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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, 25 November 10
INDONESIAN ROUNDS ARE ACHIEVING IN THE LOW 10S, OWNERS ARE NOT KEEN FOR TRIPS TO INDIA - FEARNBULK
HANDY
Uneventful week - Supra/Panamax stems ex USG to China/Korea/Japan are the main focus + grains ex. Argentina. The Atlantic market activity re ...
Thursday, 25 November 10
JSW ENERGY BUYS CANADIAN COAL FIRM FOR $411 MN - NDTV PROFIT
NDTV Profit reported that, Sajjan Jindal-owned JSW Energy on Wednesday said it has entered into an agreement to buy out British Virgin Islands-based ...
Thursday, 25 November 10
DRY BULK MARKET STILL GOING STRONG THIS WEEK, CAPESIZE SECTOR LOSING STEAM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market kept its upward momentum yesterday, with the industry’s benchmark, the Baltic Dry Index (BDI) gaining a further 0.64% to e ...
Wednesday, 24 November 10
COAL PRODUCTION PREDICTED TO CLIMB IN SUNNIER 2011 - THE JAKARTA GLOBE
The Jakarta Globe reported that, Indonesia’s coal producers are expected to increase output by 13 percent in 2011, thanks to predicted better ...
Monday, 22 November 10
RUSSIA'S KTK HAS PRODUCED 4.59 MLN TONNES OF COAL IN FIRST 9 MONTHS OR AN INCREASE OF 5% YEAR-ON-YEAR
COALspot.com (Press Release) - KTK has produced 4.59 mln tonnes of coal in first nine months or an increase of 5% year-on-year.
Kuzbasskaya Topli ...
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- Thai Mozambique Logistica
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Global Green Power PLC Corporation, Philippines
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Siam City Cement - Thailand
- Mjunction Services Limited - India
- VISA Power Limited - India
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indogreen Group - Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Mercator Lines Limited - India
- Economic Council, Georgia
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Latin American Coal - Colombia
- Bhatia International Limited - India
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Trasteel International SA, Italy
- White Energy Company Limited
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Deloitte Consulting - India
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- London Commodity Brokers - England
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Aditya Birla Group - India
- GAC Shipping (India) Pvt Ltd
- Samtan Co., Ltd - South Korea
- Sical Logistics Limited - India
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Coalindo Energy - Indonesia
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Tamil Nadu electricity Board
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Coal and Oil Company - UAE
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Planning Commission, India
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- ICICI Bank Limited - India
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Holcim Trading Pte Ltd - Singapore
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Antam Resourcindo - Indonesia
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Krishnapatnam Port Company Ltd. - India
- Star Paper Mills Limited - India
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
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