News Clipping Archive - Page 1222 of 1296

Oil & Gas

Investor opportunities rise with upcoming tender, better contract terms

4 January 2019

–

Myanmar

The oil and gas sector is looking exciting this year, with opportunities emerging from an international tender scheduled to take place early this year for the first time since 2014.

In addition to onshore and offshore blocks, the tender is expected to include work in “Improved Petroleum Recovery” blocks at older oil fields in Myanmar.

One senior official from the Ministry of Electricity and Energy (MOEE) told The Myanmar Times that the tender will be launched “as early as possible this year”.

According to the MOEE official, the ministry is now revising the terms and conditions of production sharing contracts (PSC) that will be offered to the winning bidders in the tender exercise. Once the revised terms are ready, they will be submitted to the Cabinet and the President’s Office for approval.

Myanmar is looking to open up more of its offshore, deepwater acreages to investors. Up to 18 onshore and 13 offshore blocks could be offered to both local and foreign investors within the coming months. Last year, Australian oil and gas company Woodside Energy also discovered two gas fields that offer potential.

Myanmar also has 17 PSCs that were awarded as part of the 2014 onshore and offshore bidding rounds, where drilling and seismic works must begin over the next two years, according to contract terms.

Better terms

Yet, investors are exposed to a high level of risk when undertaking exploration and production projects in the country. These have included red tape, unpredictable changes in tax rates and unfavourable PSCs, which are all barriers for potential investors. Previous contracts, for example, stipulate that production would be shared on a 65percent/35pc basis in favour of Myanma Oil and Gas Enterprise.

“Now, the conditions will be eased. It is very costly to develop deepwater blocks, so a 50-50 based PSC will do more to attract international investors,” the MOEE official said.

“Improving the existing PSC terms will be crucial for Myanmar, as Nay Pyi Taw seeks to attract more investment into the oil and gas sector while reducing the growing strain on depleting domestic oil and gas reserves,” according to a January 2 report by Fitch Solutions Macro Research.

“We need to think about both sides if we want to offer good agreements. In my opinion, I want to neither give more nor take less. It must be fair for both sides,” said U Kyaw Kyaw Hlaing, chair of local oil and gas services company Smart Group.

The MOEE is also reviewing unfavourable terms and conditions for investors in the sector. This includes an 8pc special commodity tax on natural gas production. In the past, the MOEE had granted three-year tax exemptions to oil companies once commercial production began.

Will investors come?

Industry insiders are expecting the bulk of investors to come from Asia this year.

There are many things to worry about although arrangements are being made to call tenders for oil and natural gas blocks, said U Kyaw Kyaw Hlaing. “The question remains whether prominent companies will come if we invite them. And, another question is whether western companies will come due to the Rakhine crisis,” he said, pointing out that international oil companies that signed exploration deals in Myanmar in 2014 and 2015, such as Shell, Equinor (formerly Statoil), Reliance Industries, all pulled out of the country in 2017 and 2018.

Due to the current situation, it is expected that few oil and gas giants from western countries will bid in the coming tender, while more ASEAN countries and small companies will bid instead, people in the local oil and gas sector said.

“The government may face challenges depending on whether the PSCs offered are attractive. Even so, I expect few western companies will come. We will have to take into consideration that small and less significant companies will apply, making things less beneficial for Myanmar,” said U Than Tun, adviser of oil and gas consultancy Arc and Partners Co and former director of Myanma Oil and Gas Enterprise.

As a whole though, analysts see promising prospects for the sector this year. “Myanmar is among the few still-underexplored upstream markets in Asia, and interest in developing its below-ground prospects continues to remain high among domestic and international oil and gas firms alike, despite a litany of domestic and external risks,” Fitch reported.

It noted that “the longer-term outlook for gas is relatively more optimistic, due to ongoing negotiations for the development of the MPRL-A6 and AD-1 blocks, in line with shifting regional investment trend towards natural gas , and to ease the g rowing export burden to China and Thailand.”

Renewables

Scatec Solar Closes Financing for a 47 MW Project in Malaysia

4 January 2019

–

Malaysia

Solar project developer Scatec Solar, along with its partners has closed the financing for a 47 MW Redsol project in northwest Malaysia with a total investment of approximately $47 million.

BNP Paribas will provide the non-recourse project finance facility for the project, covering 73 percent of the project cost.

The solar power plant is expected to deliver 67 GWh of electricity per year with annual revenues of approximately $6 million. The project is being realised in a consortium with Fumase (Malaysia) Sdn Bhd, a U.S.- and Malaysia-based asset management and development company focused on renewable energy in south and southeast Asia. The Redsol project was awarded under Malaysia’s second large-scale solar tender in December 2017 and will be Scatec Solar’s fourth solar power plant in the country.

“With this project we continue to strengthen our position as the leading solar IPP in Malaysia and as a long-term partner to meet the country’s renewable energy targets”, said Raymond Carlsen, CEO of Scatec Solar.

Scatec Solar will provide 100 percent of the project’s equity. In addition, the company is turnkey EPC provider and will be providing operation, maintenance as well as asset management services to the power project. Construction is expected to start imminently with grid connection to be achieved in the fourth quarter 2019.

In June 2018, Scatec Solar and partners reached the financial closure for 258 MW of solar project in Upington, South Africa. The total cost of the projects is ZAR4.76B ($402M). A consortium of commercial banks and DFIs with Standard Bank in the lead provided non-recourse project finance of ZAR3.68B (~$311M).

Oil & Gas

Indonesia’s Pertamina to buy domestic crude oil from contractors from January

4 January 2019

–

Indonesia

JAKARTA: Indonesian state energy company PT Pertamina has signed deals to purchase crude oil produced from domestic fields by Chevron Corp, PetroChina and others, a company source familiar with the matter said.

Purchases will start this month, including from other contractors such as Petrogas and Saka Energi Indonesia, the person said on Friday, without disclosing the volume agreed. The person declined to be identified because of the private nature of the transactions.

The deals follow a government regulation introduced last September requiring contractors to offer their production to Pertamina, and obliging the state company to prioritise crude purchase from Indonesian fields. Jakarta is seeking to slash its energy import bill as it grapples with a decline in the Indonesia’s currency, the rupiah.

The biggest oil-producing nation in Southeast Asia currently supplies around 775,000 barrels per day (bpd) of crude oil, of which 550,000 bpd already goes to Pertamina, including its own oil output.

A Pertamina spokesperson was not immediately available for comment.

Chevron Pacific Indonesia, a local unit of Chevron, “has reached agreement with Pertamina for the sale of crude oil,” spokesman Cam Van Ast told Reuters without disclosing further details.

Indonesia’s deputy energy minister Arcandra Tahar has previously said oil contractors export around 217,000 barrel per day (bpd) of their share of the country’s output which could potentially be diverted to Pertamina.

Oil & Gas

Energy World Philippines gets go signal to build LNG facility

4 January 2019

–

Philippines

THE local unit of Australia’s Energy World Corp. Ltd. (EWC) has taken the lead in the race to build an integrated liquefied natural gas (LNG) facility in the Philippines as its proposal has been cleared by the Department of Energy (DoE).

In a letter dated Jan. 2 to the Australian Securities Exchange, EWC said DoE Secretary Alfonso G. Cusi on behalf of the department had issued Energy World Gas Operations Philippines, Inc. a permit to construct, own and operate an LNG import terminal and regasification facility on Pagbilao Grande island in Quezon province.

“The permit which was issued on 21 December 2018 forms an update to the original permit documentation and provides for a further construction period of 24 months from the permit issue date,” it said.

EWC said the permit would enable the completion date for the first tank of the LNG hub to be aligned to the commercial operation date of the associated 650-megawatt (MW) power plant and the National Grid Corporation of the Philippines switchyard expansion, which is under construction, and for the construction of the second tank.

Separately, Rino E. Abad, director of the DoE’s Oil Industry Management Bureau, told reporters on Thursday that EWC is now leading as far as permitting is concerned.

Mr. Abad said EWC’s proposal was the first to be endorsed by the centralized review and evaluation committee (CREC) for Mr. Cusi’s approval. He said the proposal was simply an extension of EWC’s previously approved project that had encountered delays because of funding issues.

The proposal of Phoenix Petroleum Philippines, Inc. and its Chinese partner China National Offshore Oil Corp. (CNOOC) is currently being evaluated by CREC, he said.

First Gen Corp. and its partner Tokyo Gas Co., Ltd. were the last to submit its project proposal, which is now under evaluation by Mr. Abad’s group for compliance with financial, technical and legal requirements.

Mr. Abad said the issue with EWC’s previous application was mainly on the extension of the project’s previously issued permit.

“The problem is nag-submit siya ng work program pero hindi niya ma-explain ‘yung budget (The problem was it submitted a work program but it was not able to explain its budget.),” he said.

Mr. Abad said the TWG (technical working group) had asked EWC to substantiate its application since at that time, the unfinished project needed around P6 billion to be completed. He said the company had replied with supporting documents, including approval from shareholders that they would release a special fund for the project’s completion.

“Ang sa amin naman as long as hindi masyadong vague ‘yung plano ‘yan naman ay ine-encourage natin, sinusuportahan ‘yung investors (From our end, as long as the plan is not too vague, we encourage it and support the investors.),” Mr. Abad said.

He also said that EWC also explained that the release of funds by local lenders depends on the approval by the DoE of the extension permit.

In an earlier interview, EWC Director Graham S. Elliott said the company had resumed talks with local lenders to fund the completion of its 650-MW combined cycle gas-fired power plant.

“We are in the process of finalizing the project funding from the Development Bank of the Philippines and Land Bank [of the Philippines] and other institutions, and hopefully we’re about six to eight months away from commercial operation of the first 200-MW gas turbine,” Mr. Elliott had said.

Francis Nicolas M. Chua, DBP first vice-president and head of the bank’s corporate finance group, confirmed the revival of talks with EWC.

Renewables

First Gen Corp./ EDC renew power contract for General Milling in the Philippines

4 January 2019

–

Philippines

First Gen Corp. has renewed a contract with food firm General Milling Corp. (GMC) related to the supply of electricity sourced from renewable energy.

First Gen said that under the new contract, the Lopez-led firm would provide GMC’s factory in Lapu-Lapu City with electricity coming from Energy Development Corp. (EDC), First Gen’s renewable energy arm.

EDC has an installed power generating capacity of 1,471.8 megawatts, from geothermal, wind, hydro and solar energy platforms.

The previous contract from 2016 explicitly stated the supply of 6.5 MW of power to come from an EDC geothermal plant on Negros Island, so we assume the same applies to the new contract.

The factory in Lapu-Lapu is the largest in the portfolio of GMC, which has been manufacturing flour and bakery products for more than 50 years.

GMC has since expanded to the manufacture of animal feeds, corn mill, snack food, pasta, instant noodles, edible oil and coffee.

“We chose to renew with First Gen and EDC because aside from the pure renewable energy that they provide, we are very satisfied with their service. It is just like a renewal of vows for us,” GMC executive vice president Joselito Parco said in a statement.

Last December, EDC signed a two-year contract with its latest customer being Citizen Machinery Philippines Inc. (CMP), maker of lathe machines with facilities in Tanauan, Batangas. CMP is a subsidiary of Japanese timepiece maker Citizen Watch. The contract involves the supply of 2.5 MW of geothermal power.

Others

Hanoi heading to transform into a smart city

4 January 2019

–

Vietnam

Criteria for building a green and smart urban area for Hanoi include smart economy (competitive economy), smart mobilization (convenient transportation system – good technical infrastructure), smart residents (city with abundant and high-qualified human resources), smart environment (good living environment, natural resources reasonably used and preserved), smart urban management (e-government), good quality of life (all needs are met appropriately and conveniently), Thai listed.

Hanoi is developing five satellite urban areas that are components of its master plan with synchronous and modern infrastructure and will be a leverage for newly-developed urban areas to solve the problems of population growth and overload of infrastructure.

Satellite cities are arranged in key areas connected to the main center, including Lang – Hoa Lac, Son Tay, Xuan Mai, Phu Xuyen – Phu Minh and Soc Son.

Besides, the plan embraces three ecological cities which are Phuc Tho, Quoc Oai, Chuc Son with the main functions of ecological cities – agriculture – training – traditional villages, and 10 towns with the main function of administrative centers, supporting production and providing public utilities for rural areas and green corridors. These are areas for Hanoi’s construction and development to become a green city.

Smart residents

Thai stressed that Hanoi has implemented and approved 57/68 projects, fulfilling 83% of the approved projects.

The urban development spaces are defined, the green spaces are shaped, the functional areas and specific functional areas are established to facilitate the mobilization of all socio-economic resources, domestic and foreign economic ones for investment and construction.

The completed projects help to change the urban landscape, provide utilities, and improve life quality of Hanoi’s residents.

Besides, the spaces contribute to the economic development of the capital in particular and the country in general, Thai said.

In addition to Hanoi authorities’ efforts, in order to realize the goal of building Hanoi as a green and smart city, the participation of all strata of the people both at home and abroad is particularly important.

Because every development plan is aimed at the highest purpose of taking people as the center for service, developing green and smart city, and bringing the best utilities to the people, Thai noted.

He emphasized that a smart city must also meet the criteria of “smart residents”. Therefore, in the time ahead, in parallel with the process of deploying technology applications in the capital’s management and construction planning, the city will universalize programs of education, training, communication to all levels so that they can really understand, use and agree to join hands with the authorities, managers and policy makers to build Hanoi as a green and smart city in the near future.

Renewables

Solar plants’ consumption crisis

3 January 2019

–

Vietnam

The National Load Dispatch Centre under the Electricity of Viet Nam (EVN) has just announced it is considering reducing the volume of electricity transmitted from all solar plants into the national grid to deal with overloaded transmission lines.

The move would force all solar power plants to reduce their production below capacity, causing significant damage to investors, said Nguyen Duc Cuong, director of the centre.

The transmission line overloads are due to the rush with which investors moved to back solar projects, precluding synchronous planning and suitable renewable energy development policies, Cuong said.

Electric transmission systems in Ninh Thuan and Binh Thuan are overloaded because they were not designed to handle the large number of solar plants located in the two central provinces, he said.

The central region is not one of the biggest electricity consumers in the country. The power sources must be connected to 220 KV and 500 KV grids to transmit electricity to far-away places.

According to the amended National Power Development Master Plan VII (for 2011-30) that was approved in 2016, the country’s power production from all resources will reach a total capacity of 60,000 MW in 2020, 96,500 MW in 2025 and 129,500 MW in 2030, with an average growth rate of 6,000-7,000 MW per year. However, the proposed solar power capacity is just 850 MW in 2020, about 4,000 MW in 2025 and about 12,000 MW in 2030, reported Nguoi Lao Dong (Worker) newspaper.

At present, Viet Nam has 332 power plants in operation and under construction with a total estimated capacity of 26,900 MW. The country’s solar plants are mainly located in Binh Thuan and Ninh Thuan provinces in central Viet Nam, Cuong said.

According to the centre, purchase negotiations are ongoing for 749.63 MW of solar power from plants in Binh Thuan and 1,732.82 MW from plants in Ninh Thuan.

The market has seen a wave of investment into solar power plants since the decision to set the purchase price of solar power at 9.35 US cents/KWh from April 2017.

Tran Viet Ngai, chairman of the Viet Nam Energy Association, said that because the country has already exploited nearly all of its hydropower resources, the development of renewable energy sources such and wind and solar power is essential.

While solar energy is widely available, Ngai said work must be done to use it effectively. Without well-planned investment schemes and operating mechanisms, solar power will merely destabilise the electrical system and could lead to grid collapses.

Solar power plants only work when the sun is shining and storage batteries are functioning properly. For large-scale projects, the system works for three to five hours; however, Ngai cautioned that advanced storage systems are very expensive.

Meanwhile, adding thousands of MW from solar power plants to the national grid requires suitable load dispatch plans in case the solar plants stop generating energy.

This is a complicated process because solar power plants, localities and the electricity sector must work together to build the dispatch plans, Ngai said.

The rapid development of solar and wind power plants has reduced the country’s reliance on power from resources that cause pollution.

However, Ngai said developing too many solar projects at the same time in certain places could lead to higher strain on the electrical grid, necessitating the construction of more transmission grids and transformer stations. Of course, these investment costs will be calculated into electricity prices.

Nguyen Duc Cuong said investment could not be executed too quickly because it takes a lot of time to plan projects, arrange investment capital and get investment licences.

To accelerate the construction of transmission lines, Minister of Industry and Trade Tran Tuan Anh has asked the Government to allow the use of capital from private investors to develop some transmission stations and grids for solar and wind power plants. After construction, the investors will hand the facilities over to the electricity industry to manage and operate them. –– VNS

Oil & Gas

Energy recommends lifting of ban on West Philippine Sea exploration

3 January 2019

–

Philippines

The Energy Department officially recommended to the Department of Foreign Affairs the lifting of the moratorium on oil and gas exploration in the West Philippine Sea amid the enhanced relations between China and the Philippines, officials said.

Energy Resource Development Bureau director Ismael Ocampo said the recommendation was submitted to the DFA, on the request of PXP Energy Corp. through Forum Energy Ltd. to lift the force majeure imposed on Service Contract 72 or the Recto Bank.

“Our main concern is energy security,” Energy Undersecretary Felix William Fuentebella said, adding the move was in line with the government’s thrust to explore for more indigenous sources of energy.

Fuentebella said the Philippines was left behind by its Southeast Asian neighbors in the area of oil and gas drilling.

PXP sent the letter of request to the DoE last month requesting the lifting of the force majeure in the wake of the signing of the memorandum of understanding between the governments of the Philippines and China for the cooperation over the West Philippine Sea.

“We see the lifting of the force majeure as a positive development for our SC 72 block and for the country in general,” Forum Energy country representative Daniel Stephen Carlos said earlier.

Forum Energy, where PXP holds a direct and indirect interest of 78.98 percent, has a 70-percent participating interest in SC 72 located in Northwest Palawan, through wholly-owned subsidiary Forum GSEC. PXP has a total economic interest of 53.1 percent in SC 72.

PXP is an upstream oil and gas company incorporated in the Philippines whose shares are listed on the Philippine Stock Exchange. The company, directly and indirectly, owns oil and gas exploration and production assets in the Philippines, and indirectly owns an exploration asset located in offshore Peru.

Energy Secretary Alfonso Cusi earlier advised PXP Energy to apply for the lifting of the moratorium on its service contracts amid the recent breakthrough in negotiation between the Philippines and China.

Cusi also expressed keen interest to immediately meet with his Chinese counterpart to draw up the framework of the oil and gas cooperation over West Philippine Sea or South China Sea.

“I have already expressed my intention to meet, my Chinese counterpart. I have sent my message already that I want to meet immediately,” Cusi said.

The Philippines and China agreed to cooperate on oil and gas development, as a part of the deals forged during the visit of Chinese President Xi Jinping in November.

“The MOU is to explore a solution. I don’t want more delays, so I gave notice to meet already,” Cusi said,

He said the notice was directed to China but coursed through the Department of Foreign Affairs.

“To China through DFA, I am ready. I want to meet immediately, anytime, anywhere. I am not passive, I’m saying let’s meet already,” Cusi said.

Energy assistant secretary Gerardo Erquiza said DoE advised DFA as a “matter of protocol.”

“Anytime we can start and go through the process, we just have to go through some details,” Erquiza said.

He assured that the framework would work within the service contract system of the Philippines and “sets forth the elements of the Philippine jurisdiction.”

News Clipping

User Dashboard

Back To ACE

User Dashboard