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Friday, 19 November 10
WE'LL THINK ABOUT COAL TOMORROW - ANALYSIS
 The future of coal generation in Russia is in question. The largest energy companies have abandoned their initial plans to switch their thermal power stations over to solid fuel. Experts think that the power-plant operators' unquenchable love for gas is not only destroying the coal industry, it is threatening the country's energy security. A correspondent for RusBusinessNews armed himself with statistics and delved into the causes and possible consequences of yet another victory of the blue flame over coal.
A COAL RENAISSANCE
Up until the 1980's, the Soviet generation actively burned coal. Then they took a so-called "gas break," and solid fuel was gradually squeezed out by gas. This "break" was supposed to last no more than 10-15 years - the amount of time energy engineers and scientists needed to develop new, more economical, and environmentally friendly ways of burning coal. But the reforms of the 1990's upset those plans and the process of returning to coal production dragged on for another decade.
The beginning of the 21st century could be called the coal renaissance era. The energy industry could barely keep up with the growing needs of Russia's reviving industrial sector. An urgent need arose to construct new facilities and rebuild older ones. Gazprom's increased exports caused a gas shortage on the domestic market, which prompted power-plant operators to resurrect the idea of returning to coal production. In addition, there was an economic incentive - in the mid-2000's, gas and coal were approximately equal in price.
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In 2006, RAO UES of Russia promised to reduce the percentage of gas in the country's fuel balance from 69% to 67% over the course of four years, and to bring it down to 60% by 2015. They planned to increase the percentage of solid fuel from 27% to 37% in the next nine years. The work begun by RAO was continued by its "daughter" companies: OGK and TGK (Wholesale Generation Company and Territorial Generation Company). A few years ago, TGK-10 (the public corporation Fortum) was planning to switch three of its thermal power stations in the Chelyabinsk region to solid fuel. This coal strategy was developed by KES-Holding, OGK-1, and OGK-3. OGK-3 was also actively buying up coal.
Although the power-plant operators' plans were frozen by the economic crisis in 2008, by 2009 and early 2010, coal was revived by the price increase of gas and began once again nipping at gas's heels. "The price of gas has increased 25% almost every year for the past three years. If this hike continues, we will actively seek to increase the percentage of coal we use," claimed Mikhail Slobodin, the president of KES-Holding, last April. The company expects to save a billion cubic meters of gas at its power plants in the Sverdlovsk region by the end of 2010.
But six months later, KES and other energy companies reversed course. "The fuel balance structure will remain as it is for now. The Chinese demand for high-energy coal prompted a jump in the price of solid fuel. In addition, there is currently a surplus of gas on the market," said Eduard Smelov, the executive vice president of KES, in October of 2010.
Analysts note that this "surplus" is the result of setbacks Gazprom has experienced with its exports. According to Igor Yushkov, an expert with the Foundation for National Energy Security, the gas giant lost its European market this year because of the "shale" revolution in the US. "This enormous Russian company had recently devised big plans to enter markets in the East and West. However, after the US dramatically increased its production of gas in early 2010, Europe reduced the amount of gas it imports from Russia. Gazprom must now increase its presence on the domestic market," notes Igor Yushkov.
This change in the market for the monopoly's products has forced power-plant operators to adjust their fuel plans, pushing coal projects into the background.
A FUEL IMBALANCE IN AN UNDERDEVELOPED ENERGY INDUSTRY
The fuel used by Russian electric plants consists of 70% gas and only 28% coal. No other country uses a mix like that. According to data from the Institute for Energy Research, coal production accounts for an average of 39% of the fuel used in power plants throughout the world. In many countries, it accounts for half of energy companies' fuel portfolios: in Poland - 96%, India - 81%, China -79%, USA - 54%, and Germany - 51%. In recent years coal has become even more attractive for Europe, due to doubts about the reliability of gas shipments caused by the energy disputes between Russia and Ukraine.
Russia has enormous reserves of solid fuel - 192.3 billion tons of categories A+B+C1, and 78.5 billion tons of category C2. 80% of these supplies consist of steam coal. The Kuznetsk basin is the largest supplier of coal, producing 55% of all of the country's solid fuel. Every year Russia produces over 300 million tons of coal.
About 20 coal-gas plants operate in the country. It's estimated that a full changeover of these plants to coal will save up to 27 billion cubic meters of gas per year. "When we burn gas, we're burning our future, our currency, and new technology. Gas should be used very sparingly - we should be getting our energy from coal," confidently claims Ivan Mokhnachuk, the chairman of the independent union of coal-industry workers.
But experts note that the Russian energy industry might not be ready for a "coal" revolution. "The declaration by energy companies that they were switching to coal was just a game of chicken that Gazprom started. It costs an enormous amount of money to retrofit a plant to use a different type of fuel, and the power-plant operators will never do it voluntarily. It's not at all realistic to try to force them to build modern coal facilities," a representative from one energy company told RusBusinessNews.
According to him, a coal power unit is 33% more expensive than a gas unit, amounting to about $2,000 for one kilowatt of energy. It also costs a lot of money to build an ash-disposal site, a water-intake structure, and treatment facilities. And in addition, one has to regularly pay penalties for air pollution and adopt expensive Western technology to burn coal with less environmental damage. Unfortunately, Russian science and industry cannot provide power-plant operators with their own technology. And the technology that they managed to create in the USSR before the era of perestroika is now hopelessly outdated.
"In the last twenty years, Europe has made huge technological breakthroughs for using coal energy. But we're still stuck in the 1980's," claims Leonid Solovjev, the chief engineer at the Sverdlovsk branch of TGK-9.
THAT DEVIOUS GAZPROM...
Compared to other regions, the fuel component of the energy industry in the Urals seems balanced. According to information from Petr Erokhina, the director of the Joint Dispatch Office for Urals Energy Systems (ODU Ural), the ratio of gas to coal in the Urals Federal District is 50/50, and even 40/60 in some areas. However, gas has recently been slowly squeezing out its competitor in the Sverdlovsk and Chelyabinsk regions. For obvious reasons, coal is not even discussed in the oil- and gas-rich Tyumen region, Yugra, and Yamal.
Much of the energy in the industrial areas of the Urals Federal District comes from burning coal from Ekibastuz (Kazakhstan) as well as local coal. The latter is of very low quality. "The thermal power station in Bogoslovsk consumes about one million tons of Volchansk coal every year. It's really filthy to burn. But if we refuse to use it, the miners will be out of work," explained Leonid Solovjev. The Forum corporation, in turn, is not ruling out gradually replacing Korkinsk coal (Chelyabinsk region) with an imported variety.
Nor does the Ekibastuz coal meet the requirements of Urals power-plant operators. "Half of every 100 cars of coal isn't coal at all - it's ash, which damages the equipment and which we have to find somewhere to store. For comparison: in Europe you're only allowed to have 10% ash, because the fuel there is treated right at the production site," notes Leonid Solovjev.
Coal in Russia is treated as well, but as a rule, the higher-quality energy resources are saved for export. The paradox is that our domestic thermal power stations are not designed for high-energy fuel. They can only burn untreated coal at a low level of efficiency and create kilowatt hours with a high production cost. "A review of our fuel options would require changes to the way we burn coal and a strict compliance with the technology. We would need serious investment to modernize our plants - up to $100 per kilowatt of installed capacity," claim representatives of the private company E4-SibKOTES.
These constraints are only part of a long list of problems connected with retrofitting the Russian energy industry. Leonid Solovjev notes that using solid fuel is financially viable as long as gas is two or three times as expensive as coal (currently the difference is 20-30%). Nor does Petr Erokhin see an economic reason for this fuel revolution. But he is certain that the development of coal production is vital to the country's energy security.
However, a number of experts believe that it's not worth it for Russia to change its gas habit. Igor Yushkov notes that the country has enough gas reserves to last a long time, and all the talk about an impending shortage is just Gazprom being devious.
The existing technological and financial obstacles, global economic trends, business interests, plus Gazprom's administrative resources all give one confidence that Russia's energy industry will be focusing on gas for the next five years. Perhaps coal will gain the upper hand once the price of gas equalizes on the foreign and domestic markets. But in any event, should the fuel revolution actually happen, it will be consumers who will have to pay for it.
Source: RusBusiness News
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Thursday, 09 December 10
INDONESIAN COAL PRICE REFERENCE REACHED US$ 103.41 PMT FOR DECEMBER DELIVERY
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Thursday, 09 December 10
DRY BULK MARKET LOOKING FOR DIRECTION THIS WEEK, AS CAPESIZE SHIPS END THEIR MISFORTUNES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk has began the week on a positive note capitalizing on the positive sentiment which finally prevailed during the last days of the previo ...
Monday, 06 December 10
NTPC MAY OPT FOR INDONESIA OVER AFRICA, OZ FOR COAL MINES
Country's largest power producer NTPC, which is scouting for coal properties abroad to fuel its power plants back home, may zero in on Indonesia fo ...
Saturday, 04 December 10
INDONESIA TO INDIA AND CHINA SEA FREIGHT UP BY ABOUT US$ 2.50 PMT - CAPT. REDDY
COALspot.com - The freight market even though remained weak, but towards end of the week the market seemed to firm up.
The BDI was almost at sam ...
Saturday, 04 December 10
OFF WEST COAST OF INDIA TONNAGE IS SEEMINGLY QUITE SPARSE - FEARNBULK
Handy
The Atlantic markets are weak and remained unusually calm after the Thanksgiving ...
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- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- PTC India Limited - India
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Eastern Energy - Thailand
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Star Paper Mills Limited - India
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- MS Steel International - UAE
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- TeaM Sual Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- Australian Coal Association
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Videocon Industries ltd - India
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Sree Jayajothi Cements Limited - India
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Grasim Industreis Ltd - India
- Bhatia International Limited - India
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Standard Chartered Bank - UAE
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- Central Java Power - Indonesia
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- The University of Queensland
- The Treasury - Australian Government
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Cement Manufacturers Association - India
- South Luzon Thermal Energy Corporation
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Planning Commission, India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
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