Markets

Asia’s largest LNG exporters, Indonesia and Malaysia, are stepping up domestic LNG deliveries. A flurry of decentralised gas power plants are under development in Malaysia and across the Indonesian archipelago, looking for steady and attractively-priced LNG supply.

Though delivered prices for coal at US power plants keep declining, burning gas is more profitable. Fuel costs for coal power units fell from $2.25 per MMBtu to less than $2.00/MMBtu, but this is not enough to outcompete combined-cycle power plants running on cheap shale gas.

Shares in Siemens Energy have opened lower than anticipated on their first trading day in Frankfurt in what analysts called a “modest market debut.” Shares opened at 22.01 Euros apiece on Monday, giving the Siemens spin-off a market value of 16 billion Euros – less than the previously estimated 22 billion Euros.

The spin-off Siemens Energy has decided to locate is corporate headquarters in Berlin, where the mother company was founded in 1847. CEO Christian Bruch was quick to point out the choice of Berlin will not distract from the important functions of other locations across Germany – notably Mühlheim and Erlangen.

Investment in U.S. generating capacity is dominated by gas power units due to its cheap capacity costs. Though construction costs for solar PV more than halved to $1,848 and costs for onshore wind fell to $1,382, both lose out on gas-fired units which cost just $837 per capacity added.

US engineering giant GE has decided to exit the market for new-build coal power plants in a bid to transform the structure of the company. “We are focused on power generation businesses that have attractive economics and a growth trajectory,” said Russel Stokes, CEO of GE Power Portfolio.

Gazprom Export’s electronic sales platform is offering new trade tools, enabling buyers to choose from several delivery points and allowing volumes to vary on a daily basis. The pricing of these new contracts can now be linked to different energy carriers and gas indexes.

A cold start to winter across Northeast Asia could boost demand and widen spreads between the Japan Korea Marker (JKM) and the Dutch TTF trading hub for Nov-20 and Dec-20 contracts. If JKM-TTF spreads widen to $0.71 per MMBtu, Asian buyers will rush to snap up US spot LNG cargoes.

The U.S. economy still runs largely of fossil fuels, with petroleum, gas and coal accounting for 80% of both domestic energy production and consumption. Renewables account for just over 12% of the energy mix and nuclear for the remaining 8%, with little drive towards green energy sources except for California.

To reach net-zero emissions globally by 2070, the industry needs to “dramatically scale up clean energy technologies” particularly in areas beyond the power sector. The International Energy Agency (IEA) hence compiled over 800 options to curb emissions, e.g. shuttering inefficient coal power plants, steel mills and cement kilns.

Gas-fired power plants in China a struggling to stay afloat as profits are squeezed by Beijing’s reduction in regulated power tariffs. Since June, tariffs for electricity generated from gas have been cut by 16% to 28% in key coastal provinces to bolster energy-intensive industries amid trade tensions with the U.S.

Global gas demand is recovering from the Covid-19-related “dip” and grows robustly over the next 15 years, spurred by coal-to-gas switching in China, India and Southeast Asia, the Rapid Scenario of BP’s Global Energy Outlook shows. From 2035, however the impetus from Asia fades and gas demand falls back to 2018-levels.

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News in Brief

Barclays may help fund Rolls-Royce

Sept 30 – UK’s prime engine maker Rolls-Royce is understood to be close to getting fresh financing from Barclays Bank. The Derby-based company, however, insists no final decision has been taken on the precise amount that may be raised or any allotment of shares to any investor.

Petronas to truck LNG to off-grid users

Sept 29 – Petronas Dagangan Group is gearing up to build a LNG truck delivery service for off-grid customers in Peninsular Malaysia. Trucks fitted with cryogenic tanks will bring the super-chilled fuel to remote industries and small-scale power generators with no access to the natural gas grid. Malaysia’s Peninsular Gas Utilisation (PGU) pipeline is only 2,500 kilometers in length and was initially built to export gas to Singapore.

Siemens to reduce emissions at NLNG

Sept 28 – Nigeria LNG has contracted Siemens Energy to provide a cryogenic boil-off gas (BOG) compression train for its liquefaction plant on Bonny Island. The new BOG train will be driven by an high-efficiency electric motor and includes two compressors. Manufactured in Duisburg, Germany, the equipment will be delivered in the fourth quarter of 2021.

Supercapcitors to replace batteries

Sept 25 – The global market for supercapacitors was valued at over $487 million last year and is forecast to top $1,570 millio by 2025, growing at an annual rate of 21.8%. Supercapacitor, an emerging technology for energy storage systems, can offer higher power density than batteries was may soon replace the latter.

Atos, Siemens expand digital partnership

Sept 24 – Atos, a global leader in digital transformation, has expanded its strategic partnership with Siemens AG for five years, helping the latter with data driven digital, cloud transformation and cybersecurity. The extension comes in the context of 5-year total €3 billion agreements which were separately signed with Siemens AG, Siemens Energy and Siemens Healthineers.

Rotterdam Port to store CO2 beneath the North Sea

Sept 23 – The Porthos project, a joint venture between the Port of Rotterdam Authority, Gasunie and EBN, seeks to transport CO2 from industry in the port to empty gas fields beneath the North Sea. In its early years, the Carbon Capture Utilisation and Storage (CCUS) will be able to store approximately 2.5 million tonnes of CO2 per year with plans to be operational by 2024.

German power sector to reach net zero in 2040s

Sept 22 – Revisions to Germany’s Renewable Energy Act (EEG) stipulate the power sector should become greenhouse-gas neutral in the early 2040s. Despite the gradual electrification of heating and transport, the German energy ministry is so far sticking to its estimate of 580 terawatt-hours (TWh) of power consumption in 2030 – close to current levels.

B&W to supply superheaters to Lumiant

Sept 21 – Babcock & Wilcox’s thermal segment has been contracted to design, manufacture and supply new superheater components for a high-efficiency boiler at Luminant’s Oak Grove Power Plant near Franklin, Texas. Material delivery to Oak Grove is scheduled for February 2021.

EC targets 55% emission cut by 2030

Sept 17 – The European Commission’s latest 2030 Target Plan stipulates a 55% cut in emissions by 2030, compared to 1990-levels. The lobby group COGEN Europe stressed the importance of combined heat and power generation (CHP) to reach that goal, calling for more stable policies and supportive regulation.

Rolls-Royce may sell ITP Areo

Sept 17 – Britain’s prime manufacturer Rolls-Royce confirmed it is looking to strengthen its balance sheet, possibly by disposing of ITP Aero which his hoped to generate proceeds of more than £2bn over the next 18 months. Further cost cutting is meant to deliver £1 billion and revamping of the company’s Civil Areospace business should save another £1.3 billion.

China’s GDP may grow 1.8%

Sept 16 – China’s GDP is forecast to grow 1.8% this year as the economy recovers from the Covid-19 pandemic. The government slashed electricity tariffs to support manufacturing but the Asian Development Bank (ADB) warns of mounting credit risk for banks. Fiscal revenue pressure also intensifies as 1.5% of China’s GDP growth in the first half of 2020 was based on bond-funded investment by local governments.

Zeebrugge goes for green hydrogen

Sept 15 – Colruyt Group (Eoly), Parkwind and Fluxys aim to spend up to 35 million Euros to develop a green hydrogen plant in Zeebrugge, Belgium, by 2023. The plan is to convert off-shore wind energy into green hydrogen which can then be injected in the high-pressure natural gas transmission grid.

Shale gas market to top $41bn

Sept 14 – Global markets for unconventional gas, mostly developed by shale fracking, is forecast to grow at an annual rate of 7% to reach $ 41.76 billion by 2024. According to Technavio, the Americas region will remain dominant with an 87% market share as hydraulic fracturing technologies evolve. Top players in the market are BP, Chevron, ConocoPhillips, Exxon Mobil, PetroChina, Gazprom, Shell, Santos, Saudi Arabian Oil Co., and YPF.

SNAM, Saipem join forces on hydrogen

Sept 11 – Two Italian energy companies, SNAM and Saipem, have agreed to develop initiatives for green hydrogen production and transport, as well as for carbon dioxide capture, transport and reuse or storage (CCRS). The move supports the European Commission’s Hydrogen Strategy to reach net-zero emissions by 2050.

MAN, Wasco to drive Power-to-Gas Tech in Asia

Sept 10 – MAN Energy Solutions and Wasco have signed a Memorandum of Understanding (MOU) to promote and commercialize Power-to-X (PtX) projects in South-East Asia. The technology in question converts electricity into carbon-neutral synthetic fuels, gas or liquid, for use as a clean, carbon-neutral energy source.

Romgaz, GSP to realise 200 MW gas and solar project

Sept 9 – Romania’s state gas company Romgaz has agreed to build 200 MW power generation capacity with the privately-owned Grup Servicii Petroliere (GSP) which is controlled by the local businessman Gabriel Comanescu. The project entails a 150 MW gas-fired power plant and a 50 MW solar photovoltaic park, to be built on the site of a disused coal power plant in southern Romania.

Alaska uses twice as much energy for transport as NY

Sept 8 – More energy is used per person for transportation in U.S. states with low population density. According to the U.S. Energy Information Administration’s (EIA), people in geographically large states with small populations, such as Alaska, Wyoming and North Dakota, are useing twice as much energy for transportation than the U.S. average on a per capita basis. That’s in stark contrast to states with higher population density, such as Rhode Island and New York.

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