• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Japan secures major Bangladesh project as China probably spurned in geopolitical game

China and Japan have been battling to invest in large port and power plant projects in Bangladesh, as the geopolitical rivals struggle for influence in Asia. In a major development in the last weeks, the Bangladeshi government has decided to go ahead with the Japanese proposal to finance and build a seaport at Matarbari, on the south-eastern coast of the country. It would be the first deep sea port in the country, and include an LNG terminal, as well as four 600 MW coal-fired power plants. The Japanese proposal is located only 25 km from the site of the proposed Chinese project at Sonadia, and although the Bangladeshi government hasn’t ruled out the Chinese proposal, it appears unlikely that both would be economic. The Japanese offer appears to have been accepted because of superior finance conditions, with the Japan International Cooperation Agency offering $US 3.7 billion (€3.24 billion) to be paid back over 30 years with an interest rate of only 0.1%, in addition to a 10-year grace period. Sumitomo Corp and Marubeni Corporation have both bid to construct the power plants in conjunction with Coal Power Generation Company Bangladesh Ltd. India is believed to have welcomed the Japanese involvement in Bangladesh, having been alarmed at China’s growing ties to Sri Lanka and Pakistan.

Argentina hoping to develop viable shale gas industry

An article in the Financial Time’s special Modern Energy feature has reported on Argentina’s push to develop its shale gas industry. Recently re-nationalised company YPF is leading the push to exploit what are the fourth biggest oil shale reserves in the world, which are of a high quality and located for the most part away from urban centres. Extraction is not yet economical, and there is some doubt if it will become so, but YPF is hopeful that it will, having already driven down the cost of a vertical well from $US 11 million (€9.8 million) to $US 7 million (€6.2 million) over the last four years. Apart from YPF, Chevron has also made a significant investment in developing shale in the country, and there have been smaller moves by Petronas, Dow Chemicals, Wintershall, Total, Shell and ExxonMobil, though Argentina’s capital and foreign currency controls have been a hurdle, as has been the difficulty in obtaining local credit. These latter problems may change, however, after October, when presidential elections are held in the country.

UK shale gas report says tax proceeds should fund CCS development

Another state pursuing a shale gas industry is the UK, where the Task Force on Shale Gas has recently released a report saying that tax revenues from a domestic large-scale future industry would have to be used to develop carbon capture and storage technologies so that the UK could meet its greenhouse gas emissions reduction targets. The implication is not that fracking will increase GHG emissions, as in the US it has led to lower GHG emissions, but that the UK simply needs to do more to meet its targets.  The Task Force estimates that it will be four to five years before any gas is extracted from shale in the UK, and that by that time CCS should be somewhat more developed. The report also called for pilot studies to measure emissions from the extraction process. The Task Force claims to be independent of its funders – Cuadrilla, Centrica, Total, Weir Group, Dow Chemical and GDF Suez E&P UK. The report’s release comes as the BBC ran a story on a new technique for storing and securing CO2 in the North Sea which could significantly widen the number of sites available for storage.

Indian government considering raising steel import tariffs to 20% temporarily

The Indian government is considering imposing a temporary additional tariff on imports of hot-rolled coiled steel as domestic manufacturers struggle to compete with their foreign competitors in China, Russia and Ukraine. Steel Authority of India, Essar Steel and JSW Steel complained to the Indian Directorate-General of Safeguards that they could not compete in July,  after imports rose 58% in the first four months of the year, and the situation has not eased. India already imposes a 12.5% tax on imports, up from 10% in July, but is considering raising this rate to 20% for 200 days. Another sector of India’s economy, the banking sector, will be watching the situation closely, having lent $US 60 billion (€53 billion) to domestic steelmakers.

China looks for more technology transfer from the US for green technology

A report from China News has stated that China and the United States should improve cooperation on technology transfer in an effort to improve the spread of greenhouse gas emissions reductions technologies worldwide. China’s special representative on climate change issues, Xie Zhenhua, has described technology transfer as one of the areas of disagreement between the two countries, though he emphasised that there is no disagreement that green technology innovation is required. He suggested that the two countries could work together on joint CCS projects as means of sharing technical knowledge, and also highlighted financing for developing nations will be a key hurdle in implementing any global climate change agreement. Chinese President Xi Jinping is due to visit the US for the first time in late September, and more climate change related announcements are expected, which in turn will be designed to produce momentum ahead of the Paris Climate Summit in late November/early December.

BHP Billiton to open global centre on CCS technology with SaskPower as mining company predicts little growth for coal over medium term

BHP Billiton has agreed a memorandum of understanding with SaskPower to set up a global centre of knowledge about carbon capture and storage in an attempt to promote research and reduce the risks and costs associated with deploying CCS technology. For BHP Billiton, the drive to globalise CCS knowledge is in the hope that it would allow greater fossil fuel firing (and therefore demand for its commodities), whereas for SaskPower there may be the opportunity to leverage its state-of-the-art knowledge to grow its business. There are no more details available at present.

BHP Billiton’s move, however, can be seen in the context of comments by the head of the company’s coal business last week, in which he predicted ongoing tough times for coal miners over the medium term (with a supply glut and reduced demand from China), but an upswing at a future date because of the demand for metallurgical coal. BHP believes the most likely scenario for thermal coal demand up until 2030 is that it will remain relatively flat.

Building of Kenya’s first coal-fired power plant delayed

Amu Power Company, a consortium of Kenyan and Chinese businesses that is planning to build a 1,000 MW coal-fired power plant in the East-African country, has announced that it will delay the commencement of building, scheduled for October, as the government resettles people from the project area. This is not the only hurdle the consortium faces, as an environmental impact statement must also be lodged and approved, although given the fact that the Energy and Petroleum Ministry invited bids for the project and awarded it to Amu Power, environmental approval from the government may not be difficult to obtain. Kenya has a plan to increase its total national power generation from the current 2,500 MW to 6,700 MW by 2017, and Amu Power’s plant will be the first coal-fired plant in the country.

Eskom construction worker dies on Kusile plant

After the good news for South African utility Eskom in opening their Medupi plant in the last edition of the Combustion Industry News, the last fortnight has seen the sad news of the death of a construction worker on their Kusile power plant. The cause of the death was a collapse of a crane on top of the worker. The Kusile plant will be, like Medupi, an enormous coal-fired plant, with a generation capacity of 4,800 MW when fully complete. It is due to begin operation in July 2017 and be at full capacity by 2021, though delays to construction have dogged Eskom projects in recent years, so these dates may change.