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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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Friday, 03 December 10
INDONESIAN LOW RANK COAL IS ATTRACTING COAL BUYERS FROM INDIA AND CHINA
COALspot.com - Bhakti Energi Persada has sold out its whole coal production until the end of 2011, Jeffry Mulyono said during McCloskey Asia P ...
Thursday, 02 December 10
INDIA'S COAL SHORTAGE TO DEEPEN NEXT YEAR - MONEY CONTROL
Money Control reported that, India's coal deficit will deepen sharply next year, its coal minister said on Tuesday, forcing Asia's third largest e ...
Thursday, 02 December 10
CIL INCHES CLOSER TO PEABODY STAKE DEAL - THE TELEGRAPH INDIA
The Telegraph India reported that, state-run Coal India Ltd (CIL) hopes to complete negotiations to buy over 10 per cent in Australian miner Peabody ...
Thursday, 02 December 10
DRY BULK MARKET WEIGHED DOWN BY CAPESIZE BLUES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The negative sentiment currently undergoing in the capesize market has kept the dry bulk market’s benchmark, the Baltic Dry Index (BDI) on the ...
Monday, 29 November 10
NUCLEAR SUPERTANKERS TO SHAKE UP SHIPPING - THIS IS MONEY
This is money reported that, plans are under way that could see nuclear-powered supertankers sailing the world’s shipping lanes, refuelling on ...
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- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Renaissance Capital - South Africa
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Global Business Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Central Electricity Authority - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Petrochimia International Co. Ltd.- Taiwan
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- CNBM International Corporation - China
- GMR Energy Limited - India
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Makmur.PT - Indonesia
- Sojitz Corporation - Japan
- Independent Power Producers Association of India
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Agrawal Coal Company - India
- PTC India Limited - India
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Sarangani Energy Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- PowerSource Philippines DevCo
- Planning Commission, India
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Larsen & Toubro Limited - India
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Directorate General of MIneral and Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Simpson Spence & Young - Indonesia
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Edison Trading Spa - Italy
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Mjunction Services Limited - India
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Binh Thuan Hamico - Vietnam
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- McConnell Dowell - Australia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
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