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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, 29 October 10
CHINA'S COAL DEMAND DRIVES DRY BULK MARKET HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market is posting marginal, yet steady growth this week, with the Baltic Dry Index rising yesterday to 2784 points, up by 0.2%. Both th ...
Wednesday, 27 October 10
TNPL TO AWARD 240,000 MT COAL SUPPLY CONTRACT TO COAL & OIL
COALspot.com: Tamil Nadu Newsprint Papers Limited, Tamil Nadu state owned Newsprint and Printing & Writing Paper producer has opened a coal purc ...
Wednesday, 27 October 10
CHINA AIDS RUSSIA IN DEVELOPING COAL RESOURCES - PEOPLE'S DAILY
People's Daily reported that, Russia will use 6 billion U.S. dollars in loans provided by China to develop coal resources in Sakhalin Island, Elege ...
Wednesday, 27 October 10
MAIDEN COAL SHIPMENTS TO NOBLE RESOURCES - PAN ASIA AUSTRALIA
Press Release :
First Coal Shipments made from Nadvara Coal Project, East Kalimantan
51,616 tonnes delivered from October production &ndas ...
Tuesday, 26 October 10
INDONESIA SHIPPED 5.32 PERCENT LESS COAL IN SEPTEMBER 10
COALspot.com: Indonesia, the world largest coal exporter, shipped 21,661,817 MT of coal in September 2010, which is 5.32 percent lesser than Au ...
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- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Toyota Tsusho Corporation, Japan
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Central Java Power - Indonesia
- India Bulls Power Limited - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mintek Dendrill Indonesia
- Kaltim Prima Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Parliament of New Zealand
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- ICICI Bank Limited - India
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Mjunction Services Limited - India
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Parry Sugars Refinery, India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- White Energy Company Limited
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Economic Council, Georgia
- PowerSource Philippines DevCo
- Global Coal Blending Company Limited - Australia
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Singapore Mercantile Exchange
- Eastern Coal Council - USA
- CNBM International Corporation - China
- London Commodity Brokers - England
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Posco Energy - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Standard Chartered Bank - UAE
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
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