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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, 12 November 10
BANPU'S NET PROFIT HAS INCREASED 249 PERCENT IN 3Q 2010 COMPARED TO THE SAME PERIOD LAST YEAR
COALspot.com: Banpu Public Company Limited (BANPU) reports its financial performance for the third quarter 2010, posting a net profit of THB 13,293 ...
Friday, 12 November 10
DRY BULK MARKET STILL ON A FREEFALL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market failed to show any signs of life this week, with the Baltic Dry Index (BDI) still being on the red, now stretching more than 11 ...
Thursday, 11 November 10
KOMIPO WANTS 400KT OF SUB BITUMINOUS COAL
COALspot.com : Korea Midland Power Co. Ltd. (KOMIPO) is looking for 400,000 MT of sub bituminous coal through International open bidding. The delive ...
Wednesday, 10 November 10
NTPC TO IMPORT 12 MILLION TONS OF COAL IN 2011
COALspot.com: India's State Trading Corp Ltd a public sector Govt of India co. is looking for 12 million tones (+/- 2%) of imported coal for NTPC. ...
Tuesday, 09 November 10
NOBLE GROUP APPOINTED AS THE EXCLUSIVE MARKETING AGENT FOR PT. BERAU COAL
COALspot.com: Noble Group Limited has recently been appointed as the exclusive marketing agent for PT. Berau Coal production exported to internation ...
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- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- MS Steel International - UAE
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- GAC Shipping (India) Pvt Ltd
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- Global Business Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- TeaM Sual Corporation - Philippines
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- CNBM International Corporation - China
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Bhatia International Limited - India
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Directorate Of Revenue Intelligence - India
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- The University of Queensland
- Iligan Light & Power Inc, Philippines
- SMC Global Power, Philippines
- VISA Power Limited - India
- Central Java Power - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Madhucon Powers Ltd - India
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
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- Agrawal Coal Company - India
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- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
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- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
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