public roads from Nov. 8, an industry association said, in a move estimated to cut the province’s annual coal sales by 23 million tonnes.

“All trucks use public roads from the mines to railway substations and special roads. This threatens total paralysis (of the industry),” APLSI spokesman Rizal Calvary said in a statement.

“All coal transporters face the threat of being unable to operate, and are readying to cut supplies to powerstations,” he added, estimating the move to cost the province $1.2 billion a year, resulting from a forecast 23-million-tonne drop in coal sales.

The move could also lead to blackouts in Java and Sumatra that are “heavily dependent” on coal supply from South Sumatra, he said.

APLSI has urged South Sumatra administration to overturn the policy.

Meanwhile, according to Indonesian Coal Mining Association (ICMA) Chairman Pandu Sjahrir, the policy was “too harsh” and would work better with a 6-9 month transition period allowing miners time to develop alternative hauling strategies.

“Trains are probably the most logical and best for the area,” Sjahrir told Reuters by telephone. “The big issue with some of the smaller players is the high capital cost because they also have to invest (in infrastructure).”

ICMA is also holding discussions with South Sumatra government, and has proposed that local banks help finance coal miners infrastructure investments, Sjahrir said.

Oil & Gas

Analysis: Trans-ASEAN gas projects losing relevance amid the fast-paced LNG growth

12 November 2018

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ASEAN

An ambitious project to link Southeast Asia with a network of natural gas pipelines is losing relevance to a much faster build-out of LNG import terminals as the region leans increasingly towards seaborne supplies.

The Trans-ASEAN Gas Pipeline was first conceived in the 1980s to boost the region’s energy security using Southeast Asia’s own prolific gas reserves, but was slow to progress like most politically driven large-scale energy projects.
In 2012, the “strategic direction” of the “pipeline” project was expanded to include LNG with the advent of seaborne gas. The decline in regional gas production, failure to build pipelines connecting more than two countries and the growth of the LNG market has made the original idea of a regional gas pipeline doubtful.

“Quite apart from the inherent challenges that all large-scale multilateral cross-border infrastructure projects face, the TAGP now faces a more basic question of relevance,” Tilak Doshi, managing consultant at Muse, Stancil & Co, said.

He said the prospects of an actual pipeline that cuts through Southeast Asia is subject to supply and demand fundamentals of a gas market that have changed profoundly since the project was first conceived.

The TAGP was already over-ambitious when it was first mooted among ASEAN planners and diplomats, and now seems threatened by redundancy due to fast-paced developments in the natural gas industry.

Moreover, pipeline projects between countries need political platforms like ASEAN, but commercially viable LNG projects do not.

NO GAS FOR GAS PIPELINES
One of the cornerstones for the TAGP pipeline project was the giant Natuna D Alpha gas field in East Natuna Basin in Indonesia, which holds around 42 trillion cubic feet of methane, according to the US Geological Survey.

The development of East Natuna, one of the world’s largest gas reserves, has struggled due to territorial disputes in the South China Sea, high exploration costs, technical issues and the departure of oil majors like ExxonMobil.

Oil industry executives have joked that East Natuna should be called a carbon dioxide reserve instead as it contains more CO2 than natural gas. CO2-heavy fields are expensive to develop as they need advanced CO2 separation and sequestration technology to prevent the CO2 from entering the atmosphere.

Southeast Asia’s existing gas production is also depleting. The region is projected to become a net gas importer as soon as 2025, with almost one-quarter of demand imported (over 60 billion cu m) in 2040, from being a large exporter of over 50 billion cu m (including pipeline and LNG), according to the International Energy Agency.

Indonesia and Malaysia accounted for 70% of Southeast Asia’s 8.1 trillion cu m of proven reserves and two-thirds of its 220 billion cu m of production in 2016, according to the International Energy Agency. But both are in decline, and are themselves mulling higher LNG imports.

TAGP’s progress isn’t just held back by gas shortages. Till date, Southeast Asia has only succeeded in building bilateral gas pipelines that run between two countries–one buyer and one seller. As of 2015, the region had 13 bilateral gas pipeline projects with a total length of 3,673 km commissioned.

Any negotiations involving a third country typically needs much more cooperation that extends to the creation of a market, beyond just buyer-seller relationships. It is also politically more challenging.

Here’s a list of Southeast Asia’s gas pipelines

**Singapore – Malaysia, 5 km, 1991
**Myanmar – Thailand 470 km, 1999
**Myanmar – Thailand 340 km, 2000
**West Natuna, Indonesia -Singapore, 660 km, 2001
**West Natuna, Indonesia – Duyong, Malaysia, 100 km, 2001
**Malaysia/Vietnam Commercial Arrangement Area (CAA) -Malaysia, 270 km, 2002
**South Sumatra, Indonesia -Singapore, 470 km, 2003
**Malaysia/Vietnam CAA – Vietnam, 330 km, 2007
**Malaysia – Thailand/Malaysia Joint Development Area (JDA), 270 km, 2005
**Singapore – Malaysia, 4 km, 2006
**Thailand/Malaysia JDA -Thailand, 100 km, 2009
**Zawtika Block M9, Myanmar -Thailand, 302 km, 2013
**Block 17 (Thailand/Malaysia JDA) to Kerteh, Terengganu, Malaysia, 352 km, 2015

LNG AKA VIRTUAL PIPELINE
Last week, Paramate Hoisungwan, chairman of the ASEAN Council on Petroleum’s Policy Research and Capability Building Taskforce, said TAGP now views regasification terminals as virtual pipelines to supplement pipeline gas supply.

Southeast Asia currently has LNG import capacity of around 36.3 million mt/year, and this is expected to grow to 64.3 million mt/year with the current LNG project pipeline, the council’s data showed.

The main LNG importers currently are Thailand, Singapore, Malaysia and Indonesia, but by the middle of the next decade, Philippines, Myanmar and Vietnam will join the list. Thailand’s capacity expansion alone will total 14 million mt/year and account for half of the growth.

The private sector has also thrown its weight behind the LNG wave, even though it remains to be seen whether cost parity with pipeline gas can be achieved. Pipeline gas prices tend to be lower and less volatile than LNG.

John Ng, chief executive of Singapore LNG Corp. suggested that the growing gas ecosystem within ASEAN be underpinned by piped natural gas and to look at the greater flexibility and spare capacity of the LNG market for growth.

“The ecosystem will consist of buyers, sellers, traders, markets for small-scale LNG, LNG bunkering and perhaps even LNG trucking as well,” Ng said.

Electricity/Power Grid

Sarawak awaits MoE to power 113 schools

12 November 2018

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Malaysia

KUCHING: The Sarawak government is still waiting for consent from the Ministry of Education (MoE) in Putrajaya to implement electricity connections to 113 schools in Sarawak.

Assistant Minister of Education, Science and Technological Research Dr Annuar Rapaee said although the ministry had replied to their letter, their consent had not been given.

He said the State Cabinet had approved RM50 million to connect these schools to the electricity grid but consent to do so must be given by the MoE since education is the federal government’s responsibility.

“Our minister wrote to the federal minister on Aug 8, and the reply only came on Oct 24 which is about two and a half months, asking whether the RM50 million is a grant to the MoE.

“It is not a grant. It’s our money that has been committed by the Sarawak government to help the 113 schools.

“We have replied their letter, and we are now waiting for them (MoE) to give us the consent to connect the electricity,” he said in reply to Gerald Rentap Jabu (PBB-Layar).

Rentap had earlier brought the attention of the august House to the problem faced by SK Nanga Lawih, which is still dependent on generator set despite being situated close to the electricity grid.

According to Dr Annuar again, SK Nanga Lawih is one of 113 schools identified for the electricity connection project.

He said the cost of connecting electricity to the school was estimated at RM233,500, which would to be implemented by Sarawak Energy Berhad once consent is given.

He also said basic needs like electricity supply had to be addressed first before other matters, such as providing e-textbooks, could be extended.

Making ends meet for Vietnam’s growing energy sector

12 November 2018

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Vietnam

Coal takes centre stage with 35% market share, whilst renewables deals are stuck at pre-investment even with electricity demand poised to grow by 8% until 2025.

As Vietnam’s energy sector expands, the role of the private sector and foreign investment is increasing, taking the form of build-operate-transfer (BOT). Some newly licensed BOTs include Nam Dinh 1 and Van Phong 1, with a number of BOT projects currently being negotiated, including Quang Tri 1 and Song Hau 2.

After the southern region suffered a severe energy shortage of 15 billion kWh in the last year, the government has been pressured to find solutions to the country’s energy problems. Energy demand is anticipated to grow 10% annually, with electricity demand accounting for most of it. In fact, electricity demand is expected to grow at 8% annually until 2035.

Power-hungry Vietnam has been the result of increasing industrialisation and positive economic growth in the last decade. Households may have reduced their share thanks to energy efficiency, whilst the industry and construction sectors are expected to remain as the country’s leading power consumers.

With the widening gap between demand and supply, the country has to avoid a quick fix and seek a sustainable long-term solution. However, the Revised National Power Master Plan (PDP VII) highlights coal as the main contributor to the future expansion of capacity, trumping hydropower as the primary source of generation.

In 2017, 37% of electricity generation came from hydropower, a little more than the 34% from coal energy. Over the next few years, the country’s fossil import will likely increase due to Vietnam’s limited domestic oil and coal resources. StoxPlus analysts said coal imports have rapidly increased due to some coal thermal power plants being put into operation.

Vietnam pinned greater hopes on coal as an energy resource. The first three months of 2018 saw over 3 million tonnes of coal imported, amounting to $384m. The number of coal thermal power plants has reached 19, with several companies under Vietnam Electricity (EVN) proposing the import of coal to save costs.

From 2000 to 2015, biomass and hydro’s share in the total primary energy supply dropped to 24% from 53% even as coal share grew from 14% to 35% of the supply. Vietnam has 20 coal-fired power plants with a total capacity of over 13,000MW. S&P Global Platts also reported that Vietnam’s coal imports hit a record of 2.25 million tonnes this year, up 132.5% YoY.

Despite the PDP VII planning for increased renewables in the country’s energy mix whilst reducing that of hydropower and gas, the majority of renewable energy projects are stuck at the pre-investment stage, taking long months, and multiple agreements to go through each stage. Vinh Quoc Nguyen, partner, Tilleke and Gibbins, said that except hydropower, other renewable sources like solar and wind are in a very early stage.

Decision 2068 has set out several non-binding targets, such as the ratio of renewable energy to total consumer primary energy at 31% in 2020, 32.3% in 2030, and 44% in 2050. Volumes are expected to reach 101 billion kWh in 2020, 186 billion kWh in 2030, and 452 billion kWh in 2050.

“The main obstacles to the development of renewable energy include: lack of capital funding; the price offered to renewable power producers is low, whilst investment costs for production of renewable energy are high, which is not attractive to investors,” said Nguyen. “EVN has no motivation to purchase the electricity from the renewable energy generators at a higher price, as it is reportedly selling the generated electricity to consumers at a loss and the lack of human resources specialising in RE.”

Analysts place coal and natural gas as the second and third largest source of electricity generation in the country. However, hydropower, which is the main source, and natural gas are already reaching full capacity, leaving Vietnam with coal as the solution to short-term woes.

The total capacity of foreign-invested power producers accounted for 2,800MW in 2015 and has continued to increase over the last three years. At present, EVN acts as a single buyer of all electricity generated from on-grid independent power projects. Going forward, the Vietnamese government aims to divide EVN-owned power plants and generation companies into independent generators, wholesalers, and retailers.

What are the woes in Myanmar’s energy mix?

12 November 2018

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Myanmar

No new MOA or PPA has yet to be concluded for two years already.

It has already been two years since Myanmar’s newly democratised government came to political power, but much to the frustration of energy firms, a new MOA or PPA has yet to be concluded to increase another kind of power in the country: electrical power.

As OWL Energy’s Greater Mekong manager Jeff Miller put it, “Nothing has been signed since democracy came.”

For the past 17 years, Myanmar’s electricity demand has more than doubled mostly due to hydropower, said IHS Markit senior research analyst Joo Yeow Lee. Installed hydropower capacity has grown five-fold since 2000 to 3,000MW in 2017. “However, this puts the system at risk to seasonal swings,” he added.

Moreover, development has been met with strong public objections due to the displacement of communities, as well as the impact on livelihood and the environment.

Can it meet targets?
Myanmar has set its electrification target to 100%, and so far, it has reached 37% (one of the lowest in Southeast Asia), slightly higher from 30% in 2016. It currently has 5GW of installed capacity, mainly composed of hydropower and gas.

According to Lee, capacity is set to grow as demand has risen from over 6TWh in 2010 to almost 16TWh in 2016, setting the yearly rate at 10%.

Lee is excited over Myanmar’s gas sector as four notices to proceed (NTP) – the equivalent of MOUs in other countries – have been issued to fast-track development of plants with total capacity of 3,111MW. As of 2016, the total capacity of gas has reached 1,824MW.

Young government’s policy woes
However, Miller said that this also raises questions about where the power will be sent. He added that these gas to power projects are far from where most the consumers are. “It’s going to need transmission lines as well,” he said.

“Gas and power plants are not fully operated due to poor maintenance,” he added. Reserves will also need five to 10 years to develop. “LNG is a short-term option, but gas laws need updating.”

There are also no policies to incentivise renewables. According to a note by Edwin Vanderbruggen of VDB Loi, the government is also still confused in implementing a furnished approval process, whilst NTPs can only serve to fast-track the completion of deals.

“A lack of experience on the government side, and I suppose a lack of familiarity with Myanmar on the sponsor side, is a commonly held notion to explain the slow progress,” he said.

Renewables

Philippines’ MGen eyes 1GW renewables output

12 November 2018

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Philippines

It wants solar to drive this renewables output.

The power generation arm of the Manila Electric Co. (Meralco), Meralco PowerGen Corp., seeks to raise its renewables output to 1,000MW or 1GW in the next two years to three years, BusinessMirror reports. It added that it wants solar power to comprise its portfolio.

MGen president Rogelio Singson said, “We want to go into more RE investments and we’re looking at solar and wind, in particular. We are looking at 500 MW to 1,000 MW of solar in the next two to three years. In wind, we’re in discussion for a wind project with 150 MW of capacity.”

MGen is looking at possible partnerships for the 150MW wind project in Luzon, which is currently not enrolled in the government’s feed-in-tariff programme.

“MGen believes solar generation will form an important part of the energy mix going forward and will be a competitive source of generation without any requirement for a subsidy,” Singson added.

Last August, MGen was in talks with multilateral lending agencies, such as the World Bank (WB), Asian Development Bank (ADB), and International Finance Corp., for a possible partnership in building merchant power plants.

Renewables

UK to assist Myanmar with renewable energy projects

12 November 2018

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Myanmar

The United Kingdom will assist Myanmar in implementing renewable-energy projects. a senior UK official said.

Douglas Barnes, director of the UK’s Department for International Trade, made the comment during a knowledge-sharing workshop for policies and regulations covering renewable-energy use and reducing carbon emissions organised by his agency in Nay Pyi Taw on Monday.

“After the workshop, the governments of the UK and Myanmar will have continuous discussions. From that relationship, policies and regulations will be drafted,” Mr Barnes said.

“When those policies are in place, Myanmar will need technologies and we will provide these technologies. UK businesses will also be invited to invest in the sector in Myanmar,” he added.

He said required technologies, workshops and training will be provided to implement renewable energy projects.

The UK has established a £15 million (K30 billion) fund which will be used until 2020 for carbon reduction, renewable energy and energy utilisations in six ASEAN member states, including Myanmar. Expenses for feasibility studies of wind and solar energy projects in Myanmar will be provided from the fund.

Countries in the region need to cooperate in carbon reduction and promotion of renewable energy, Mr Barnes explained, adding that Myanmar needs policies and regulations in place if it is to meet its carbon-reduction goals by 2030.

“Myanmar can meet its carbon reduction targets but everyone needs to cooperate for this project to be successful,” he said. UK will continue to help Myanmar and energy is one of the country’s essential needs.

Meanwhile, the Ministry of Electricity and Energy (MOEE) is drafting a renewable energy law to develop the sector, U Maung Maung Kyaw, Chief Engineer from the Department of Renewable Energy and Hydropower Plants under the MOEE, said in September.

The ministry is aiming to generate 8 percent of the country’s electricity through renewable sources of energy by 2021. By 2025, the target is for 12pc of all electricity generated in Myanmar to be renewable.

The government will prioritise the development of solar energy, followed by wind energy, U Maung Maung Kyaw said.

On the solar front, the state is currently building a plant in Minbu, Magway Region, which will have the capacity to generate 170MW of electricity when it is complete in February next year. The Minbu plant is the first solar powered plant in Myanmar. Operations are expected to commence this month.

Two more solar plants are expected to be constructed “soon,” U Maung Maung Kyaw said. The plants will be built in Myingyan and Wundwin in Mandalay Region and are expected to have the capacity to generate 150MW of electricity each.

Meanwhile, an agreement has been signed for China’s Three Gorges Corporation to develop a 30MW wind power project in Chaung Thar, Ayeyarwaddy Region. It will be first such project in Myanmar. Currently, the MOEE is negotiating terms for the power purchase agreement. Development of the Chaung Thar wind power project will commence after, said U Maung Maung Kyaw.

Wind-powered projects can potentially also be developed in Chin State, Rakhine State, Ayeyarwaddy Region, Yangon Region, Shan State, Kayah State, Tanintharyi Region, Mon State and Kayin State, according to the MOEE.

Myanmar’s push to develop new sources of energy via renewable means coincides with the need to provide businesses ranging from manufacturing to banking with a reliable supply of electricity for further expansion.

The government has also promised to provide the entire country with access to power by 2030.

Oil & Gas

DOE wants moratorium on oil exploration in West Philippine Sea lifted

12 November 2018

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Philippines

Energy Secretary Alfonso Cusi said Wednesday it is imperative for the government to lift the moratorium on exploration works in the disputed areas in the South China Sea in order for the possible joint oil and gas exploration deal with China to move forward.

The Philippines and China are negotiating for the exploration deal which Malacañang hopes will be signed during the visit to Manila later this month by Chinese President Xi Jinping.

Former Foreign Affairs Secretary Alan Peter Cayetano had said the Philippines was open to a 60-40 deal, in favor of Manila, should a joint development undertaking pushes through with China.

He previously mentioned that Reed Bank or Recto Bank, which is within the Philippines’ 200-nautical mile exclusive economic zone (EEZ), could be a site for exploration.

The Philippines suspended exploration in the Reed Bank in 2014 as it pursued international arbitration of its maritime dispute with China.

The United Nations-backed Permanent Court of Arbitration in July 2016 invalidated Beijing’s historic claims in the resource-rich waters and spelled out the Philippines’ sovereign rights to access offshore oil and gas fields within its EEZ. China, however, refused to recognize the ruling.

“The issue of the lifting is being taken cared of by the DFA [Department of Foreign Affairs] because of the diplomatic issue. As far as the DOE is concerned, so that we can resume exploration, we need to lift that moratorium,” Cusi said at a news conference in Malacañang.

Cusi said he had discussed the DOE’s position with the DFA “but as I have said, that issue, because of the diplomatic concerns, is best answered by DFA.”

Relations between the Philippines and China have vastly improved under President Rodrigo Duterte, who sought Chinese trade and economic aid while shelving long-running territorial disputes, including the arbitral tribunal case won by Manila in July 2016.

Pending the joint exploration deal, the DOE has been pushing for the exploration of oil and gas resources in non-disputed areas under the DOE’s Philippine Conventional Energy Contracting Program (PCECP).

The DOE identified 14 pre-determined areas (PDAs) for potential petroleum exploration and development activities.

The PDAs include one area in the Cagayan Basin, three in Eastern Palawan, three in Sulu, two in Agusan-Davao, one in Cotabato, and four in Western Luzon.

“[T]hose are off-shores and on-shores and these will be made available come third week of November,” Cusi said.

The DOE said the PCECP is the revised and transparent petroleum service contract awarding mechanism that allows the government to develop and utilize indigenous petroleum resources under a service contract with qualified local and international exploration companies. —KG, GMA News

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