News Clipping Archive - Page 1246 of 1320

Energy Economy ,
Others

Red Dot Power exits electricity market in Singapore

5 January 2019

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Singapore

Red Dot Power has pulled out of the electricity market, saying yesterday that it has been a “financially challenging period” for the firm.

The company was part of the initial soft launch for the open electricity market (OEM) in Jurong, signing up around 3,000 customers, including 120 households.

When the open market roll-out to other parts of the island began on Nov 1, Red Dot Power decided not to sign up new customers as it evaluated its business.

Now, it has decided to exit the OEM, and its customers’ electricity accounts will be transferred back to the SP Group on Monday.

Its departure leaves 22 electricity retailers in Singapore, of which 13 will continue to participate in the OEM’s nationwide launch.

“We are working closely with Red Dot Power to ensure a smooth transfer of its customers, mostly commercial and industrial consumers, to SP Group as part of the standard process for retailers who are exiting the business,” said a spokesman for the Energy Market Authority (EMA).

Red Dot Power was one of 13 retailers which took part in the pilot in April last year of the OEM in Jurong. Experts believe it fell victim to a price war among retailers, which are offering big discounts and attractive freebies to get customers to switch from SP Group.

In September, Red Dot Power was offering residential plans of 19.08 cents per kwh, while some retailers were offering as low as around 17 cents. Red Dot’s customer base of 3,000 to date is below the 10,000 some retailers have secured.

Professor Subodh Gautam Mhaisalkar, executive director of the Energy Research Institute at the Nanyang Technological University, believes Red Dot’s exit is likely to be part of a process of consolidation in the market.

He said: “Being an electricity retailer is still a long-term viable business opportunity for companies, and with multiple companies also in the business, one company bowing out does not raise a red flag.”

Yesterday’s announcement surprised some customers.

Ms Daphne Koh, 26, whose family of three in Jurong has a subscription plan with Red Dot, said: “I don’t appreciate that the services were halted so quickly. I hope the prices other retailers provide won’t be far beyond what we pay now.”

Red Dot has assured customers that their power supply will not be disrupted. “We are working closely with the EMA and SP Group to ensure a smooth transfer,” said its chief executive Vijay Sirse.

He also assured customers they would not be required to pay any early contract termination charges.

Customers with security deposits held by Red Dot will have the money used to offset their latest electricity bill. The remaining sum will be refunded no later than one month from the date of the final invoice.

The EMA spokesman said that several safeguards are in place when selecting retailers to participate in the OEM. “Even if a customer’s retailer exits the business, their electricity supply will not be disrupted and their security deposits will be protected by business insurance or banker’s guarantee.”

The OEM was conceptualised as a way to enable households and businesses to buy electricity produced by power plants through a retailer with a price plan that best meets their needs.

EMA said about 30 per cent of residents in the areas where the OEM is under way have switched to retailers other than SP Group.

Oil & Gas ,
Others

Singapore light distillate fuel stocks hit record high

4 January 2019

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Singapore

SINGAPORE, Jan 4 (Reuters) – Light distillate fuel stocks at Asia’s refining hub in Singapore have climbed to a record on surging supply, just as fears emerge of an economic downturn heading into 2019.

Light distillate stocks in Singapore, which include the key transportation fuel gasoline and important petrochemical feedstock naphtha, rose by 1.47 million barrels in the week to Jan. 2, to a record 16.1 million barrels, according to data from Enterprise Singapore released on Friday.

The record comes on soaring supply from refineries across Asia, including China where exports have surged amid a broad expansion of the country’s refining capacity.

Weighed down by excess supply and sluggish demand, gasoline producers began losing money from gasoline after Asia’s benchmark gasoline margin GL92-SIN-CRK in December turned negative. The benchmark has since recouped some losses.

Traders said a slowdown in economic growth and, by extension also in fuel and petrochemical consumption, could keep inventories elevated.

“If factory utilisation rates fall, then purchases of raw materials like petrochemical feedstocks will also weaken,” Singapore-based shipping brokerage Eastport said on Friday.

Data for December from the Institute for Supply Management (ISM) on Thursday showed the broadest U.S. slowdown in growth for more than a decade, as the trade conflict with China, falling equity prices and increasing uncertainty started to take a toll on the world’s biggest economy.

Leading economies in Asia and Europe have already reported a fall in manufacturing activity.

Reporting by Roslan Khasawneh and Henning Gloystein Writing by Henning Gloystein Editing by Kenneth Maxwell

Electricity/Power Grid

Indonesia realizes 98.3 pct national electrification ratio

4 January 2019

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Indonesia

JAKARTA, Jan. 4 (Xinhua) — Indonesian Energy and Mineral Resources Minister Ignasius Jonan said on Friday that the electrification ratio among the population has reached 98.3 percent in 2018, showing a continuous ratio growth since the current government started to function in 2014.

“It is hoped that the ratio would grow further to 99.9 percent this year,” the minister said at his office.

The highest national electrification ratio recorded last year has peaked the ratios in previous years that stood at 95.3 percent in 2017, 91.2 percent in 2016, 88.3 percent in 2015 and 84.3 percent in 2014 respectively, he added.

Most of the electrification ratio was supported by electricity supplies from state-run power firm of PLN with 95.45 percent and from other power suppliers with 2.48 percent, he said.

The ministry has set a target to boost a total capacity of power plants operating in the country up to 80,000 Mega Watt (MW) this year from 63,000 MW last year.

Electricity/Power Grid

Electrifying Myanmar

4 January 2019

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Myanmar

Since sanctions by the United States (US) and European Union (EU) were lifted, Myanmar has enjoyed relatively strong economic growth. According to the Economist Intelligence Unit (EIU), Myanmar’s economy has grown at an average of 7.5 percent between 2012 and 2017. Its economy is slated to accelerate further, driven by a spike in private and public investment and aggressive consumer spending.

However, for Myanmar’s economic ambitions to come to fruition, it must first solve its energy challenges – primarily, in meeting the demand for power.

Myanmar’s electrification problems

According to the Asian Development Bank (ADB), between 2000 and 2012, electricity demand in Myanmar grew by 9.8 percent year-on-year and will continue to grow at a staggering pace. Estimates by the Japan International Co-operation Agency (JICA) – Myanmar’s largest source of official development assistance (ODA) – places electricity demand at approximately 15 gigawatts (GW) by 2030. That translates to a fivefold increase from current levels. Myanmar’s existing installed electricity generation capacity is five GW although its peak capacity is only half of that, at 2.5 GW.

Besides powering burgeoning industries, the increase in electricity demand is also due to Myanmar’s attempt to bridge the electrification gap. For a nation blessed with a wealth of electricity-generating resources, electrification and electricity usage rates are woefully dismal. As it stands, 65 percent of its citizenry do not have access to the national grid. Per capita usage of electricity was just 217 kilowatt hours (kWh) in 2014 according to World Bank numbers – the lowest amongst all member states of the Association of Southeast Asian Nations (ASEAN).

While efforts are taken to bridge this gap, energy demand will continue to surge.

Source: Various sources

Between hydropower and natural gas

Under the National Electrification Plan, Myanmar has set a goal of 50 percent electrification by 2020 and 100 percent by 2030.

The most obvious solution, is to harness the abundance of hydropower available in the country. The ADB estimates this to be in excess of 100,000 megawatts (MW) in terms of installed hydropower capacity.

Dams are already the primary source of Myanmar’s power generation at approximately 60 percent. There are currently 26 state-run hydropower plants in operation with a total installed capacity of 3,181 MW. Another five – a number of which are mega-dams (over 1,000 MW) – are slated for construction but are all currently facing delays.

Hydropower may suffer drawbacks due to the damming of rivers which may affect the livelihoods of people dependent on the water source. For example, the projects which would dam the Irrawaddy and Salween rivers have come under severe criticism by environmental rights groups who claim it would affect downstream land fertility and significantly impact the income of the local people.

The government of Myanmar has turned its focus to natural gas but gas production in existing oil fields are declining. There are fields that are in the early stages of exploration but won’t be ready until after 2020. This leaves the government with a 10-year deficit of gas supply which it must fill if it intends to rely on gas for electricity production. Myanmar’s Ministry of Electricity and Energy (MOOE) has announced plans to commission a liquified natural gas (LNG) terminal which would provide a huge chunk of gas intended for electricity supply until the fields are ready.

Source: Various sources

Government inexperience and a solar answer

As the country attempts to quench its thirst for electricity, it indirectly opens up room for investment. However, a recent report by The Economist revealed that government inefficiencies often hinder the development of the energy sector in Myanmar.

The MOOE has little experience with public-private partnerships – especially negotiations with foreign investors – as most electrification initiatives are state-run. Besides that, bureaucracy is also to be blamed.

The report also highlighted a mismatch of expectations between government and independent power producers (IPPs). IPPs often approach governments, expecting some sort of guarantee as they undertake such large financial commitments.

“To date, the government has been reluctant to take these steps, resulting in IPPs unable or unwilling to secure the finance without government support, while government counterparts search in vain for completely independent power suppliers,” the report stated.

The door has not completely closed for Myanmar. Its electrification goals can still be attained. But that would require the government to shift its posture on engagement with IPPs and to diversify its sources of energy.

Solar is a likely option. Two projects exceeding 150 MW are currently being constructed and should be monitored as “demonstration projects.” Given that the cost of solar generation has fallen, herein lies an opportunity for Myanmar to bridge the gap in its energy needs. The growing trend of corporate power purchasing agreements (PPA) and projects that are directly financed via long-term contracts with the private sector, is a carrot for solar energy producers as they are not currently impacted by tariffs or subsidy issues.

Oil & Gas

Investor opportunities rise with upcoming tender, better contract terms

4 January 2019

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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

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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

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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

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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.

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