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    Spanish company Ferry Group is to invest €42/US$55.2 million in a project for the production of biomass fuel pellets in Bulgaria. The 3-year project consists of establishing plantations of paulownia trees near the city of Tran. Paulownia is a fast-growing tree used for the commercial production of fuel pellets. Dnevnik - Feb. 20, 2007.

    Hungary's BHD Hõerõmû Zrt. is to build a 35 billion Forint (€138/US$182 million) commercial biomass-fired power plant with a maximum output of 49.9 MW in Szerencs (northeast Hungary). Portfolio.hu - Feb. 20, 2007.

    Tonight at 9pm, BBC Two will be showing a program on geo-engineering techniques to 'save' the planet from global warming. Five of the world's top scientists propose five radical scientific inventions which could stop climate change dead in its tracks. The ideas include: a giant sunshade in space to filter out the sun's rays and help cool us down; forests of artificial trees that would breath in carbon dioxide and stop the green house effect and a fleet futuristic yachts that will shoot salt water into the clouds thickening them and cooling the planet. BBC News - Feb. 19, 2007.

    Archer Daniels Midland, the largest U.S. ethanol producer, is planning to open a biodiesel plant in Indonesia with Wilmar International Ltd. this year and a wholly owned biodiesel plant in Brazil before July, the Wall Street Journal reported on Thursday. The Brazil plant is expected to be the nation's largest, the paper said. Worldwide, the company projects a fourfold rise in biodiesel production over the next five years. ADM was not immediately available to comment. Reuters - Feb. 16, 2007.

    Finnish engineering firm Pöyry Oyj has been awarded contracts by San Carlos Bioenergy Inc. to provide services for the first bioethanol plant in the Philippines. The aggregate contract value is EUR 10 million. The plant is to be build in the Province of San Carlos on the north-eastern tip of Negros Island. The plant is expected to deliver 120,000 liters/day of bioethanol and 4 MW of excess power to the grid. Kauppalehti Online - Feb. 15, 2007.

    In order to reduce fuel costs, a Mukono-based flower farm which exports to Europe, is building its own biodiesel plant, based on using Jatropha curcas seeds. It estimates the fuel will cut production costs by up to 20%. New Vision (Kampala, Uganda) - Feb. 12, 2007.

    The Tokyo Metropolitan Government has decided to use 10% biodiesel in its fleet of public buses. The world's largest city is served by the Toei Bus System, which is used by some 570,000 people daily. Digital World Tokyo - Feb. 12, 2007.

    Fearing lack of electricity supply in South Africa and a price tag on CO2, WSP Group SA is investing in a biomass power plant that will replace coal in the Letaba Citrus juicing plant which is located in Tzaneen. Mining Weekly - Feb. 8, 2007.

    In what it calls an important addition to its global R&D capabilities, Archer Daniels Midland (ADM) is to build a new bioenergy research center in Hamburg, Germany. World Grain - Feb. 5, 2007.

    EthaBlog's Henrique Oliveira interviews leading Brazilian biofuels consultant Marcelo Coelho who offers insights into the (foreign) investment dynamics in the sector, the history of Brazilian ethanol and the relationship between oil price trends and biofuels. EthaBlog - Feb. 2, 2007.

    The government of Taiwan has announced its renewable energy target: 12% of all energy should come from renewables by 2020. The plan is expected to revitalise Taiwan's agricultural sector and to boost its nascent biomass industry. China Post - Feb. 2, 2007.

    Production at Cantarell, the world's second biggest oil field, declined by 500,000 barrels or 25% last year. This virtual collapse is unfolding much faster than projections from Mexico's state-run oil giant Petroleos Mexicanos. Wall Street Journal - Jan. 30, 2007.

    Dubai-based and AIM listed Teejori Ltd. has entered into an agreement to invest €6 million to acquire a 16.7% interest in Bekon, which developed two proprietary technologies enabling dry-fermentation of biomass. Both technologies allow it to design, establish and operate biogas plants in a highly efficient way. Dry-Fermentation offers significant advantages to the existing widely used wet fermentation process of converting biomass to biogas. Ame Info - Jan. 22, 2007.

    Hindustan Petroleum Corporation Limited is to build a biofuel production plant in the tribal belt of Banswara, Rajasthan, India. The petroleum company has acquired 20,000 hectares of low value land in the district, which it plans to commit to growing jatropha and other biofuel crops. The company's chairman said HPCL was also looking for similar wasteland in the state of Chhattisgarh. Zee News - Jan. 15, 2007.

    The Zimbabwean national police begins planting jatropha for a pilot project that must result in a daily production of 1000 liters of biodiesel. The Herald (Harare), Via AllAfrica - Jan. 12, 2007.

    In order to meet its Kyoto obligations and to cut dependence on oil, Japan has started importing biofuels from Brazil and elsewhere. And even though the country has limited local bioenergy potential, its Agriculture Ministry will begin a search for natural resources, including farm products and their residues, that can be used to make biofuels in Japan. To this end, studies will be conducted at 900 locations nationwide over a three-year period. The Japan Times - Jan. 12, 2007.

    Chrysler's chief economist Van Jolissaint has launched an arrogant attack on "quasi-hysterical Europeans" and their attitudes to global warming, calling the Stern Review 'dubious'. The remarks illustrate the yawning gap between opinions on climate change among Europeans and Americans, but they also strengthen the view that announcements by US car makers and legislators about the development of green vehicles are nothing more than window dressing. Today, the EU announced its comprehensive energy policy for the 21st century, with climate change at the center of it. BBC News - Jan. 10, 2007.

    The new Canadian government is investing $840,000 into BioMatera Inc. a biotech company that develops industrial biopolymers (such as PHA) that have wide-scale applications in the plastics, farmaceutical and cosmetics industries. Plant-based biopolymers such as PHA are biodegradable and renewable. Government of Canada - Jan. 9, 2007.

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Monday, February 16, 2004

How will mighty China power its future growth?

We have already analysed the opportunity of a triangular trade relationship, whereby (1) Africa produces exportable bioenergy, (2) the EU monitors and helps so that the production is done in a socially and environmentally sustainable way, and (3) China and the EU finance and import the energy.

It is in this context that we monitor China's energy strategies and policies. The following piece addresses part of those approaches:

The rampant Chinese economy shows no signs of slowing down putting increasing pressure on the country’s oil reserves. The fastest growing economy in the world, China has notched up consistent growth rates of over 8 per cent a year for the last five years with 2004 tipped to be no different.

This blistering pace of development, the result of sweeping market reforms and booming exports, culminating in accession to the World Trade Organisation in 2001, is putting ever greater strain on the country’s oil supplies.

Last year, oil demand soared by more than 10 per cent leading to record imports of crude and a rising energy deficit.

Surging power demand, huge infrastructure projects and a bustling transport sector, including a family car boom, all played a part in driving the explosive growth.

Alongside the United States and Japan, China is now one of the world’s biggest guzzlers of foreign oil despite domestic production of around 3.4 million barrels per day (b/d).

In January 2004, imports again jumped to 10.3 million tonnes, or 2.5 million b/d, up 10 per cent on December, and 23 per cent from a year earlier.

The situation is causing great concern in Beijing. With the relentless pace of growth set to continue for the foreseeable future, the oil deficit looks set to widen.

According to the International Energy Agency, Chinese oil demand will lead world demand in 2004 and beyond. It believes China’s net crude imports could rise further to 4 million b/d by 2010 and 8 million b/d by 2020.

Foreign energy firms are waking up to the opportunity this presents. Shell Chemical’s $4.3 billion Nanhai petrochemicals project - the biggest Sino-foreign joint venture - is its largest single investment anywhere in the world.

BP has already ploughed $4 billion into various Chinese oil and gas projects and expects to commit another $3 billion over the next five years.

It recently moved to divest equity stakes in leading Chinese oil companies PetroChina and Sinopec, worth over $2 billion, after securing its position in the market.

Although domestic oil production has been rising since the 1980s, there are worrying trends. The bulk of Chinese oil production, over two-thirds, comes from mature eastern onshore basins, now in slow decline. Enhanced oil recovery techniques are being used to halt the fall. On the other hand, the relatively undeveloped offshore sector has proved fruitful. Offshore oil has increased by over 200 per cent since the mid-nineties and now makes up more than 500,000 b/d, about 15 per cent of total production.

State oil companies China National Petroleum Corporation (CNPC), PetroChina and China National Offshore Oil Company (CNOOC) have embarked on a frantic search for more oil both at home and abroad. This includes more intensive development of the offshore sector, alongside foreign partners.

International oil and gas firms still play very little part in China’s upstream development although this could change. While some of the heavyweights are present - the largest producers include ChevronTexaco and ConocoPhillips - their share of production is only marginal. Other mid-sized firms, and some smaller ones, are also active, primarily offshore.

The problem for international operators is that most of China’s most prized hydrocarbon territories inland remain largely off limits. The authorities are keen to attract offshore interest, however, partly because of the additional cost and technology involved, but also to retain control on Chinese soil. On the down side, recent offshore licensing rounds have failed to ignite much interest from abroad.

Further afield, Chinese firms have actively spread their wings far and wide in the hunt to secure more oil reserves to fuel growth.

As well as the Middle East, the country’s traditional supplier, the government is keen to diversify into new areas like Russia and other republics of the former Soviet Union, including Kazakhstan.

The prospect of an import pipeline bringing oil from Siberia directly into China is a fundamental part of Beijing’s long-term energy strategy. It faces stiff competition from Japan, however, which is equally keen to influence the direction of the pipeline.

The political struggle is set to continue for some time to come as Moscow weighs up its options.

Chinese firms have also staked a claim in other emerging provinces such as Africa, in countries like Sudan, in a bid to shore up new supplies. CNPC is a major stakeholder in the Greater Nile Petroleum Operating Company, Sudan’s largest producer.

In a bid to reduce its growing dependence on foreign oil, China is looking at diversifying into natural gas and other fuels. The country is expected to double its gas use by the end of the decade as power stations and other industrial projects make the switch from oil fuel. Within 20 years gas consumption will have doubled again.

The 4,000 km West East gas pipeline, which will carry gas from onshore gas fields in the remote west of the country to the industrialised coast, forms a key part of the strategy. The first part of the project, linking Shanghai, was opened at the beginning of the year.

Final completion, which will take gas from the Tarim field in Xinjiang to Shanghai, is slated for early 2005.

Foreign firms Shell, ExxonMobil and Gazprom are each looking to take an equity stake in the giant scheme, which would potentially open up more lucrative upstream acreage inland.

There is also a commitment to buy liquefied natural gas (LNG) from Australia and Indonesia with the first import terminals already underway. BP has a 30 per cent stake in one project, near Shenzhen, Guangdong province, which is led by CNOOC. It will have a capacity of 3.3 million tonnes a year (t/y). A second receiving terminal is to be built at Fujian with a capacity of 2.6 million t/y.

Both BP and Shell are actively positioning themselves in the retail market forming close alliances with local operators, PetroChina and Sinopec.


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