HONG KONG (MarketWatch) -- Siemens AG (SI92.13, -0.42, -0.45%) is in preliminary discussions with provincial governments in China to provide energy-efficient power grids, the South China Morning Post reported Monday, citing Richard Hausmann, Siemens' northeast Asia president and chief executive of China operations.
Siemens and the Shanghai government are in talks to use the technology on the city's Chongming island, Hausmann said, adding that talks with mainland authorities and business partners were still at an early stage.
The German company's new technology could lead to multibillion-dollar orders from China as the country seeks to reduce its carbon emissions, the report said.
Nov. 9 (Bloomberg) -- Iraq expects three of its oilfields will together pump more than 6 million barrels a day once foreign companies complete development work they were awarded this year.
BP Plc and other international oil companies have signed contracts for the Rumaila, Zubair and West Qurna fields, which were originally offered in Iraq’s first post-war licensing round in June.
“Total production from the three fields exceeds 6 million barrels a day and this is higher than what we were hoping for from all the eight fields in the first bid round,” Oil Minister Hussain al-Shahristani said in an interview recorded in Baghdad yesterday. Today’s oil prices near $80 a barrel are not hindering the global economy, he said.
Iraq pumped 2.45 million barrels a day last month, according to Bloomberg estimates, making it OPEC’s third-largest producer after Saudi Arabia and Iran. The country hasn’t exceeded 3 million barrels a day since 2000, when the lateSaddam Hussein was still president.
Sitting atop the world’s third-largest oil reserves, Iraq is allocating licenses to international companies as it seeks to boost output from its oil and gas industry after years of neglect. It awarded its largest field, Rumaila, to London-based BP and China National Petroleum Corp. in the summer.
Rumaila was the only oilfield contract to be awarded by Iraq out of eight projects in the June bidding round, the first since the U.S.-led invasion in 2003. Most bids failed because companies wanted higher remuneration fees than the ministry was willing to pay. Iraq retains ownership of oil in the fields.
Lesson Learned
The country’s second bidding round next month, with a new set of fields, will result in a “better match,” al-Shahristani said. “I think both sides have learned their lessons” from the first round, he said.
BP’s plan to almost triple Rumaila’s output to 2.85 million barrels a day would make it the world’s second-largest producing oilfield, the company said in a Nov. 3 statement.
The West Qurna field, also on the first round list, was subsequently awarded last week to Exxon Mobil Corp. and Royal Dutch Shell Plc after the companies held direct talks with the ministry. Similarly, Zubair was awarded to Italy’s Eni SpA. Contracts for those two fields will be discussed at Iraq’s next cabinet meeting, al-Shahristani said.
Oil has gained 74 percent this year and last month traded above $80 a barrel for the first time in a year.
Not Hurting Economy
“I do not think the current price is hindering the recovery of the world economy,” the minister said. “We have been witnessing a fairly satisfactory recovery in a number of regions of the world at current price levels,” he said.
Iraq seeks to boost its oil production capacity eventually to between 10 million and 12 million barrels a day through the second bidding round, al-Shahristani said last month. Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, currently pumps just over 8 million barrels a day.
Iraq is the only OPEC member not bound by the group’s quotas system and expects this exemption to last for many years.
The country’s current output “is way below what is expected of a country with the reserves of Iraq and the needs of Iraq,” the minister said. “Of course when we reach that stage in six years time then the issue will be taken up and we discuss with our partners in OPEC.”
Asked about oil companies operating in the northern part of the country controlled by the semi-autonomous Kurdistan Regional Government, al-Shahristani said the Baghdad-based oil ministry hasn’t received, or been consulted on, any oil contracts negotiated by the KRG.
More Natural Gas
Expansion plans in the oil industry mean Iraq can probably boost its production of natural gas, which is also found in oil wells.
Iraq is one of several potential suppliers for the planned Nabucco gas pipeline, which aims to shift Caspian and Middle East natural gas to European buyers, sidestepping Russia.
Asked when his country might commit to supply gas to Nabucco, al-Shahristani said: “We do not expect in the near future or the coming few years to be able to provide dry gas or LNG to the international market before meeting our domestic demand.”
Rising gas supply will be used at first for local electricity production and may later be exported. Liquefied natural gas, or LNG, is gas that’s cooled to a liquid form for easier transportation by ship.
Shell, based in The Hague, is a possible partner to help Iraq capture flared natural gas from Rumaila, Zubair and West Qurna and transform part of that into LNG for export, the minister said.
“Shell and other companies are under discussion with us but we have not reached any conclusion,” he said.
An international arbitration tribunal has been formed to settle a longstanding dispute over a gas deal between the United Arab Emirates and Iran, a spokesman from the UAE-based Crescent Petroleum told Reuters on Sunday.
'The three-person arbitration tribunal, for the arbitration between Crescent Petroleum and the National Iranian Oil Company (NIOC), has now been officially formed, as per the contract procedures,' said a Crescent Petroleum spokesman.
The National Iranian Oil Company (NIOC) and Crescent signed the 25-year gas contract in 2001, with a price linked to oil.
But as oil rallied in the following years, some officials and politicians in Iran called for a revision to the price formula and blamed the price dispute for delivery delays.
Crescent said in July that it was seeking international arbitration for the failure of NIOC to fulfil the contract.
NIOC has yet to complete testing facilities at its offshore Salman field which should have pumped the Islamic Republic's first gas exports to the UAE in December 2005.
'Crescent Petroleum started arbitration in July 2009, seeking specific performance in relation to NIOC's almost 4-year delay in providing gas under the 25-year gas supply contract.'
Last week Iranian parliamentarians sought clarifications from NIOC on the contract with Crescent, the Iranian student news agency ISNA reported.
Iran's former oil minister Gholamhossein Nozari had threatened to take the gas back to the mainland if a new agreement could not be reached on price. Crescent says the contract with its agreed price is internationally binding. -Reuters
SHARM EL-SHEIKH, Egypt — Chinese Prime Minister Wen Jiabao pledged to give African countries 10 billion dollars in concessional loans as a two-day Forum on China-Africa Cooperation opened in Egypt on Sunday.
"We will help Africa build up its financing capabilities... we will provide 10 billion US dollars for Africa in concessional loans," Wen said at the start of the forum in the Red Sea resort of Sharm el-Sheikh.
He also pledged to cancel debts of African countries to increase his country's role in the continent.
The Asian giant pledged 5.0 billion dollars in assistance at the last Forum on China-Africa Cooperation summit, held in Beijing in 2006, and has signed agreements to relieve or cancel the debt of 31 African countries.
"China is ready to deepen practical cooperation in Africa," Wen said, adding that China was prepared to take on a role in "the settlement of issues of peace and security."
He also said China would set up environmental programmes in the continent, including 100 clean energy projects.
Chinese firms have been pouring investments into oil and other raw materials in Africa to fuel the Asian country's booming economy.
Over the past five years, Chinese direct investment in Africa has soared, from 491 million dollars in 2003 to 7.8 billion dollars in 2008, according to official Chinese figures.
Total trade between China and Africa surpassed 100 billion dollars in 2008, a tenfold increase in eight years.
Booming trade ties have been accompanied by China also building schools, hospitals and clinics to fight malaria and offering scholarships for Africans to study in China.
But Beijing's growing economic role in the poverty-ridden continent has also been met with some scepticism and criticism.
China has been accused of throwing a lifeline to pariah regimes accused of massive human rights violations, such as the government of Sudan's President Omar al-Beshir, who is wanted for war crimes by the International Criminal Court.
Chinese officials say they follow a policy of non-interference in the domestic affairs of African countries, and deny that Chinese investments and loans come with strings attached.
"Africa is fully capable of solving its own problems, in an African way," Wen said in his speech.
"China has never attached any political strings... to assistance to Africa," he said, adding that trade is based on "win-win programmes... and transparency."
The investment for Dung Quat refinery in Quang Ngai Province needs to be raised to US$3.05 billion from the $2.5 approved in 2005
The government has asked the National Assembly to approve more funds for three major infrastructure projects, all of which are behind schedule.
Vu Huy Hoang, Minister of Industry and Trade, said Friday that due to additional work and higher construction costs, the investment for Dung Quat refinery in the central province of Quang Ngai needs to be raised to US$3.05 billion from the $2.5 approved in 2005.
When plans were first drawn up for Vietnam’s first oil refinery in the 1990s, the estimated cost was $1.5 billion.
The refinery, slated for completion at the end of this year, will be two months behind its schedule. A cracker at Dung Quat, which makes gasoline and other products, broke down on August 18, leading to a six-week shutdown.
The refinery, which started commercial operations in February, has a projected capacity of 6.5 million tons of crude a year, but the National Assembly said the productivity should be increased to ensure energy security.
The cost estimates for another major project, the Son La Hydropower Plant, have also been increased by 39 percent from the original $2.6 billion. The government said construction costs have surged at a faster pace than capital disbursement, driving up the estimate.
The government in April admitted the process of compensating residents displaced by the power project was slow. Construction at the plant started in 2005 and was set for completion in 2012. The hydropower plant in the northwest will have the largest reservoir in the country.
The government also said on Friday that the transnational Ho Chi Minh highway project needs another VND3.1 trillion ($176 million) and it will not be completed in 2010 as planned.
More than VND41 trillion ($2.3 billion) has been approved for the project which will link the two farthest provinces in Vietnam, Cao Bang in the north and Ca Mau in the south.
ADB report says the Kingdom will develop a huge appetite for energy as more homes are connected to national grid
Photo by: Tracey Shelton
Workers install new electricity lines on a street in downtown Phnom Penh. Just 20 percent of the Kingdom’s homes are connected to an electricity supply, the ADB said, most of which are in the capital.
Electricity is ... a pleasure if you have it, so development should be promoted.
ENERGY demand in Cambodia will grow 3.7 percent per year from 2005 to 2030, outpacing the regional average of 2.4 percent, according to a new report by the Asian Development Bank (ADB) and the Asia-Pacific Economic Cooperation (APEC).
The report, Energy Outlook for Asia and the Pacific, which was released Tuesday at the Pacific Energy Summit in Tokyo, projects that energy demand in Cambodia will rise from 4.8 million tonnes of oil equivalent in 2005 to 12 million tonnes in 2030 as manufacturing industries are established and more households are connected to the electricity grid.
It did not say how much Cambodia would need to invest to meet energy needs, but placed the price tag for the Asia and Pacific region at between US$7 trillion and $9.7 trillion.
The report’s author could not be reached for comment Thursday, but an ADB spokesperson said a detailed breakdown of investment requirements was likely to be released in December.
Although nearly 80 percent of the region’s energy needs in 2030 would still have to be met by fossil fuels – coal, oil and natural gas – the report said that more than 60 percent of the total investment in the region’s energy sector would need to be in electricity generation, transmission and distribution.
In Cambodia just 20 percent of households are connected to the national grid, which is fragmented into isolated power systems centred on provincial towns and cities. Around 75 percent of the country’s energy needs are currently met by the burning of biomass.
Rogier Van Mansvelt, a rural energy expert and consultant to the Ministry of Industry, Mines and Energy, said that electrification is desirable but, that immediate energy needs also need to be considered.
“Electricity is really a pleasure if you have it, so development should be promoted. But it’s good to discuss also at a regional level what is important for families, what do they like, and also the price of electricity, which is much more expensive outside of the cities,” he said.
Connecting the entire country to the grid would be expensive, said Van Mansvelt, especially in rural areas where greater distances between dwellings exponentially raised the cost. Government attempts to promote private investment in the sector could also result in higher prices for electricity, as investors need to make a return on their money, he added.
The ADB report said renewable energy technologies such as solar heating, biogas for cooking, and solar and wind power generation were potential options for extending energy to rural areas.
It also said Cambodia was looking to better exploit indigenous energy resources, namely coal and hydroelectricity, as a way of bringing down prices and boosting industrial-sector development. With power stations in the country tending to be fuelled by imported diesel, Cambodia has the highest electricity prices in the ASEAN region, it added.
“Once the country is able to tap indigenous energy resources and develop its electricity supply infrastructure, the share of the industry sector’s contribution to GDP can be expected to increase,” the report said, adding that would further boost energy demand.
The industrial sector was projected to need 15 percent more energy every year until 2030, taking its share of consumption from just 1.2 percent percent in 2005 to 14.9 percent.
A growing share of energy demand will be met by hydroelectricity, which is expected to grow 19.1 percent per year, the report said. Coal demand will grow 11.2 percent a year over the period, while the demand for oil will slow to 4.9 percent per annum, just half of its 10.3 percent annual growth rate from 1995 to 2005.
Over the period, coal is set to replace oil as the primary source of electricity generation, supplemented by hydroelectricity as more hydroelectric dams come onstream. Electricity generation from coal is expected to increase from zero terawatt hours (TWh) in 2005 to 4.3 TWh in 2030, while generation from oil will decrease from 0.8 TWh to zero TWh. Oil currently accounts for 95 percent of electricity generation, and the remainder comes from hydroelectricity.
Cambodia could learn from developed countries to reduce pollution and greenhouse gas emissions from coal power plants, the report said.
A fire broke out on the oil rig in the Timor Sea as crews attempted to plug the oil leak [Reuters]
As specialist teams extinguished a blaze on an oil rig in the Timor Sea, the 610,000sqkm expanse of water is now, according to campaigners, home to one of the worst environmental disasters in Australian maritime history.
The West Atlas rig on the Montara oil field, located around 690km near the city of Darwin, leaked millions of litres of oil, creating a slick as wide as 15,000sqkm.
It ruptured on August 21 and PTTEP, the rig's operator, has not revealed why it occurred.
But what is now in full view is the "sea of oil" and the long-term impact scientists have compared to the Exxon Valdez disaster off the Alaskan coast in 1989, where ecological damage is still being felt 20 years later.
Environmental groups say marine animals are swimming through the slick, while PTTEP reported in a statement last week of high rates mortality among sea birds.
Marine life at risk
The environmental campaign group, World Wildlife Fund (WWF), conducted the first expedition to the area last month and Gilly Llewellyn, director of conservation, told Al Jazeera that more species were at risk.
"Hundreds, if not thousands, of dolphins, sea birds and sea snakes are being exposed to toxic oil," she said.
"The critical issue is the long-term impact of this slick on a rich, marine ecosystem, taking into consideration the magnitude and duration of the incident."
As sweet light crude seeped into the Timor Sea for over two months, it hardly registered on the Australian and international radar.
Environmentalists fear for the lives of thousands of species affected by the spill
"If the spill occurred close to Australian shores and surfers in the vicinity were somehow inconvenienced by the spill, there would be outrage," Llewellyn said.
"But since it was so far out to sea, it was more a case of 'out of sight, out of mind'."
However, four weeks into the spill, the Australian Maritime Safety Authority submitted a report to the Indonesian government, informing them that volumes of oil had entered the country's Exclusive Economic Zone.
According to Ferdi Tanoni, director of the West Timor Care Foundation, fishermen operating near the Indonesian island of Roti encountered a slick that had damaged hundreds of hectares of ready-to-harvest seaweed.
"Seaweed is one of the area's prime commodities, and it has been polluted. If the farmers fail to harvest their seaweed, they would incur losses of up to billions of rupiah [Indonesian currency]," he told Al Jazeera.
Tanoni also said at least 7,000 traditional fishermen and more than 10,000 coastal communities rely on the Timor Sea for a living.
Produce 'declining'
Tanoni said that the amount of fish caught in the area dramatically declined as the oil leak spread.
"They [the fishermen] normally catch 100 to 120 fish per week. Since the spill, they are finding it hard to catch 25," he said.
The regional impact has also prompted East Timor to demand compensation from Australia for any environmental damage caused by the oil leak.
The rig lies 250km from East Timor's coastline.
In video
Al Jazeera interviews the World Wildlife Fund on the Timor Sea oil spill
Australian officials said on Thursday that only small patches of "weathered oil" had gone into Indonesia's economic zone, and that was about 100km from Roti.
The situation took a dramatic turn for the worse last week when a portion of the rig caught on fire as crews embarked on their fifth attempt to stop the leak.
The blaze had been burning for two days and the company said that it feared a possible collapse of the rig could worsen the impact of the leak.
But just how much oil that spilled into the Timor Sea remains a source of contention.
PTTEP estimates that betwen 300 and 400 barrels of oil a day was pouring out of the well, but a survey conducted by the Australian department of resources and energy said that it could be at least 2,000 barrels.
The company also estimated the spill could have leaked 3.7 million litres of oil since August.
However, opposition groups in Australia say the actual figure is between 10 and 20 million litres.
Contested numbers
Rachel Siewert, a senator from the Australian Greens party, said officials from the resources and energy department told a senate hearing in Canberra that PTTEP failed to give them a basis for its calculations on the rate of oil flow.
"It's important to determine how much has leaked because it can give us a picture of just how serious the long-term effects will be," she told Al Jazeera.
"If the department's figures are used, up to 20 million litres of oil have spilled into the sea since August."
Sweet, light crude had been spilling from the West Atlas rig since August
PTTEP continues to defend its handling of the spill, saying it has gone "by the book".
But as oil continued to seep from the West Atlas rig, PTTEP was given access to more Australian oil fields.
Last month, the government handed PTTEP control of five new exploration licences and several oilfields, totalling an extra 1,480sqkm of water near the formerly leaking rig.
The deal has prompted concern from scientists and environmentalists, such as Euan Harvey, associate professor of marine ecology at the University of Western Australia.
''They need to demonstrate they cannot impact on others' livelihoods or on the ecosystem, and at the moment, [PTTEP] demonstrated very clearly that they can't do that,'' he said.
Access to the the Timor Sea's resources has been contested for decades. As hundreds of companies vie for a share, campaigners fear this may result in the transformation of what was once was a thriving ecosystem, to an area littered with oil wells.
NEW YORK/SAN FRANCISCO, Nov 6 (Reuters) - Halliburton Co (HAL.N) has won a broad five-year oilfield service contract from Saudi Aramco to develop wells in the world's largest oil field, South Ghawar, the company said on Friday.
Halliburton did not release the financial terms of the deal, which includes an option for a five-year extension.
Described by analysts at Simmons & Co as a big win in a "zero-sum game" with the competition, the award lifted Halliburton shares 2 percent on Friday, while industry leader Schlumberger Ltd (SLB.N) slipped 0.7 percent and Baker Hughes Inc (BHI.N) fell 2 percent.
The deal comes more than two years after Houston-based Halliburton set up another headquarters in Dubai and posted its chief executive there to sharpen its focus on the Middle East.
The company will provide Aramco with "turnkey" services, which means the wells will be built so that no additional work will be required by Aramco.
The project is expected to use three to four rigs to develop between 153 and 185 oil production, water injection and evaluation wells.
The contract is Aramco's first-ever integrated turnkey drilling award, as part of a strategy to increase collaboration with major oilfield service providers, Halliburton said.
Halliburton shares rose 2 percent to $31.15, which is within a dollar of the 12-month high they hit last month, despite a sharp drop in U.S. oil prices on Friday CLc1 that weighed on the rest of the energy sector. (Reporting by Matt Daily in New York and Braden Reddall in San Francisco; editing by Gerald E. McCormick)
(PhysOrg.com) -- A Californian company, SolarReserve, is developing a solar power system that can store seven hours' worth of solar energy by focusing mirrors onto millions of gallons of molten salt, allowing the plant to provide electricity 24 hours a day.
The company has applied to regulators in California for permission to build the 150-megawatt Rice Solar Energy Project solar farm near the abandoned town of Rice in San Bernadino County, California.
The solar energy is stored using a massive circular array of up to 17,500 mirrors (heliostats), each measuring 24 by 28 feet and attached to a 12-foot pedestal. The heliostat field encircles a concrete Solar Power Tower 538 feet high, with a 100-foot high receiver on top, which holds 4.4 million gallons of molten salt. When the heliostats focus the sunlight onto the receiver the salt is heated to over 1,000 degrees Fahrenheit.
When it is needed, such as at night or at peak times, the heat is released by passing the molten salt through a steam generator that drives a turbine to produce electricity. The cooled salt is then recirculated to the receiver for re-heating. The project brings the dream of a solar system that generates electricity in the dark to a reality, and avoids the need to use fossil fuel plants for backup electricity generation.
The salt used is a mixture of sodium and potassium nitrate (the same as that used in fertilizers), which is cheap, reliable, and environmentally friendly. It will be mixed on site with no additives. Apart from a few unique components such as the high heat flux hardware in the tower, the system uses existing technologies such as turbines and steam generators. This means SolarReserve can produce electricity at prices equivalent to or below fossil fuel burning plants.
The system was proven over a four-year period in the 1990s at the 10-megawatt Solar Two demonstration project near Barstow in California. The solar salt technology was originally developed by Rocketdyne, a subsidiary of United Technologies, and many of SolarReserve's scientists are former employees of Rocketdyne. United Technologies has licensed the system to SolarReserve and guarantees its performance.
Chief Executive at SolarReserve, Kevin Smith, said other solar systems also use salt as storage, but they use synthetic oil in the steam generation. Using salt for both means the system is more efficient, since it can produce steam at higher temperatures and can harvest three times as much energy for the same amount of salt.
The Rice Solar Energy Project solar farm will be constructed on now privately-owned land that used to belong to a World War II Army air base to the east of Palm Springs. The system will be air cooled, thus avoiding criticisms about water use, but its height, at 653 feet (with a maintenance crane on top), could spark other criticisms, as did a previously proposed SolarReserve project in Nevada.
SolarReserve expects the solar farm to go online late in 2013, and is in negotiations with utility companies in California to buy the generated electricity.
The hunt for oil and gas resources is taking the exploration and production industry to all parts of the globe, as higher-risk exploration is needed to satisfy world demand for these resources. This need for newly discovered resources may become acute as the emerging economies industrialize and bring higher living standards to their citizens.
Exploration In Vietnam Vietnam currently only has 4.7 billion barrels of proved oil reserves, and it had 19.7 trillion cubic feet of gas at the end of 2008. Production is also fairly low at 317,000 barrels of oil per day. This is sure to move higher fairly quickly due to the pace of exploration in Vietnam.
Since this type of exploration is riskier and expensive, the majors are active here. ConocoPhillips (NYSE: COP) has interests in 2.7 million acres in six blocks offshore. The company currently has only 24,000 barrels of oil equivalent in production, but it is an important future area.
The infrastructure is mostly in place for future expansion, as its exploration blocks are located near the Nam Con Son Pipeline, which runs 244 miles from offshore into Southern Vietnam. Conoco Phillips and BP (NYSE: BP) jointly own just under 50% of the pipeline, with PetroVietnam, the Vietnamese national oil company, owning the balance.
Other Southeast Asian Countries Chevron (NYSE: CVX) is another major active in Southeast Asia, but mostly in Thailand, Cambodia and next door in China. The company plans to ramp up its exploration in all these areas in future years.
While most independent exploration and production companies have focused on domestic shale plays, Plains Exploration & Production (NYSE: PXP) is exploring offshore Vietnam. The Purple Tiger exploration prospect, located on Block 124, started drilling in the third quarter of 2009. Plains Exploration & Production operates the well and has a 100% working interest. This is not a major area for Plains Exploration & Production as only 3% of its capital budget in 2009 was allocated here.
Talisman Energy (NYSE: TLM) currently has 21% of its production from Southeast Asia, including Vietnam. The company believes both the operating and the finding and development costs to be lower than average in this region. Talisman Energy is seeing production from an existing field at Song Doc that it helped develop, and it has several prospective areas to explore.
How Much Is Enough? Vietnam is one of the frontier areas where the industry is exploring for future oil and gas resources, as it desperately tries to keep up with future demand. No one is certain if this will be enough. (Learn about factors that affect oil prices in our article, What Determines Oil Prices?)
The Oil and Gas Group of Vietnam (PetroVietnam) plans to start exploiting oil and gas from two new sites by the end of this year to help ensure the national energy security.
According to a recent announcement from the group, it will start operating the Nam Rong-Doi Moi mine, which is some 135 kilometres off the southern seaport of Vung Tau, and the D30 mine in Malaysia.
PetroVietnam’s output from 11 domestic and 2 overseas oil and gas wells remained stable at 14 million tonnes of crude oil in the last ten months, up 14.1 percent from the same period last year. Together with crude oil, gas exploitation reached 600 million cu.m in October, bringing the total output of gas over the last ten months to 6.3 billion cu.m, up 5.5 percent.
However, the export value of crude oil fell sharply despite an increase of eight percent in the volume because oil prices have slumped by two thirds over the last ten months to only US$60 per barrel.
According to PetroVietnam, the export revenue from crude oil is projected to reach US$7.2 billion, a 35 percent decrease from 2008.
Recorded 3Q09 earnings of Bt2.3bn, a drop of 5% qoq
The company announced a 3Q09 net profit of Bt2,299mn (EPS Bt0.12), a decrease of 5% qoq and improved a lot from the loss of Bt4,430mn in the same quarter of last year. In petroleum, the company booked a net profit of Bt47mn down from the high Bt642mn last quarter due to a lower inventory gain and a narrower gross refining margin (GRM), however improved from the huge loss of Bt4,312mn in 3Q08 (mostly from an inventory loss). The sales volume was also down 5% yoy to 152,146 barrels/day due to a slowdown in refined oil demand. In petrochemicals, the company reported a net profit of Bt1,989mn, up 6.5% qoq and a jump from the profit of Bt400mn in the same period of last year. This was due to a wider margin spread of downstream products. In 3Q09, the company booked extra items from a forex gain on debentures of Bt115mn and an unrealised loss on forex, along with an interest rate swap of Bt23mn. If excluding the extra items, the company reported a normalised profit of Bt2,212mn (norm EPS Bt0.11), down 9% qoq.
Lower GRM and spread will narrow 4Q09 earnings
We expect the 4Q09 earnings to slow from the previous quarter, but to improve over the large loss of Bt20,562mn in the same quarter of last year when the company suffered a huge inventory loss. The key earnings pressure was a lower GRM, currently down to $1.2/barrel compared to a 3Q09 average of $3.14/barrel. Based on a Hydroskimming refinery, we believe the company will book a loss from operations from this currently low GRM. Also, the petrochemical margin spread has fallen from 3Q09 following new supply coming into the market. This will pressure the 4Q09 net profit in our view. With the 9M09 net profit accounting for 99% of our full year earnings forecast, we will likely upgrade our 2009 earnings projection after an analyst's meeting with the company.
Upgrade rating to HOLD with a target price of Bt3.80
With the 9M09 net profit better than our expectation and a pending upcoming upgrade to our full year earnings forecast, we are upgrading our recommendation from Fully Valued to HOLD with a target price of Bt3.80 based on DCF.
We expect the company to report a 3Q09 net profit of Bt1,972mn (EPS Bt1.76), down 27% qoq from lower inventory and hedging gains, but an improvement from a loss of Bt252mn in the same period of last year. We estimate the company to achieve a base gross refining margin (GRM) of $3.1/barrel, down from $4.26/barrel in 2Q09. However, we forecast the company will still book a hedging gain of $4.6/barrel or Bt1,238mn to help offset earnings this quarter. In 3Q09, we expect the company to book a surprising inventory gain of $4.4/barrel compared to other refineries, with no inventory gains. This will be due to the company storing more low priced crude oil than normal since May this year as they wanted to test run the product quality improvement (PQI) project, but the project was delayed and resulted in high crude inventory at low prices. The total GRM will be $12.1/barrel in 3Q09, down from $15.3/barrel in 2Q09. We also expect the utilisation rate to slow from 70% in 2Q09 to 68% (81,700barrels/day) following the slowdown in oil demand.
PQI project will operated in mid September
The PQI project is currently in test runs with an expected transfer from the EPC contractor this month. We forecast the company 4Q09 earnings outlook will weaken from 3Q09 based on a lower GRM and utilisation rate. The company plans to run the plant at 70,000-75,000barrels/day (utilisation 58-63%) due to a maintenance shutdown of 7-10 days and the ongoing slowdown in domestic refined oil demand. However, the recent rise in crude oil prices is expected to boost the inventory gain this quarter. We also forecast the company to book a hedging gain of around Bt1bn in 4Q09, which will be the last quarter for huge hedging gains.
Revised target to Bt18 and maintained Speculative Buy rating
We expect the company to pay a 2H09 dividend of at least Bt0.50 after an interim dividend of Bt1 for 1H09 representing an attractive yield of 10.9%. However, the 2010 earnings are expected to slow from this year due to the lack of any huge hedging gains. As a result, we have revised our fair value estimate to be more conservative at Bt18 based on a target PER of 8x (down from 9x). The current share price still looks inexpensive trading on a 2010 PER of 6.1x and offering an upside of 31% to our new fair value estimate. We are maintaining our Speculative Buyrecommendation on BCP.
3Q09 net profit Bt1,978mn, down 68% qoq, but 3% above
The company reported a 3Q09 net profit of Bt1,978mn (EPS Bt0.97), down 68% qoq and improved over the huge loss of Bt5,802mn or Bt2.84/share (due to inventory loss of $10.3/barrel) in the same period of last year. The lower gross refining margin (GRM), an inventory gain and a forex gain caused a drop in this quarter's earnings compared to last quarter. The norm. GRM was reported at $0.7/barrel, down from $1.2/barrel in 2Q09, while the gross integrated margin (GIM) was $4.1/barrel improved from a negative $4.1/barrel in the same quarter of last year. TPX reported an improved net profit up 3% qoq to Bt1,954mn based on higher benzene spreads, which recovered from $79/tonne in 2Q09 to $160/tonne in 3Q09 despite paraxylene spreads dropping from $475/tonne in the previous quarter to $355/tonne this quarter. The company recorded a forex gain of Bt440mn, down from Bt1,297mn in 2Q09 due to narrow a stronger baht compared with last quarter.
4Q09 outlook to slow following a lower GRM and spread
The current GRM continues to weaken in 4Q09 following a slowdown in refined oil demand. The Singapore GRM in 4Q09 is to date $1.2/barrel, down from an average of $3.14/barrel in 2Q09, which we expected to not to cover the cash cost. However, the recent rise in crude oil prices to $75-80/barrel from 3Q09 end price of $66/barrel, is expected to help the company to book an inventory gain this quarter to support the lower GRM. In petrochemicals, we expect the business to slow from a lower spread both in paraxylene and benzene. Paraxylene margins dropped 41% qoq to $210/tonne, while benzene declined 31% qoq to $110/tonne based on new supply coming into the market. We roughly estimate that the company 4Q09 earnings will weaken 3Q09, but be absolutely better than the huge loss in 4Q08.
Maintain Buy on weakness with a target price of Bt48
We expect the company to pay a 2H09 dividend of Bt1.95, after an interim dividend of Bt1.05, for 1H09 representing a full year yield of 7.4%. With some short-term negative factors, such as a lower GRM, a weaker spread, the slowdown in 4Q09 earnings outlook and the delay in the PTT group merger, we are maintaining our Buy on Weaknessrecommendation on TOP with a target price of Bt48 (based on a target PER of 8x).
The latest Turkey Oil & Gas Report from the forecasts that the country will account for 5.98% of Middle Eastern (ME) regional oil demand by 2013, while providing an insignificant contribution to supply. Regional oil use of 8.24mn barrels per day (b/d) in 2001 rose to 11.25mn b/d in 2008. It should average 11.30mn b/d in 2009 and then rise to around 12.17mn b/d by 2013. Regional oil production was 22.87mn b/d in 2001, and in 2008 averaged 26.29mn b/d. It is set to rise to 28.01mn b/d by 2013. Oil exports are growing steadily, because demand growth is lagging the pace of supply expansion. In 2001, the region was exporting an average 14.63mn b/d. This total had risen to 15.04mn b/d in 2008 and is forecast to reach 15.84mn b/d by 2013. Iraq has the greatest production growth potential, followed by Qatar.
In terms of natural gas, the region in 2008 consumed 391.5bn cubic metres (bcm), with demand of 512.8bcm targeted for 2013, representing 31.0% growth. Production of 390.1bcm in 2008 should reach 611.6bcm in 2013 (+56.7%), which implies net exports rising to 99bcm by the end of the period.
Turkey’s share of gas consumption in 2008 was 9.19%, while it makes no meaningful contribution to production. By 2013, its share of demand is forecast to be 8.91%.
For 2009 as a whole, we are now assuming an average OPEC basket price of US$55.00 per barrel (bbl), a 41.5% decline year-on-year (y-o-y). This represents an upgrade from the US$52 forecast we have stuck with during the past three quarters. Our OPEC basket assumption delivers likely Brent, WTI, Urals and Dubai prices of US$56.30, US$57.50, US$55.60 and US$55.60/bbl respectively. For 2010, we expect to see a recovery to US$60.00/bbl for the OPEC price (up from our previous forecast of US$58), gaining further ground to US$65.00 in 2011 and to US$70.00/bbl in 2012. Our post-2010 forecasts are unchanged and we are continuing to use a long-term price assumption of US$70.00 for 2013-2018.
In 2009, the report is now assuming a global average gasoline price of US$62.12/bbl, with the fuel having peaked in June. The overall y-o-y fall in 2009 gasoline prices is put at 40.0%. The gasoil forecast is for an average price of US$68.62/bbl, assuming a monthly high of US$92.49/bbl in December. The fullyear outturn represents a 43.4% fall from the 2008 level. The annual jet price level for 2009 is forecast to be US$65.17/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put at US$49.06/bbl, down 43.9% from the previous year’s level.
Turkish real GDP is now forecast to shrink by 6.2% in 2009, following growth of 1.1% in 2008.
We are now assuming 1.7% growth in 2010, 4.2% in 2011, 4.5% in 2012, followed by 5.0% in 2013. We expect oil demand to rise from 690,000b/d in 2008 to 728,000b/d in 2013. State upstream company TPAO and some international oil companies (IOCs) are attempting to raise domestic oil output, but our estimates assume 37,000b/d of 2009 oil and liquids production sinking to 27,000b/d by the end of the forecast period. Gas production will remain insignificant, but consumption is expected to rise from 36.0bcm to 45.7bcm by the end of the forecast period, requiring imports of 44.5bcm.
Between 2008 and 2018, we are forecasting an increase in Turkish oil consumption of 16.09%, with demand rising steadily from 690,000b/d to 801,000b/d by the end of the 10-year forecast period. Refining capacity between 2008 and 2018 is set to increase by 122.4%, reaching 1.36mn b/d by 2018. Gas consumption is expected to climb from 36bcm 51bcm, depending largely on imports. LNG imports are expected to more than double from 5.3bcm to 12.0bcm during the forecast period. Details of BMI’s 10- year forecasts can be found in the appendix to this report.
Turkey is ranked fourth in the updated Upstream Business Environment rating, in spite of the virtually non-existent oil and gas resource base. It stands just one point clear of Iran, and could be faced with a challenge over the medium term. Turkey’s score reflects the lower level of state asset ownership and the more advanced stage of privatisation than is the norm for the region, plus an established licensing framework and largely encouraging country risk factors. The country leads the league table in the updated Downstream Business Environment rating, with several high scores but some threat from the UAE to its position over the medium- to long-term. It is ranked four points ahead of the Emirates, thanks largely to high scores for oil demand, retail site intensity, non-state competition, deregulation, and nominal GDP.
Russian troops crossing the Russian-Georgian border. (Photo from Russiablog)
From Swiss Info:
OSCOW (Reuters) - Russian military intelligence believes Georgia might again attack South Ossetia, the pro-Moscow region over which the two countries fought a war last year, a powerful spy chief said Thursday.
Alexander Shlyakhturov, who in April took over command of the military's Main Intelligence Directorate (GRU), said the situation was strained and accused NATO countries of continuing to supply arms to Georgia.
"The situation with Georgia remains tense because the current Georgian authorities do not just refuse to recognise the sovereignty of Abkhazia and South Ossetia, but are trying in every way to return these countries...to their jurisdiction," he said in a rare interview with state news agency ITAR-TASS
The partially collapsed Montara well head platform and the West Atlas mobile offshore drilling unit smoldering in the Timor Sea. (Reuters Photo)
Indonesia May Seek Redress for Timor Oil Spill
Indonesia may seek compensation from a company operating an oil rig that has spewed nearly 30,000 barrels of crude oil into the Timor Sea, the Ministry of Foreign Affairs said on Friday.
Ministry spokesman Teuku Faizasyah said the government may seek damages from PTTEP Australasia, a unit of Thailand’s state-owned PTT Exploration & Production, for the oil spill, which is believed to have reached Indonesian waters. “We will have a meeting with the Transportation Ministry next Tuesday to hear their confirmation of the spill,” Faizasyah said.
He said the government could seek compensation if it is determined the spill had reached domestic waters.
As many as 28,000 barrels of oil have leaked into the Timor Sea since Aug. 21. On Sunday, the rig caught fire while workers were pouring mud into a hole that had been leaking oil.
Only by Wednesday had the fire been extinguished and the leak plugged.
“We have received complaints from local government and fishermen in the area,” Faizasyah said, referring to East Nusa Tenggara, where hundreds of dead fish have reportedly been seen and residents have complained of skin problems and acute diarrhea after eating contaminated fish.
Faizasyah said PTTEP Australasia must be held accountable if there was evidence of damage to Indonesia’s environment. The form of the compensation would be considered after the damage was confirmed, he said.
However, the Australian Embassy in Indonesia has said it was “highly unlikely that any oil would have come close to Indonesian coastal waters.”
World Wildlife Fund Australia’s Ghislaine Llewellyn has said the spill of oil and condensate, combined with the dispersant used to control the slick, had created a toxic cocktail that would have a long-term impact on the area’s pristine tropical marine life.
Bobby Mamahit, secretary general of the Transportation Ministry’s maritime department, declined to comment. “All I can say is that we are in the middle [of investigating the spill], and we will leave the rest to the Foreign Affairs Ministry,” he said.
The oil slick, which originated about 240 kilometers off Australia’s northwest coast, now stretches across thousands of square kilometers.
“This is a major spill,” Llewellyn has been reported as saying. “This is up in the top three in Australian history.”
BANGKOK — Thailand said Friday it would tear up an oil and gas exploration deal with Cambodia, stoking a row over Phnom Penh's naming of fugitive former Thai premier Thaksin Shinawatra as an economics adviser.
The government in Bangkok also warned that it could seal the border between the two countries, one day after the neighbours both recalled their respective ambassadors due to the dispute over Thaksin's appointment.
Thai Foreign Minister Kasit Piromya said Bangkok had decided to cancel a 2001 agreement to jointly develop a disputed area in the Gulf of Thailand, which was signed during Thaksin's time in power.
Twice-elected Thaksin was ousted in a coup in 2006 and had close relations with Cambodian Prime Minister Hun Sen during his six years in power. Thaksin is now living abroad to avoid a two-year jail term for corruption.
"The Foreign Ministry has decided to terminate the memorandum of understanding between Thailand and Cambodia to develop the overlapping area which was signed by the Thaksin government," Kasit said.
Kasit said the oil and gas exploration deal for a 26,000-square-kilometre (10,038-square-mile) area had made no progress in the last eight years and he would propose to the cabinet on Tuesday that it should be scrapped.
"We think that this overlapping issue can be settled in another framework of law," he told reporters by telephone from a regional summit in Tokyo starting Friday which was attended by the Thai and Cambodian prime ministers.
Cambodia said that, under the agreement, neither country could renege on its pledges to develop the area.
"I don't see any articles or any sentences that allow either party to terminate the memorandum of understanding," Var Kimhong, the Cambodian government's top border negotiator, told AFP.
"Both sides have to implement it until we find a solution to the overlapping claims area," he said.
Thailand said Thursday that it was halting all ongoing talks with Cambodia, including long-stalled discussions over how to divide up offshore energy resources along their disputed sea border in the Gulf of Thailand.
Thai Deputy Prime Minister Suthep Thaugsuban urged Cambodia earlier Friday to reverse the appointment of Thaksin, which was announced on Wednesday and first floated by Hun Sen at an Asian summit in late October.
"If Cambodia still adopts a hard line and uncompromising attitude, then we must continue to downgrade relations and maybe seal off all border checkpoints," Suthep said.
There were no reports of any incidents along the border so far and trading was going on as normal, Suthep said.
Thailand and Cambodia have fought a series of deadly skirmishes since July 2008 over disputed land around the ancient Preah Vihear temple on the border.
Cambodian cabinet spokesman Phay Siphan said that sealing checkpoints "is not a good thing to do. It means they're isolated, they don't solve the problem."
Thailand meanwhile boosted security around the Cambodian embassy in Bangkok, where anti-Thaksin protesters have staged rallies in recent weeks.
Relations between the two countries nearly reached breaking point in 2003 when a mob burned down Thailand's embassy in Phnom Penh and sacked several Thai-owned businesses.
Suthep meanwhile said there were no plans for Thai Prime Minister Abhisit Vejjajiva to meet his Cambodian counterpart at the summit of Mekong River basin nations in Tokyo.
Thaksin remains a hugely influential figure in Thailand, which has been rocked by years of protests by his red-clad supporters and yellow-clad opponents, including rallies that shut down Bangkok's airports last year.
BANGKOK, Nov 6 (Bernama) -- Thailand has cancelled an eight-year-old memorandum of understanding (MoU) with Cambodia on the oil and gas-rich overlapping area in the Gulf of Thailand as it continues its feud with its neighbour.
Foreign Minister Kasit Piromya said the MoU was signed in June, 2001, when Thaksin Shinawatra was the Prime Minister.
"The MoU was pushed by Thaksin and he knew the details of the negotiations. We cannot negotiate anymore based on this MoU as it will affect our economy and security," said Kasit, who is currently attending the two-day Mekong sub-region summit in Japan, in a telephone interview with the media here.
Kasit said as there was not much progress made since the MoU was signed, the government felt that it should be scrapped so that it can find new ways to start afresh in dealing with the Cambodian side.
Tension between the two neighbours rose again Thursday when Bangkok recalled its ambassador to Phnom Penh as a form of retaliation over Cambodia's decision to appoint the fugitive Thaksin as its economic advisor.
Cambodia immediately followed suit by pulling back its ambassador to Thailand.
Under the agreement signed in 2001, Thailand and Cambodia, which share 26,000 square kilometres of overlapping area, agreed to delimit and develop as a joint development area for oil and gas exploration.
Cambodian Prime Minister Hun Sen caused stir during the recent 15th Asean Summit in Hua Hin, Thailand, when he first announced his intention to appoint Thaksin and to allow him to stay in Cammbodia.
Both countries have been on loggerhead since last year when Thailand protested Cambodia's move to list the ancient Preah Vihear temple as a World Heritage site. Soldiers from sides had clashed on several occasions.
Both Thai Prime Minister Abhisit vejjajiva and Hun Sen are expected to hold talks over the latest dispute in Tokyo on the sidelines of the Mekong Summit.
Kasit's secretary, Chawanon Intarakomalyasut, told reporters here that so far there was no decision to close borders between the two countries, adding that it was up to the security forces to monitor the situation and take necessary measures.
Group wins bid to develop west Qurna as baghdad signs up slew of big contracts Friday, November 06, 2009 Ahmed Rasheed and Muhanad Mohammed
BAGHDAD: An ExxonMobil-led consortium has beaten rival Russian, French and Chinese groups to bag initial rights to develop Iraq’s West Qurna field, the Oil Ministry said, adding momentum to Iraq’s bid to unlock its oil riches. With reserves of 8.7 billion barrels, West Qurna is among the prized Iraqi fields eyed by Western oil majors as they face flat or lower output at home and stiff competition from Chinese and Indian oil companies in bidding for oilfields elsewhere.
“The consortium led by ExxonMobil, which includes Shell, won the contract to develop West Qurna Phase One oilfield,” Oil Ministry spokesman Asim Jihad said.
The initial deal was signed in Baghdad on Thursday but needs Cabinet approval before it can be finalized.
The 20-year contract is part of a raft of deals Iraq is close to formalizing in a bid to catapult itself to the world’s third largest oil producer after decades of war and economic decline.
There is no guarantee that Iraq’s next government – to be elected in January – will honor the deals, but it injects optimism into prospects for Iraq’s battered oil sector and a second oil bid-round in December, after a lacklustre June auction.
