Markets

Tellurian is trying to sway Saudi Aramco to take an equity stake in the $30 billion Driftwood LNG export plant, after agreeing similar investor-buyer deals with Petronet and Total. Importing LNG could displace Saudi crude oil currently used for power generation.

Germany’s lignite operator RWE is aspiring to become carbon neutral within 20 years as it shuts its coal power plants and focuses on wind, solar and storage. The strategic turnaround follows the takeover of the renewables activities of subsidiary Innogy and rival E.ON.

Sempra Energy has agreed to divest its Peruvian businesses to a unit of China Yangtze Power Co for $3.59 billion, in a move to exit the South American market and focus on its natural gas infrastructure and LNG export business in the United States.

Quinbrook Infrastructure Partners has questioned the profitability of peaking power stations in Australia, indicating its Lockyer project is unlikely to proceed without government support. The 132 MW Lockyer gas power unit is the first stage of a 1,000 MW development in Gatton, Queensland.

British energy companies are preparing for Brexit on October 31 amid uncertainty about future cross-border energy flows and carbon pricing. Cornwall Insight warns that with the risk of a depreciation of sterling, prices in both electricity and gas markets will go up.

Japan has committed to invest $10 billion in LNG import infrastructure and related power projects in India and Southeast Asia. The initiative is backed by public-sector financing from JBIC, and analysts expect it will help LNG compete with other fuels like coal in emerging economies.

To meet burgeoning demand, Southeast Asia will have to invest an average of $17 billion per year in on new power generation units. Cheap coal is forecast to cover the lion’s share, before being overtaken by gas and renewables starting from 2034.

Fast-growing Asian economies will trigger a nearly 50% rise in world energy consumption by mid-century, according to the International Energy Outlook 2019. Gas use in non-OECD countries is set to surge 70% to reach 120 quadrillion British thermal units (Btu) in 2050.

India’s energy giant Petronet has signed a $7.5 billion agreement with Tellurian to take a stake in Driftwood LNG and import 5 mtpa. If supplies can be delivered at a close-to-fixed-price, analysts see it as “extremely attractive” for ensuring downstream sales to Indian power producers and industry.

South Korea’s state-run KOGAS has agreed with BP to buy 1.58 million tons of US LNG annually starting from 2025. The deal is worth an estimated $9.61 billion over 18 years and will help facilitate a coal-to-gas switch in the Korean power sector.

Wind power could soon be cheaper in Britain than electricity from gas-fired power plants. Contracts for difference (CfDs), awarded at auction for nearly 6 GW of new wind farms, came in at £8-9/MWh below the government’s ‘reference price’ for electricity in the open market.

McDermot, a leading EPC company for the gas and power industry, has received unsolicited offers to sell its Lummus Technology business for over $2.5 billion. The divestment could herald the start of a wider business overhaul.

The Japan-Korea-Marker, an LNG benchmark price for spot cargoes, is set to strengthen relative to the Dutch Title Transfer Facility (TTF). This winter, South Korea is preparing to halt a substantial share of its coal-fired power generating capacity, boosting LNG demand which is set to propel up JKM contracts starting from November.

Crude oil, thermal coal and natural gas continue to account for the largest share of energy use in the United States. With 79% of domestic production and 80% of consumption made up of fossil fuels, there is much room left for further renewable penetration.

Rising national gas production in Argentina and peak potential LNG export during the summer months is coinciding with strong winter demand from utilities in Asia. This seasonal dynamic is expected to attract Asian buyers amid very competitive shipping costs.

Page 6 of 162

News in Brief

Norway’s oil fund starts investing in renewables

Dec 11 – The Norwegian Government Pension Fund Global (GPFG), traditionally heavily exposed to the oil and gas industry, has been permitted to shift its strategy. Acknowledging heavy losses of the world’s largest pension fund, worth an estimated $1 trillion, the government in Oslo has allowed GPFG fund managers to also invest in unlisted infrastructure, notably renewable energy sources and alternative fuels, including hydrogen.

ENGIE invests in wind energy in Italy and France

Dec 10 – France’s largest energy company ENGIE has completed the acquisition of Renvico from Macquarie Infrastructure and Real Assets and KRR. The move contributes to utility’s ambition of boosting its renewable energy assets to 3 GW in Europe and 9 GW worldwide by 2021. The Renvico takeover comprises 329 MW of operating wind farms of which 142 MW in Italy and 187 MW in France. It also includes a 300 MW greenfield portfolio of various fossil power assets.

Dominion issues Scammer Alert

Dec 9 – Dominion Energy Ohio has reminded customers they will begin receiving the next U.S tax credits automatically, beginning in April 2020, in their monthly bills. Customers were warned not to provide banking details to scammers who claim such data is required to receive the federal tax credits.

BOL finances entire 220 MW plant in Nassau

Dec 6 – Bahamas Power and Light (BPL) has agreed to cover the entire costs to build a 220 MW power plant at the Clifton Pier site in Nassau, and transfer the assets to Shell North America. BPL and Shell had agreed to jointly develop a 220 MW power plant plus LNG regas terminal, but the Bahamas state utility later signed a $95 million contract with Wärtsilä to install a 132 MW engine-driven power plant at the same site.

Kepco to operate CCGT in Uruguay

Dec 5 – Kepco KPS has been awarded a contract to operate and maintain the recently commissioned combined cycle gas turbine (CCGT) power plant in Punta del Tigre, Uruguay. Under the O&M contract, Kepco said it expects to earn 17 billion Won in sales every year, for a maximum eight years.

Siemens to create thermal twin for Bajaj Energy plant

Dec 4 – Lalitpur Power Generation Company Ltd (LPGCL), part of Bajaj Group, has contracted Siemens to create a complete twin for its fossil power plant in Uttar Pradesh, India. The thermal twin, powered by thermodynamic analysis and machine learning, allows power plant operators to diagnose performance gaps for every asset in the cycle in real time.

Talks between Gazprom and Naftogaz continue

Dec 3 – Russia’s Gazprom and Naftogaz Ukrainy have continued difficult negotiations about an extension of Russian gas supplies and transit after the current contract expires on December 31, 2019. The two state-run companies are embroiled in a legal dispute that still needs resolving, however, they confirmed talks are underway and focus on the technical aspects of transiting Russian gas to Europe from 2020 onwards.

Asia seen add 400 GW by 2030

Dec 2 – Asian nations are expected to add more than 400 gigawatts (GW) of electrical capacity to the grid over the next decade — equaling about twice the installed capacity of Germany. Much of the new capacity will be renewables, backed up by some 140 GW of dependable gas-fired capacity, according to GE Energy findings. Hence, the U.S. turbine manufacturer decided to invest up to US$60 million to convert its Singapore repair center into a HA engineering and development center.

Total starts up hybrid plant with energy storage

Nov 29 – Total Quadran has started up the largest hybrid power plant combined with energy storage to harness the ample solar power potential of New Caledonia, a French overseas territory. With an installed capacity of 16 MW-peak, the plant also features a 10 MW lithium-ion energy storage system. Combining of hybrid solar PV units and possibly gas-powered generator sets with energy storage balance out supply swings and enhances the reliability of the electricity grid.

Rolls-Royce, AVK partner on standby gensets

Nov 28 – AVK, Britain’s largest supplier of critical power solutions for data centres and the financial sector, has partnered with Rolls-Royce’s MTU brand for standby gensets in UK and Ireland. The deal covers MTU Series 2000 and 4000 diesel systems in a range from 825 to 4,000 kVA. In the past 30 years, AVK has developed into the largest solutions provider in the UK’s critical power market and has to date supplied gensets equipped with MTU engines with a total capacity of more than 3.5 GW.

Golar suffers setback amid restructuring

Nov 27 – Golar LNG, owner of a fleet of 27 vessels, has seen operating revenues plunge 20% to $98.67 million, in the first nine month of this year, while net losses amounted to over $236 million. Bermuda-registered Golar in May 2019 announced plans to spin off its LNG carrier fleet with the aim of becoming a gas project developer. It recently won a contract for the Barcarena power project (605 MW) in northeastern Brazil.

Burckhardt buys remaining share of Arkos

Nov 26 – Burckhardt Compression’s subsidiary in North America has purchased the remaining 60% of Arkos Group. The US has the world’s largest installed base of reciprocating compressors, and the integration of Burckhardt and Arkos Field Services, will turn the company into the only independent one-stop provider for equipment and service in the upstream, midstream and downstream business.

Gazprom’s exports to Austria reach fresh record

Nov 25 – Supplies of Russian gas to Austria and transits to Western Europe have already exceeded record levels set last year. From January 1 through November 21, 2019, Gazprom delivered over 12.7 billion cubic meters of natural gas – 33.5% more than in the same period in 2018. Austria’s OMV imports Russian gas under a long-term contract that was recently extended until 2040.

OGUK responds to Labour Party Manifesto

Nov 21 – The UK North Sea industry association Oil & Gas UK (OGUK) has warned of an investment hiatus in reaction to Labour’s pledge to introduce a windfall tax on oil and gas companies, if it wins the General Election on December 12. Responding to this, OGUK said any increase in tax rates would drive investors away, damage the competitiveness of the UK’s offshore oil and gas industry, and could potentially increase the country’s reliance on imports. OGUK underlined it has put in place a ‘Roadmap 2035 a blueprint for net zero emission’ and is investing in technology to achieve this goal.

France, Germany and UK led on demand-side flexibility

Nov 21 – France, Germany and the UK are leading on demand-side flexibility (DSF) and grid-integration of decentralized energy sources while Sweden, Spain and Portugal are lagging behind the rest of Europe, the consultancy Delta-EE and SmartEN finds. Areas covered by their new DSF monitoring tool include availability and accessibility of demand-side response, and its monetization across the gas value chain.

AI predicts peak in power use

Nov 20 – ABB and Verdigris Technologies have developed machine-learning algorithms to predict unplanned peaks in electricity consumption and help avoid them. The Energy Forecasting app will enable users to reduce their electricity bills by reducing peak demand charges.

India’s first UHVDC link commissioned

Nov 19 – GE Grid Solutions has commissioned Pole-3 - the ultra high-voltage direct current (UHVDC) transmission line in India, capable to transmit 4,500 MW of electricity. Once completed the Champa-Kurukshetra UHVDC project will be expanded to transmit 6,000 MW of electricity at 800 kV, serving customers in the areas of Punjab, Haryana, Delhi, Uttar Pradesh.