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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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Monday, 08 November 10
INDONESIAN HBA HAS INCREASED TO $ 95.51 PER TON FOR NOVEMBER LOADING
COALspot.com: The Directorate General of Mineral, Coal and Geothermal of Indonesia has been publishing a monthly coal price reference (HBA) since Fe ...
Sunday, 07 November 10
THE SUPRAMAX INDEX IN THE FAR EAST CONTINUED TO BE UNDER PRESSURE - CAPT. REDDY
COALspot.com: The freight market continued to remain soft and all segments were down by almost about 6 pct.
The BDI and Cape Size index was down ...
Saturday, 06 November 10
DRY BULK MARKET LACKING SUPPORT TO SUSTAIN CURRENT LEVELS, BUT PANAMAX OWNERS ARE MORE FORTUNATE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Posting its fifth straight losing session, the dry bulk market benchmark, the BDI (Baltic Dry Index) was down yesterday by another 1.26% to 2510 poi ...
Friday, 05 November 10
RI COAL EXPORT PROSPECTS STILL BRIGHT - THE JAKARTA POST
The Jakarta Post reported that, Indonesia, already the world’s largest exporter of seaborne thermal coal since 2005, will continue to be a maj ...
Thursday, 04 November 10
CAPE SIZE SENTIMENT FOR THIS WEEK WAS NEGATIVE - FEARNBULK
Handy
The Atlantic markets remain flat and lackluster. High volume of tonnage availabi ...
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- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- The Treasury - Australian Government
- Heidelberg Cement - Germany
- White Energy Company Limited
- Bulk Trading Sa - Switzerland
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Latin American Coal - Colombia
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Mercuria Energy - Indonesia
- GMR Energy Limited - India
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- The University of Queensland
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Jindal Steel & Power Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- PTC India Limited - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- South Luzon Thermal Energy Corporation
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- New Zealand Coal & Carbon
- LBH Netherlands Bv - Netherlands
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Directorate General of MIneral and Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Borneo Indobara - Indonesia
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sical Logistics Limited - India
- Australian Coal Association
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