Asia Energy1 Outlook

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November 2010
2011
Asia Energy Outlook

page 20
India: Changing the World Coal Market

Exclusive
Power Sector Revival

page 46
2010 Platts Top 250 Global Energy Company Rankings
insight
Publishers Note
Asia at a Crossroads? Welcome to the 2010 Asia Energy Outlook issue of Platts Insight. This year one major theme has emergedchange. While world economies struggle to rebound many energy markets try to nd their footing. Demand for power and fuel continues to rise opening up new opportunities for foreign interests, which is of concern for some countries. Platts distinguished and global editorial staff will provide a unique level of analysis of the challenges and opportunities for growth Asia is experiencing. Also, we are pleased to be able to showcase once again the full Platts Top 250 Global Energy Companies rankings. Each year, Platts ranks the worlds top energy companies by nancial performance, identies whos up and whos down and provides a breakdown of the Top 250 by industry and region while offering commentary on trends and movement within the list. I hope you gain some new Insight from this issue! Patsy Wurster Publisher, Platts Insight
Patsy Wurster
Guest Editors Note

The Unfolding Asian Story The center of gravity in the global energy business is shifting towards Asia, as several articles in this issue of Insight demonstrate. Whether it is oil, gas, coal, nuclear, renewable energy or carbon trading, Asia is the increasing focus of attention. This is not a new phenomenon. Nor is Asia unique in the global growth stakes Brazil and Russia are, after all, seen as partnering India and China in the quadrumvirate of emerging powers. And while North America and Europe may be growing much slower than Asia, they retain the greatest weight in the global energy economy. But there is an inexorable shift to Asia and it has many implications. Not least, a shift in the type of companies populating the roll of global energy players. Many of the Asian companies in the global rankings may be stock market-listed, but they remain state-controlled. Others may not be state-owned, but are regarded as national champions and backed by state resources. These are very different to the traditional western energy giants. This partly reects a key difference between Asia and Europe or North America. In most of Asia pipelines and power lines stop at the border. With few cross-border connections, physical and especially nancial energy trading is still at rst base in much of the continent. This is, however, beginning to change. At the same time a new wave of young companies is surging up the Asian rankings. All of which suggests that just as important as the shift to Asia will be the shifts within Asia. Martin Daniel Editor, Platts Power in Asia
Martin Daniel
November 2010 insight 1
Inside
1 Publishers Note
Patsy Wurster
24 Chinese Generators: Preparing for Competition

Martin Daniel
1 Guest Editors Note

Martin Daniel
32 Renewables Industry Shifts Focus to Asia

David R. Jones
4 China: Driving the Oil Price

Ross McCracken
38 Halt to Projects Spurs Carbon Market Jitters

Frank Watson
10 Japans Oil Industry at the Crossroads

Takeo Kumagai
14 The LNG Market Bounces Back

Jonty Rushforth
42 Singapore A Living Laboratory For Sustainable Solutions

Energy Market Authority
20 India: Changing the World Coal Market

James OConnell
46 Power Sector Revival (Platts Top 250 Global Energy Company Rankings)
Ross McCracken
Authors
Martin Daniel
David R. Jones
Takeo Kumagai
Ross McCracken
James OConnell
Jonty Rushforth
Frank Watson
2 insight November 2010
Martin Daniel read Modern History at Oxford University. After research on economic history there, he joined the Economics Unit of the then British Coal Corporation, following which he became head of the Supply, Transport and Markets Group at IEA Coal Research. He then worked at a UK energy media and consultancy company until 2001 when he joined Platts, where he edits the newsletter Power in Asia. He is an active naturalist, specializing in Asian forest birds.
James OConnell, international coal managing editor, joined Platts Metals in 2001, covering global precious metals trading. He joined the coal team in early 2007, leading reporters in Europe and Asia producing news for the global coal, electrical and steel industries. He previously worked for Irish broadcaster RTE. He holds a BA in English and History and a Higher Diploma in Applied Communications from the National University of Ireland.
David R. Jones is Platts global renewable energy editor, based in London. An environmental journalist with 20 years experience, Jones edited newsletters on US state and local government, medical waste management, oil pollution, and solid waste before joining Platts in 2001 to cover coal and energy policy.
Takeo Kumagai is currently Platts Tokyo News Editor. He has been covering energy news for Platts in Tokyo since 2005. He covers developments in Japan and beyond in the oil and natural gas industry, from upstream exploration and production activities, to downstream rening and retail businesses.
Jonty Rushforth, Senior Asia LNG Editor, joined Platts in 2006, covering European gas and power. He moved to Singapore in 2009 to launch Platts spot Asian LNG assessment, the Japan Korea Marker, and leads a team of reporters covering the Asia-Pacic LNG market. He was previously editor of a magazine covering the Latin American legal scene for four years. He holds a BA in Philosophy, Politics and Economics from Oxford University, and an MA in International Journalism from Cardiff University.
Ross McCracken, editor of Energy Economist, joined Platts in 1999 to run the European and West African crude desk. He was previously an editor with an Oxford University-based political and economic consultancy, and has taught in Poland and China. He holds a masters degree in European studies from the London School of Economics and his undergraduate degree is from the University of East Anglia.
Frank Watson, managing editor of Platts Emissions Daily, is a nancial journalist and editor with nine years experience of commodities coverage, specializing in energy markets. He has headed up the global emissions team at Platts since May 2008, having held the position of Europe Editor on emissions markets since August 2005. Frank developed Platts coverage of the emerging EU Emissions Trading Scheme, UN Clean Development Mechanism and Joint Implementation schemes, covering regulatory policy under the EU ETS and Kyoto Protocol, producing independent over-the-counter price assessments, market commentary and analysis.
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China: Driving the Oil Price

Ross McCracken, Editor, Platts Energy Economist
The supply side of the oil market has for the moment been substantially de-risked; inventories are high and surplus capacity is plentiful. The one support amid an indifferent economic recovery is China, and notably a Chinese industrial success that is based on domestic rather than external demandcar manufacturing. This suggests that if China sneezes, the oil market will catch more than just a cold.
If fundamentals are the primary determinant of a commoditys price, then the current stock situation would clearly imply lower price levels for crude oil. Commercial oil stockpiles in Organization for Economic Co-operation and Development (OECD) countries rose by 19 million barrels in July 2010 to end the month at 2.785 billion barrels, according to the September oil report of the International Energy Agency (IEA). Preliminary data pointed to a further stock build of 8.7 million b/d in August, which would take commercial OECD inventories over the record level of 2.797 billion barrels seen in August 1998. What the IEA didnt mention was that the last time stocks were this high, in August 1998, the price of crude was at one of its lowest ever points, hovering around $12 per barrel. By December 10, 1998, the physical benchmark Dated Brent had dropped to a record low of $9.13/b, a level as unimaginable now as $100/b was then. Of course, one of the major differences between now and 1998 is the size of in4 insight November 2010
ventories relative to demand. In 1998, world consumption of crude oil was 74.053 million b/d, more than 10 million b/d less than the 85.950 million b/d expected in 2010. However, OECD oil consumption in 1998 was in fact larger than it is now by some 1.5 million b/d. Moreover, the OECD has increased its level of strategic stockpiles in addition to commercial stocks. According to US Energy Information Administration data, total OECD stocks surpassed the level of 1998 in 2005, reaching 4.272 billion barrels in April of this year, or about 94 days of forward cover compared with about 85.4 in 1998. Chinese demand for oil is far greater now than it was in 1998, but China too has made great strides in increasing its level of both commercial and strategic stocks. At end-July, Chinas commercial crude inventory stood at 29.2 million tons, or about 213 million barrels. Strategic stocks are estimated to be in excess of 100 million barrels, together representing more than 60 days of import cover. Until early 2006, commercial oil
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reserves held by Chinas two largest oil companies, the China National Petroleum Corporation and Sinopec, could meet demand for only about two weeks. 1999 but $28.50/b in 2000. The price rise was terminated in 2001-2002 as surplus capacity grew again, but the drop from 5.54 million b/d in 2002 to 1 million b/d in 2005 saw the average crude price more than double to $54.52 million b/d. Surplus capacity increased in 2006 and 2007, but not enough to take the market out of the danger zone. It was also apparent that there was a lack of renery capacity capable of taking lower-value crude grades that were heavy and high in sulfur. Only in 2009, when surplus crude capacity jumped from 1.49 million b/d to 4.33 million b/d, did the crude price react, falling from $97.26/b to $61.67/b. To September 9, 2010, the crude price averaged $67.92/b; surplus capacity has risen further to 5.09 million b/d. Surplus capacity is a good measure of the supply-demand balance because it encapsulates shocks on both sides of the equation. The shrinking of surplus capacity after 2002 reects the dramatic increase in world oil demand, most particularly Chinese demand, and the lack of investment caused by low prices in the period from 1998. The huge rise in surplus capacity in 2009 reects both the drop in demand as a result of the aftermath of the nancial crisis and the oil industry investment cycle responding to the rising prices of the
Surplus Capacity
Stock levels, while an important indicator of the state of the market, are not a major determinant of price. High inventories will bear down on sentiment, while low inventories are bullish, but the stock level is largely a symptom of the pre-existing supply/demand balance. If it came to the crunch, for an industry that takes two to three years at least to bring a major eld on stream, one day more or less of stocks makes little material difference. It is the more immediate relationship between supply and demand that inuences prices. This nds representation in the amount of surplus capacity in the marketthat is, how much more oil could be produced should there be demand for it, and should the holders of that capacity (OPEC) prove willing to produce it. Surplus capacity in 1999, when crude prices were still in the doldrums, was 4.98 million b/d. The large drop to 3.05 million b/d in 2000 was accompanied by a correspondingly large rise in the price of crude, which averaged $17.97/b in 1. World oil consumption (million b/d).
Total OECD 100000 90000 80000 70000 60000 50000 40000 30000 20000 10000
Total non-OECD
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Source: EIA
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preceding period. Taking a step back from the events that impact oil prices on a day-to-day basis, there appears to be a strong correlation between surplus capacity and crude prices that explains the latters rise and fall since 1998. given for a rising market, is, of course, facetious, but nonetheless true. Those who downplay the idea that speculation has been behind the long-term rise in crude prices since 1998 argue that it cannot be the weight of new money, because in futures markets every seller needs a buyer. However, the argument misses the point that sellers will be found for all the new buyers, but only if the price rises. The broader argument that energy commodities have become nancialised means that forces less immediately related to supply and demand in the oil market help determine prices. It is the attractiveness of an investment in energy commodities relative to other types of investment that affects money ows. Even if oil inventories are high and surplus capacity plentiful, suggesting a bearish oil market, if the outlook for other investments looks worse, then energy markets will still attract funds.
Financials and Speculation

Fundamentals, of course, are not the only game in town. Much has been made of the nancialisation of commodity markets and investment in the commodity super cycle. There is little doubt that the nature of commodity markets has changed over the last ten years as new investors have ooded into the market for a multitude of reasons. The rise of long-only commodity investment indices, heavily weighted towards energy commodities and crude oil in particular, put pressure on the market to nd sellers to take the other side of the contracts. More buyers than sellers, the general uninformative explanation 2. Chinese total crude oil stock changes.
4.00 3.00 million tons 2.00 1.00 0.00 -1.00 -2.00
1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 7/10
Source: Derived from Bureau of Statistics and Customs data
3. China petroleum stockpile statistics (commercial stocks).

29.50 29.00 28.50 million tons 28.00 27.50 27.00 26.50 26.00 25.50 Source: Xinhua, OGP
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
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There is also the question of time horizons. Arguments based on fundamentals tend to take a very short-term outlook. Inventories are rising, surplus capacity is high and that means that prices should be fallingnow. This treats the oil price as a market-clearing price. A level is achieved at which all producers and consumers net out their positions and meet their physical requirements on a daily basis. Surplus oil means prices fall, shortage means they rise. However, nancial investors want to buy and hold. They are looking at the capacity of a price to change. If the market is going to tighten in the future, then they will buy now on the expectation that prices will rise. The oil price is no longer a clearing price but an investment vehicle. It should be no surprise that as investment grew in energy commodities and the nancial side of the market expanded in relation to the physical side that futures prices also grew in importance. Oil prices are currently seeking direction, which essentially means no-one is sure whether they are going to go up or down. They have stayed pretty much within a $70 to $80/b band for the last 12 months. There are no real supply concerns so attention is focused on demand. Good economic news pushes prices up, bad news pushes them down. This has upset the idea that commodities might represent a hedge against ination or a safe haven against an ailing economy as equities are behaving in the same way. The inverse correlation, if it existed, appears to have gone. This does not have to be bad news. It indicates that the recovery is ongoing, just unspectacular. For every spate of poor economic data there is a raft of good data. It isnt a double dip recession, but nor is it a return to robust health. In this context, oil demand in the OECD looks set to remain weak, with further falls in OECD Europe and Asia cancelling out any growth in North America. As a result, the only place that really matters is China, whether one takes a view of the market based on near-term fundamentals or treat oil as an investment commodity with a longer time horizon.
Single Support
With attention focused on the demand side of the market, Chinas already important position in the oil market becomes hard to overstate. The overall contraction in world oil demand of 1.3 million b/d in 2009 shown by IEA data masks the stark division between the OECD and non-OECD blocks and between Asia and the rest of the world. In 2009, amid the worst of the global slowdown, Chinese oil demand grew by 0.7 million b/d, according to the IEA. The only other growth areas were the rest of non-OECD Asia, up 0.3 million b/d, and the Middle East, also up 0.3 million b/d. Even without the emergence of the electric car, OECD oil demand is broadly seen as having peaked. That cannot be said of Chinese oil demand. China became the worlds largest car market in November 2009 surpassing the United States. It had previously exceeded Japan as the worlds largest maker of automobiles. Three notable aspects of this industry are, rst, that while there are a number of large foreign joint ventures in the car manufacturing sector, auto production is predominantly indigenous. Second, very few cars are made for export, almost all are absorbed by the domestic market. And, third, there is still huge
4. Surplus capacity in the oil market.

Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
*To September 9
(million b/d) 4.98 3.05 4.07 5.54 1.92 1.27 1.00 1.42 2.07 1.49 4.33 5.09 5.19
Average price of Dated Brent ($/b) 17.97 28.50 24.44 25.02 28.83 38.27 54.52 65.14 72.39 97.26 61.67 67.92*
Source: EIA, Platts
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potential for growth, owing to the current low per capita level of car ownership and Chinas pattern of social and economic development. When the nancial crisis turned into a global slowdown, analysts keen to remain optimistic argued that the BRIC (Brazil, Russia, India and China) countries, and China in particular, had an internal growth dynamic that would allow them to avoid recession. These dynamic growth regions would help pull the rest of the world back from the brink. 5. OECD stocks position.
Year 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: EIA
Total OECD stocks (million barrels) 3587 3531 3376 3255 3494 3408 3543 3643 3588 3634 3706 3713 3718 3791 3875 3758 3762 3875 4006 3733 3796 3912 3811 3914 3980 4068 4161 4090 4214 4217 4272
OECD forward cover, including strategic stockpiles (days) 85.9 89.4 89.4 88.2 92.7 90.9 91.8 92.6 88.3 87.9 89.0 88.4 86.5 87.5 87.1 83.6 81.7 82.8 85.4 78.0 79.2 81.5 79.5 80.4 80.5 82.2 84.7 83.8 88.6 92.8 94.2
The argument downplayed the extent of export-led growth in the BRICs and to a large extent contradicted the whole notion of globalization. And the idea appeared plain wrong as Chinas previous double-digit GDP growth rates stalled and the southern coastal areas of the countryits export-orientated manufacturing center and the locus of the countrys job creationsaw a severe slowdown in growth. However, in retrospect Chinas fantastically successful not-for-export car industry is indeed evidence of a more powerful internal growth engine. In the auto sector, China is absorbing raw materials, but instead of processing them and exporting manufactured and semi-manufactured goods, it is capturing the whole value chain and selling increasingly sophisticated goods internally, and in ever larger volumes. This puts the auto sector in an important position within the Chinese economy. If domestic demand needs to be stimulated, it is a prime target for benets, whether direct or, as is currently the case, in terms of incentives for new vehicle sales. As the car industry increases in importance within the economy, it runs the risk of becoming too big to fail, just as it has in other countries. It represents an important facet of the countrys growing structural addiction to petroleum.
Expansion Fears
The tensions this creates are already evident. In September, Chinas automakers rejected an ofcial warning that unchecked growth in the industry was leading to excess capacity and could harm the wider economy. Chen Bin, an ofcial with the National Development and Reform Commission, Chinas top economic planner, said excess auto capacity threatened sustainable economic development and must be resolutely stopped. However, industry representatives and the China Association of Automobile Manufacturers (CAMM) see it differently, arguing that car makers were only trying to meet demand in the worlds largest auto market. Fan Zhong, a senior manager with Dongfeng Auto-
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mobile, a major Chinese manufacturer, said, our problem is not having enough capacity. Most entrepreneurs at the International Forum on Chinese Automobile Industry Development in Tianjin in September expressed similar views. The overall capacity of Chinas auto industry might seem excessive, but the market has huge potential for restructuring and growth, said Hu Xinmin, honorary chairman of CAAM. Chinas auto industry has been operating at 120% of its nameplate capacity, and most manufacturers were operating more than 20 hours a day, said Xu Changming, head of information resource development at the State Information Center. Sales were expected to grow by more than 15% annually in the next few years, Xu said. There is no need to worry about excessive output. However, Chen Bin warned that local governments have been making blind efforts to open new factories and expand capacity, encouraged by the industrys healthy prots and ancillary economic benets. Twenty-seven of the Chinese mainlands 31 provinces, autonomous regions and municipalities have plants that are able to produce nished vehicles. This appears to be an all too familiar pattern of Chinese investment, in which each tier of government mobilizes resources to enter a protable sector quickly, resulting eventually in overcapacity and a large amount of inefcient plant. Nevertheless, there is condence that Chinas car market can continue to grow. Despite average incomes remaining relatively low, the proportion of the population that can afford cars is growing and China has a huge billion plus population. Car ownership levels tend to rise much faster than income once middle-income levels are achieved. In addition, Chinas urban population is increasing far quicker than its overall population. Rapid urbanization tends to increase income growth and with it car ownership. Suburbanization increases the demand for transit further, either for cars or for mass transit systems. These long-term underlying trends suggest that any over expansion of the Chinese car market in the near term might prove short-lived. But a wider slowdown in the rate of Chinese oil demand growth could pull from the oil market what has become its central support. Without Chinese growth in oil demand and expectations that this growth will be sustained and replicated in other developing countries such as India, the fall in the price of oil from its 2008 peak would have been deeper. China has always been concerned about its exposure to international markets, and particularly to raw materials on which its manufacturing and processing industries depend. It has been keen to gain control of resources abroad to mitigate the security implications of dependence on imported commodities and the price impact of being dependent on industries where the supply side is heavily concentrated among a few large players. The de-risking of the supply side in the oil market has for the moment passed a modicum of price control to China as the main center of demand growth. Unfortunately for Beijing, Chinas demand for oil is part of a dynamic that is not easy to control, even for a state-dominated economy. It represents a deepening of the countrys addiction to oil and a strengthening of the relationship between Chinese economic health and the oil price. 6. Passenger vehicle ownership per 1,000 population (1980, 2002 and 2020).
Economy PRC Beijing Shanghai Hong Kong, China Indonesia Jakarta Japan Tokyo Korea, Republic of Seoul Thailand Bangkok Source: APERC (2006)
1980 2 9 5 41 5 34 203 159 7 15
2002 19 80 47 59 16 143 428 266 204 205 100 324
2020 65 177 100 70 26 161 522 271 284 288 158 389
1980-2002 (%) 10.8 10.4 10.7 1.7 5.4 6.7 3.4 2.4 16.6 12.6
2002-2020 (%) 7.1 4.5 4.3 1.0 2.7 0.7 1.1 0.1 1.9 1.9 2.6 1.0
PRC = Peoples Republic of China, - = no data available
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Japans Oil Industry at the Crossroads

Takeo Kumagai, Tokyo News Editor, Platts
As Japan tries to navigate a way through the far-reaching changes facing its oil sector, industry sources and analysts see a potential for the country to emerge as North Asias premier trading hub.
Changing Japanese oil consumption patterns mean that local re ners face falling domestic demand. While this has prompted successive rounds of re nery rationalizations, mergers and modications, industry sources say that the country could leverage its surplus storage capacity to play a more active role in crude and oil products trading.
Source: Getty Images
The worlds third-largest oil consumer after the United States and China, Japan is expected to nd itself with a lot of surplus storage capacity at oil terminals and reneries in coming years. And this prospect has prompted one senior renery source to say that we must think about ways to utilize our existing facilities instead of closing down and scrapping them. Japanese re ners have been forced to mothball unprotable plants and consolidate assets in recent years. One of the latest moves is the creation of the JX Group, following a merger of Nippon Oil, Japans largest re ner, and miner and re ner Nippon Mining Holdings. JX is committed to cut overall rening capacity by 400,000 barrels per day by the end of March 2011. It will cut another 200,000 b/d of rening capacity by March 2014 at latest. And this plan could be advanced, depending on the demand situation, the company has said. Japans domestic demand for oil products is ofcially projected to fall to 160.8 million kiloliters (2.77 million b/d) in the scal year ending March 31, 2015. This is 12.5% lower than the
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183.75 million kl estimated for the current year ending March 2011, according to forecasts from the Ministry of Economy, Trade and Industry (METI). The outlook is thus stark. The forecast domestic demand for products in the year ending March 2015 represents 59.7% of Japans current installed rening capacity of 4.64 million b/d. Satvinder Roopra, head of downstream oil consulting at the energy consultancy Wood Mackenzie, described the options. He told Platts that Japans rening capacity is signicantly in surplus today and, with rapidly declining demand, there is no doubt that the surpluses are going to increase in future. The question is what you would do with that surplus? Do you just cut [the rening capacity], as in the current strategy, or do you try to nd other markets? Roopra said. The South Koreans have used their surpluses [excess capacities] to export out, while Singapore has used its surpluses to support its hub status to supply into regional markets, he said. There are certainly options available for Japanese re ners other than closing down. He pointed out that good infrastructure is the main requirement for a trading hub. The two main things which are missing in Japan today are availability of independent third-party storage at reasonable rates and port infrastructure to load large vessels, Roopra said. Local government sources say there are no physical restrictions or regulations that prevent foreign companies from owning or renting storage tanks
The outlook is thus stark. The forecast domestic demand for products in the year ending March 2015 represents 59.7% of Japans current installed rening capacity of 4.64 million b/d.
at Japanese ports, as long as the companies clear basic business and credit requirements. But some government initiatives need to be put in place for Japan to become a trading hub, the sources added. Roopra agreed on the latter point. If you look at how other oil trading hubs have developed, there has been quite a lot of support ... incentives provided by the government and other agencies to make them happen. I think you need to see something similar in Japan, he said. I think this initiative would need some pretty serious backing, he added. There is a big difference between a fully-edged international trading hub and an idea ... you need some kind of coor-
1. Japans oil product rening conundrum (million b/d).

5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 Current capacity Source: METI Projected demand in FY2011 Projected demand in FY2015
FY means Japanese nancial year (e.g. FY 2011 is April 1, 2010-March 31, 2011)
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dinated response; whether that comes from the industry body or whether it comes from the government. Among the numerous locations which could be considered in western Japan, the southwestern island of Okinawa could be ideal because of its proximity to China and other markets in Asia, sources said. Okinawa has a total oil storage capacity of 6.25 million kl at two terminals dedicated to strategic stockpiles. With at the Okinawa terminals. In exchange, the kingdom agreed to prioritize the supply of crude to Japan in times of emergency. Saudi Aramco is expected to start storing about 600,000 kl of crude at METIs crude storage tanks at Okinawa by the end of 2010. In June 2009, Japan struck a similar deal with the United Arab Emirates when METI and Abu Dhabis Supreme Petroleum Council signed a basic agreement on storing the emirates crude in Japan. The Abu Dhabi National Oil Company (ADNOC) subsequently signed a three-year contract in December 2009 with Nippon Oilnow JXto store crude at its 620,000 kl terminal at Kiire in southwestern Japan. Under the deals with Saudi Aramco and ADNOC, the government has agreed in principle to allow the oil companies to carry crude on very-large crude carriers (VLCCs) to Japanese reneries, sources said. Special permission would be issued by the Ministry of Land Infrastructure, Transport and Tourism after scrutiny of requests for each VLCC as part of the deals, sources added. Under Japanese regulations, companies are required to carry oil by coastal vessels. These are generally more expensive, due to their smaller size and other xed costs such as the need to employ an all-Japanese crew. Incentives such as access to larger vessels could lure domestic and foreign companies to store oil at Okinawa for trading. Although there is no storage available in Okinawa at present, it is a location where the government has the bandwidth to open up some storage space for trading by renting out tanks, sources said. If the government opts to open up storage space at the terminals where it holds its strategic stockpiles it could look at renting capacity from the private sector in other parts of the country, sources added. This way it would be able to still comply with its IEA commitments and also offer storage to domestic and foreign traders. All of which could go a long way in helping transform Japan into one of the most lucrative trading hubs in Asia.
Although there is no storage available in Okinawa at present, it is a location where the government has the bandwidth to open up some storage space for trading by renting out tanks.
government backing, part of that capacity could be opened up for trading, sources said. The two Okinawan terminals currently store up to 4.93 million kl of crude for Japans strategic stockpile. But the remaining 1.32 million kl of storage is kept empty to facilitate maintenance of the terminals. As a member of the International Energy Agency (IEA), Japan is required to hold oil stocks equivalent to 90 days of its net imports. It currently holds 94 days worth of consumption in its strategic reserves and 72 days worth of consumption in private stockpiles. But the country might be able to lease some storage capacity to both foreign and domestic companies for trading in Okinawa if the government allows third-party access to the terminals, sources said. If the existing crude oil tanks could be converted into oil products tanks to hold, for instance, 1 million kl each of gasoline, jet fuel and gasoil, Okinawa could easily become a trading hub, they said. With a storage capacity of 3 million kl, market participants could easily trade 30 million kl of oil products a month, they added. And there are precedents. Under a recent deal, Japan allowed Saudi Arabia to store its crude oil for commercial use
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The LNG Market Bounces Back

Jonty Rushforth, Senior Asia LNG Editor, Platts LNG
The smell of fear has started to dissipate and there is even a faint aroma of optimism in its place: the LNG market is bouncing back. After 2009s rollercoaster, which saw LNG and gas prices plunge from the previous years heady, double-digitted heights, most participants expected at best a slight rise in 2010. But in fact the year has seen a surprising recovery in demand, and with it prices.
There is an argument that LNG demand never went away. After all, 2009 saw production grow, up 5.6% year on year to 181.6 million metric tons (mt) according to data from independent consultant Andy Flower, albeit at a slower pace than originally intended. And all those extra cargoes found a home. But the prices achieved were on the whole a substantial amount lower than might have been expected just a year previously, as cargoes were rejected by the worlds premium LNG buyers in Asia as the crisis bit into their industrial demand. And the new supplies did not make it as far west as rst planned either. Massive new LNG production trains in Qatar, the socalled mega-trains, were built, in part, on the basis of rising US demand and falling US production. The recession and shale gas, respectively, confounded those assumptions, leaving the US perhaps the least attractive market in the world for LNG.
So instead the excess LNG went to Europe, where it crowded out pipeline supplies and ignited a debate over oilindexed contract pricing and the overall market structure. The effect was a global harmonization of gas and spot LNG prices at levels not seen since the rst half of the decade, hovering at around $4 to $5/MMBtu. That meant US prices had dropped to about a half of the previous years peak, UK prices to about a third, and Asian spot LNG prices to about a fth. Alongside the drop in prices, there was a drop in liquidity in the Asian spot LNG market. After a urry of spot trades in 2007 and 2008, the winter of 2008/09 saw virtually no spot trades in the region, and in the following months the market remained quiet aside from a few sporadic deals into China and India. While prices were down, Asian LNG buyers had little to take comfort in as their long-term oriented portfolios looked too heavy for their reduced de-
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mand levels. Low priced spot cargoes were attractive, but there was simply no space for them. For 2010, many of those same issues persisted. The growth in LNG production carried on, though hiccups among new projects also persisted. Economies in Europe and the US limped along, with downstream gas demand consequently relatively weak. And the miracle of shale gas confounded doubters by adding further to US gas production despite persistently low prices there. Yet in the course of a few months LNG imports in Asia had bounced back to even above 2008 levels, European imports hit new highs and spot prices were again looking healthy (at least outside of the US). As Tony Regan, principal consultant at Tri-Zen International, says, Demand is running far faster than people expected. Everyones been focusing on the glut and the projects, but demand has grown, particularly in northeast Asia. We had a cold winter, so demand was up, but then the question was, was it sustainable? And it was, not just for LNG but for gas. So what happened? As Regan notes, a prime factor was the weather. The year started with one of the coldest winters on record across the northern hemisphere. In the UK, January temperatures in the south averaged just 1.5 degrees Celsius, more than 3 degrees below the 20-year average, according to data from NASAs Goddard Institute for Space Studies, which provides temperature data from around the world. Similarly, Seoul saw average temperatures of -4.5 degrees Celsius, also close to 3 degrees below the 20-year average. Handily, the UK faced its coldest winter on record at the end of a year when it had just ramped up its LNG import facilities, giving it ample new supply and avoiding the gas price spikes it had seen in earlier winters. But it still meant a strong draw on storage, setting the country up for steady demand for LNG cargoes throughout the following months. By the end of winter 2009/10, in March, stocks at the UKs largest storage site, Rough, had fallen to under 3,000 GWh, 80% below the average level for that time of year from 2005 to 2009. Meanwhile Asian importers did not have the option of storage to draw on, and so instead upped their intake of cargoes considerably. In doing so, they were able to make up for the reductions to term contract volumes many buyers had made at the height of the demand drop in 2009. So Japan, for example, hit its highest ever monthly LNG import volume in March 2010, 6.7 million mt, after some
Yet in the course of a few months LNG imports in Asia had bounced back to even above 2008 levels, European imports hit new highs and spot prices were again looking healthy (at least outside of the US).
particularly cold weather that month and in February. And South Korean monthly imports were above 2008 levels throughout the rst quarter of 2010, only briey dropping below pre-recession volumes in May, before again rising. But while the cold weather had arrived in time to rescue the LNG market from an all-out rout, there were still doubts as to whether underlying demand would cope with the projected increase in supply for 2010. The previous year had seen the completion of an additional 44 million mt/year of new liquefaction capacity, and 2010 was due to see a further 30 million mt/year or so of new capacity. Yet while the Atlantic economies struggled to build steam for a recovery, much of Asia experienced an industrial resurgence, bringing with it a call on LNG supplies. Looking at the core LNG buyers, Japan and South Korea, data from the Organization of Economic Cooperation and Development shows industrial production already recovering in the second quarter of 2009. At that point, South Korea had quarter-on-quarter growth in industrial production of 11.3%, and Japan a more modest 6.0%.
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Both countries saw steady quarterly production growth averaging above 5% throughout the remainder of 2009 and into 2010. More broadly, Chinas GDP growth year on year is forecast at as much as 10.5% for 2010, according to the International Monetary Funds latest projections, with India seeing 9.4% growth, Taiwan 6.5% and South Korea 4.5%. Even Japan, where the economy is looking more sluggish, is forecast to see GDP growth of 2.4% in 2010. Thus, consultancy FACTS Global Energy (FGE) says it now expects South Korean LNG imports to recover to precrisis levels this year, driven by a conuence of macroeconomic, weather and power related factors. And the rm sees Taiwan having a bullish LNG import performance in 2010 ... courtesy of the strong rebound in the industrial sector. Similarly, Tri-Zens Regan notes: The pull from South Korea and Japan has been the industry and power sectors. We are seeing an industrial recovery. A cold winter and rebounding economies probably would have been suf1. Global gas and LNG prices.
Algonquin City Gate 1st Month UK NBP 1st Month 10 9 8 7 6 $/MMBtu 5 4 3 2 1 Japan Korea Marker SoCalGas 1st Month
cient to bring the market back towards balance in 2010, but the weather had yet more support to give to the market: Japans hottest summer on record. In almost a mirror image of the winter, Tokyos July and August temperatures were about 2 degrees above the 20-year average, the NASA GISS data show. Going into the summer, a few buyers picked up extra spot cargoes, largely due to nuclear plant outages. But as the hot, sticky summer carried on, generators drew down on their LNG inventories to feed demand for air-conditioning. Spot buying picked up, and utilities started to increase their term supplies where possible. By September, one utility was forced into the desperate position of paying the highest spot price of the year so far, above $9/MMBtu, when it was caught short by the steady pull on supplies. For Japan, FGE has lifted its forecast for 2010 imports because of a heat wave that lasted from July to early September. On the industrial side, the rm is more cautious for Japan, warning that: If the yen continues to remain strong against the dollar, industrial demand
Feb-09 Source: Platts
Apr-09
Jun-09
Aug-09
Oct-09
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for gas could deteriorate in the fourth quarter of this year as the Japanese manufacturing industry, which is dependent on exports, weakens. Overall, the steady pull on demand from industrial recovery and the weather led to spot prices rising convincingly above the previous years level. Platts Japan Korea Marker (JKM), an assessment for spot LNG delivered into Japan and South Korea, has averaged $6.97/MMBtu so far in 2010, 50% higher than in the same period the year before. After the winter saw prices above $7/MMBtu, the spring brought a dip back down to the $5s/MMBtu, but by the summer the JKM was already on the rise again, and at the time of writing was holding above $9/MMBtu, with plenty of expectations of further rises up into double digits. The pattern of spot prices also demonstrates the extent to which 2010 has been an Asian-led recovery. While gas prices in the Atlantic have also seen a year-on-year rise this year, it has been more muted than the Asian LNG jump. UK front-month futures at the National Balancing Point gas hub have averaged $5.75/MMBtu so far this year, up 29% on the same period in 2009. And in the US, the equivalent contract for the Henry Hub has averaged just $4.46/MMBtu in 2010, up only 19% year on year. With 2010 now looking fairly balanced, what does that mean for next year and beyond? Certainly 2011 is likely to see continued growth in LNG demand across Asia. Economic forecasts indicate further recovery in the region, with the IMFs latest forecasts indicating GDP growth of 9.6% in China, 8.4% in India, 5% in South Korea, 4.8% in Taiwan and, notably more modest, 1.8% in Japan. And 2011 will also see the entrance of new buyers to the market. Thailands PTT has said it hopes to complete its
2. Asian LNG imports.

China 14 12 10 mt millions 8 6 4 2 South Korea Taiwan Japan India
1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 Asian LNG - year on year change mt millions 2 0 -2 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10
Asian LNG - 2010 on 2008 change mt millions 2 0 -2
1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09 1/10 2/10 3/10 4/10 5/10 6/10 Source: Customs data
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new 5 million mt/year terminal by the second quarter of next year. And Petrochina has two terminals under construction, at Dalian and Rudong, both due for completion within the rst half of 2011, and giving a total of 6.5 million mt/year of capacity. In India, the much-delayed Dabhol terminal is expected to come onstream by the end of 2010, while across the water Dubai is, at the time of writing, commissioning its new oating terminal. For the existing buyers, import capacity on the whole is not a constraint. Japan has terminals with a total capacity of 177 million mt/year, versus longterm contract volumes of only 57 million mt/year or so. Similar, for South Korea total capacity is 44.4 million mt/ year, serviced by long-term contracts at 25.5 million mt/year. Taiwan is a little more constrained, having 10.4 million mt/year of capacity and 8.7 million mt/ year of long-term contracts. But even with plenty of spare capacity across the region, 2011 may not see the same rapid increase in LNG imports that was seen this year. John Harris, director for global gas at consultancy IHS Cera in Beijing, says 2011 will likely have more sedate growth in the traditional importers. He explains that this is largely because of the scale of 2010s recovery. We have more modest growth than this year, because Japan and Korea are expected to rebound quickly this year. So to some extent the slowdown in growth in 2011 is a reection of strength this year. Similarly, FGE expects Asian LNG imports to surpass 130 million mt, after recovering more than 10.0% in 2010. That more modest growth is likely to be centered on China and India. Though both were somewhat absent from the spot market in 2010, that was due in part to long-term contracts ramping up, meaning they both saw some growth in 2010, with China by far the larger. As Harris says: Growth will switch back to China and India, who will be energetic importers, no pun intended. China National Offshore Oil Corporation saw major contracts with Qatar and Malaysia start up in 2009, and ramp up in earnest in 2010, as well as the start of a contract with Frances Total at the beginning of 2010. Its total long-term contract volumes reached 11.9 million mt/year by the end of 2010, leaving little room at its terminals for additional supplies. But with the Petrochina terminals starting up next year, that bottleneck will be removed. FGE says it forecasts Chinese LNG import growth of a tremendous 58.4% in 2010 and a solid 47.8% in 2011. It adds that incremental LNG supply will be met largely by the ramp-up in long-
3. Liquefaction.
Project North West Shelf - Train 5 Sakhalin - Trains 1/2 Qatargas 2- Trains 4/5 Tangguh - Trains 1/2 RasGas 2 - Trains 6/7 Yemen - Trains 1/2 Dua expansion Peru LNG Qatargas 3/4 Trains 6/7 Pluto Angola LNG Location Australia Russia Qatar Indonesia Qatar Yemen Malaysia Peru Qatar Australia Angola Capacity (mil mt/yr) 4.4 4.8 each 7.8 each 3.8 each 7.8 each 3.35 each 1.5 4.4 7.8 each 4.8 5.2 Start-up H2 2008 Q1 2009/Q2 2009 Q2 2009/Q4 2009 Q2 2009/Q4 2009 Q3 2009/Q1 2010 Q4 2009/Q1 2010 H1 2010 10-Jun Fiscal 2010/11 early 2011 Q1 2012 Destination Asia Japan, US/Mexico, South Korea UK, France, Mexico, US and Asia China, South Korea, Japan, US and Mexico US US and South Korea Japan and South Korea Mexico, US, Europe, Asia? US Japan US, Europe
Source: LNG Daily liquefaction tracker
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term contractual volumes, but that China is expected to rely on the shorter term cargoes in 2011 to meet spikes in LNG demand beyond those met by long-term contracts. Meanwhile, in India, Petronet LNGs third tranche of a long-term contract with Qatars RasGas kicked in at the start of 2010, raising its term imports to 7.5 million mt/year, from 5 million mt/ year the year before. While that should have given the countrys overall LNG imports a sharp shove higher, it was tempered by the rapid growth in domestic gas supplies. Gas produced from the Krishna-Godavari basin reached about 60 million cubic meters/day during the year, or almost half total domestic production. With pipeline capacity lagging the development of supplies, LNG was crowded out. Imports sagged to just 641,000 mt in each of May and June, about 15% less than the average level in 2009, and barely higher than the long-term contract level. But new pipelines are due to start up in India in 2011, likely allowing a ramp-up in LNG imports. The country currently has import capacity of 15 million mt/year, and with the start-up of Dabhol would see the addition of a further 1-2 million mt/year. Further terminals are due to commission in the following few years, giving the possibility of a steady increase in supplies, so long as the downstream pipeline network keeps pace. Alongside potential demand growth in 2011, there are still further new production trains due to come onstream. Qatar has two mega-trains, capable of producing 7.8 million mt/year each, under construction and due to be completed by the end of March 2011. And Australias Woodside is building its 4.8 million mt/year Pluto LNG terminal, also due to start up in early 2011. Added to that is the likelihood of further production gains at those facilities that started up this year. So will Asias growth cover all the new supply? The issue for sellers is that if the new supply swamps Asia, then cargoes start being sent instead to Europe or the US, where spot prices have been far lower this year. Term supplies into Asia are linked to oil prices, so the price risk there is not gas related. But for everything else, producers would benet from a more balanced Asian market in 2011 and beyond, and would suffer from any excess. Tri-Zens Regan is particularly bullish on this score. Theres forecast to be a surplus of 60 million mt/year in 2011, but thats still less than 2% of global gas demand, and it is being absorbed, he says. In fact, he adds, if the new liquefaction terminals only operate at 90% of capacity, we could be short by 5 million mt by the second half of the year. Regan is forecasting a progressively tighter LNG market in the years ahead, largely led by Asian demand growth. By 2012 he sees the global market short by 23.8 million mt, growing to as much as 103.2 million mt by 2015. That would be, he says, a lot tighter than in the previous sellers market. And the effect would likely be far more seller-friendly long-term contracts. So any concessions will go, there will be no s-curves, back to oil parity and spot prices likely higher than term prices, he adds. Others are slightly less bullish, though still forecasting a more balanced future than 2009 saw. Ceras Harris says the market should slowly tighten to the extent that as more countries import LNG, the potential demand grows. That reduces short-term availability. He adds that while there have been a number of new facilities starting this year, which has kept spot prices relatively low compared to term prices, theres no evidence of real weakness in term negotiations. For the longer-term, then, the lift in 2010 seems likely to carry through to the following year, and in turn tighten the market further out. That should feed through to higher spot prices in Asia, and higher term contract prices. But the inelasticity of the market means that that could set off yet another cycle of the market lurching from tight to loose and back again, as higher prices encourage more projects to come onstream, and discourage demand.
coal
India: Changing the World Coal Market

James OConnell, Managing Editor, Platts International Coal Report
India is far from a new player in the international coal market. But now more than ever it is proving itself a considerable force for change. The country is having an impact on the global coal market that no other consumer has had in decadesaltering trade ow patterns, highlighting bottlenecks and dictating price trends in an industry more used to viewing India as a sleeping giant. And if any evidence were needed that the worlds second most populous country is now very much awake, it is set to pass a key landmark in 2010 by displacing Europe as the largest consumer of South African coal. Up until 2009, Europe consumed the majority of thermal coal exported from the Richards Bay terminal in South Africa. Nowadays, it is Asia, more specically India and China, that are the main destinations for Richards Bays exports. Ofcial statistics from Richards Bay Coal Terminal indicate that exports to India in 2009 totaled 17.7 million metric tons (mt), some 29% of its total exports. This was up from 6.8 million mt, or 11% of Richards Bay exports, in 2008. And statistics for 2010 are almost certain to show that India is now the main customer for South African coal. A conservative estimate would put 2010 imports in the region of 22-23 million mt, roughly 30-33% of total Richards Bay exports. And it isnt just South Africa that is seeing Indian buyers. Earlier this year, Indian consumers took delivery of thermal coal cargoes from Colombia in South America, a voyage distance of
10,700 nautical miles. By comparison, the voyage from Richards Bay to Mumbai on the west coast of India is 3,700 nautical miles, around a third of the distance of Colombia deliveries to west coast India. In fact, India is dubbed the fastest growing importer of thermal coal by the Australian Bureau of Agricultural and Resource Economics (Abare). The Australian government research agency forecast in its June 2010 quarterly report that Indian thermal coal imports will reach 68 million mt in 2010, up 26% on 2009 volumes. Abare further expects that Indian demand for imported thermal coal will increase 13% in 2011 to 77 million mt, with the demand being stimulated by Indias vast electric power program. India is projected to complete 18.8 GW of coal- red generation capacity in the nancial year ending March 2011, said Abare. The extraordinary development and shift in market emphasis is being marked by experts and analysts alike as a warning for an industry that has underinvested in infrastructure and one that has consistently underestimated Indias impact on the wider market. Standard Chartered, a bank with India links going back to 1853 as the Chartered Bank of India, Australia and China, shed light on potential issues facing Indian importers, the countrys domestic power and cement industries and, of course, southern hemisphere coal producers. India hopes to grow its power generation capacity by 14% per annum till 2012, increasing its capacity from
coal
170 GW in 2010 to 220 GW in 2012 (we forecast 198 GW). If India meets even half of its power generation targets, the thermal coal market would face huge problems, it said in August 2010. Indias demand for imported thermal coal is growing at a faster rate than Chinas. With access to vast domestic coal reserves, China is forecast to import 98 million mt of thermal coal in 2010, an increase of 7% on 2009, with Abare projecting that imports will grow 5% to 103 million mt in 2011. China, with domestic coal production exceeding 3 billion mt/year, is currently a swing importer and likely to remain one at least in the short term. Indias production, while over half a billion mt/year, is more constrained and likely to leave it more reliant on imports. Standard Chartered thus assumes that China may need to import up to 10% of its power coal needs but puts a gure of 40% on Indias capacity program. Unlike China, India cannot simply fast-track developments. Coal mines take many years to gain mining licenses and approvals while the transportation bottlenecks are much more severe in India than in China, it said. Standard Chartered also puts Indias massive power program in perspective. Assuming India sources 60% of the coal it requires from its own mines, it would still need to build an additional 106 million mt of coal capacity in the next ve years. This is double Australias planned expansion over the same period and over two-thirds of Indonesias planned growth. It is a large number and it clearly highlights why Indian consortia are spending so much money on buying coal projects in Indonesia, Australia and Mozambique. From the perspective of exporters and producers even the banks bearish forecasts of 6%/year growth are good news, with Indian imports projected to increase from its 2010 forecast of 73 million mt to 124 million mt by 2015. This represents a healthy 51 million mt of additional demand, and is about 35% of all additional seaborne supply of 142 million mt. On the ip side, on a bullish 10% per annum growth assumption for power generation capacity, Indias coal imports could grow by as much as 125% to 164 million mt by 2015, which would push prices well above $200/tonne, it said. Historically, Australia has experienced infrastructural issues that have caused international coal market prices to spike. India is a price-sensitive buyer, although this is changing somewhat. Subu Varada, Associate Director of Resources at Standard Chartered, told Platts in early October that, while India
In fact, India is dubbed the fastest growing importer of thermal coal by the Australian Bureau of Agricultural and Resource Economics (Abare).
has plans to develop its port infrastructure, it may not be able to complete the program in time to deal with the level of imports the country needs. Indian ports will not be able to handle 200 million mt of coal imports by 2015, 150 million mt would be more realistic, with 160-170 million mt a bullish projection, Varada said, adding: The other risk is that these projects tend to get delayed. Varada and his colleagues suggest that India is now playing a delicate balancing act to avoid a spike in international coal prices, which in turn would pressure domestic prices (which are at a signicant discount). As a competitor for Richards Bay coal, India has several advantages over Europe. The price of carbon and initiatives to reduce pollution from fossil fuel use are more stringent in Europe while electricity demand is depressed, unlike the rising trend in India. Consider, for example, the views of Oystein Loseth, the chief executive of Swedens Vattenfall, a major electric utility particularly in northern Europe, with just under half of its generation being coal-red. Outlining the utilitys revised strategy, Loseth told a conference call in September that demand for electricity in the Nordic markets would
coal
not recover until 2020. In continental Europe he thought demand would pick up earlier, but did not suggest a date. His tone was far from optimistic, observing that markets were weak, pressure on margins strong and the way forward to a sustainable system expensive. Loseth warned of a much weaker market outlook, with a lot of new production coming in to meet the EUs 20% renewable target by 2020, twinned with slow recovery in demand. 2008 was the top in terms of power demand, he said. That level will not 1.4 million mt year-on-year, more than offsetting the 800,000 mt year-on-year decline in Q1 10, Barclays Capital said in September. With business condence gures indicating further growth, Barclays Capital said that as a result, we expect German coal imports to remain strong, rising 1.24 million mt higher year-onyear in 2010 and a further 900,000 mt in 2011. By contrast, steam coal imports in the UK slumped to 31 million mt in 2009 from the 2006 peak of 42 million mt. Barclays attributed the fall to competition from gas-red generation and reduced demand. While weak European demand is helpful for coal-hungry India, it may not be sufcient to avert the higher prices anticipated because of the uptick in global, and particularly Indian, demand. Standard Chartered believes prices are set to move higheran increase that formerly price-sensitive India may now have to absorb. We believe thermal coal prices are on the verge of a major move up. Even assuming conservative growth in Chinas and Indias power-generating capacity, it is difcult for us to see how their mines can deliver enough coal to power their expansion programs. Coal imports could be the only answer, but it is difcult to see how traditional producers such as Indonesia and Australia will be able to deliver enough coal, it said. In fact, over the medium to longer term, the news Standard Chartered is delivering to India is not very good at all. Getting export coal out of the ground is easy. Moving it out of Australia, South Africa, Mozambique, Mongolia and Indonesia to China and India, however, is where the problem lies. Building port and rail infrastructure is difcult and we think the big expansion plans are too optimistic. Indias sphere of inuence is strongest in the Pacic basin but extends around the coal consuming world. As an agent of change, it is ironically part of the process that may bring the era of cheap power station coal to an end, just as it is needed most.
While weak European demand is helpful for coal-hungry India, it may not be sufcient to avert the higher prices anticipated because of the uptick in global, and particularly Indian, demand.
be reached before 2020 in the Nordic markets. On the Continent we think demand will pick up earlier than that, but it still puts pressure on prices and margins. We are facing two-to-three years of really hard work, then well be ready for growth. With the tide turning against coalred generators in Europe, utilities are actively considering future investment plans. But rumors that Vattenfall wanted to sell lignite-red power stations in Germany are not correct, Loseth said in the conference call. We want to optimize our lignite and hard coal plants in Germany, he said, adding that we want to run them, but it is not likely that we will invest to prolong the lives of the older coal plants there. To invest in new coal-red plants is difcult without carbon capture and storage. And Germany is the one European country where coal-red generation is buoyant. Coal burn is up on year in 2010, with imports going against the European trend by moving higher. Such has been the strength of German imports that over [the second quarter of 2010] it helped to eclipse a rather dismal start to the year. In Q2, German coal imports are higher by a massive
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power
Chinese Generators: Preparing for Competition

Martin Daniel, Editor, Platts Power in Asia
China is one of the main driving forces in the global energy market, with electricity demand central to its voracious appetite for indigenous and imported energy. The power sector consumes an increasing proportion of the countrys total primary energy demand, with the percentage of national energy supplies devoted to electricity production rising from 20.8% in 1990 to 42.4% in 2007, according to International Energy Agency (IEA) statistics.
And the percentage is set to grow further. In the reference scenario of its 2009 World Energy Outlook, the IEA projects that the Chinese power sector will account for 49.9% of total primary energy demand by 2030. Chinese generators already buy a signicant amount of internationally-traded coal and gas, with the amount set to grow substantially and, in the process, give the countrys electricity sector an increasing role in determining global energy prices. Understanding the likely evolution of the Chinese power market is thus a key concern for participants in the global energy business, whether energy producers and traders, consumers in other countries or the suppliers of power equipment and services. Understanding the market is not just a matter of assessing the growth in power
demand and generation, although the projected growth is certainly enormous. The IEA projects that output will increase from 3,318 TWh in 2007 to 8,847 TWh in 2030, while generating capacity will increase from 706 GW to 1,936 GW over the same period. Within the total, coal-red plant is projected to rise by an average of 4.1% a year to reach 1,275 GW by 2030, while gas-red capacity is projected to rise by 7.4%/year to 125 GW. While enormous, the scale of growth is nevertheless only part of the story. It is equally important to look at the structure of the market and at the differences between generators in a country where the extent of the opportunities is only equaled by the scale of the potential pitfalls. At rst glance, the Chinese power generation market in 2010 appears lit-
power
tle different than a decade ago, when the government was preparing reforms centered on the break up of the monolithic State Power Corporation. It is still de ned largely by the need to meet an inexorable growth in demand, much of it coming from energy-inefcient large industrial enterprises. It is still fundamentally reliant on coal red plants. It is still almost entirely state regulated, especially with regard to power pricing. And it is still populated predominantly by generators controlled by national and local government entities. But as the swathe of 2010 rst-half results issued by Hong Kong-listed mainland generators show, the market is far from monolithic. Listed generators are pursuing very different strategies with the aim of securing competitive advantage ahead of the anticipated partial liberalization of the market. That this is happening is down, in no small part, to the global nancial tsunami. Prior to 2008, the generators main imperative was to add megawatts to avert power shortages in the face of breakneck growth in demand. To this end, the government effectively sacriced its electricity reform program before it had even begun. The collapse in the rate of demand growth after the nancial tsunami struck in late 2007 afforded both Beijing and the generators a breathing space. As the pipeline of constructing generating projects continued to churn out close on 90,000 MW per year of new plant, a substantial overhang of capacity emerged for the rst time in over a decade. By the end of June 2010 total installed capacity stood at 869,170 MW, an increase of 11.6% on year. The plant included 665,330 MW of fossilfueled, 172,480 MW of hydroelectric, 21,750 MW of wind, and 9,080 MW of nuclear capacity. by industrial users and especially those enterprises, often owned by provincial or local governments, with aging, inefcient and often economically unviable facilities. Industrials account for about 75% of all Chinese power usea very large proportion by international standards and one that is again growing. In the rst six months of 2010, when overall demand rose by 21.57% on year to 2,009 TWh, industrials posted a 24.2% increase in consumption to 1,493 TWh. Against this background of renewed and apparently inexorable industrial power demand, Beijing clamped down in mid 2010 on regional governments who were giving unauthorized power discounts to industrial users. The crackdown, which targets sectors with overcapacity as well as inefcient and obsolete plants, required 13 provinces, autonomous regions and municipalities to toe the ofcial line by revoking preferential power rates. The move came as Beijing also imposed punitive tariffs on all inefcient consumers utilizing obsolete technology and earmarked for shutdown. How successful Beijing will be in staunching the ow of power to inefcient manufacturing plants is moot. The government has, after all, been pursuing the policy in different guises for at least two decades, with little apparent success. But the issue is pressing with power use surging again, and with inefcient energy use as much as sustainable economic activity apparently explaining the fact that power demand records across the county were broken time and again in the third quarter of 2010. On the supply side, the breathing space afforded by the nancial tsunami has allowed the government to resume trials of competitive power sale arrangements. While pool-based systems have been trialed in the wholesale power markets of several regions of the country, in cases for more than a decade, the reform program is currently centered on forging bilateral sales between selected generators and consumers.
Demand-Side Strategies
This has allowed the government time to assess once again both the structure of demand and the best way of meeting it. On the demand side, the key issue is the amount of power used
power
Looking to Competition
For instance in the second quarter of 2010 participants were selected for a pilot program in Fujian province, while Jiangsu, Zhejiang and Chongqing obtained approval to test bilateral power purchase arrangements. Anhui, Jilin, Gansu, Liaoning and Sichuan had previously joined the program, rst announced in 2009, which allows up to 20% of a particular market to be supplied at directly negotiated prices. While the program still involves extensive regulation, with, for example, the state selecting the participants rather than setting general criteria that give the automatic right to contestability, it is a move towards a more competitive market. In the process, Chinas two state-owned transmission groups, State Grid and Southern Power Grid, have lost their role as monopoly electricity buyers and sellers, and must wheel power between bilateral participants at set transmission fees. The bilateral trials nevertheless still leave most of the generating market regulated and generators biggest gripe unresolved. While the government sets the retail prices paid by regulated consumersin cases at levels not fully reective of costsand also sets the wholesale power sales tariffs paid to generators, the prices the power producers pay for coal and other fuels are set at least partly by the market. The resultant changes in generator fuel costs are only retrospectively included in their power sales tariffs. Even then, they involve only partial pass through with the generator expected to absorb up to 30% of additional unit fuel costs through efciency savings. And critically, the pass through of cost changes into the wholesale tariffs is not automatic but requires specic state approval. The problems that can occur when market-based fuel costs collide with regulated electricity prices can be illustrated by the case of Enerchina Holdings Limited, which for the six months ending June 30, 2010 posted a 30% on-year reduction in turnover to the equivalent of $27 million. Revenue fell because output from its oil-red plant at Shenzhen in Guangdong province fell by 31% on year to 284.5 GWh. Enerchina said that it scaled down operations of its electricity generators that consume a higher amount of fuel, following serious delays in the receipt of subsidies for fuel cost due to the Shenzhen governments reorganization. Even so, its gross loss for the sixmonth period was 21% worse than in the same period of 2009, mainly due to delays in the receipt of subsidies for fuel cost, the generator said. Direct payment of subsidies is less common than adjustment of a plants power sales tariff, and generally applies to high-cost peaking generators in spe-
1. China as percentage of world electricity production.

30% 25% 20% 15% 10% 5%
1990
2007
2015
2030
Source: International Energy Agency (2009 World Energy Outlook)
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cial economic zones and similar locations such as Shenzhen. However, the upshot is the same, with the generators nances at risk of state inaction or being sacriced to wider government economic policies such as ination control. Chinese generators must thus operate with one eye on a problematic power payment structure and the other on an uncertain future in which competition is likely to be introduced at some stage. Against this background generators, and especially the increasing number of listed power companies, are adopting widely different strategies to position themselves to face future eventualities. For instance, Enerchina is seeking to avoid the problems associated with volatile oil prices by converting its power station feedstock to liqueed natural gas, which it regards as likely to be less volatile in cost, at least when bought under long-term contract. It has modied two 180-MW units at its plant to dual-ring and plans to convert the remaining 235-MW unit to gas use. Oil accounts for a very small part of Chinas power generation and its use is concentrated in a few areas such as Guangdong. However coal, which is the dominant feedstock across China and currently produces more than 70% of all its electricity, is equally susceptible to volatile pricing and availability. With coal the main component of the great majority of Chinese generators portfolios, and no guarantee that they will recoup changes in the cost of the fuel, it is unsurprising that power producers key concern is reducing their exposure to the risks associated with the fuel. Mitigating the risk of uncertain coal prices or availability may involve switching to other fuels, upstream integration into coal mining and transportation operations, or the sectoral or geographical diversication of business activities. in the Wuling Power Corporation in 2009. Formerly solely a coal-red generator, CPI Development bought the 63% interest in the hydro generator Wuling Power from its parent CPI Holding, which is in turn a wholly-owned subsidiary of the state-owned China Power Investment Corporation. Costing Yuan 4,465 million ($653.75 million), the acquisition of Wuling Power increased CPI Developments nancing and depreciation costs, although the impact on its debt burden was mitigated by making 70% of the payment in shares and only 30% in cash. But Wuling Power has had a signicant impact on the companys protability. In the rst half of 2009, CPI Development reported turnover of Yuan 4.93 billion and an operating prot of Yuan 503.33 million. By the rst half of 2010 the revenues had risen by 41% to Yuan 6.93 billion, while operating prot had increased more than two and half times on year to Yuan 1.27 billion. The entire prot increase, and more, came from the hydroelectric business. CPI Developments revenues from its coal-red plants rose by 16.4% on year to Yuan 5.74 billion in the rst half of 2010. But the plants operating prot fell from Yuan 503.33 million in the rst half of 2009 to Yuan 421.23 million in the same period of 2010 as the companys average cost of producing coal-red electricity rose by Yuan 21.47/MWh to Yuan 235.15/MWh. Meanwhile CPI Developments hydroelectric plants, which had not been acquired in the rst half of 2009, posted revenues of Yuan 1.196 billion and an operating prot of Yuan 851.52 million in the rst six months of 2010. CPI Development said that Wuling Power had thus contributed almost 78% of the companys total after-tax net prot in the rst half of 2010, vindicating its strategy of combining hydroelectric and coal-red assets. Pressed by the increasing coal price, the company has successfully minimized the risk of coal price uctuation, optimized its asset structure and improved its revenue model since the hydropower business was introduced, it said.
The Hydropower Option

Securing hydroelectric capacity has been a popular, if expensive, option. For instance the Hong Kong-listed China Power International Development Limited acquired a controlling interest
power
CPI Development owned 11,752 MW of equity capacity on June 30, 2010, of which 9,129 MW was coal-red and 2,623 MW hydroelectric. In the rst half of 2010, the coal plants produced just over 19 TWh while the hydroelectric units generated 4.82 TWh, indicating the bottom-line value of adding even a relatively small proportion of hydroelectric plant to a coal-red portfolio. in the rst half of 2010. As the plants are relatively old they represented only Yuan 245.3 million in depreciation and amortization expenses plus Yuan 72.2 million in interest expenses in the rst half of 2010, compared with equivalent wind farm expenses of Yuan 777.3 million and Yuan 385.1 million, respectively. The coal-red plants also operated at a higher load factor, averaging 2,967 hours of operation in the rst half of 2010 compared with the 1,086 hours recorded for the wind farm capacity. The latter partly reects the innate unevenness of wind output, but also the problems that many Chinese wind farms have met when seeking connection to the grid. As Longyuan put it, certain regions still experienced limitations on electricity output. Wind farms nevertheless have some marked advantages compared with coal, with Longyuan noting that the average power sales tariff for its wind farms had increased on year by Yuan 25/MWh to Yuan 565/MWh in the rst half of 2010, whereas the average tariff for its coal-red plants was at at Yuan 422/MWheven though coal prices had risen in the interim. The company also noted that it had managed to reduce the average cost of purchasing wind turbines by 10% in the rst six months of the year compared with the same period of 2009.
Going with Wind

As with hydro, wind power has been seen by many Chinese generators as a way of diversifying coal-dependent power portfolios. The countrys largest wind generator is the China Longyuan Power Group Corporation Limited, which is controlled by the state-owned Guodian Group but was listed in Hong Kong in December 2009. In the rst half of 2010 Longyuan produced almost 10.5 TWh, including 4.9 TWh from 4,553 MW of wind farms and 5.6 TWh from less than 2,000 MW of coal- red plant. The companys construction and development pipeline is dominated by wind projects, with 50,000 MW of wind capacity at some stage of development at the end of June 2010. Longyuans coal-red capacity is still central to the companys portfolio, accounting for Yuan 3.813 billion of the groups Yuan 6.244 billion of revenues
2. China power production by fuel.

Renewables 1% Hydro 21%
Nuclear 1% Gas 3% Oil 3% Coal 71%

power
Overall, Longyuans wind revenues for the rst half of 2010 totaled Yuan 2.15 billion, with operating prot for the wind sector being 53.4% up on 2009 at Yuan 1.54 billion. This was substantially above the coal-red plants operating prot of Yuan 447 million, which was slightly down on the gure for the rst half of 2009. Wind projects can also benet from access to income from certied emissions reductions under the clean development mechanism of the Kyoto Protocol. With a dedicated team responsible for CDM project development, Longyuan received Yuan 162 million of net income from carbon credits in the rst half of 2010. The difculty has resulted not so much from gas being unavailable as from competition for the fuel. Gas can be sold to nal consumers served by city distribution networks for more than generators remunerated through inexible state-set tariffs can pay without jeopardizing their viability. Diversifying from coal into other types of power generation can be a time-consuming and expensive business. In these respects Longyuan has beneted from its long involvement in the wind sector, while CPI Development was able to buy a substantial hydro business from its parent.
Tweaking Coal Portfolios

Thus while many generators have sought to add non-coal capacity, a core strategy of almost all the producers has been to seek to reduce the fuel risks within their coal portfolio. This may involve upgrading the efciency of their coal-red plants; seeking a geographical spread of coal-red assets in a country where constrained grid links mean the protability of coal plants in different places may vary at different times; and in particular by upstream integration into the coal mining and transportation businesses. Typical is the China Resources Power Holdings Company Limited (CRP). The company owned interests in 18,894 MW of operating capacity in June 2010, of which almost 95% was coal-red. In common with almost all other major coal-red generators, part of CRPs strategy has been to close smaller coal plants and build larger, more efcient ones. Thus in the rst half of 2010 the company commissioned its rst 1,000MW ultra-supercritical unit at Xuzhou while at the same time closing two 200MW units at Jinzhou. The closures not only removed less economic units but also mitigated the increase in environmental expenses, CRP said, referring to the increasing requirement to pay efciency-related environmental fees on coal-red generation. CRP has also sought geographical diversication. In a country where the majority of generators still have plants
The Nuclear and Gas Options

Some generators are also looking to invest in Chinas burgeoning nuclear power sector. However, only the largest companies can afford the entry costs and conditions, and the investments are at least initially likely to be made directly by the big state-owned power generation holding groups rather than their listed subsidiaries. The generators are also, again at least in their initial projects, likely to be limited to minority stakes in project companies controlled by the China National Nuclear Corporation and its Guangdong subsidiary. China Power Investment, Huaneng and Datang are among the main groups expressing interest in the nuclear sector. Investing in gas-red generation involves far fewer obstacles than building nuclear plants. Projects generally take less time to build and have a lower unit capital cost than coal-red generators, let alone nuclear reactors. However securing gas, whether supplied through pipelines or liquefied natural gas terminals, is a key problem, and has constrained the gas-fired generation option. Even leading generators such as Huaneng have experienced problems in securing the desired level of fuel supplies, with a number of newly-built gas-fired plants having been idled for long periods.
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concentrated in a traditional service area, CRP has plants scattered across the ve regions of China. However, CRP still faced a 19.8% on-year increase in average unit fuel costs in the rst half of 2010. To reduce future risk, the company has thus recently channeled much of its capital investment into developing and buying coal mines. CRP said that mines acquired at Luliang in Shanxi province in the second half of 2009 had produced 2.6 million metric tons (mt) in the rst half of 2010. In May 2010 the company added to its Shanxi mining operations when it acquired three mines and coal-related assets from the Jinye Group, at the same time noting that it was also negotiating the acquisition of 18 more mines in Shanxi to secure our long-term fuel supply at competitive costs. CRP is far from alone in its pursuit of coal mining assets. For instance the third largest overseas-listed Chinese generator, Huadian Power International Corporation Limited, agreed to buy equity in several coal mining projects in the third quarter of 2010. Huadian Power is concentrating its mining acquisitions in Inner Mongolia, in the same way that CRP is focusing on Shanxi. Investing in coal mines has, apart from the immediate goal of reducing fuel risk, also tended to be one of the main starting points for generators seeking to further mitigate risk by diversifying into other business sectors. For instance, some generators have begun coal trading, especially where they have access to the coking coal resources needed for steel making as well as the thermal coal needed for power generation. One of the earliest and most active proponents of diversication is the countrys second-biggest listed producer, Datang International Power Generation. Datang Power says that, at the same time as building a largescale and strong core business in power generation, we are also making haste in developing the coal mining, coal-based chemical, railway, port and marine transportation businesses, with the company saying that revenues from ancillary businesses now make up about 25% of the total. Apart from diversifying into new business areas, some generators are also diversifying geographically by looking overseas. In some cases the companies are competing for engineering, procurement and construction or other contracts, but in other cases they are looking to make equity investments by building or acquiring power and other energy assets. The motives behind individual international investments vary considerably. They include the higher returns available in some regulated overseas markets, gaining experience of operating in unregulated markets ahead of the introduction of competitive generation at home, securing power for sale into the Chinese market, or securing energy resources to fuel domestic generating plants. One of the most active companies to date is the countrys largest generator China Huaneng and its main listed subsidiary, Huaneng Power International. Huanengs pioneering overseas acquisition was made in 2003 when it paid $227 million for a 50% stake in the Australian generator OzGen. The investment gave Huaneng interests in the 880-MW Millmerran and 920-MW Callide coal-red merchant plants. Huanengs largest overseas foray to date also involved the acquisition of a generating company operating in a competitive market. In 2008, the group won the privatization tender for the Singaporean generator and retailer Tuas Power. The $3-billion purchase
3. Chinese power generation by fuel, TWh.

1990 Coal Oil Gas Nuclear Hydro Others Total 471 49 3 0 127 0 650 2007 2685 34 41 62 485 11 3318 2015 4391 44 113 227 734 107 5622 2030 6639 32 253 487 1046 390 8847
power
of a 100% stake in Tuas Power gave Huaneng 2,670 MW of installed capacity as well as a 25% stake in the liberalizing Singaporean power market. At the time of writing (early October), Huaneng was also said to be a contender in the ongoing privatization of generating assets in the Australian state of New South Wales and in the sale by Indias GMR of a 50% stake in the USbased generating company InterGen. While many of the existing and putative acquisitions involve merchant plants operating in competitive markets, Huaneng and its subsidiaries have also been active investors in more regulated projects developed on an independent power producer basis and selling their output under the single-buyer model. For instance, Huaneng subsidiary Lancangjiang Hydropower has agreed to invest in a 270-MW coal-red project at Yangon in Myanmar. The $265-million build, operate and transfer project would be undertaken in consortium with Myanmars state power utility and a local company. In such projects in nearby countries, the Chinese investments are often based on the right to export the power to the Chinese market. This can be attractive to the investors because exports to China involve sales into a much bigger market and may also involve less payment risk than sales to cash-strapped utilities in the host country. And where power exports to China are not feasible, payment risk may be mitigated by barter deals. Under these arrangements the power plant is built, and the power sold, in return for energy or other commodities rather than cash. This is where the power sector dovetails with Chinas go global strategy the voracious need of the countrys economy for imports of energy and other resources on the one hand and export markets on the other. But while there is a clear element of pursuing the national interest, individual generators are also driven by their own interest in securing competitive edge through gaining access to imported power station feedstock and the earnings potential of high-return overseas assets.
Conclusions
While the Chinese generation market may look monolithic at rst glance, the impression is misleading. It is true that all the generators face the same problems, the central one being the disparity between the regulated power market and partly deregulated fuel markets. It is also true that this will only be resolved when the government accepts that the electricity sector will only evolve optimally if liberalized, and legislates accordingly. But here, the inexorable growth in demand that appears to offer such vast opportunities is also the markets biggest constraint. The need to keep the lights on has repeatedly overridden the authorities desire to reform the market. Breaking this circle is one of Chinas biggest challenges. The Chinese power market has nevertheless already seen a number of successful entrants from overseas. And the increasing number of domestic generating companies seeking an overseas listing, and thus confronting the need for transparency, has also had a positive impact on the evolution of the market and on the sophistication of its generators. All said, China is a difcult power market. But it is one that is equally difcult to ignore, and one that can be cracked with detailed and objective analysis. It is nave to believe that the sheer size of the market will in itself offer opportunities, but the increasing diversity of its population of generators will do so.
4. Chinese power generation capacity by fuel, GW.

2007 Coal Oil Gas Nuclear Hydro Others Total 502 20 24 8 145 7 706 2015 827 21 69 28 220 49 1215 2020 970 19 88 40 255 87 1460 2030 1275 16 125 60 316 144 1936
renewables
Renewables Industry Shifts Focus to Asia

David R. Jones, Editor, Platts Renewable Energy Markets
Since renewable energy emerged as a mainstream power source in the 21st Century, European countries like Germany and Spainlater joined by the United Stateshave dominated markets as generous feed-in tariffs and other incentives offered attractive returns on investments. But as many European renewables markets mature and governments cut back nancial support, Asia is poised to become the worlds renewable energy powerhouse.
When Ernst & Young issued its latest Renewable Energy Country Attractiveness Indices in August, a surprising champion had emerged as the worlds most attractive target for renewables investors: China. The latest Ernst & Young rankings highlight a critical shift in the worldwide renewable energy industry as wind, solar and other renewables plant developers and technology producers search for new growth opportunities. The US, previously atop Ernst & Youngs leader board, fell to No. 2 as doubts persist about whether Congress would adopt a national renewable energy standard requiring most utilities to secure a portion of electricity from renewable resources, and as a major renewables tax-break program was set to expire. At the same time, former leading renewables markets in Europe have slashed the generous feed-in tariffs for renewables that made their countries such magnets for investments. Both
Germany and Spain, for instance, lost a point in the Ernst & Young rankings because of their cutbacks in support for solar photovoltaics generation. By contrast, Asias two renewable energy leaders, Chinawhich four years ago failed to rank even in the top 10 in the Country Attractiveness Indexand India, which placed fourth in the Ernst & Young index, are strengthening their renewables support programs and setting national targets for clean energy production. They join Asias mature renewables markets, Australia, Japan, Korea and New Zealand as the leaders in the regions efforts to expand both renewables generation and technology production. Other analyses echo Ernst & Youngs ndings on Asias ascendancy. The Asia Pacic region is an increasingly important market for renewable energy. Over the next decade, the manufacturing of products and equipment for the industry will increasingly shift to Asia, according to a study, Renewable energy in Asia Pa-
renewables
cic, published in July by law rm Norton Rose. Asia Pacics renewable energy markets will also become an important region for investment Much of the future growth in renewable energy will ultimately come from Asia Pacic. With security of energy supplies a major concern for many Asian countries, renewables offer a potential source of homegrown power and vehicle fuels that can cut their dependence on imported oil, the study noted. In addition, many Asian countries see renewable energy as an opportunity to create local champions that will manufacture products required in a carbonconstrained world, it said. Spearheading Asias renewables drive is China, which last year added 37 GW of renewable power capacitymore than any other country in the world. The nations wind power capacity has soared as onshore wind farm construction has grown 40-fold over the last decade (Figure 1). China, excluding Taiwan, now ranks second in installed wind energy capacity, adding 13.8 GW of wind capacity to reach 25.8 GW in 2009, the Global Wind Energy Council reports. Whats more, China has become a major technology-manufacturing center. Foreign investors like Danish windturbine manufacturer Vestas have set up shop while domestic production companies such as wind-turbine makers Sinov1. Total installed wind power capacity in China.
30000
el, Goldwind and Dongfang, and solar photovoltaics producers like Solarfun and Yingli Green Energy have emerged. With lower manufacturing costs than Europe and America and a seeming insatiable domestic thirst for energy, China produces 40% of the worlds solar PV, 25% of the wind-energy turbines and 77% of the solar hot-water collectors. Having established a solid foundation in meeting domestic energy demand, Chinas renewables technology companies are now targeting countries like the United States and Germany for exports. The next boom market in China could be offshore wind. The country late last year brought on stream its rst offshore wind turbines at the Shanghai Donghai Bridge wind farm, part of a planned 102-MW offshore plant that is slated to come fully online this year. The Chinese government is supporting the drive to develop offshore wind power, which analysts estimate could far exceed onshore wind-farm capacity. China already has a lot of onshore wind, Liming Qiao, policy director for the Global Wind Energy Council, told Platts. Offshore seems to be the next step, and the offshore wind market is booming. Its an opportunity for manufacturers to get into a new international market. China has a huge coastline. There are great opportunities, said Qiao.
25000
20000 MW 15000 10000 5000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Global Wind Energy Council

renewables
Most turbine manufacturers are targeting intertidal regionsshallow areas of water close to the shoreshe said. The government news agency Peoples Daily Online reports that China National Offshore Oil Corp started construction this year of an offshore wind farm in Weihai in east Chinas Shandong Province. The wind farm is initially set to comprise 30 1.5-MW machines, but the plant is scheduled to produce 1.1 GW in 10 years, the news service said. Shenhua Group Corp also started work this year on the third stage of the 300-MW Dongtai offshore wind farm and has begun preliminary work on the plants fourth stage. Other leading Chinese power businesses, such as China Power Investment Corporation, Longyuan Electric and Huaneng New Energy, have also been attracted to the promising offshore wind power sector. They have begun to study offshore wind farms in Dafeng and Rudong of east Chinas Jiangsu Province and Roncheng of east Chinas Shandong Province, the Peoples Daily Online said. China boasts enormous offshore wind potential, according to estimates from the China Meteorological Administrationmore than 750 GW that can be tapped at a height of 10 meters, or about three times the countrys onshore wind power potential. The Chinese government has strongly supported efforts to build offshore wind farms for more than a year. The countrys National Energy Bureau and State Oceanic Administration, for instance, in January jointly implemented a 38-page policy, known as the Interim Measure on the Management of Offshore Wind Farm Development, de2. Indias solar energy generation targets.
Industry Segment Solar collectors Off grid solar applications Utility grid power, including roof top Target for Phase 1 (2010-13) 7 million sq meters 200 MW 1,000-2,000 MW Target for Phase 2 (2013-17) 15 million sq meters 1,000 MW 4,000-10,000 MW Target for Phase 3 (2017-22) 20 million sq meters 2,000 MW 20,000 MW
Source: India Ministry of New and Renewable Energy

signed to oversee the details of offshore wind power development. Indias renewables market also has continued its surge of recent years. While generating the fourth-largest amount of wind energy worldwide, the government has zeroed in on solar energy as the key for renewables expansion. India has some of the worlds best solar radiation, and the government this year launched the Jawaharlal Nehru National Solar Mission, known as Solar India, to tap this bountiful resource. Solar India looks to add 20 GW of solar power, including both grid-connected and off-grid plants, in three phases by 2022 (Figure 2). Successfully implementing Solar India requires the identication of resources to overcome the nancial, investment, technology, institutional and other related barriers which confront solar power development in India, according to a government statement. The penetration of solar power, therefore, requires substantial support. The policy framework of the Mission will facilitate the process of achieving grid paritythe point at which solar energy costs the same as conventional powerwithin a decade, it said. The southern Indian state of Karnataka (population 52 million), offers a smallscale reection of Indias vast renewables potential. It is preparing to develop several large-scale solar projects following completion of its rst utility-sized plants, each with 3 MW of capacity. Solar power projects totaling 300 MW have been proposed for development at six locations in partnership with private investors. Karnataka Power Corp, a stateowned power enterprise, will select joint venture partners for the project, and the JV partners will pick up 75% equity with KPC holding the balance. Overall, Karnataka has an estimated 23 GW of renewable energy capacity (Figure 3). The state has set the goal of securing 20% of its electricity from renewables by 2014, up from the current 11%. Its renewable energy strategy, unveiled last year, includes tax concessions to renewable energy developers and allotment of land for renewable projects, with the goal of eliminating the long delays that
renewables
developers often face when they try to directly purchase land. Other key features include administrative decisions on projects within six months, enforcement of a three-year completion deadline for projects and creation of a green energy fund to collect annually Rs550 million ($12.2 million) from a tax on commercial and industrial electricity consumers. Switzerland-based Bank Sarasin called India a thriving market for solar and wind energy in an August research note. Like China, India faces enormous domestic energy demand and sees renewables as one solution that can both boost electricity capacity and address concerns about global warming. The existing shortfall in the energy supply and soaring demand for energy make India an attractive market for renewable over the next 20 years, Bank Sarasin analyst Matthias Fawer said. The Indian government has seen the signs of the times; it not only plans to meet 20% of its total energy needs with renewables by 2020, but aims to reduce greenhouse gases as well. The greenhouse effect is a highly relevant topic for India, as according to a number of different forecasts, the country will be affected by it more than most. In establishing specic targets for renewables production, he said, India could become a role model for other developing countries. As China and India have set policies in place for vastly expanding renewables, nations such as Australia, Japan, Korea and New Zealand are working to solidify their mature renewables markets. Australia, for example, overhauled its national support scheme, the Renewable Energy Target, to provide a more certain investment climate while earmarking about $600 million for a Renewable Energy Future Fund to foster technology development. Japans government vowed to continue its feed-in tariff established in 2009 for small solar PV producers. Feed-in tariffs are an effective policy approach to promoting the introduction of renewable energy. Since a feed-in tariff scheme brings additional burdens, cost effectiveness is an important consideration in designing it, Japans Ministry of Economy, Trade and Industry said in March. Accelerating the introduction of renewable energy is important for diversifying Japans sources of energy and combating global warming, according to a ministry statement, as well as for developing green industries. It is essential to create an environment conducive to the expansion of the introduction of renewable energy in Japan by identifying the appropriate mix of regulatory measures (e.g., feed-in tariffs), public support and private-sector voluntary efforts that are best suited to the characteristics of each energy source, according to a ministry statement. In addition, the government has introduced legislation in the Japanese Diet (Parliament) designed to encourage energy suppliers to use non fossilfuel sources, including solar power, nuclear power, biofuels and biogas. In a third initiative, METI is examining how PV generation plants are sited under the countrys Factory Location Act and discussing possible statutory changes, such as making it easier to site PV plants under the law. On a broader scale, Japan is considering establishing a market for trading carbon emissions that could make renewables an even more attractive alternative to CO2-emitting power plants. New Zealands right-of-center government has already launched an emissions trading scheme. South Korea has issued a strategy that emphasizes developing renewables equip3. Renewable energy potential and installed capacity in Indias Karnataka state, in MW.
Potential Wind power Small hydropower Co-generation Biomass Solar Waste-to-energy Total 12,950 3,000 1,500 1,000 5,000 135 23,585 Installed capacity March 2010 1,536 545 581 87 6 0 2,755 Targeted by 2014 4,337 1,016 816 381 50 6,600
Source: Karnataka state government

renewables
ment for export. The country will invest 100,000 billion won, or $81.9 billion, in so-called strategic industries by 2015, Korea Finance Corporation President Ryu Jae-han said in unveiling the plan. We will focus on developing green growth industries, especially renewable energy business. Starting with 6 trillion to 8 trillion won this year, we plan to increase investments by 30% each year until 2015 to inject a total of 100 trillion won, he said. Of this, about 42,000 billion won will be invested in renewables. Money will be raised through government bonds and the sale of shares in state-owned companies, including Hynix Semiconductor and Hyundai Engineering & Construction. South Korea secured 2.4% of its total energy consumption in 2008, but the government wants to increase renewables share of total power production to 10% by 2022. This goal, set in August 2009, represented the rst concrete target on renewables the government had set. Other Asian countries are emerging as new potential markets. Malaysia, for instance, is drawing in interest from Western PV companies and from investors in the United Nations Clean Development Mechanism. Nepal, with its enormous hydropower resources, is expected to export much of its large hydroelectricity production to India while developing smaller hydropower plants to supply its many isolated communities that are difcult to connect to a central grid. What lies ahead? As renewable energy in Asia continues to prosper, it faces major challenges, ranging from grid limitations to threats of conict over international trade. Unlike Europe, where electricity can be easily shifted and traded across national borders and baseload hydropower in Scandanavia offers backup for variable renewables output, Asia presents fewer opportunities for electricity exchanges. Even within countries, vast distances and the accidents of geography can hinder renewables expansion. China, for example, is scrambling to bolster its electric grid as it confronts the problems of transmitting electricity generated from wind farms in remote areas
like Inner Mongolia to population centers along its southern coast. In addition, archipelago nations like Indonesia and the Philippines face limits to renewables growth as lack of centralized grids likely will limit development to regional or local projects in which renewable energy is consumed close to where it is generated. In addition, as renewable energy has grown into a global industry, it has begun to face the political and economic controversies of international trade. The USs United Steelworkers union led a 5,800-word petition in September asking the Obama administration to le a complaint with the World Trade Organization over Chinas renewable energy practices, charging that China provides unfair subsidies to its renewables businesses and engages in other renewablessupport activities that the union said violate international trade rules. Further, as Asian renewable-energy markets blossom, they could face the same problem that Western countries confront: having too much of a good thing. Two nations which until recently set the pace for renewables development, Germany and Spain, over the past two years have slashed funding for their renewables support mechanisms, especially for solar PVpartly because renewable energy proved so popular among households and businesses, making the support programs expensive. These cutbacks have rattled investor condence, and booming Asian markets like China and India could face similar tough choices as they implement their own support regimes for renewable energy. Stability of the regulatory regime is a critical issue for investors in the sector, Norton Rose said in its analysis of Asian renewables markets. The global industry has become concerned with the threat of changes to support regimes which were previously viewed as stable, for example, the current debate in Spain on retroactive cuts to the solar feeding tariff regime. Asia Pacic countries must learn from other markets and put in place regulatory frameworks which stand the test of time, stimulate long term investment and foster local industries.
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emissions
Halt to Projects Spurs Carbon Market Jitters

Frank Watson, Managing Editor, Platts Emissions
A delay in the issue of carbon credits for a project proposed by a Chinese chemical company may at rst sight appear a small matter in the international carbon market, let alone the wider global energy business. But the implications of the dispute could be far reaching.
Already-simmering tensions over the issue of HFC-23 destruction projects reached the boiling point on August 19 when the Executive Board of the Clean Development Mechanism delayed a request for the issuance of 500,000 Certied Emission Reductions (CERs). The request had been made by Chinese chemical company Zhejiang Juhua Co. The CDM puts on hold any CERs requested by a project if three or more members of its executive board request a review of the project. Zhejiang Juhua had sought the CERs for one of its projects to destroy HFC-23, which is a byproduct in the production of the refrigerant gas HCFC-22. The United Nations agency has since put off a nal decision on Zhejiang Juhuas request for CERs until its November 2010 meeting, at earliest, along with requests for CERs by several other operators of HCFC-22 facilities. It has asked the companiesmost of them in Chinato provide monthly and annual HCFC-22 production gures for the facilities from January
2000 to date, as well as detailing the demand for HCFC-22 since 2000, specifying sales of the chemical, and stating whether all the produced HCFC-22 was sold, stored or destroyed. The HFC-23 issue was initially raised by a coalition of German non-governmental organizations, including CDM Watch. The NGOs claim that the UN methodology specied for HFC-23 is so lucrative for chemical companies that it could encourage them to ramp up production of HCFC-22 simply to generate more HFC-23 waste gas, in order to destroy it to earn extra CERs. One indicator that chemicals companies could be boosting production to abuse the CDM mechanism would be production levels of HCFC-22 that exceeded normal demand. Under such a scenario, they would need to sell, store or destroy the surplus, and the UN is investigating this aspect of companies behavior as part of its probe into possible gaming of the CDM. The UN has asked a total of 11 HFC23 project operators to clarify any imbalance in the supply of and demand
emissions
for refrigerant chemicals. The companies must explain the development of the so-called w-factorthe ratio of waste HFC-23 generated per unit of HCFC-22 producedand justify changes in this ratio. All this may appear to be a minor spat in what, to many energy practitioners, may appear to be one of the more arcane corners of the global carbon market. But as so often, it is the minor issues that can have the biggest ramications. The projects requests for CERs have been put on hold amid the ongoing UN investigation into possible abuse of the scheme. As of September 29, the UNs CDM executive board had put on hold a total of 17.8 million CERs from 11 HFC-23 projects, of which all but two are located in China. This represents a considerable number of offsets in a business where a fair-sized hydroelectric or wind project can expect to garner less than 1% of that amount. In fact, HFC-23 destruction projects make up more than half the 440 million CERs issued to date, reecting the fact that HFC-23 has a global warming potential 11,700 times that of CO2 . This means that the number of carbon credits entering the market could be well below the level that participants had anticipated if there is a protracted delay in the issue of CERs
As of September 29, the UNs CDM executive board had put on hold a total of 17.8 million CERs from 11 HFC-23 projects, of which all but two are located in China.
to HFC-23 projects until the UN is satised by its investigations. The impact this could have on the market was indicated when the fth request for issuance, also made by Zhejiang Juhua, was blocked in the same week that the CDM board blocked the issuance of credits to four other Chinese HFC-23 projects. On the day of the UN announcement, there was a 6.5% surge in the value of CERs for delivery in December 2010. The UN at the time dismissed concerns that there is a blanket ban on HFC-23 projects. HFC-23 projects, like other projects under the CDM, are as-
1. 2010 EUA, CER and differential: May-September 2010 (Eur/mt CO2e).

EUAs 17 16 15 2 Differential Eur/mtCO2e 14 1.5 13 1 12 11 10 12-May-10 2-Jun-10 22-Jun-10 12-Jul-10 30-Jul-10 19-Aug-10 9-Sep-10 29-Sep-10 0.5 Differential CERs 3
2.5
EU Emissions Allowances for December 2010 delivery UN Certied Emission Reductions for December 2010 delivery
Source: Platts Emissions Daily
emissions
sessed on a case-by-case basis, said CDM spokesman David Abbass. But Barclays Capitals director of carbon markets research, Trevor Sikorski, has said he believes that all HFC-23 requests for CERs will be held up in the short-term. When asked whether he thought the blocking of CERs from HFC-23 projects reprethe EU ETS, with CERs being seen as a key source of nance for power and energy projects throughout Asia, Latin America and beyond. Many of the beneciaries of all types of CDM projects are in China, which as an example currently accounts for more than three quarters by capacity of all the electricity generating projects worldwide receiving CERs. But the country appears to have been less than happy that Chinese companies are the focus of an investigation into the manipulation and possible abuse of the CDM system. And HFC-23 is not the only CDM direction and methodology to concern NGOs. The issue of CERs to coal and gas-red projects, albeit high-efciency projects equipped with environmental equipment and intended to replace inefcient plant, are among the more vociferous concerns of some NGOs who want to see the CDM improve as a key driver of renewable energy, particularly in the least developed countries. None of this may amount to much in the longer term, but in the shorter term it has all the elements of indecisiveness and drift that markets abhor. And after the experience of Copenhagen, the last thing the carbon and wider energy markets need are reasons for developing countries to stay away from the table.
But [China] appears to have been less than happy that Chinese companies are the focus of an investigation into the manipulation and possible abuse of the CDM system.
sented a de facto policy by the UN to freeze issuance of credits to all projects of this type, he replied: It certainly seems that way. Sikorski added that the blocking of CERs by the UN, and awareness that all such projects are facing similar hurdles, had led to a urry of CER purchasing as cover against delivery commitments for December 2010. Its a one-way pressure on the curve, he said. Beyond the near-term impact on carbon prices, the issue could have wider implications for the CDM market. CDM is the worlds second-largest greenhouse gas emissions market after
2. December 2010 EUA prices, September 2009 to September 2010 (Eur/mt CO2e).
18 17 16 15 14 13 12 11 10 26-Sep-09 26-Nov-09 26-Jan-10 26-Mar-10 26-May-10 26-Jul-10 26-Sep-10
EU Emissions Allowances for December 2010 delivery
Source: Platts Emissions Daily
You cannot afford to miss this event register today to reserve your seat!
6th Annual
California Power Markets Forum
Procurement Approaches, Meeting Renewables/GHG Goals and Investor Project Finance Challenges
December 67, 2010 The Whitcomb Hotel San Francisco, California
Attend Platts timely 6th Annual California Power Markets Forum, being held December 67, 2010 in San Francisco, California.
Gain the latest information about the California Power Market:

Is there a least regrets approach to transmission build-out and how do independent transmission companies participate? Developing a Tradable REC market in California Restrictions on out-of-state resources Exchange trading and clearing of California nodal power contracts Load serving entity long-term planning and procurement processes What role will CHP play in resource diversification, energy independence, and greenhouse gas reduction in Californias future? What is the impact of AB 32 on resource procurement? How should investors manage the risks associated with diametrically opposing views on more renewable generation and NIMBY?
Dont miss these foremost California power players:

Southern California Edison PG&E Iberdrola Renewables Calpine Corp. Mirant California LLC Constellation Energy Commodities Group California PUC California ISO John Hancock RBS Sempra RBS Global Banking & Markets BNP Paribas Prudential Capital Group Union Bank of California California Cogeneration Council Powerex Corp. TURN Western Power Trading Forum Winston & Strawn LLP Stoel Rives LLP Hydrogen Energy California, LLC Nodal Exchange, LLC LCH.Clearnet
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sustainable energy
Singapore A Living Laboratory For Sustainable Solutions

Energy Market Authority, www.ema.gov.sg
As a small city-state without any signicant energy resources, Singapore is dependent on fossil fuel imports to meet its needs. Today, about 80% of Singapores electricity is generated using natural gas from Malaysia and Indonesia. This high level of gas dependency leaves the country vulnerable to price uctuations and supply disruptions. At the same time, Singapore faces the additional challenge of being alternative energy disadvantageddue to inherent geographical and physical conditions, there is limited scope to deploy alternative energy such as solar and wind on a large scale. Given the challenges faced in todays energy landscape, Singapore is gearing itself to develop a smart energy economy, and to bring about reliable, sustainable and competitively priced energy to fuel its growth. opportunity. LNG is expected to contribute about 17% of global gas supply in 2020, a signicant increase from a mere 7% in 2003. Singapore is thus constructing a terminal to import LNG. This LNG terminal facility will be the rst open-access multi-user terminal in Asia. It will be capable of importing and re-exporting LNG from multiple suppliers. When fully operational in 2013, it will not only help meet Singapores growing energy needs, but also catalyse the development of a robust gas market to underpin the countrys industrial growth. To further diversify its energy portfolio, Singapore is also considering other energy sources such as renewables, clean coal and electricity imports in the medium term.
Enhancing Energy Efciency

Energy efciency is an integral part of Singapores sustainable development strategy. As a small island state highly urbanised and industrialised it has always had to make the most of its limited indigenous resources, and do more with less. These resource constraints are felt even more acutely in terms of energy. Singapores overall approach toward energy efciency is based on sound economic principles. The starting point is to price energy properly and avoid subsidiesthis incentivises energy ef-
Diversifying Its Resources

To effectively meet Singapores longterm energy needs, the country needs a diversied energy portfolio. Over the past years, Singapore has moved towards combined-cycle gas turbines to make its electricity generation cleaner, more efcient and responsive. But it recognises the need to look beyond piped natural gas to broaden its energy sources. In that context, the growing global liqueed natural gas (LNG) market presents a compelling
sustainable energy
ciency and discourages overconsumption. At the same time, the country recognizes that there are limitations to a pure market-based approach. Energy efciency improvements typically require considerable upfront investments. Even if these investments pay for themselves over time, they may not always be undertaken due to market distortions and failures, such as poor information, limited access to capital and split incentives between tenants and landlords. These barriers persist at multiple levels and have to be overcome through a combination of policy tools, including targeted nancial incentives and disincentives, as well as regulatory codes and standards. Therefore, the country is actively pursuing a wide range of measures to mitigate carbon emissions and improve energy use, such as: a) More information on energy use, costs and benchmarks, including mandatory energy labelling and minimum performance standards, to help businesses and households manage their consumption. b) More public transport facilities to support the projected growth in trafc, with better infrastructure to encourage cleaner forms of commuting, like cycling. c) More efcient buildings with Green Mark CerticationSingapores Building and Construction Authoritys (BCA) rating system to evaluate the buildings environmental impact and performance, and greener public housing estates where the vast majority of Singaporeans reside. Singapores efforts have so far yielded some short-term winsa 15% improvement in energy efciency between 1990 and 2005and prepared both the country and region for a more sustainable future. But the country acknowledges that there is still more it can do, and has mapped out a long-term plan in the Sustainable Singapore Blueprint. The Blueprint aims to raise Singapores energy efciency by 35% from 2005 levels by 2030.
Fostering Innovation
Technology is an important enabler. Hence, Singapore is committed to the fostering of innovation in the development and deployment of new energy technologies. Piloting Smart Grids Smart grid technologies enable consumers to manage their energy needs and make better decisions about energy usage. The Energy Market Authority (EMA) of Singapore has thus embarked on an Intelligent Energy System pilot project to evaluate new applications and technologies around a smart grid. Launched during the Singapore International Energy Week 2009, the project will see the installation of more than 4,000 smart meters across Singapore. If successful, it will be rolled out on a nationwide basis, which has not been done in any other country to date. Electrifying the Transport System Electric Vehicles (EVs) are increasingly recognised for their superior advantages in fuel efciency and smaller carbon footprint vis--vis their conventional counterparts. In preparation for a greener transport network, a multi-agency taskforce chaired by EMA and Land Transport Authority (LTA) has been set up to test-bed EVs and assess the benets and applicability of adopting EVs in Singapore. The testbed will address a number of hypotheses around the operation and deployment of the charging infrastructure, consumer behavior around charging and range anxiety associated to battery power availability, robustness of the battery system and general performance of the EVs on Singapore road conditions. Through this test-bed, the city-state aims to be better prepared to position Singapore for possible largescale deployment when electric vehicles take off. These initiatives form part of our efforts to stay ahead of technology trends and adapt new innovations to meet local needs. Through participation in these test-beds, rms can also
sustainable energy
gain better product insights, seek suitable partnerships and demonstrate their technologies and capabilities in a living environment so they can penetrate new markets with commercially viable solutions. Convened annually to encourage companies in Southeast Asia to integrate sustainable solutions in their projects, the ASEAN Energy Awards is a showcase of the regions innovative efforts towards a sustainable future. The wins by the Peoples Association (PA) and City Developments Limited are testament to Singapores successful efforts in greening buildings islandwide. The 300,000 sq. ft. Tampines Grande building by City Developments Limited came away with top honors in the category ASEAN Best Practices for Energy Efcient Buildings Competition 2010. Tampines Grandes intelligent use of BIPV panels as part of the buildings faade to function alongside a solar air-conditioning system has helped to reduce CO2 emissions from the building by an average of 1,400 tonnes yearly. The PA headquarters was also recognized for its efforts in complementing a sustainable design with technology to promote energy efciency. Singapore has to continually identify ways to overcome its lack of natural resources and aid its drive for energy efciency. IUT Singapore Pte Ltd has made signicant strides in addressing this issue by developing the regions rst food waste biomethanization and renewable energy plant. The award-winning project is able to recycle 800 tonnes of organic waste per day, and generate up to 10 MW of electricity. Mr. Ronnie N. Sargento, Ofcer inCharge & Project Manager, United Nations Development Programme Capacity-Building to Remove Barriers to Renewable Energy Development, succinctly encapsulated Singapores leading role in the region by saying, Singapore is currently showing other ASEAN countries the signicance of research and the tangible results it could achieve. Singapores drive to become a clean energy hub and living laboratory for new energy solutions continues to gather pace. The island-state might be small but its ambitions to be a platform for large-scale renewable energy solutions are by no means miniscule.
Leading the Southeast Asian Region

At the recent Association of Southeast Asian Nations (ASEAN) Energy Ministers Meeting in Vietnam, Southeast Asian countries reaf rmed their commitment towards strengthening efforts to address climate change and enhancing ASEAN energy cooperation towards a low-carbon and green economy. In particular, the Ministers singled out energy efciency as the low-hanging fruit to achieve the multiple objectives of reducing energy consumption and carbon emissions, while achieving savings and increasing productivity, and agreed to review ASEANs current target of an 8% reduction in regional energy intensity by 2015, with a view of setting a more ambitious target. Singapores clean energy efforts have helped it to assume the unique role of gearing up the region for smart energy solutions. For instance, the United Nations Economic Programme ofce and Singapores BCA are working together to conduct a regional status report on Southeast Asias sustainable buildings. The International Energy Agency (IEA) and EMA are also working together to bring together ASEAN policy makers and industry representatives to kickstart discussions toward developing the ASEAN technology roadmap.
Singapore Companies Shine at ASEAN Energy Awards

Singapore-based energy companies have also demonstrated that they are at the forefront of innovative solutions in the region. Recently, four Singaporean entries bagged top honors at the 2010 ASEAN Energy Awards, highlighting the commitment of the various industries to integrate renewable energy and energy efcient solutions into the projects.
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top 250 global energy companies
Power Sector Revival

Ross McCracken, Editor, Platts Energy Economist
Platts Top 250 Global Energy Company Rankings reviewed.
For some, 2009 was the hangover, for others it spelled readjustment and recovery. Platts Top 250 Global Energy Rankings for 2010 might be taken as a survivors guide to the nancial crisis. Energy demand slumped in the OECD, while elsewhere the growth rates of the fastest developing economies were all but cut in half. The 2010 rankings, which are based on nancial reports from 2009, thus provide a relative picture of which energy industry sectors proved most resilient to the cataclysmic events of the past two to three years. Illustrating the scale of the shock, Platts physical crude benchmark Dated Brent averaged $97.26 a barrel in 2008, its highest ever annual average, only
Platts Top 250 Global Energy Company Rankings measures nancial performance by examining each companys assets, revenue, prots and return on invested capital. All ranked companies have assets greater than (US) $3 billion. The underlying data comes from Capital IQ, a Standard & Poors business (like Platts, a division of The McGraw-Hill Companies).
to slump 36.5% in 2009 to $61.67/b, below the average price level seen in 2006. This took its toll. Total prots for the top ten companies, which are dominated by integrated oil and gas companies, dropped precipitously from $214.042 billion in 2008 to $136.018 billion in 2009. If oil prices suffered, natural gas suffered more. Globally, natural gas demand experienced what the International Energy Agency called an unprecedented drop in demand. Exchange-traded natural gas prices, particularly in the United States, plummeted in 2009 in both absolute terms and relative to oil. Prots and prices were hit by the combined success of US unconventional gas production, expanding LNG supply worldwide and diminishing demand. By contrast, gas sellers dependent primarily on oil indexation and take-orpay contracts for their long-term sales found a measure of protection that others facing gas-to-gas competition did not. The coexistence of these two ways of pricing gas created distinct pressures, impacting on selling and acquisition strategies. The 2009 nancial year stood out because of the huge disparity between spot gas, which was cheap, and relatively expensive prices for oillinked long-term gas sales.

But one persons loss is anothers gain. As feedstock prices fell from secondhalf 2008, the power sector, expecting some much-deserved relief, was instead caught in a pincer movement between a near total lack of liquidity in the banking sector and a precipitous drop in demand. It has taken all of 2009 for these companies to nd their feet. Some did so more quickly and effectively than others. As energy feedstock prices have remained relatively low in 2009, oil and gas prots have fallen from 2008, but power sector returns have revived from often negative territory, bringing utilities in many regions of the world back up the Platts rankings. Nevertheless, the last two years have forced a strategic rethink on the part of utilities and independent power producers. The demand and price outlook remains depressed, challenging previous expansion plans, while the environment regarding carbon pricing in key jurisdictions remains as uncertain as it ever was. 1. Fastest growing Asia companies.
Rank Company 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 China Resources Power Holdings PTT Aromatics & Rening Plc Adaro Energy Tbk Tata Power Co Ltd Huadian Power Intl Corp Ltd Reliance Infrastructure Ltd Datang Intl Power Generation Co PowerGrid Corp Of India China Shenhua Energy Co Ltd Huaneng Power International Reliance Industries Ltd China Coal Energy Co PT Bumi Resources Tbk Shenergy Co Ltd YTL Corp Berhad Shenzhen Energy Group Co Ltd Gail (India) Ltd Yanzhou Coal Mining Co Ltd Indian Oil Corp Ltd China Yangtze Power Co Country Hong Kong Thailand Indonesia India China India China India China China India China Indonesia China Malaysia China India China India China Industry IPP R&M C&CF EU IPP EU IPP EU C&CF IPP R&M C&CF C&CF IPP DU IPP GU C&CF R&M IPP 3-year CGR % 50.5 44.4 40.3 39.7 34.3 28.4 24.5 24.2 23.6 21.6 21.4 21.1 20.2 20.2 19.0 17.9 17.8 17.6 17.0 16.8 Platts Rank 121 165 158 159 227 198 185 205 19 102 13 93 242 235 237 204 107 142 78 163
Top Ten
Reigning supreme at the top of the rankings for the sixth consecutive year is US major ExxonMobil. Despite being fth in terms of asset value, ExxonMobil came second in terms of both revenues and prots. Platts rankings are based on a combination of assets, revenues, prots and return on capital invested for listed companies with over $2 billion in assets. While ExxonMobils European gas production declined, the coming on stream of its giant LNG production facilities in Qatar have helped it retain a strong grip on European markets. Second in the running is the now troubled UK major BP, which improved its position from fourth in the rankings in 2008. This reects a strong performance in 2009 relative to its peers. BPs revenues dropped by a third, but prots by only little more than a fth. Contrast this with Chevron and Shell, which moved down from second and third respectively to ninth and tenth. Both saw prots more than halve.
Fastest Growing is based on a three year compound growth rate (CGR) for revenues. The compound growth rate (CGR) is based on the companies revenue numbers for the past four years (current year included). If only three years of data was available then it is a two year CGR. All rankings are computed from data assessed on June 1, 2010.
Source: Capital IQ/Platts

Platts Rank 2010 Company 1 Exxon Mobil Corp 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 BP Plc Gazprom Oao Petrobras Total E.ON AG Petrochina Co Ltd Chevron Corp Royal Dutch Shell Plc LUKOIL Oil Company RWE AG Reliance Industries Ltd Rosneft Oil Company Endesa SA ENI SpA TNK-BP Holdings State or country Texas United Kingdom Brazil France Germany China California United Kingdom Germany India Spain Italy Region Americas EMEA Americas EMEA EMEA Asia/Pacic Rim Asia/Pacic Rim Americas EMEA EMEA Asia/Pacic Rim EMEA EMEA Asia/Pacic Rim Asia/Pacic Rim EMEA EMEA EMEA Americas Americas EMEA EMEA Asia/Pacic Rim EMEA Americas EMEA Americas Americas Asia/Pacic Rim EMEA EMEA EMEA EMEA Americas EMEA EMEA Americas Asia/Pacic Rim Americas EMEA Asia/Pacic Rim Americas Return on Assets Revenues Prots invested capital 3-year Industry $ million Rank $ million Rank $ million Rank ROIC % Rank CGR% code 233,323 5 275,564 2 19,280 2 15.7 14 -6.3 IOG 235,968 270,501 190,411 156,913 187,476 212,305 128,505 164,621 292,181 79,019 114,765 55,939 83,232 73,935 144,355 28,041 33,377 45,455 37,463 197,082 297,131 26,338 152,588 29,912 49,180 86,990 210,553 35,465 38,185 23,544 107,309 44,229 28,166 34,006 45,921 25,511 19,020 63,278 71,341 16,686 28,247 76,996 28,730 18,601 16,034 48,458 42,618 14,019 52,046 4 3 9 12 10 6 16 11 2 21 17 33 20 25 15 81 67 43 58 8 1 88 13 71 38 19 7 62 57 104 18 47 80 64 42 92 124 29 27 132 78 24 75 126 136 39 51 148 35 239,272 98,135 100,880 157,673 115,772 149,213 192,638 159,293 278,188 81,083 65,234 43,636 39,431 34,350 117,006 25,696 22,400 17,759 18,918 87,404 93,260 34,375 136,016 22,236 17,318 77,642 112,341 15,322 16,291 15,599 34,527 15,403 15,345 47,681 11,518 10,318 18,098 22,312 66,465 18,860 35,033 28,331 12,406 7,062 12,478 15,643 21,979 19,645 15,743 3 13 12 6 10 7 4 5 1 16 21 27 28 33 9 44 52 66 60 15 14 32 8 54 67 18 11 83 74 78 31 80 82 26 105 113 64 53 20 62 30 41 99 146 97 77 56 59 75 16,578 25,578 16,002 11,875 12,045 15,135 9,041 10,483 12,518 7,011 4,892 5,248 6,514 4,822 6,139 5,175 4,240 4,432 4,806 7,807 5,490 1,970 4,858 3,013 2,706 3,076 6,294 4,316 3,458 4,503 3,971 2,927 2,590 1,790 3,951 2,807 1,792 2,211 2,175 1,487 1,018 1,779 1,592 6,095 1,784 1,615 1,080 1,214 1,708 3 1 4 8 7 5 10 9 6 12 20 18 13 22 15 19 27 25 23 11 17 40 21 32 35 31 14 26 30 24 28 33 36 45 29 34 44 37 38 55 82 47 52 16 46 50 76 69 48 13.0 11.4 11.8 11.6 11.5 10.4 11.3 10.2 7.4 10.7 11.3 12.4 10.6 8.9 6.4 23.2 20.9 12.1 13.4 5.5 5.1 14.9 5.1 13.2 11.2 6.2 4.6 15.3 12.4 32.3 5.1 9.2 13.1 7.3 9.8 15.8 13.7 5.2 4.0 14.5 7.2 3.9 9.6 47.4 16.3 5.5 5.8 11.9 4.8 25 37 31 33 35 49 38 52 85 47 39 27 48 64 107 3 5 28 21 131 141 16 138 23 41 114 154 15 26 2 143 62 24 89 54 13 20 134 172 17 91 174 60 1 12 132 120 30 149 -3.5 11.6 4.9 -5.5 8.7 13.9 8.0 -6.6 -4.4 8.1 2.7 21.4 6.4 7.6 -1.1 5.0 14.0 23.6 10.4 18.4 4.0 22.0 -6.7 3.7 3.4 3.0 21.7 5.6 12.7 -6.8 30.6 -4.5 18.2 9.3 20.1 5.9 18.7 17.2 1.8 -4.8 10.1 12.1 0.7 11.0 6.2 -0.1 5.6 7.9 3.1 IOG IOG IOG IOG EU IOG IOG IOG IOG IOG DU R&M IOG EU IOG IOG E&P C&CF IOG EU EU EU IOG IOG EU IOG DU E&P IOG IPP EU IOG IOG IOG S&T EU IOG DU IOG IOG DU EU DU IOG E&P EU EU R&M EU
Russian Federation EMEA
China Petroleum & Chemical Corp China
Oil & Natural Gas Corp Ltd India China Shenhua Energy Co Ltd China Surgutneftegas Oao Enel SpA EDF ConocoPhillips Gazprom Neft Exelon Corp Statoil Asa GDF Suez CNOOC Ltd BG Group Plc Iberdrola SA Ecopetrol SA PTT Plc AK Transneft Oao CEZ AS Sasol Ltd National Grid Repsol YPF SA Imperial Oil Ltd Centrica Plc Vattenfall Origin Energy Ltd Tatneft Oao NextEra Energy Inc EnBW AG Formosa Petrochemical Southern Co Italy France Texas Illinois Norway France Hong Kong United Kingdom Spain Colombia Thailand Czech Republic South Africa United Kingdom Spain Canada United Kingdom Sweden Australia Florida Germany Taiwan Georgia
Scottish & Southern Energy United Kingdom
Constellation Energy Group Inc Maryland Occidental Petroleum Corp California
Public Service Enterprise Group Inc New Jersey
Notes: C&CF = coal and combustible fuels, DNR = data not reported, DU = diversied utility, E&P = exploration and production, EU = electric utility, GU = gas utility, IOG = integrated oil and gas, IPP = independent power producer and energy trader, R&M = rening and marketing, S&T = storage and transfer. All rankings are computed from data assessed on June 1, 2010.

Platts Rank 2010 Company 51 XTO Energy Inc 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 NTPC Ltd Marathon Oil Corp Encana Corp EDP Gas Natural Sdg SA PG&E Corp Enbridge Inc Fortum OYJ State or country Texas India Texas Canada Portugal Spain California Canada Finland Region Americas Asia/Pacic Rim Americas Asia/Pacic Rim Americas Asia/Pacic Rim EMEA EMEA Americas Americas EMEA Americas Asia/Pacic Rim Americas Americas Americas EMEA Americas Americas Americas Americas EMEA Americas Americas Americas EMEA Americas Asia/Pacic Rim Americas Americas Asia/Pacic Rim Americas Asia/Pacic Rim Americas Americas Asia/Pacic Rim EMEA Americas Americas Americas Americas Americas Asia/Pacic Rim Asia/Pacic Rim Americas EMEA EMEA Asia/Pacic Rim EMEA Americas Return on Assets Revenues Prots invested capital 3-year Industry $ million Rank $ million Rank $ million Rank ROIC % Rank CGR% code 36,255 60 9,052 123 2,019 39 7.3 88 25.5 E&P 26,276 47,052 144,895 33,793 78,095 49,451 55,704 42,945 26,901 24,370 48,348 58,160 42,554 25,111 37,365 61,187 24,959 66,606 29,465 12,756 20,608 28,512 39,177 34,304 26,303 10,294 29,380 57,040 20,262 16,726 33,873 20,518 44,684 41,444 22,098 19,387 15,904 11,656 41,867 12,358 23,378 16,056 11,659 39,535 6,498 44,350 20,103 12,709 31,236 90 41 14 66 22 37 34 50 85 99 40 31 52 96 59 30 98 28 73 156 113 76 56 63 89 173 74 32 116 131 65 115 44 54 109 121 137 166 53 160 105 135 165 55 220 46 119 157 68 10,335 48,546 54,532 10,951 28,336 17,149 20,918 13,399 11,742 7,641 13,489 24,335 15,131 14,198 10,746 48,574 11,488 24,710 29,614 18,886 5,848 8,106 9,473 12,712 25,189 8,954 52,287 12,731 7,003 3,822 13,032 37,162 11,204 12,361 9,136 8,478 6,463 4,553 8,445 18,520 8,952 7,866 26,518 14,119 13,529 6,368 6,531 25,898 9,885 112 25 22 110 40 69 57 93 103 141 92 49 84 87 111 24 106 47 35 61 162 135 118 96 46 124 23 95 148 191 94 29 108 100 122 128 155 176 130 63 125 139 42 88 91 156 153 43 115 1,893 1,184 1,454 1,803 1,382 1,439 1,625 1,234 1,471 1,845 1,365 1,180 1,304 1,334 1,251 881 1,248 1,079 740 741 1,589 1,129 1,488 1,006 804 910 557 1,063 1,268 1,602 879 567 1,157 907 1,165 975 1,028 1,186 1,300 579 942 969 350 729 538 312 1,056 527 836 41 71 57 43 60 58 49 68 56 42 61 72 63 62 66 91 67 77 101 100 53 75 54 84 97 88 126 78 65 51 92 123 74 89 73 85 81 70 64 121 87 86 165 102 130 173 79 132 96 8.3 3.9 1.5 6.6 2.8 4.3 3.7 5.6 6.7 9.1 4.7 3.1 4.8 6.6 6.2 2.3 6.8 2.0 4.1 8.5 9.7 6.7 4.3 4.9 4.3 16.6 3.9 2.8 7.6 11.5 4.3 4.8 3.6 4.0 6.2 7.4 10.8 13.2 3.6 7.0 5.8 7.4 8.1 2.7 18.9 7.8 6.6 5.7 3.8 71 179 225 103 202 160 186 129 99 63 153 198 151 105 115 212 98 219 167 68 59 102 161 146 162 10 175 201 79 36 164 148 190 173 112 83 45 22 189 94 122 84 72 203 8 75 104 125 181 12.5 -6.8 -1.7 -15.3 0.1 6.2 12.9 2.2 5.4 6.6 2.2 0.4 -2.8 6.0 -0.6 6.5 16.0 20.9 1.8 9.8 12.4 -11.7 -0.4 3.4 -1.9 10.2 17.0 -5.7 -7.9 4.5 2.4 n/a 2.8 -0.7 -4.7 10.7 6.5 21.7 6.0 -6.2 16.8 21.1 8.0 6.9 0.5 6.6 3.5 -3.8 1.1 IPP IOG EU E&P EU EU GU DU S&T EU EU EU DU IOG EU DU EU IOG IOG IOG IPP DU E&P EU IOG IOG R&M EU S&T E&P DU R&M DU EU E&P EU EU IPP S&T S&T IPP C&CF R&M IPP R&M EU EU IOG EU
Tokyo Electric Power Co Inc Japan Kansai Electric Power Co Japan
American Electric Power Co Inc Ohio Chubu Electric Power Co Inc Japan Dominion Resources Inc Husky Energy Inc Entergy Corp Veolia Environnement Enersis SA Suncor Energy Inc Hess Corp Murphy Oil Corp International Power Plc Sempra Energy FirstEnergy Corp OMV AG YPF Indian Oil Corp Ltd Duke Energy Corp Woodside Petroleum Ltd Consolidated Edison Inc SK Energy Co Ltd Edison International Inpex Corp CEMIG Endesa TransCanada Corp NRG Energy Inc China Coal Energy Co Bharat Petroleum Co Ltd AES Corp Tupras Saudi Electricity Co CLP Holdings CEPSA Progress Energy Inc Virginia Canada Louisiana France Chile Canada New York Arkansas United Kingdom California Ohio Austria Argentina India North Carolina Australia New York Korea California Japan Brazil Chile Canada New Jersey China India Virginia Turkey Saudi Arabia Hong Kong Spain North Carolina
Canadian Natural Resources Canada
Kinder Morgan Energy Partners LP Texas
Midamerican Energy Holdings Iowa
Public Power Corp of Greece Greece
Plains All American Pipeline LP Texas

Platts Rank State or country 2010 Company 101 KazMunaiGas Exploration Kazakhstan 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 Huaneng Power International China Galp Energia SGPS SA Xcel Energy Inc Mol Hungarian Oil Alpiq Holding AG Gail (India) Ltd Tokyo Gas Co Ltd Verbund GS Holdings Corp CPFL Energia SA RusHydro JSC CONSOL Energy Inc Snam Rete Gas SpA Spectra Energy Corp PKN ORLEN Eletropaulo Portugal Minnesota Hungary Switzerland India Japan Austria Korea Brazil Pennsylvania Italy Texas Poland Brazil Region EMEA Asia/Pacic Rim EMEA Americas EMEA EMEA Asia/Pacic Rim Asia/Pacic Rim EMEA Asia/Pacic Rim Asia/Pacic Rim Americas Americas EMEA Americas Americas EMEA Asia/Pacic Rim Americas Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim Americas Americas Asia/Pacic Rim Asia/Pacic Rim Americas EMEA Asia/Pacic Rim Asia/Pacic Rim Americas Americas Asia/Pacic Rim Americas Americas Americas Americas Asia/Pacic Rim Americas Asia/Pacic Rim Americas EMEA Americas Americas Asia/Pacic Rim EMEA Return on Assets Revenues Prots invested capital 3-year Industry $ million Rank $ million Rank $ million Rank ROIC % Rank CGR% code 8,812 190 3,258 204 1,408 59 19.2 7 5.6 E&P 28,399 8,896 25,488 18,924 17,399 7,739 20,202 12,707 44,489 21,228 9,294 15,630 7,725 23,299 11,735 24,079 14,803 43,001 6,532 15,273 9,266 77,530 16,284 7,603 6,263 23,790 24,195 43,562 9,626 35,629 13,980 4,167 30,528 27,686 9,955 4,245 25,280 7,953 22,165 7,012 9,113 73,726 27,172 5,319 7,826 7,622 6,110 8,490 20,213 77 189 93 125 130 199 118 158 45 112 182 139 200 106 164 101 145 49 219 141 183 23 134 203 223 102 100 48 175 61 149 246 69 83 174 243 94 197 108 214 184 26 84 232 198 201 224 192 117 11,674 16,882 9,644 16,721 14,086 5,790 15,390 4,897 15,708 29,257 5,263 3,793 4,538 3,428 5,417 4,552 23,164 18,083 4,445 4,281 3,586 28,798 11,922 5,190 2,913 7,090 8,014 80,329 1,340 67,271 3,891 15,578 11,289 25,511 6,012 8,541 8,255 6,474 7,556 2,180 3,147 13,670 33,834 1,901 4,373 3,021 19,941 1,592 12,466 104 70 116 71 89 163 81 174 76 36 170 192 178 198 167 177 50 65 181 183 195 38 102 171 213 144 138 17 246 19 188 79 107 45 159 127 132 154 142 229 206 90 34 234 182 211 58 241 98 744 488 686 618 630 713 585 906 455 414 710 1,006 540 1,029 792 843 446 281 587 685 666 -82 526 631 854 612 532 -2,735 863 -352 644 276 337 204 443 363 438 434 465 675 568 94 65 626 458 567 258 667 337 99 138 106 117 115 104 120 90 144 153 105 83 129 80 98 95 145 179 119 107 111 238 133 114 94 118 131 248 93 244 112 181 167 209 146 162 147 149 140 109 122 234 236 116 143 124 188 110 166 3.8 8.4 4.5 4.4 5.1 14.2 4.1 8.5 1.5 3.2 11.2 7.3 22.1 5.6 7.3 5.0 3.9 1.0 20.5 6.8 10.9 -0.1 4.1 10.3 16.6 3.8 3.9 -13.9 10.4 -1.6 5.9 9.6 1.5 0.9 6.8 10.8 2.5 7.4 3.5 11.8 7.9 0.2 0.5 16.8 8.4 9.7 5.7 9.9 2.1 184 70 156 158 140 18 169 67 227 196 42 90 4 130 87 145 178 231 6 97 43 238 168 51 11 182 180 248 50 242 118 61 226 233 96 44 206 82 193 32 74 237 235 9 69 58 124 53 217 21.6 -0.6 -0.7 3.7 9.5 17.8 0.9 6.6 0.9 12.2 2.3 77.8 8.2 11.6 -11.7 0.1 8.7 -1.3 -1.2 50.5 10.2 7.4 -2.3 11.7 22.3 1.0 -3.9 6.5 -5.1 -9.6 1.6 -1.3 -1.2 22.2 4.6 0.6 -11.3 11.2 3.1 8.1 17.6 8.0 -2.9 8.4 -0.1 0.5 96.0 -2.8 1.3 IPP IOG DU IOG EU GU GU EU EU R&M EU EU C&CF GU S&T S&T R&M EU EU IPP E&P EU GU DU E&P DU DU R&M EU R&M DU R&M EU S&T C&CF R&M S&T S&T EU C&CF C&CF EU R&M IPP IOG EU S&T GU IPP
Kyushu Electric Power Co Inc Japan
Energy Transfer Partners LP Texas
Tohoku Electric Power Co Inc Japan China Resources Power Holdings Hong Kong PTT Exploration & Production Thailand KEPCO Inc Osaka Gas Co Ltd AGL Energy Novatek Oao Ameren Corp DTE Energy Co JX Holdings Inc Valero Energy Corp Caltex Australia Ltd Korea Japan Australia Missouri Michigan Japan Texas Australia
Hongkong Electric Holdings Ltd Hong Kong United Utilities Group Plc United Kingdom Chugoku Electric Power Co Japan Enterprise GP Holdings LP Texas Peabody Energy Corp Thai Oil Pcl Williams Companies Inc ONEOK Partners LP PPL Corp Cameco Corp Eletrobras Idemitsu Kosan Co Ltd Tractebel Energia SA OMV Petrom COPEL Missouri Thailand Oklahoma Oklahoma Pennsylvania Canada Brazil Japan Brazil Romania Brazil
Yanzhou Coal Mining Co Ltd China
Ultrapar Participacoes SA Brazil Hong Kong & China Gas Co Ltd Hong Kong Edison SpA Italy

Platts Rank 2010 Company 151 EOG Resources Inc 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 CenterPoint Energy Inc Neste Oil Oyj Nexen Inc Polish Oil And Gas Co ONEOK Inc Adaro Energy Tbk Tata Power Co Ltd Korea Gas Corp Mirant Corp S-Oil Corp China Yangtze Power Co Tenaga Nasional Bhd State or country Texas Texas Finland Canada Poland Oklahoma Indonesia India Korea Georgia Korea China Malaysia Region Americas Asia/Pacic Rim Americas EMEA Americas EMEA Americas Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim Americas Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim EMEA Asia/Pacic Rim EMEA Americas Americas Americas Americas Asia/Pacic Rim EMEA Americas Asia/Pacic Rim EMEA Americas EMEA EMEA Americas Americas Asia/Pacic Rim EMEA EMEA Americas EMEA Americas Americas EMEA EMEA Americas Americas Americas Americas Asia/Pacic Rim Asia/Pacic Rim Americas Return on Assets Revenues Prots invested capital 3-year Industry $ million Rank $ million Rank $ million Rank ROIC % Rank CGR% code 18,119 127 4,238 184 547 128 4.3 163 2.8 E&P 6,650 19,773 7,001 21,869 9,359 12,828 4,628 6,866 19,144 9,567 7,563 23,694 21,826 4,764 26,453 18,052 7,079 50,123 12,698 8,898 7,077 5,157 10,643 25,219 8,988 22,211 15,779 7,617 11,589 12,840 4,406 14,058 12,094 26,652 4,527 12,202 8,675 11,447 6,043 8,989 5,643 4,195 28,186 19,272 11,895 6,640 7,446 12,869 29,686 217 120 215 110 180 155 238 216 123 177 204 103 111 236 87 128 210 36 159 188 211 233 171 95 187 107 138 202 168 154 242 147 162 86 239 161 191 169 225 186 229 245 79 122 163 218 205 153 72 282 8,281 11,964 5,340 6,578 11,112 2,828 3,781 16,554 2,309 14,869 1,613 8,460 6,773 2,825 28,397 9,499 8,210 4,128 3,038 2,816 2,669 24,347 9,155 5,732 6,354 9,259 1,710 3,427 8,243 9,352 5,439 4,237 7,018 4,883 2,213 2,434 1,852 5,738 1,463 3,338 14,280 8,574 6,649 28,804 2,463 3,105 21,987 8,015 250 131 101 169 151 109 216 193 73 226 85 240 129 149 217 39 117 134 186 210 218 219 48 121 165 157 120 237 199 133 119 166 185 147 175 228 224 235 164 244 202 86 126 150 37 223 208 55 137 718 372 311 505 410 305 459 423 203 494 195 676 270 275 522 -117 246 -135 377 393 353 334 162 203 382 317 235 465 393 279 191 336 357 217 301 554 478 498 259 421 282 126 -284 231 -370 407 325 -626 -2,753 103 161 174 135 154 175 142 150 210 137 213 108 183 182 134 239 193 240 160 156 164 169 225 211 158 172 197 141 157 180 215 168 163 205 176 127 139 136 186 151 178 231 243 201 245 155 171 246 249 11.5 3.2 5.8 3.0 5.6 3.9 14.1 8.8 1.5 7.2 5.2 3.5 1.9 7.7 2.5 -1.3 5.6 -0.4 5.0 6.9 9.8 12.0 2.3 1.1 4.9 1.7 2.6 7.6 5.2 3.2 7.4 3.8 4.4 1.0 7.6 4.5 6.0 5.3 6.7 6.7 7.9 5.6 -1.4 2.1 -7.1 7.0 6.4 -17.2 -12.9 34 197 121 199 128 176 19 66 224 92 136 192 220 76 207 240 127 239 144 95 56 29 211 229 147 222 205 80 137 195 86 183 157 230 78 155 117 133 100 101 73 126 241 216 244 93 109 249 247 6.2 -3.9 -10.2 2.5 8.3 -2.2 40.3 39.7 14.4 -9.4 5.9 16.8 12.2 44.4 42.4 -5.2 -5.9 -6.9 1.1 2.3 50.0 1.5 16.2 1.3 -4.2 0.6 3.5 8.6 3.2 -12.7 1.0 -7.6 -2.4 24.5 3.8 6.0 2.1 1.0 3.2 8.7 14.9 -6.1 2.0 -3.9 -7.2 2.4 28.4 -11.5 -8.8 EU DU R&M E&P IOG GU C&CF EU GU IPP R&M IPP EU R&M IPP R&M R&M E&P DU GU EU EU R&M EU S&T IPP EU EU EU EU R&M EU DU IPP R&M GU DU EU GU IPP EU R&M E&P DU R&M E&P EU R&M E&P
Cheung Kong Infrastructure Bermuda
PTT Aromatics & Rening Plc Thailand Iberdrola Renewables SA Spain Cosmo Oil Co Ltd Hellenic Petroleum SA Wisconsin Energy Corp Questar Corp Light SA Acciona SA Japan Greece Wisconsin Utah Brazil Spain
Anadarko Petroleum Corp Texas
Moscow United Electric Power Russian Federation EMEA Hindustan Petroleum Corp Ltd India Enbridge Energy Partners LP Texas Electric Power Development Co Japan Pepco Holdings Inc Red Electrica Corp SA Allegheny Energy Inc EWE AG Petrol Osi As Northeast Utilities SCANA Corp Grupa Lotos SA Gasunie Canadian Utilities Terna SpA UGI Corp CESP BKW Energie AG Esso SAF Apache Corp NiSource Inc Sunoco Inc Canadian Oil Sands Trust Showa Shell Sekiyu KK Devon Energy Corp Spain Pennsylvania Germany Turkey Massachusetts South Carolina Poland Netherlands Canada Italy Pennsylvania Brazil Switzerland France Texas Indiana Pennsylvania Canada Japan Oklahoma
District of Columbia Americas
Datang Intl Power Generation Co China
Reliance Infrastructure Ltd India

Platts Rank 2010 Company 201 NSTAR 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 Chesapeake Energy Corp State or country Massachusetts Oklahoma Region Americas Americas Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim EMEA Americas Americas Americas Asia/Pacic Rim Americas EMEA Americas Asia/Pacic Rim EMEA Americas Americas Americas Americas Americas Asia/Pacic Rim Americas Americas Asia/Pacic Rim Asia/Pacic Rim Asia/Pacic Rim Americas EMEA Americas EMEA Americas Americas Asia/Pacic Rim EMEA Asia/Pacic Rim EMEA Americas Americas Americas Asia/Pacic Rim Americas Americas Asia/Pacic Rim Americas Americas Americas Americas Asia/Pacic Rim Return on Assets Revenues Prots invested capital 3-year Industry $ million Rank $ million Rank $ million Rank ROIC % Rank CGR% code 8,145 194 3,050 209 246 192 6.3 110 -5.2 DU 29,914 15,179 4,428 13,706 9,604 7,099 7,267 15,256 5,424 9,561 3,803 25,993 16,650 3,723 14,985 5,899 25,003 3,642 3,618 8,070 4,436 15,493 7,072 11,613 17,635 14,709 13,143 7,074 8,224 4,775 5,876 6,344 9,506 4,636 4,208 13,890 4,962 7,220 6,440 11,413 7,411 5,440 9,036 5,717 9,322 8,075 22,554 11,847 5,560 70 143 241 151 176 209 207 142 231 178 247 91 133 248 144 226 97 249 250 196 240 140 213 167 129 146 152 212 193 235 227 222 179 237 244 150 234 208 221 170 206 230 185 228 181 195 107 171 272 7,702 5,929 1,667 1,527 22,957 1,238 2,870 6,205 1,653 1,915 1,436 7,067 6,564 3,959 8,101 3,124 4,481 1,589 2,045 16,589 2,652 5,125 4,494 3,426 5,972 5,367 2,847 2,317 3,857 3,856 3,751 4,969 2,928 2,254 7,352 2,613 728 3,311 3,426 3,586 3,219 1,159 3,433 1,954 2,609 2,179 6,002 7,499 4,473 140 161 238 243 51 247 214 158 239 233 245 145 152 187 136 207 180 242 231 72 220 172 179 200 160 168 215 225 189 190 194 173 212 227 143 221 249 203 201 196 205 248 197 232 222 230 166 147 190 -5,830 240 292 437 -236 419 258 209 328 381 256 -1,210 149 129 112 241 50 229 127 -140 136 184 170 264 83 170 233 222 250 225 177 191 267 234 102 245 253 214 214 183 190 234 129 195 170 180 -666 -70 119 250 196 177 148 242 152 187 208 170 159 189 247 226 229 232 195 237 202 230 241 227 218 224 185 235 223 200 204 191 203 221 214 184 199 233 194 190 206 207 219 216 198 228 212 222 220 341 311 262 -23.8 2.3 9.8 4.1 -9.3 6.4 6.2 2.2 7.6 4.7 10.7 -7.9 1.1 7.7 0.9 6.1 0.3 9.8 11.2 -2.8 8.8 1.5 5.1 2.7 0.7 1.8 3.5 5.9 3.6 5.2 5.7 4.4 3.4 6.6 4.8 2.4 6.2 4.0 4.2 2.1 3.9 5.1 2.0 4.2 2.1 2.9 -3.7 -1.3 3.1 250 210 55 170 246 108 111 213 81 152 46 245 228 77 232 116 236 57 40 243 65 223 139 204 234 221 191 119 188 135 123 159 194 106 150 209 113 171 166 214 177 142 218 165 215 200 329 314 224 1.7 -2.0 17.9 24.2 -11.8 -21.9 -10.5 -3.1 22.2 -7.0 2.4 13.7 -0.7 -0.2 -4.1 0.6 50.4 4.5 21.2 -2.7 -3.6 -1.0 -1.1 35.5 -0.6 34.3 13.7 -4.0 9.6 50.3 -14.7 -6.9 2.8 20.2 -4.4 19.0 15.6 -1.3 24.3 2.2 20.2 15.4 0.7 1.9 -0.3 -2.4 -6.6 2.8 -0.01 E&P EU IPP EU R&M GU DU DU IPP E&P GU EU IPP EU DU IOG DU EU C&CF R&M GU EU EU EU EU IPP IPP GU EU R&M EU GU DU IPP R&M DU DU DU EU EU C&CF IPP DU E&P IPP S&T E&P DU GU
Shikoku Electric Power Co Japan Shenzhen Energy Group Co Ltd China PowerGrid Corp Of India Enagas SA OGE Energy Corp CMS Energy Corp AES Gener SA Santos Ltd Energen Corp Eskom Calpine Corp Manila Electric Co A2A SpA Petrobras Energia SA DPL Inc Patriot Coal Corp Tesoro Corp Nicor Inc AES Elpa SA Fortis Inc India Spain Oklahoma Michigan Chile Australia Alabama South Africa Texas Philippines Italy Argentina Ohio Missouri Texas Illinois Brazil Canada TonenGeneral Sekiyu Corp Japan
Abu Dhabi National Energy Co United Arab Emirates EMEA
Hokuriku Electric Power Co Japan
Hokkaido Electric Power Co Japan Huadian Power Intl Corp Ltd China GD Power Development Co Ltd China AGL Resources Inc EVN NuStar Energy LP EGL AG Atmos Energy Corp Atco Ltd Shenergy Co Ltd YTL Corp Berhad Teco Energy Inc CGE NV Energy Inc PT Bumi Resources Tbk Colbun SA Alliant Energy Corp Transalta Corp Southern Union Co Talisman Energy Inc Toho Gas Co Ltd Georgia Austria Texas Switzerland Texas Canada China Malaysia Florida Chile Nevada Indonesia Chile Wisconsin Canada Texas Canada Japan
Saras Rafnerie Sarde SpA Italy Qatar Electricity & Water Qatar
Japan Petroleum Exploration Co Japan
Integrys Energy Group Inc Illinois

However, BP will struggle to retain its position in 2010. Since the start of the Macondo oil spill in the Gulf of Mexico in April, the USs largest ever oil disaster, BP has rarely left the headlines. The company faces huge liabilities for the damage wrought by the spill. It is expected to weather the storm and resultant nancial pressures, but set asides, expenditures and asset sales of around $20 billion will directly impact the companys resource base and its longterm growth prospects, suggesting a drop in its ranking. Nevertheless, it is important not to overstate the impact to a company of BPs size. BPs shares have already bounced from an apparent oor price, beyond which investors see value in the company. A $20 billion asset write down would shift BP only from fourth to fth for that indicator. There is also a large gap between BP at third in terms of revenue and the China Petroleum & Chemical Corp which is fourth for this individual indicator. If BP or one of the other western majors were to fall out of the top ten, who might take its spot? Indias Reliance Industries Ltd, which this year rose to 13th in the rankings from 25th last year, may be a good candidate. It has substantially increased its asset base from $37,188 million to $55,939 million last year and increased revenues on the back of that by almost 50%. Protability, however, remains low in 2. Fastest growing Americas companies.
Rank Company 1 2 3 4 5 6 7 8 9 10 Ultrapar Participacoes SA NuStar Energy LP Fortis Inc XTO Energy Inc CGE AES Gener SA Enterprise GP Holdings LP Endesa Patriot Coal Corp Suncor Energy Inc State or country Industry Brazil Texas Canada Texas Chile Chile Texas Chile Missouri Canada S&T R&M EU E&P EU IPP S&T IPP C&CF IOG 3-year CGR % 96.0 50.3 35.5 25.5 24.3 22.2 22.2 21.7 21.2 20.9 Platts Rank 148 231 225 51 240 210 135 89 220 69
relation to its asset base and revenues. Regulated prices in the companys domestic market may hold Reliance back. While the top ten rankings remain the preserve of the integrated oil and gas companies, one intruder is evident: German electric utility E.ON AG moved from 45th in last years rankings to 6th this year, the only non-IOG company in the top ten, although it is a sizeable gas producer. The companys revenues fell only modestly, from $120.806 billion in 2008 to $115.772 billion in 2009, but E.ON AG successfully squeezed out $12.045 billion in prot, more than 600% above the previous year. This also made E.ON rst among electric utilities, having been seventh the previous year. However, E.ON has seen a see-saw ride. Reporting prots of $9,991 million in 2007 on revenues of $100,651 million, prots slumped to just $1,929 million in 2008. Last year saw a remarkable recovery from an asset base that had shrunk to $187,476 million from $222,178 million in 2008. E.ON has seen extremes2008s performance was particularly poor relative to its peers, the rebound in 2009 unusually good. The slump in prots in 2008 was largely the result of unexpected goodwill impairments relating to acquisitions and to losses from non-operating earnings. In its 2008 annual report, E.ON reported losses attributable to currency differences of 7,879 million ($10,037 million) and to derivative nancial in-
Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. The compound growth rate (CGR) is based on the companies revenue numbers for the past four years (current year included). If only three years of data was available then it is a two year CGR. All rankings are computed from data assessed on June 1, 2010.

Asian companies in 2010 Top 250
Top Asia 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Platts Rank 2010 Company 7 Petrochina Co Ltd 8 13 18 19 29 35 45 49 52 54 56 63 78 81 83 86 93 94 98 102 107 108 110 111 119 121 122 123 124 125 129 130 133 China Petroleum & Chemical Corp Reliance Industries Ltd Oil & Natural Gas Corp Ltd China Shenhua Energy Co Ltd CNOOC Ltd PTT Plc Origin Energy Ltd Formosa Petrochemical NTPC Ltd Tokyo Electric Power Co Inc Kansai Electric Power Co Chubu Electric Power Co Inc Indian Oil Corp Ltd Woodside Petroleum Ltd SK Energy Co Ltd Inpex Corp China Coal Energy Co Bharat Petroleum Co Ltd CLP Holdings Huaneng Power International Gail (India) Ltd Tokyo Gas Co Ltd Kyushu Electric Power Co Inc GS Holdings Corp Tohoku Electric Power Co Inc China Resources Power Holdings PTT Exploration & Production KEPCO Inc Osaka Gas Co Ltd AGL Energy JX Holdings Inc Hongkong Electric Holdings Ltd Caltex Australia Ltd Return on Assets Revenues Prots invested capital Industry State or country $ million Rank $ million Rank $ million Rank ROIC % Rank code China 212,305 6 149,213 7 15,135 5 10.4 49 IOG China India India China Hong Kong Thailand Australia Taiwan India Japan Japan Japan India Australia Korea Japan China India Hong Kong China India Japan Japan Korea Japan Hong Kong Thailand Korea Japan Australia Japan Hong Kong Australia 128,505 55,939 33,377 45,455 35,465 34,006 18,601 14,019 26,276 144,895 78,095 58,160 29,380 16,726 20,518 22,098 16,056 11,659 20,103 28,399 7,739 20,202 44,489 21,228 43,001 15,273 9,266 77,530 16,284 7,603 43,562 9,626 4,167 16 33 67 43 62 64 126 148 90 14 22 31 74 131 115 109 135 165 119 77 199 118 45 112 49 141 183 23 134 203 48 175 246 192,638 43,636 22,400 17,759 15,322 47,681 7,062 19,645 10,335 54,532 28,336 24,335 52,287 3,822 37,162 9,136 7,866 26,518 6,531 11,674 5,790 15,390 15,708 29,257 18,083 4,281 3,586 28,798 11,922 5,190 80,329 1,340 15,578 4 27 52 66 83 26 146 59 112 22 40 49 23 191 29 122 139 42 153 104 163 81 76 36 65 183 195 38 102 171 17 246 79 9,041 5,248 4,240 4,432 4,316 1,790 6,095 1,214 1,893 1,454 1,382 1,180 557 1,602 567 1,165 969 350 1,056 744 713 585 455 414 281 685 666 -82 526 631 -2,735 863 276 10 18 27 25 26 45 16 69 41 57 60 72 126 51 123 73 86 165 79 99 104 120 144 153 179 107 111 238 133 114 248 93 181 11.3 12.4 20.9 12.1 15.3 7.3 47.4 11.9 8.3 1.5 2.8 3.1 3.9 11.5 4.8 6.2 7.4 8.1 6.6 3.8 14.2 4.1 1.5 3.2 1.0 6.8 10.9 -0.1 4.1 10.3 -13.9 10.4 9.6 38 27 5 28 15 89 1 30 71 225 202 198 175 36 148 112 84 72 104 184 18 169 227 196 231 97 43 238 168 51 248 50 61 IOG R&M E&P C&CF E&P IOG IOG R&M IPP EU EU EU R&M E&P R&M E&P C&CF R&M EU IPP GU GU EU R&M EU IPP E&P EU GU DU R&M EU R&M
struments of 6,552 million. In 2009, the rebound came predominantly from energy trading activities rst and sales in its new markets segment second. E.ONs nancial patterns look more like a trading rm than a utility, suggesting future volatility ahead.
Asia on the Ascendant

It is clear that Asia as a whole has substantially improved its position in the global energy rmament over the course of 2009. Of the top ten Asian
companies regionally, nine improved their global ranking; of the top 20, 15 improved their global position; while if new entrants are included, out of the top 50 Asian companies, as many as 40 of the top 50 gained a higher global ranking this year to the detriment of other regions. There are now 68 Asian companies in the Platts top 250, compared with 55 last year. The Asian top ten remains dominated by Chinese and Indian companies. PetroChina Co Ltd retains the

Asian companies in 2010 Top 250 (continued)
Top Asia 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 Platts Rank 2010 Company 134 Chugoku Electric Power Co 137 142 144 149 152 158 159 160 162 163 164 165 167 174 177 185 198 199 203 204 205 206 211 215 223 226 227 228 235 237 242 245 250 Thai Oil Pcl Yanzhou Coal Mining Co Ltd Idemitsu Kosan Co Ltd Hong Kong & China Gas Co Ltd Cheung Kong Infrastructure Adaro Energy Tbk Tata Power Co Ltd Korea Gas Corp S-Oil Corp China Yangtze Power Co Tenaga Nasional Bhd PTT Aromatics & Rening Plc Cosmo Oil Co Ltd Hindustan Petroleum Corp Ltd Electric Power Development Co Datang Intl Power Generation Co Reliance Infrastructure Ltd Showa Shell Sekiyu KK Shikoku Electric Power Co Shenzhen Energy Group Co Ltd PowerGrid Corp Of India TonenGeneral Sekiyu Corp Santos Ltd Manila Electric Co Hokuriku Electric Power Co Hokkaido Electric Power Co Huadian Power Intl Corp Ltd GD Power Development Co Ltd Shenergy Co Ltd YTL Corp Berhad PT Bumi Resources Tbk Japan Petroleum Exploration Co Ltd Toho Gas Co Ltd Return on Assets Revenues Prots invested capital Industry State or country $ million Rank $ million Rank $ million Rank ROIC % Rank code Japan 30,528 69 11,289 107 337 167 1.5 226 EU Thailand China Japan Hong Kong China Indonesia India Korea Korea China Malaysia Thailand Japan India Japan China India Japan Japan China India Japan Australia Philippines Japan Japan China China China Malaysia Indonesia Japan Japan 4,245 9,113 27,172 8,490 6,650 4,628 6,866 19,144 7,563 23,694 21,826 4,764 18,052 10,643 22,211 26,652 7,446 12,869 15,179 4,428 13,706 9,604 9,561 3,723 15,493 17,635 14,709 13,143 4,636 13,890 7,411 5,717 5,560 243 184 84 192 217 238 216 123 204 103 111 236 128 171 107 86 205 153 143 241 151 176 178 248 140 129 146 152 237 150 206 228 272 8,541 3,147 33,834 1,592 282 2,828 3,781 16,554 14,869 1,613 8,460 6,773 28,397 24,347 6,354 7,018 3,105 21,987 5,929 1,667 1,527 22,957 1,915 3,959 5,125 5,972 5,367 2,847 2,254 2,613 3,219 1,954 4,473 127 206 34 241 250 216 193 73 85 240 129 149 39 48 157 147 208 55 161 238 243 51 233 187 172 160 168 215 227 221 205 232 190 363 568 65 667 718 459 423 203 195 676 270 275 -117 162 317 217 325 -626 240 292 437 -236 381 129 184 83 170 233 234 245 190 195 119 162 122 236 110 103 142 150 210 213 108 183 182 239 225 172 205 171 246 196 177 148 242 159 229 218 235 223 200 199 194 216 212 262 10.8 7.9 0.5 9.9 11.5 14.1 8.8 1.5 5.2 3.5 1.9 7.7 -1.3 2.3 1.7 1.0 6.4 -17.2 2.3 9.8 4.1 -9.3 4.7 7.7 1.5 0.7 1.8 3.5 6.6 2.4 3.9 4.2 3.1 44 74 235 53 34 19 66 224 136 192 220 76 240 211 222 230 109 249 210 55 170 246 152 77 223 234 221 191 106 209 177 165 224 R&M C&CF R&M GU EU C&CF EU GU R&M IPP EU R&M R&M R&M IPP IPP EU R&M EU IPP EU R&M E&P EU EU EU IPP IPP IPP DU C&CF E&P GU
top spot, while the China Petroleum & Chemical Corp comes in second, ousting CNOOC Ltd, which falls to sixth place. Indias Reliance Industries Ltd moved from fourth to third, while Indias Oil and Natural Gas Corp Ltd rises from fth to fourth. Two companies have moved out of the Asian top ten: the India Oil Corp Ltd, which may reect late nancial reporting of its 2009 results, and Japans Tonen General Sekiyu Corp which fell from ninth in the regional Asian rankings to 57.
The latter saw a precipitous decline in revenues and prots in 2009, which might be taken as emblematic of the shift taking place within the downstream sector. In this sectorrening and marketingmany Asian companies saw their global ranking rise, but their position regionally against energy companies in other sectors declined. Of the top Asian R&M companies, only three improved their rankings both globally and regionally: Indias Reliance Industries, Taiwans Formosa Petrochemical

and South Koreas GS Holdings. Four Asian R&M companies fell in both the regional and global rankings: India Oil Corp., South Koreas SK Energy Co. Ltd and S-Oil Corp, and Indias Hindustan Petroleum Corp. Ltd. Nevertheless, Asia, and India in particular, continues to dominate the R&M sector with all ve of the top R&M companies hailing from Asia, three of those from India. The fastest rising company in Asia this year was Australias Origin Energy Ltd, which jumped from 201st last year to 45th in the global rankings, and from 47th to eighth regionally, owing to an extraordinary turnaround in protability. This was the result of one-off factors for a company that was the target of a hostile and unsuccessful takeover attempt by BG Group in 2008. Of the A$6,941 million ($6,422 million) recorded prots in the nancial year ending June 1, 2009, A$6,700 million reected a gain resulting from the dilution of Origins interest in Australia Pacic LNG following US major ConocoPhillips subscription for shares to form a 50:50 joint venture. Nevertheless, Origins underlying prots were also up by 20% at $530 million and further gains have been posted for rst-half 2010. Origins high place in the Asian and global Platts rankings is exaggerated this year by its asset sale related prots, but this is still a company on the rise, one with the cash, assets and partners to expand. It may drop back in the rankings next year, but the company has laid the basis for long-term growth that is likely to put it on a steady improving trend. Another strong riser was Taiwans Formosa PetroChemical, toughing it out in a sector experiencing erce competition. Formosa PetroChemical improved its global ranking from 113th to 49th, and its regional ranking from 18th to 9th. Despite revenues dropping by about 27% in 2009, prots rose almost threefold. Revenues have also picked up in 2010 from the declines seen in 2008, although in its second-quarter 2010 results, operating prots in its key rening segment were down. A signicant trend has been the relative rise in the regional rankings of Japanese electric utilities, beneting from the fall in feedstock prices last year. Tokyo Electric Power Co moved up from 20th in the regional rankings to eleventh, Kansai Electric Power Co from 25th to 12th and Chubu Electric Power Co from 27th to 13th. Power prices in the only partially deregulated Japanese electricity market tend to lag fuel source prices by between three to four months. Japans electric utilities were thus hammered in 2008Tokyo, Kansai and Chubu all reported losses for the yearbut beneted in 2009.
New Asian Entrants

Of the new Asian entrants, ve are from China, ve from southeast Asia, one from India and one from Australia. Chinas new entrants are without exception independent power producers Shenzhen Energy Group Co Ltd, Huadian Power International Group Ltd, GD Power Development Co and Shenergy Co Ltd. All have been listed on the Shanghai Stock Exchange for some years. In India, the new entrant was also a power company, Tata Power, the countrys largest integrated private power company. Both the Indian and Chinese power sectors are on rapidly expanding paths, suggesting strong growth prospects for the two countries electric utilities and IPPs. In Japan, the Nippon Oil Corp and Nippon Mining Holdings were reorganized to become JX Holdings, while the Hokkaido Electric Power Co returned to the Global top 250. A new Japanese en-
3. #1 in Asia by industry.
Industry IOG R&M E&P C&CF IPP EU GU DU Company Petrochina Co Ltd Reliance Industries Ltd Oil & Natural Gas Corp Ltd China Shenhua Energy Co Ltd NTPC Ltd Tokyo Electric Power Co Inc Gail (India) Ltd AGL Energy Country China India India China India Japan India Australia Platts Rank 2010 7 13 18 19 52 54 107 125
All rankings are computed from data assessed on June 1, 2010.

trant to the top 250 came in the form of the Japan Petroleum Exploration Co, reecting its increased size with the acquisition in 2009 of the oil product sales units of a Mitsubishi Materials subsidiary. The company has also taken on a 30% interest in the Garraf oil eld in Iraq to be developed with Malaysias Petronas and a domestic Iraqi oil company, which should promise future growth in its production base. The number of southeast Asian companies in the top 250 rose from four to nine, two being added in Thailand, one in Indonesia and one in Malaysia, while the Philippines gained its rst company in the top rankthe Manila Electric Co, the countrys largest distributor of electricity. For Thailand, Thai Oil made a reentry, while PTT Aromatics and Rening Plc was ranked 156th overall and 45th in Asia, reecting the amalgamation of the Aromatics Public Company Ltd and Rayong Renery Public Company Ltd. For Malaysia, Diversied Utility YTL Corp Berhad rejoined the Platts 250 at 237, having last been included in 2007 when its ranking was 216. Indonesia also saw an additionthe only one in the Coal and Combustible Fuels segmentminer Adaro Energy Tbk entered the ratings at 158th. Adaro, Indonesias second largest coal miner, is also the ninth fastest growing company in the top 250 with a 3-year CGR of 40.3%. This year the company signed up to a joint-venture agreement with Australian mining major BHP Billiton to develop resources estimated at 774 million mt, suggesting further growth to come. What these BRIC companies have in common is that, despite all being listed, they are all ultimately state-controlled entities. They all benet from varying degrees of protection in what are generally large and expanding domestic markets, the Chinese economy being particularly dynamic in terms of oil demand growth. The western majors, while global in reach, exist in more competitive environments, where oil demand declined in 2008 and 2009 and, in Europe and Japan at least, appears to be on a long-term downward trend. However, the BRIC companies equally have distinct characteristics that make them unique. Gazprom is a gas company rather than an IOG. It can claim in 2009 to have been the worlds most protable listed energy company. It is expanding the size of its oil subsidiary Gazprom Neft, but its oil arm is listed and reported separately. Petrobras sits on some of the largest oil discoveries in recent decades and has a state willing to strengthen its hold on its domestic upstream. The emergent Chinese companies also have strong state support, but more importantly lie at the heart of the worlds most dynamic economy in terms of car ownership and transportation demand growth. Notably, if Gazprom and Gazprom Neft were listed as one entity, the combined company would come rst in terms of both assets and prots and move from 13th to seventh in terms of revenues. Its ROIC would improve, but remain below that of ExxonMobil. It 4. Fastest growing Asian companies by industry.
Industry IPP R&M C&CF EU GU E&P IOG DU Company China Resources Power Holdings PTT Aromatics & Rening Plc Adaro Energy Tbk Tata Power Co Ltd Gail (India) Ltd Oil & Natural Gas Corp Ltd Petrochina Co Ltd YTL Corp Berhad Country Hong Kong Thailand Indonesia India India India China Malaysia 3-year CGR % 50.5 44.4 40.3 39.7 17.8 14.0 13.9 19.0 Platts Rank 2010 121 165 158 159 107 18 7 237
BRICs to the Fore

Within the global top 20, eleven companies are from the BRICsBrazil, Russia, India and Chinacompared with just six the year before. Moreover, while BRICs still account for four of the top ten, all are rising; Russias Gazprom gained six places to come third in the top 250 rankings, Brazils Petrobras rose ve places, PetroChina was up two places and the China Petroleum and Chemical Corp jumped from 23rd place last year to eighth in the global rankings this year.
Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. All rankings are computed from data assessed on June 1, 2010.

might prove enough to come top of the global rankings, although ExxonMobil will in 2010 absorb unconventional gas producer XTO Energy, increasing its overall asset base and revenues. Just as oil major ExxonMobil expands its gas operations, gas major Gazprom is expanding its oil segment. Otherwise, Russian oil companies did less well than their competitors. Rosneft and TNK-BP, the latter perhaps still suffering from the 2008 conict between its Russian and its UK shareholders, slipped in the rankings, while Lukoil and Gazprom Neft were pretty much static. Surgutneftegaz rose, but late reporting meant the use of 2008 data, which would be likely to atter any oil company, owing to higher oil prices in that nancial year. This stands in stark contrast to the positive performance of Russian companies in the gas, power and transport sectors. presence of the worlds rst and third largest coal industries in China and India respectively and the coal export industries of Australia and Indonesia. Of the ve C&CF companies in the fastest growing Asian companies, three are Chinese and two Indonesian. Coal outside Asia gures little, only US company Patriot Coal Corp registering in the Americas. Patriot is growing fast through the development of assets in Appalachia and the Illinois basin, but it is involved in the controversial practice of mountain top removal mining. This is coming under greater environmental and regulatory scrutiny, which may threaten its future growth prospects. Brazils Storage and Transfer company Ultrapar Participacoes SA tops the Americas fastest growing list with a 3-year CGR of 96.0%. Texan R&M company NuStar Energy LP takes up second place, while Canadas oil sands-based Suncor is the only IOG in the top ten Americas list. In Asia, the front runner is the Hong Kong-based IPP China Resources Power Holdings, with a 3-year CGR of 50.5%. Thailands PTT Aromatics & Rening Plc takes second place, and Indonesias Adaro Energy Tbk third. There are no IOG or E&P companies in the Asian top 20 fastest growing company rankings, which are dominated by power sector rms. In Europe and the Middle East, power companies are again to the fore, making up seven of the top ten fastest grow-
Speedy Growth
If oil and gas companies generally dominate the energy sector as a whole, their lack of presence among the top fastest growing companies is noticeable, although it is easier for small companies to show increases in growth measured in percentage terms. In Asia, eleven of the top 20 fastest growing companies are involved in the power sector, but only four in oil and gas, whether up or downstream. Five are in the coal and combustible fuels sector, reecting the 5. Fastest growing EMEA companies.
Rank Company 1 2 3 4 5 6 7 8 9 10 RusHydro JSC Abu Dhabi National Energy Co Iberdrola Renewables SA Iberdrola SA Novatek Oao Scottish & Southern Energy GDF Suez AK Transneft Oao Sasol Ltd
Country Russian Federation United Arab Emirates Spain Spain Russian Federation United Kingdom France Russian Federation South Africa
Industry EU DU EU IPP EU E&P EU DU S&T IOG
3-year CGR % 77.8 50.4 50.0 42.4 30.6 22.3 22.0 21.7 20.1 18.7
Platts Rank 113 218 172 166 32 126 23 28 36 38
Moscow United Electric Power Russian Federation
Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. The compound growth rate (CGR) is based on the companies revenue numbers for the past four years (current year included). If only three years of data was available then it is a two year CGR. All rankings are computed from data assessed on June 1, 2010.

ing companies. Russian companies are particularly prominent: of the top ten, RusHydro JSC comes rst with a 3-yr CGR of 77.8%, despite a major accident in August 2009, which took ofine the companys 6.4 GW Sayano-Shushenskaya hydro plant and resulted in the deaths of 75 people. Despite this setback the company managed to increase its overall power output in 2009 by 1.7%. Moscow United Electric Power came in third with 50.0%, E&P and gas specialist company Novatek Oao is sixth with 22.3% and S&T rm AK Transneft Oao is ninth with 20.1%. This reects opportunities arising from the deregulation of Russias power generating and distribution industries and the willingness of the state to allow the emergence of independent Russian companies in niche areas of markets still dominated by state-controlled giants. Spains Iberdrola continued its strong growth performance. Iberdrola SA is ranked fth with a 3-year CGR of 30.6%, while its separately listed Iberdrola Renewables SA came fourth with a 3-year CCR of 42.4%. The Abu Dhabi National Energy Co came second with 50.4%.
Sectoral Leaders
While scoring well in terms of fastest growing companies, the C&CF segment in fact declined relative to other segments in the rankings. The average ranking of C&CF companies registering in the top 250 fell from 128.4 last year to 140.6 this year, a lower number denoting a higher ranking. China Shenhua Energy Co Ltd kept its top spot in this segment, but US company Peabody dropped from second to fourth and was replaced by another Chinese company China, Coal Energy Co, in the second slot. Canadas
6. Top 50 fastest growing companies.

Company 1 2 3 4 5 6 7 8 9 Ultrapar Participacoes SA RusHydro JSC China Resources Power Holdings Abu Dhabi National Energy Co NuStar Energy LP Moscow United Electric Power PTT Aromatics & Rening Plc Iberdrola Renewables SA Adaro Energy Tbk 3-year Platts CGR % Rank 96.0 148 77.8 50.5 50.4 50.3 50.0 44.4 42.4 40.3 39.7 35.5 34.3 30.6 28.4 25.5 24.5 24.3 24.2 23.6 22.3 22.2 22.2 22.0 21.7 21.7 113 121 218 231 172 165 166 158 159 225 227 32 198 51 185 240 205 19 126 210 135 23 28 89 Company 26 Huaneng Power International 27 Reliance Industries Ltd 28 Patriot Coal Corp 29 China Coal Energy Co 30 Suncor Energy Inc 31 PT Bumi Resources Tbk 32 Shenergy Co Ltd 33 AK Transneft Oao 34 YTL Corp Berhad 35 Sasol Ltd 36 Enel SpA 37 Ecopetrol SA 38 Shenzhen Energy Group Co Ltd 39 Gail (India) Ltd 40 Yanzhou Coal Mining Co Ltd 41 National Grid 42 Indian Oil Corp Ltd 43 China Yangtze Power Co 44 NRG Energy Inc 45 Hindustan Petroleum Corp Ltd 46 Enersis SA 47 Qatar Electricity & Water 48 Colbun SA 49 BKW Energie AG 50 Korea Gas Corp 3-year Platts CGR % Rank 21.6 102 21.4 21.2 21.1 20.9 20.2 20.2 20.1 19.0 18.7 18.4 18.2 17.9 17.8 17.6 17.2 17.0 16.8 16.8 16.2 16.0 15.6 15.4 14.9 14.4 13 220 93 69 242 235 36 237 38 21 34 204 107 142 39 78 163 92 174 68 238 243 192 160
10 Tata Power Co Ltd 11 Fortis Inc 12 Huadian Power Intl Corp Ltd 13 Iberdrola SA 14 Reliance Infrastructure Ltd 15 XTO Energy Inc 16 Datang Intl Power Generation Co 17 CGE 18 PowerGrid Corp Of India 19 China Shenhua Energy Co Ltd 20 Novatek Oao 21 AES Gener SA 22 Enterprise GP Holdings LP 23 Scottish & Southern Energy 24 GDF Suez 25 Endesa Source: Capital IQ/Platts
Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. All rankings are computed from data assessed on June 1, 2010.

Cameco rose from eighth to fth, but US company Arch Coal dropped out of the top 250 and thus out of the sectoral rankings as well. Patriot Coal Corp and Indonesias Adaro Energy Tbk were both new entrants to the sectoral leader board. Diversied Utilities appear to have weathered the nancial crisis and ensuing recession relatively well. The top ten average ranking in this category strengthened from 60.6 last year to 51 this year. Within the sector, RWE of Germany and GDF Suez of France retained their rst and second places respectively. The UKs Centrica Plc was a strong riser, moving from 145 to 42 in the global rankings, as it returned to protability, taking fourth place in the top ten DUs. Veolia Environment was another new entrant, while MidAmerican Energy Holdings of Iowa and Frances Suez Environment dropped out of the leader board. Electric Utilities also did well in 2009. The average ranking for the top ten companies improved from 37.8 to 27.2. This was clearly helped by the rise of UK utility Scottish and Southern from 127 in the global rankings to 23, which helped place it fth in the EU segment, and E.ON, which moved from 45th to sixth, the only non-IOG to make it into the top ten globally, also putting it rst in the EU segment. IPPs, too, improved their overall position, with the average top ten ranking strengthening from 119.1 last year to 94.9 this year. There was considerable movement within the group. Maryland-based Constellation Energy Group Inc can be particularly pleased with its exceptional rise from 185th last year to 31st, putting it in the number one slot sectorally for IPPs. Having suffered a tough price and liquidity environment, along with the rest of the US power sector in 2008, Constellations restructuring appears to have brought quick benets. Although revenue dropped from $19,818 million in 2008 to $15,599 million in 2009, prots turned from a loss of $1,301 million to a gain of $4,503 million. A notable facet of this sector was the entry to the top ten of two Chinese companies, Huaneng Power International and Hong Kong-based China Resources Power
Holdings. Last year, there were only two non-OECD IPPs in the top tenChiles Endesa and Brazils Tractebel Energia SA now there are four. The Chinese companies saw a strong recovery in prots in 2009 as international feedstock prices dropped from the highs of 2008, returning a prot margin to regulated domestic power prices. Leaving the top tier were the UKs Drax Group, Spains Iberdrola Renewables and US IPP Mirant Group. By contrast, in all of the oil and gas segmentsIOGs, E&P, R&M and S&T the average ranking of the top ten companies weakened. This can largely be explained by the rise in oil and gas prices in 2008 delivering windfall prots, and then the subsequent fall in prots in 2009 as oil and gas prices dropped. In the S&T segment there were no new entrants. Russias Transneft stayed on top. The most notable change was Enbridges elevation from fourth to second and Williams Companies journey in the opposite direction from second to ninth. US pipeline companies look certain to see increased costs arising from stricter safety regulation following Enbridges two oil spills in 2010 and Pacic Gas & Electrics fatal gas line explosion in San Bruno, California. For Gas Utilities, Enis takeover of Belgiums Distrigas left a vacant spot in the top ten that was lled by the Netherlands Gasunie. Spains Gas Natural remained at the top, with Indias Gail (India) Ltd moving up from fth to second. More change was seen in the IOGs and E&P sectors. For IOGs, Russias Rosneft and Italys Eni were nudged out of the top ten, while Russias Lukoil moved up to come 10th in the sector. The China Petroleum and Chemical Corp also moved into the top ten group, taking seventh place. The balance has shifted to ve companies each for BRIC versus OECD IOGs in the top ten, but Gazprom, the worlds biggest gas producer and exporter, which has taken big strides out of its European comfort zone with LNG trade and supply in Asia and the US, now occupies third place and Brazils Petrobras fourth, as opposed to eighth and sixth last year, while BPs second place is clearly under threat.
Recognizing the Stars of the Global Energy Industry
Congratulations to the 2010 Platts Global Energy Awards Finalists

Finalists were chosen from a list of well over 200 nominations, based on their performance for each categorys criteria within the designated time frame. The Energy Company of the Year will be selected from this overall list of nalists by the independent panel of judges including former regulators, past heads of major energy companies, leading academics and international energy experts. Winners of the 2010 Global Energy Awards will be announced at a black-tie celebration on December 2, 2010 at Cipriani Wall Street in New York City.
To see the full list of nalists please visit: www.GlobalEnergyAwards.com

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Asia Energy Outlook

India: Changing the World Coal Market

Power Sector Revival

2010 Platts Top 250 Global Energy Company Rankings

Guest Editors Note

November 2010 insight 1

24 Chinese Generators: Preparing for Competition

1 Guest Editors Note

32 Renewables Industry Shifts Focus to Asia

4 China: Driving the Oil Price

38 Halt to Projects Spurs Carbon Market Jitters

10 Japans Oil Industry at the Crossroads

14 The LNG Market Bounces Back

42 Singapore A Living Laboratory For Sustainable Solutions

20 India: Changing the World Coal Market

2 insight November 2010

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November 2010 insight 3

China: Driving the Oil Price

Financials and Speculation

Source: Derived from Bureau of Statistics and Customs data

3. China petroleum stockpile statistics (commercial stocks).

4. Surplus capacity in the oil market.

Source: EIA, Platts

November 2010 insight 7

1980 2 9 5 41 5 34 203 159 7 15

2002 19 80 47 59 16 143 428 266 204 205 100 324

PRC = Peoples Republic of China, - = no data available

Japans Oil Industry at the Crossroads

Source: Getty Images

10 insight November 2010

1. Japans oil product rening conundrum (million b/d).

November 2010 insight 11

Asia Energy Outlook 2008 Platts

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Oil Price History Redened

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liqueed natural gas

The LNG Market Bounces Back

liqueed natural gas

liqueed natural gas

Feb-09 Source: Platts

16 insight November 2010

liqueed natural gas

2. Asian LNG imports.

Asian LNG - 2010 on 2008 change mt millions 2 0 -2

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Source: LNG Daily liquefaction tracker

18 insight November 2010

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India: Changing the World Coal Market

Reach Key Decision Makers in the Petrochemical Industry

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