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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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- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- London Commodity Brokers - England
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Attock Cement Pakistan Limited
- Straits Asia Resources Limited - Singapore
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Energy Development Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- The University of Queensland
- Marubeni Corporation - India
- Standard Chartered Bank - UAE
- Bayan Resources Tbk. - Indonesia
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- OPG Power Generation Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- New Zealand Coal & Carbon
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Trasteel International SA, Italy
- White Energy Company Limited
- Minerals Council of Australia
- Tamil Nadu electricity Board
- Indonesian Coal Mining Association
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Global Green Power PLC Corporation, Philippines
- Altura Mining Limited, Indonesia
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jindal Steel & Power Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- PetroVietnam Power Coal Import and Supply Company
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
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