Page 10 - AsiaElec Week 11

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compensated for declining output by Coal India, whose monthly output fell every month from July to November.
Power plants are major coal customers in India, and many power plants switch to imported fuel when domestic supply is unreliable, which is a key problem in India’s power sector.
Domestic coal has the attraction of being 25%-30% cheaper, a saving which is in theory passed on to the consumer.
Coal India’s efforts to boost production come as power companies imported 58.09 million tonnes in the year from April 2019 to January
2020, about 16% more than the previous year. State-owned generator NTPC imported almost 2 million tonnes, five times more than
the previous corresponding period.
From April to December 2019, Coal India
supplied 3.4 million tonnes of domestic coal as part of its coal import scheme, while it supplied 4 million tonnes in 2018-19.
Despite government efforts, the power sector often has to resort to imports when unseasonal rains reduced domestic production. Bottlenecks in the rail network also cause coal supply prob- lems for power plants.™
GAS-FIRED GENERATION
CNOOC mulls internal merger
CHINA
STATE-OWNED China National Offshore Oil Corp. (CNOOC) is reportedly planning to hand control of its natural gas and power division to listed unit CNOOC Ltd.
CNOOC has begun reviewing a poten- tial internal merger in 2019 and had decided to revisit the plan after CNOOC Gas & Power recorded heavy losses last year, Reuters reported.
While the deal has its advantages, such as streamlining the internal sale of domestic gas production to CNOOC’s power plants, analysts have said the deal could spook CNOOC Ltd investors.
CNOOC owns about 64% of CNOOC Ltd.
“Shareholders may have welcomed it in 2017 or 2018 when China’s gas demand soared and terminal business was robust,” Reuters quoted an unnamed Western banking analyst as say- ing. “But the timing is wrong now because of the unit’s big trading losses.”
Another source said: “Apart from internal synergy ... an extension into the mid- and down- stream gas business can be a trendy topic in the capital markets as investors increasingly favour a ‘green’ energy firm.”
CNOOC’s power and gas unit reportedly
suffered its deepest loss in more than a decade from liquefied natural gas (LNG) trading. The company was caught out by slowing domestic demand that sent local prices below those agreed in its long-term contracts, the newswire said.
CNOOC invoked force majeure on LNG cargoes in early February amid government-im- posed quarantines and travel restrictions over large swathes of the country in an effort to stem the spread of the coronavirus (COVID-19). However, Total, Royal Dutch Shell and Qatargas all rejected the notice.
Rystad Energy said in a research note released on March 10 that while CNOOC’s decision to invoke force majeure was prompted by logistical constraints at receiving ports, “there has been a growing concern in the industry that these notices are an attempt to renegotiate contracts”.
CNOOC Gas & Power owns 10 operational LNG terminals, with another three under con- struction, and is the country’s largest buyer of LNG.
However, one of Reuters’ sources said the gas and power company was gearing up to hand over seven of the 13 terminals to newly established PipeChina later this year ™
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Week 11 18•March•2020