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  • Oil & Gas , 
  • Others

India cuts tax on palm oil imports; Malaysia to benefit the most

2 January 2019

 – 

  • Malaysia

Mumbai

INDIA has cut import taxes on crude and refined palm oil from South-east Asian countries after a request from suppliers, a government notification said.

The reduction will lead to higher imports of palm oil by the world’s biggest edible oil buyer in coming months as it would narrow the difference between the tropical vegetable oil and competitors such as soya oil and sunflower oil.

The duty on crude palm oil was lowered to 40 per cent from 44 per cent, while a tax on the refined variety was cut to 50 per cent from 54 per cent, according to the notification issued late on Monday. The cuts took effect on Tuesday.

In March 2018, India raised the import tax on crude palm oil to 44 per cent from 30 per cent and lifted the tax on refined palm oil to 54 per cent from 40 per cent.

Palm oil is now seen as more competitive due to the duty reduction and this will lead to higher imports from January onwards, said Sandeep Bajoria, chief executive of the Sunvin Group, a Mumbai-based vegetable oil importer.

India primarily imports palm oil from Indonesia and Malaysia and soya oil from Argentina and Brazil. It also buys small volumes of sunflower oil from Ukraine and canola oil from Canada.

Its palm oil imports dropped 6.4 per cent from a year ago to 8.7 million tonnes in the 2017/18 marketing year ended in October, according to Solvent Extractors’ Association (SEA), a Mumbai-based trade body.

Indonesia and Malaysia, the top two palm oil producers, were seeking a reduction in the import tax by New Delhi as inventories were rising in both countries due to higher output.

India’s palm oil imports could have fallen in December but will jump this month as some importers had delayed shipments in anticipation of tax cuts, said BV Mehta, executive director of the SEA.

The effective duty difference between crude and refined palm oil has narrowed to 5.5 per cent from 11 per cent for shipments from Malaysia, which could lead to higher imports of refined palm oil, Mr Mehta said.

“This is a death knell for the domestic refining industry and will halt expansion of palm plantations in the country,” he said.

India relies on imports for 70 per cent of its edible oil consumption, up from 44 per cent in 2001/02.

“Traditionally, Indonesia corners the bulk of India’s palm oil market. The duty reduction will now allow Malaysia to raise its share,” said a Mumbai-based dealer with a global trading firm. REUTERS

  • Oil & Gas

Indonesia’s Medco Energi in talks to buy London-listed Ophir Energy

2 January 2019

 – 

  • Indonesia

Singapore — Indonesian oil and gas group Medco Energi is in talks to buy UK-based Ophir Energy to create one of the biggest private upstream producers in Southeast Asia, the two companies said separately.

Shares in London-listed Ophir — an oil and gas company with upstream assets in Thailand, Vietnam, Indonesia, Malaysia, Equatorial Guinea and Tanzania — jumped in trading Wednesday, valuing it at GBP325 million ($414 million). The possible deal was announced Monday.

Medco Energi, with a market capitalization of around $900 million, has oil and gas exploration and production assets mainly in Indonesia, but has been expanding into Oman, Yemen and the US.

Combined with Medco’s 2018 target production 85,000 boe/d, Ophir’s output of 25,000 b/d of oil equivalent would take an enlarged Medco’s production to 110,000 boe/d, more the 90% of which would be within Southeast Asia, energy consultancy Wood Mackenzie estimated Wednesday.

“This is a bold move by Medco, and if successful would create a Southeast Asian upstream powerhouse,” Wood Mackenzie research director Angus Rodger said in a note. “This would catapult the firm into being the seventh largest non-NOC upstream producer in Southeast Asia, above Hess and BP, and just behind Repsol and Total.”

PIVOT TO ASIA

Rodger said the deal would also bulk up Medco’s non-Asian exposure by adding growth options in Tanzania and Equatorial Guinea to existing positions in Libya, Oman, Yemen, Tunisia and the US.

“It would also offer exposure to the global upstream hotspot that is offshore Mexico, where Ophir recently secured participation in three blocks,” Rodger said.

He said after Ophir’s acquisition of Santos’s Asian assets last year, the explorer appeared to have pivoted its portfolio towards Asian growth, given its troubled Fortuna FLNG project in Equatorial Guinea was struggling to attract finance.

Medco Energi is also operational in the natural resources and power sectors, with gas, geothermal and hydro power plants in Indonesia through its 88% stake in Medco Power and a 39% interest in an Indonesian copper and gold mine.

Medco Energi said the purpose of the deal was “business development…there [is] no offer price determined, the amount of funds to be made for the cash offer, (or) the number of securities to be purchased.”

Under UK takeover rules, Medco Energi must announce a firm intention to make an offer for Ophir by January 28 or announce that it does not intend to make an offer.

 

  • Others

PTT unit to take over Glow Energy; TMB, Thanachart Bank in merger talks

2 January 2019

 – 

  • Thailand
PTT Group’s Global Power Synergy has secured the approval to acquire a 69.11 per cent interest in Glow Energy, the Thai unit of French energy major Engie while Thanachart Bank and TMB Bank are in talks for a merger.

PTT’s $4b acquisition of Glow Energy approved

The Thai energy watchdog has approved the $4-billion takeover of Glow Energy Plc by state-owned PTT Group’s Global Power Synergy (GPSC), on the new condition that the deal would not result in an electricity monopoly in the country.

The Energy Regulatory Commission had rejected the acquisition proposal twice earlier. However, it has granted permission last week, given that Glow must sell Glow SPP1 to a third party before or at the same time as the merger between Glow and GPSC materialises.

Glow’s major shareholder, French power firm Engie, has entered into an agreement with GPSC for that amendment to the 69.11 per cent share sale, SET-listed Glow said in a filing.

“Any adjustment of GPSC’s tender price of Glow’s shares will be disclosed by GPSC to investors,” it added.

Glow SPP 1 provides 110 MW of electricity to the Electricity Generating Authority of Thailand under the Small Power Producer programme. The Glow demineralised water plant, starting commercial operation since 1999, is capable of producing a total of 120 cubic metres per hour of demineralised water.

The initial merger proposal had been submitted in June 2018, with estimation of the transaction amounting to $4 billion. It was then dismissed two times in October and December.

Glow said it recorded a net profit of 6.52 billion baht in the first nine months of 2018.

Thanachart Bank, TMB in talks for merger

In a consolidation move in the financial services space, Thanachart Bank and TMB Bank are examining the options of a merger,  local media reported.

The local finance ministry might also put fresh funding in TMB following the merger, to retain its 25.9 per cent stake, the Bangkok Post cited Prapas Kong-Ied, general director of the State Enterprise Policy Office (Sepo).

The finance ministry is currently the largest shareholder in TMB. The lender also counts Dutch bank ING as a significant shareholder with a 25 per cent interest. Meanwhile, Thanachart Capital has 51 per cent in Thanachart Bank, and Canada’s Bank of Nova Scotia owns the rest.

Thanachart Bank and TMB are sixth and seventh largest banks in terms of total assets in Thailand, home to around 2,000 banks. Thailand has been encouraging local bank consolidation in a bid to create strong banking institutions in competition with global banks. In April 2018, the cabinet approved policies on tax deduction and exemption for merged banks. Krung Thai Bank was also said to be keen on acquiring TMB.

The merger talks between TMB and Thanachart Bank is expected to conclude in January.

  • Energy Efficiency

When Keeping Cool, Socioeconomic Status Matters

2 January 2019

 – 

  • Singapore

AsianScientist (Jan. 2, 2018) – Singapore households from different socioeconomic groups vary significantly in their use of water and electricity for heat relief, according to a study by researchers from the National University of Singapore (NUS). They published their findings in the journal Nature Communications.

In Southeast Asia, climate models project annual temperature to increase by 1–4 degree Celsius, and winter rainfall to decrease by 20 to 30 percent by 2070. Currently, only eight percent of the three billion people living in the tropics have access to air-conditioning, compared to over 90 percent in the US and Japan.

To better understand how socioeconomic status affects resource consumption for heat relief, scientists led by Associate Professor Alberto Salvo of NUS examined the demand for water and energy among Singapore households across the socioeconomic distribution.

The researchers obtained data on the water and electricity bills of about 130,000 households in Singapore from 2012 to 2015, examining each household’s consumption of water and electricity over time. They observed that when ambient temperatures rise, water demand increases among lower-income Singapore households.

For instance, with a one-degree Celsius increase in temperature, the average household living in a two-room apartment (about 50m2) raises water use by nine liters per day, amounting to an additional daily shower for every 2.3 households. At the time of the study, less than 20 percent of two-room apartments had an air conditioner.

In sharp contrast, heat induces larger shifts in electricity demand and no significant change in water consumption among higher-income households, such as those staying in five- or six-room apartments (110m2 or more). These households frequently have air conditioners, and the average increase in electricity demand was two kilowatt hours per day with every one-degree Celsius increase in temperature. This is equivalent to operating an air-conditioning unit for two more hours each day.

To complement the observational evidence from the study, a 300-person survey on heat relief behaviors by Singapore households was also conducted. Thirty-nine percent of respondents stated that on a very hot day, they would shower more often and longer. This is comparable to the 36 percent who indicated that they would turn on the air conditioner.

“As we face shifting temperature extremes and rainfall variability, the study can contribute towards improving demand forecasting for water and electricity in water-stressed cities in tropical Asia, where incomes are rising. This can facilitate better design and allocation of water and electricity grids,” said Salvo.

“Air conditioners powered by electricity generated from burning fossil fuels come at an environmental cost, but one added benefit is that they may reduce a household’s water demand when seeking relief from heat.”

———

Source: National University of Singapore; Photo: Pixabay.
Disclaimer: This article does not necessarily reflect the views of AsianScientist or its staff.

  • Electricity/Power Grid

Activists demand cheaper, public-focused power plan

1 January 2019

 – 

  • Thailand

An advocacy group is planning to ask the Energy Ministry to revise its Power Development Plan draft, which it says has failed to raise people’s awareness on energy saving and may ultimately burden consumers with high electricity charges.

The call for a revision comes as Thailand gears up to launch its national Power Development Plan (PDP) for 2019-2037, which was put up for public hearings in Bangkok and four other regions last month.

The final hearing on the PDP draft took place in Bangkok on Dec 24, after similar hearings were held in Chiang Mai, Khon Kaen, Surat Thani and Chon Buri.

Suphakit Nuntavorkarn, a researcher at the Healthy Public Policy Foundation and a sustainable energy advocate, voiced his concerns over the erroneous load forecast assumptions contained in the draft.

He said the new PDP does not take into account the fact that the county’s actual average peak load has been declining since 1998, thus paving the way for the construction of more power plants to meet the forecast demand, which is far higher than real demand.

As a result, Mr Suphakit said, customers will lose out because the cost of constructing new power plants will ultimately be passed on to them.

Thailand’s average peak load decreased from 6.4% in 1998-2006 to 1.45% between 2013-2018 because of the global economic downturn and numerous energy savings campaigns.

The new PDP draft assumes the peak load for 2019-2037 to be 73,211 megawatts — higher than the peak load of 40,879 mW in 2018.

“The real victims of the government’s new PDP are the consumers,” he said.

“We will send a letter to ask the ministry to revise the draft for the benefit of the people.”

“The plan was created to justify the construction of megapower plants — such as the two 700-mW plants planned for the Western region, the bidding processes for which are expected next year,” he said.

  • Oil & Gas

Prospects for oil and gas in 2019

1 January 2019

 – 

  • Myanmar

new draft of the petroleum law has been tabled. After the bill is amended, Hluttaw will enact in. However, before in comes into force, it can be amended if the people provide suggestions.

Will the new law be effective in the case of the oil block tenders that will be called soon and for the tenders called before the law is passed?  These are questions that must be asked. Traditionally, the old law is overshadowed by the new.

It is important that the amendments make the landscape attractive to investors. If the government wants to encourage investments, it needs to think more about the benefits for both the country and investors. Restrictions need to be eased as it is important for the country to receive taxes from investors while streamlining the process for investors to bring money into the economy.

The question of whether there will there be interest in new oil and gas blocks should also be looked into.

It is expected that new blocks and blocks from previous tenders which did not see any interest will be offered to investors. A degree of interest in the offerings is anticipated as it is believed that some of the blocks offer potential.

However, the oil exploration business is risky by nature and no one can say with certainty whether efforts will pay off.

Some 18 inland blocks and 12 offshore blocks may be included in new tender. It will also include permissions to redevelop old oil fields. As some inland blocks hold potential to produce oil, they will be the focus of attention.

Who will compete in the tender?

It will be interesting to see which oil companies will participate in the international oil site tender expected to be made in beginning of next year. In 2014, many big oil companies participated and entered production sharing contracts with the country. The government also negotiated with companies that needed more time before entering the country’s oil and gas sector.

Companies that won tenders in 2014 carried out seismic studies only in offshore blocks and started exploration and drilling. As soon as the companies initiated exploration, they were required to pay a bonus to the government and commit to drilling a well under the conditions of their contracts.

If no one explores, no discoveries will be made – no risk, no success. Oil companies actually doing good work must be encouraged.

The coming year will be an important one as it is necessary to attract capable international oil companies. Myanmar will not benefit if the tender attracts only small players.

This year, an exploration well was dug in the AD-1 Block by China National Petroleum Corporation, resulting in the discovery of a potential natural gas source.  Australia’s Woodside Energy Ltd dug a well in the A-7 Block which came up dry. Meanwhile, a  MPRL-Woodside-Total appraisal well in Shwe Yee Htun 2 tested natural gas production.

One success for Myanma Oil and Gas Enterprise (MOGE) was the Myanaung Well 172 which produced over 100 barrels of oil. It is a record for Myanaung which has seen declining production for many years. MOGE is using exploration wells to see if there is gas in the old field. PTTEP from Thailand and Petronas from Malaysia are also drilling development wells in old oil fields.

There were few exploration wells drilled this year. If no one explores, no discoveries will be made – no risk, no success. Despite discoveries offshore, production is not certain. It takes time. Oil companies actually doing good work must be encouraged.

It’s important to note that the new petroleum law should provide more benefits for investors. Only by doing so will foreign investments flow into the country. If the conditions are difficult for them, they will be reluctant to invest. It’s crucial to find more new oil and gas fields. Money should not to be spent on uncertain fields.

Tendering for new work sites should be welcomed. Reputable and capable petroleum enterprises are needed to do business in the country. It’s important to take care not to select corporations with low budgets and poor track records.

Oil and natural gas production should be boosted up by effectively conducting inland quests for oil and gas by the Myanmar Oil and Gas Enterprise (MOGE). It is our responsibility to provide as much supply as possible to meet growing demand. It’s necessary to have dependable amount of oil and gas in hand. The coming year is expected to see as a year of remarkable success.

U Than Tun is former Director of Myanma Oil and Gas Enterprise and is now Advisor for Arc and Partners Co.

  • Renewables

Deal signed for hydropower project

1 January 2019

 – 

  • Myanmar

The Ministry of Electricity and Energy has announced the signing of a power purchase agreement (PPA) for the Upper Baluchaung hydropower project with Neo Energy Oasis Co Ltd, the builder of the project.

The PPA was signed between Electric Power Generation Enterprise (EPGE), a unit of the ministry and Neo Energy Oasis on December 28.

Within three years of the signing of the PPA, the project will be able to feed power to the national grid, said Union Minister for Electricity and Energy U Win Khaing.

The Upper Baluchaung project, which started in 2011, is being implemented under a build, operate and transfer (BOT) deal and is now 45.5 pc completed.

The hydropower project features two power plants with a total capacity is 30.4megawatts. The installed capacity of the first power plant is 20.4mw and 10mw for the second.

Under the design, annual power generation is projected to be 134.482 million kilowatt-hours and once completed, it is expected to supply electricity to villages in southern Shan State’s Nyaungshwe Township and its surroundings, and U Win Khaing said, adding the project is expected to be finished on time.

The project will support the economic development as well as the country’s development as it will provide job opportunities for about 500 people during construction period and for about 30 local engineers when power plants start to operate, and support economic development. Some 2 pc of annual net profit will be used for environmental conservation programme and corporate social responsibility projects the minister said.

 

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