OVERSEAS BULLETIN OIL&GAS ALTERNATIVE ENERGY …eshop.chinadaily.com.cn/e-reports/pdf/2010/11/20101108_6d23d8_.pdfIndia's Mahindra to introduce e-vehicles into China next year (2010-11-01)

OVERSEAS BULLETIN

Alstom powers ahead with new generation game

OIL&GAS Sinopec boosts crude processing and cuts diesel exports

ALTERNATIVE ENERGYState Grid sees big role for clean tech

ANALYSISCoal costs a burning issue this winter

Nov.2-8 2010No .23

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CONTENTS

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CONTENS OVERSEAS BULLETIN .................................................................................................................1

India's Mahindra to introduce e-vehicles into China next year .................................................1 US Dow seeks China's approval for coal-to-chemicals project ................................................1 France to sell China nuclear material, technology ....................................................................2 Alstom powers ahead with new generation game.....................................................................2

COAL & ELECTRICITY .................................................................................................................4

Gansu’s potential coal reserves up to 160 Bt ............................................................................4 Shanxi Datong Group to build 2 billion yuan coal machinery base..........................................4 Power consumption to hit 4.1 trillion kWh...............................................................................5 N China plant ready to produce coal mine rescue robots..........................................................5 China to have less than 4000 coal firms by 2015......................................................................6 First index deal done for South Africa coal to China ................................................................6 Henan newly discovers 16 Bt coal reserves ..............................................................................7 State Grid's investment in 12th FYP to exceed 0.17 trillion yuan.............................................7

OIL & GAS.......................................................................................................................................9

GNPC, CNOOC bid for Kosmos Ghana assets fails.................................................................9 China, Russia oil pipeline starts trial operation.......................................................................10 Offshore operators seek deepwater development....................................................................10 Oil surges on improving US, China manufacturing ................................................................11 CNPC, partners seek workover rigs for Iraq Halfaya .............................................................12 Sinopec boosts crude processing and cuts diesel exports........................................................12 China's Sinochem to issue up $2 bln debt in 2-part sale .........................................................13 Sinochem to up Colombia crude imports through 2013..........................................................13

ALTERNATIVE ENERGY ............................................................................................................16

Suntech brightens job outlook.................................................................................................16 State Grid sees big role for clean tech.....................................................................................17 First stage completed of China's largest wind power project ..................................................18 CNOOC's 1st offshore wind farm to be into operation ...........................................................18 Nuclear power capacity to rise................................................................................................19 SAIC, GM to boost cooperation in new energy vehicle development ....................................19 Atlantis eyes tidal interest .......................................................................................................20 Datang's renewable energy unit said to seek $1 Billion in Hong Kong offer..........................20

STATISTICS ...................................................................................................................................21

Inner Mongolia Jan-Sep import 10.94 Mt coal from Mongolia ..............................................21 POLICY ..........................................................................................................................................22

China may start 3-5% sales tax on coal...................................................................................22

CONTENTS


China to unveil 5-yr energy plan in March .............................................................................23 China to limit coal production to 3.6-3.8 Bt ...........................................................................23

ANALYSIS .....................................................................................................................................25

Coal costs a burning issue this winter .....................................................................................25

OVERSEAS BULLETIN


OVERSEAS BULLETIN

India's Mahindra to introduce e-vehicles into China next year (2010-11-01) Mahindra & Mahindra, one of the leading automakers in India, will begin to sell electric vehicles under the brand of Reva in China in 2011 after the company acquired a 55 percent stake in Bangalore-based Reva Electric Car earlier this year. Reva Electric Car, which currently exports e-vehicles to Britain and Norway through ocean shipping, intends to make profits by selling autos of such kind in China, as the Chinese government is boosting its new energy auto market and hopes to have 5 million e-vehicles running on the road in 2020. Chetan Maini, chief engineer of Mahindra Reva Electric, said that the firm has sold only 3,500 e-vehicles in 24 countries so far due to shortage of charging stations. In China, however, nearly 100 charging stations for e-vehicles will be built by the end of this year, said an executive from State Grid Corp of China. Established in 1994, Reva Electric Car, a joint venture between Maini Group and AEV (American Expedition Vehicles) LLC, plans to add an annual output capacity of 30,000 units in 2010, bringing its total capacity to 40,000 units. US Dow seeks China's approval for coal-to-chemicals project (2010-11-04) The Dow Chemical Company and China's Shenhua Group are seeking approval from the Chinese government to build and run a coal-to-chemicals complex at Yulin city, Shaanxi province, the former said late Nov 2. The two companies have submitted a Project Application Report to the government, Dow Chemical said, adding that discussions with relevant stakeholders are ongoing as the two partners continue to advance the project." The new complex, valued at $10 billion, is expected to consist of a 3.32 million tonnes per year methanol plant, a 1.22 million tonnes per year methanol-to-olefins unit, a 400,000 t/yr monoethylene glycol plant, a 210,000 t/yr ethanolamines/ethylenediamines facility, a 340,000 t/yr polyether polyols unit and a 150,000 t/yr acrylic acid facility.

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Other units expected to be built are a 200,000 t/yr acrylic ester plant, a 200,000 t/yr chlorinated methane unit, a 510,000 t/yr ethylene dichloride/vinyl chloride monomer plant and a 500,000 t/yr polyvinyl chloride plant. Plans called for the plant to begin operations in 2016 after both Dow Chemical and state-owned Shenhua Group completed a detailed feasibility study on the complex at end-2009. France to sell China nuclear material, technology (2010-11-04) France announced euro16 billion ($22.8 billion) in deals to sell uranium, technology to China on Nov 4, and the two countries also agreed to a sweeping strategic partnership on nuclear power. The deal expands on 30 years of nuclear cooperation between China and France, which gets about three-quarters of its electricity from nuclear power and has deep knowledge of the field. Alstom powers ahead with new generation game (2010-11-05) French power and transportation equipment maker Alstom opened a 1 billion yuan ($150.02 million) hydropower manufacturing facility in Tianjin on Nov 4 to expand its portfolio in China's rapidly growing energy market. The plant, which will become Alstom's manufacturing base for hydropower equipment in China as well as the Asia-Pacific region, can deliver up to 30 turbine and generator units with capacity ranging from 20 megawatts (mW) to 1,000 mW per year. The plant places Alstom "in a great position to respond to demand and execute our order backlog in the Asian region," said Philippe Joubert, president of Alstom Power and executive vice-president of Alstom. Around 75 percent of products made by the plant are for the Chinese market, and the remainder for the overseas market, according to Alstom. The new facility will also house a global technology center where the company will carry out research and development activities, and test turbines developed for its customers. It will be the third global technology center for Alstom's hydropower business, following

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other facilities in France and India. The investment in Tianjin is in line with the growth of hydropower in China, said Joubert. Alstom is also looking closely at opportunities in other clean energies such as wind power, he said. The development of hydropower in the country will form an important part of the energy plan for 2011 and 2015, said industry insiders. Use of clean energy will help China achieve its targets in building an environmentally friendly economy, they said. Hydropower will see accelerated growth in China in the next few years, said Li Junfeng, deputy director-general of the Energy Research Institute under the National Development and Reform Commission. Use of the energy is essential to China's two major objectives for energy and the environment. The country plans to increase the use of non-fossil energy to 15 percent of primary energy use in 2020, and also to reduce carbon intensity by 40 to 45 percent by 2020 from the 2005 level, Li said. Alstom also announced on Nov 2 that it had won a 50 million euro ($71.24 million) contract to supply five 40 mW bulb turbine and generator units to the new Xiajiang hydropower station, currently under construction on the Ganjiang river. The plant is due to be operational in the summer of 2013. To date, Alstom has signed contracts for hydro turbines and generators providing 43 gigawatts (gW) in the country, out of which about 28 gW are already in commercial operation.

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COAL & ELECTRICITY


COAL & ELECTRICITY

Gansu’s potential coal reserves up to 160 Bt (2010-11-01) Gansu Province, one major coal producer in northwestern China, announced that its potential coal reserves is 17.4 billion tonnes higher than a previous forecast, according to geological report finished by the provincial geological bureau and approved by experts. The province now is estimated to have more than 160 billion tonnes of potential coal reserves, said the provincial Department of Land and Resources on Oct 28. And the provincial government confirms that areas including Beishan, Alxa League, Qilian, Southwestern Ordos and Longnan are rich in coal resources. Gansu, rich in coal resources, has taken various measures to step up merger and consolidation over coalmines and develop high efficiency coal industry in recent years to cope with growing demand at domestic and global market. Shanxi Datong Group to build 2 billion yuan coal machinery base (2010-11-01) Datong Coal Mine Group plans to spend two billion yuan ($298.78million) to build the largest coal machinery manufacturing base in northern Shanxi during the 12th Five-Year Plan period, said Wang Zhonghu, general manager of Datong Group Machinery Equipment. The facility will bring in annual sales income of five billion yuan in five years once fully operational. All nine of Datong Group’s 10 million-tonne mines will be equipped with a proprietary mining machine that the company independently developed. Wang estimates the group’s non-coal business income will total 65 billion yuan by the end of the 12th Five-Year Plan, accounting for 40 percent of its total revenue. At present, Datong Group holds a 60.48 percent stake in Datong Coal Industry. The listed company’s 2009 coal output reached 25.79 million tonnes, accounting for 23.44 percent of Datong Group’s total output.

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Power consumption to hit 4.1 trillion kWh (2010-11-01) Power consumption in China in 2010 may reach 4.1 trillion kWh according to a research report published by the China Electricity Council (CEC). According to the CEC, newly-added power generation capacity may reach about 90 million kW and China may shut down over 12 million kW of capacity from small power generation units this year. Installed capacity in 2010 may exceed 950 million kW, including 210 million kW of hydropower, 700 million kW of thermal power, 10.82 million kW of nuclear power and over 30 million kW of wind power. Investment in the power industry in 2010 may reach close to 660 billion yuan（$98.76 billion, slightly lower than 2009. For the first eight months, the electricity industry recorded total profits of about 97.2 billion yuan, up 108.5 percent year-on-year. Besides, China's total installed electric power capacity will surpass 1.4 billion kilowatts by the end of 2015, the last year of the country's 12th Five-Year Plan (2011-2015), according to China Electricity Council. The demand for energy will keep increasing in the next five years, because China's economic development is still at high speed. However, the coal-dominated electric consumption structure will not change. The demand of coal power will rise year-on-year even though the proportion is scheduled to drop. But the report also said that emissions of conventional pollutants will not increase in the next five years. The China Electricity Council is writing a five-year development proposal for China's electric industry, according to the report, and the proposal is expected to be used as a reference for writing the country's next five-year plan. N China plant ready to produce coal mine rescue robots (2010-11-02 ) A factory in North China is set to start producing coal mine rescue robots designed to enter hazardous environments to collect data during mining accidents.

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The robot, equipped with blast-proof amour and chained wheels, was designed by Kaicheng Electronic Co Ltd in Tangshan, North China's Hebei province. It has received the authorities' permit to begin industrial production. Company officials said when the factory runs at full capacity by 2012 it will be able to produce 1,800 units per year. A number of research institutes and firms have begun to develop coal mine rescue robots, though few of them have started industrial production. China to have less than 4000 coal firms by 2015 (2010-11-03) China announced to reduce its number of coal firms to less than 4000 by the end of the 12th Five Year Plan (2011-2015). With merger and consolidation over coalmines, China still planned to build 6-8 super large coal firms with annual production capacity above 100 million tonnes and 8-10 large coal firms with annual production capacity above 50 million tonnes during the 2011-2015 period as the target was not accomplished in the 11th Five Year Plan period. China’s coal output is estimated to reach 3.6 to 3.8 billion tonnes by 2015, in which large coal firms will possess about 2.5 billion tonnes, accounting for 66 percent of the whole country’s total coal output. Shanxi, Shaanxi, Inner Mongolia, Ningxia, Gansu and Xinjiang aims to phase out small coalmines with production capacity below 300,000 tonnes by merger and reconstruction during the 12th Five Year Plan period. And Yunnan and Guizhou plans to reduce the number of small coalmines with out-dated production capacities. First index deal done for South Africa coal to China (2010-11-03) The first index-priced term deal to supply South African coal to China has been done by an international company active in physical coal trade and for around 2 million tonnes a year. The seller, which declined to be identified for reasons of commercial confidentiality, said Chinese forward demand for South African coal has been increasing. "There's going to be a lot more South African coal shipped to China going forward," one

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source said. A deal that is indexes against benchmark prices allows sellers to use coal derivatives to mitigate price risk. The significance of the first such deal is that if more Chinese counterparties adopt indexing, it will encourage many more sellers to weigh the margins offered by China and India against those offered in Europe, traders and producers said. "If index-pricing starts to be possible into China, then selling South African there will be a no-brainer," one of South Africa's largest exporters said on Nov 1. Expectations of rising prompt demand from China have pushed benchmark South African prices to $100 a tonne FOB Richards Bay from $85/T a month ago. Although spot demand is rising, some importers are looking much further ahead - a big change from the past year when most deals were for no further ahead than the next month. China is expected to import around 6 million tonnes of South African coal in 2010, out of total South Africa exports of 70 million tonnes Henan newly discovers 16 Bt coal reserves (2010-11-05) Henan Province, one major coal producer located in central China, announced that its potential coal reserves is 16 billion tonnes higher than a previous forecast, according to geological report finished by the provincial geological bureau and approved by experts. The provincial government confirms that the coal deposit is mainly distributed at areas including Suixian, Yuzhou, Jiaxian, Anyang, Hebi and Puyang. Henan, rich in coal resources, has taken various measures to step up merger and consolidation over coalmines and develop high efficiency coal industry in recent years to cope with growing demand at domestic and global market. State Grid's investment in 12th FYP to exceed 0.17 trillion yuan （2010-11-05） In the 12th FYP (Five-Year-Plan) period, State Grid's investment on power grids will exceed 0.17 trillion yuan（$25.5 billion） and by 2015, it will basically finish the strong

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smart grids and initially achieve the world-class power grids target. And its resource allocation capability, operation efficiency, safety level and the technological level will rank in the world advanced list. At present State Grid has completed the 12th five-year-plan, the 12th five-year-plan of power grids and specific plans on agricultural electricity, finance, internationalization, grid construction, debugging operation, production, technology, informationization and safety emergency. These plans have formed a relatively complete and systematic five-year development plan. Spokesman for State Grid stressed that in the 12th five-year-plan period, State Grid will implement “One Ultra, Four Large” strategy and build the strong smart grid. Developing EHV( Extra-High Voltage) is the basic guarantee for the intensive development of large coal-fired power, large hydropower, large nuclear power and large renewable energy and the efficient sendout of electric power and it’s also the significant measure of optimizing electric power structure, enhancing efficiency and promoting the energy-saving and emission reduction of electricity industry. During the 12th five-year-plan period, in the aspect of promoting the optimization of energy structure and enhancing the clean energy proportion, State Grid has set the specific goal: by 2015, the proportion of clean energy generating in one-stage energy consumption is expected to rise from 6.8 percent in 2005 to 11.1 percent.

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OIL & GAS


OIL & GAS

GNPC, CNOOC bid for Kosmos Ghana assets fails (2010-11-01) State-owned CNPC (Ghana National Petroleum Corp) and China's CNOOC(China National Offshore Oil Corporation) Ltd. made an unsuccessful $5 billion joint bid to buy U.S.-based Kosmos Energy LLC (Limited Liability Company )'s stake in one of Africa's most promising oil regions, a GNPC official said on Nov 1. The deal -- which would have included a massive oilfield once sought by Texas oil giant Exxon Mobil Corp. (XOM) -- is a sign of the heating competition between Western and Asian oil companies for Africa's oil wealth. Analysts say, however, that the rejection by Kosmos is only a temporary setback for the bidders. GNPC Chief Geophysicist Gabriel Q.A. Osatey said that the bid was rejected by Dallas-based Kosmos. Speaking on the sidelines of an oil conference, Osatey said that "GNPC wanted to buy" Kosmos' assets, but wasn't able to do so. The private equity-backed Dallas Company, a small player compared to other large international oil companies that have a presence in the area, focuses on developing relatively unexplored basins in offshore West Africa. It holds a 23.5 percent stake in the Jubilee field offshore Ghana, one of the largest deposits of oil in the continent. The field, estimated to contain 1.5 billion barrels of crude, is scheduled to start producing oil in December, heralding Ghana's entry into the ranks of Africa's major oil producers. Exxon was in talks with Kosmos to buy the field and other Ghana assets for $4 billion, but backed out of a deal last August without specifying a reason. Kosmos' potential sale of the assets to Exxon had generated vocal opposition from GNPC. The joint bid from GNPC and CNOOC is the latest sign of Chinese interest in one of the most promising frontiers for offshore oil exploration. "They are putting under the sunlight that there is a credible bid that is even higher than the one Kosmos had from Exxon," Jefferies & Co. analyst Subash Chandra said. "Everyone knows now that there is a deal on the table." Some analysts said that Kosmos may not be willing to sell because the price offered by GNPC and CNOOC is too low. The Buckingham Research Group said in a note to clients in September that Anadarko Petroleum Corp.'s (APC) stake in Jubilee, which is identical

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to Kosmos's, has an estimated value of $6.75 billion. Other recent discoveries nearby could boost the price even further. China, Russia oil pipeline starts trial operation （2010-11-02 ） Russia's crude oil started flowing into China through a pipeline linking Russia's far east to China's Northeast as the two countries began testing the pipeline on Nov 1. The crude oil will arrive at Mohe at 8 to 9 am on Nov 2, the first of terminal of the pipeline in China, said an official with China National Petroleum Corp, the operator of the Chinese branch of the pipeline. The lure of the silver screen looms ever larger An official of China Customs said China planned to import 250,000 tons of crude from Russia in November and 300,000 tons in December. The pipeline will bring 15 million tons of crude oil across the border annually beginning on Jan 1, 2011. The pipeline is a branch of Russia's 4000-km-long East Siberia to Pacific Ocean Pipeline which runs from Taishet in Eastern Siberia to the Pacific port of Kozmino. The Chinese branch of the pipeline runs from the Chinese border town of Mohe to Daqing, both in northeast China's Heilongjiang province. According to an agreement between Russia and China, the pipeline will transport 15 million tons of crude oil annually from Russia to China from 2011 to 2030. However, the pipeline is capable of pumping twice that amount into China annually. Offshore operators seek deepwater development (2011-11-02) Deepwater development drew interest from participants at the 2nd Asia Offshore Operation & Development conference held in Beijing from Oct 27 to 29, which provided a platform for industry players in China and the Asia-Pacific region to seek cooperation in the offshore oil and gas industry. Chen Weidong, chief energy researcher of China National Offshore Oil Corporation (CNOOC), said the capability of drilling onshore oil and oil in shallow waters was reaching the limit but oil still remained the most important energy source despite fast development in new energy.

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In light of the growing demand for oil, deepwater development has become more and more important, he said. West Africa, Gulf of Mexico and Brazil were the three major fields for deepwater development, said Li Qingping, chief engineer at CNOOC Research Center. Oil had also been found in the deepwaters of South China Sea, she added. Li said because of the extreme environment and special storage requirements, deepwater development meant high technologies, high risks, high investments as well as high returns, which called for wider and further development among national and international oil corporations. The conference, held by SZ&W Group, was attended by market players to share ideas, gain new insights and network with industry leaders such as CNOOC and China National Petroleum Corporation (CNPC). Bankers from BNP Paribas and HSBC also shared their visions about financing in the deepwater oil and gas development. Oil surges on improving US, China manufacturing (2010-11-02) Oil prices surged on Nov 1 on a series of reports that point to improving economic growth in the United States and China. Benchmark oil for December delivery rose $1.52 to settle at $82.95 a barrel on the New York Mercantile Exchange. Oil traders were more optimistic after two U.S. reports showed improvement in the manufacturing sector and in construction spending. Both came shortly after China said its manufacturing activity had improved. The Institute for Supply Management reported on Nov 1 that U.S. manufacturing activity expanded last month at the fastest pace since May. It credited an increase in new orders, particularly for autos and computers, as well as exports. In addition, construction spending inched higher in September because of an increase in residential activity and government projects that helped offset weakness in commercial projects. Yet, it remained 34 percent below the 2006 peak when residential housing boomed. China said its purchasing managers index rose in October, a sign that the economy is on

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track for more stable growth. The reports were released ahead of two key developments that could affect oil markets: Midterm elections in the U.S on Nov 2 and Decision from the Federal Reserve on economic stimulus programs on Nov 3.. In other energy trading on the Nymex, heating oil was up 4 cents to settle at $2.2777 a gallon, gasoline gained 3.35 cents to $2.0929 a gallon and natural gas fell 20.6 cents to $3.832 per 1,000 cubic feet. In London, Brent crude rose $1.47 to settle at $84.62 a barrel on the ICE (Intercontinental Exchange) Futures exchange. CNPC, partners seek workover rigs for Iraq Halfaya (2010-11-03) China National Petroleum Company (CNPC), Iraq, French and Malaysian partners have invited bids from oil service companies to supply two workover rigs as they prepare to start work on the 4.1 billion barrel Halfaya oilfield. The tender from state-run Maysan Oil Company, along with CNPC, French oil major Total and Malaysian state firm Petronas, closes on Nov 28, and the offer must remain valid for 90 days after the bid closing date. The first drilling is supposed to start in November 2010, and three more drilling rigs are to be mobilized in the near future, according to the tender documents obtained on Nov 2. CNPC and its partners had said in August they planned to start drilling new wells in September in Halfaya as part of a plan to boost output to 70,000 barrels per day in 2011 from 3,000 bpd now. Iraq agreed to pay the companies a fee of $1.40 per barrel. CNPC has a 37.5 percent interest in the consortium, and Total and Petronas have 18.75 percent. Sinopec boosts crude processing and cuts diesel exports (2010-11-05) China Petrochemical Corp. plans to increase its daily processing of crude oil in November by 9.9 percent to an average of 583,000 metric tons. The refiner, known as the Sinopec Group, will also buy 200,000 tons of diesel from overseas to help ease a domestic shortage of the fuel, according to source of the

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company. Last month the company’s daily crude processing volume increased by 12.3 percent to a record high. October was the fourth month the company operated at full capacity, according to Sinopec Group. The capacity utilization rate rose 0.6 percentage point from the average between January and September, the company was cited as saying. It will reward plants that will beat their diesel production targets and is limiting the output of kerosene. The company arranged immediate imports of 200,000 tons of diesel to ease tight supplies in regions including Zhejiang, Gansu and Jiangxi. Diesel output rose by 8.3 percent in October and the yield of the product, used to fuel power generation and trucks, increased to 2.16 times of that of gasoline last month, higher than the average diesel yield ratio so far this year. It will also cut its overseas diesel shipments by about 70 percent in the last two months of the year to ease a domestic shortage. "Sinopec will likely export about 40,000-50,000 tonnes for November and December, about 70 percent below the normal level of 200,000 tonnes per month," a source with knowledge of the refiner's export plans said. China's Sinochem to issue up $2 bln debt in 2-part sale (2010-11-05) China's Sinochem HK will issue bonds worth up to $2 billion, which will be sold via Sinochem Overseas Capital Co. Sinochem is planning to sell $1.25-$1.5 billion of 10-year notes and $500-$750 million of 30-year bonds. Citigroup Inc and other institutions are managing the deal. Sinochem to up Colombia crude imports through 2013 (2010-11-03) China's fourth-largest oil company, Sinochem, will raise crude oil imports from Colombia through 2013, reaping the benefits from upstream asset acquisitions and rising production in the South American country. Colombia will become a regular supplier to Sinochem by 2013, when the company

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expects to take between 1 million and 2 million barrels of crude per month from the Andean country, or as much as 67,000 barrels per day , a trading source familiar with the plans said. That's up from just sporadic shipments on a spot basis now, a second trading source said on Nov 3. Chinese refiners are increasing purchases of crude from Latin America as the world's second-largest oil consumer seeks to diversify import sources. Expanding output from Brazil to Colombia is driving producers to increase sales to Asia, where demand is booming. China's crude imports from Colombia, led by Sinopec and PetroChina more than doubled in January-September 2010 to about 50,000 bpd from the same nine-month period a year earlier, customs data showed. Shipments from Brazil also more than doubled over the period, reaching almost 185,000 bpd. Sinochem took over London-listed Emerald Energy Plc for $878 million in August 2009, seeking to secure access to oil from Colombia, where production is growing at one of the fastest paces in Latin America. Colombia's state-run Ecopetrol has estimated its output would average 615,000 barrels of oil equivalent per day this year, up from 521,000 boepd in 2009. The firm has an $80 billion investment plan for 2011-2020 to boost daily production to 1.3 million barrels, matching mid-sized OPEC (Organization of the Petroleum Exporting Countries) producers such as Algeria. Through the acquisition of Emerald Energy, Sinochem also acquired production assets in Syria. Sinochem's production in Colombia will rise to 10,000-20,000 bpd by 2013, one of the trading sources said, adding that regular shipments to China will comprise both Sinochem's own barrels and output from Ecopetrol. Sinochem's crude requirements will be steady in the next two years from 2010 levels, sources said, but will increase in 2013 with the opening of a new refinery. State-owned Sinochem Group is still "actively" pushing forward the construction of its first major refinery in coastal Fujian province in southern China, group president Liu Deshu said last month.

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Sinochem had earlier aimed to complete the estimated $4 billion plant in Quanzhou city in 2012 and hoped to partner with OPEC-member Kuwait, which in late 2007 agreed to supply 240,000 bpd of crude under a long-term pact.

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ALTERNATIVE ENERGY


ALTERNATIVE ENERGY

Suntech brightens job outlook (2010-11-03) Suntech Power Holdings, China's largest solar panel maker, plans to create more than 1,000 jobs in the United States over the next few years, a further indication of Chinese new-energy companies' growing global presence. More than 8,000 applicants are vying for 150 jobs at Suntech's Arizona plant, its first in the US. The plant is part of its long-term strategy for the US, which the company expects to be its biggest market in three years. Suntech hopes its first manufacturing plant in the country can help ease worries that China is taking green jobs from the US, especially when the employment situation stateside remains bleak. US-listed Chinese solar panel manufacturer Yingli Green Energy Holding Co Ltd said it hopes to sell at least 10 percent of this year's output in the US. While Europe and the US are important markets for the solar industry, others are also expanding, with Africa, South America and Southeast Asia emerging at a rapid pace, said Jason Liu, Yingli's vice-president. The company expects to boost its US market share to 12 percent next year from the current 10 percent, despite recent trade disputes. Manufacturing continues to expand in order to cut logistics costs, Chinese wind turbine manufacturers are establishing overseas production facilities. Sinovel Wind Group Co Ltd, China's largest wind turbine maker, said it is in discussions with the Ohio state government on the possibility of opening a factory there. "Local government welcomes such investment because it will create jobs," said Tao Gang, vice-president of Sinovel. Whether the company will make the investment depends on the US wind power industry policy, said Tao. Other Chinese new-energy companies planning factories in the US include Mingyang

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Wind Power Group and A-Power Energy Generation Systems Ltd. Though China is the world's largest wind turbine maker, exports to the US remain negligible. China has exported only three wind turbines to the United States so far with total power-generating capacity of less than 10,000 kilowatts. But direct overseas investments could also be a risky choice as industry policies in those countries are unpredictable, said Li Junfeng, deputy director-general of the Energy Research Institute under the National Development and Reform Commission. State Grid sees big role for clean tech (2010-11-03) State Grid Corp of China, which manages power supply in 26 provinces, municipalities and autonomous regions, said clean energy is expected to account for 29.2 percent of total installed capacity in the area by the end of 2015. It would have 100 million kilowatts in wind and solar power generating capacity by the end of 2015, said Shu Yinbiao, the company's vice-president. Development of green energy is a key task for State Grid during the 12th Five-Year Plan (2011-2015), said Shu. Clean energy, including hydro, nuclear, wind and solar, is among the most dynamic industries in China. For example, China has the world's largest number of nuclear reactors under construction at present. Nuclear power is expected to account for 8 percent of the country's total power capacity by 2020, they said. China now has 10.8 gigawatts of nuclear power capacity under operation, which accounts for around 1 percent of China's total power capacity, according to the National Energy Administration (NEA). Other clean energies, like wind and solar power, have also experienced massive growth in China in recent years. The domestic wind power industry has seen over 100 percent annual growth in the past five years. The national energy plan for 2011 to 2015 will be published in March at the earliest, according to Wu Yin, deputy administrator of the NEA. The plan will be unveiled only after the full national economic plan is published, he said. The development of clean energies, including nuclear, hydro, wind and solar power will certainly be highlighted in the 12th Five-Year Plan for the energy industry, said Li Junfeng,

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deputy director-general of the Energy Research Institute under the National Development and Reform Commission. First stage completed of China's largest wind power project (2010-11-04) China has completed building the first-stage of Jiuquan wind power base, the country's largest wind power project, in northwest China, local officials said at the ceremony to mark the completion on Nov 3. More than 3,500 turbines have been erected with an installed capacity of 5.16 GW, and at present the turbines are generating 1.15 GW of power, said Wang Jianxin, director of Jiuquan Development and Reform Commission. Jiuquan wind power base is located in the desert area near Jiuquan City, northwest China's Gansu Province, which has abundant wind resources. CNOOC's 1st offshore wind farm to be into operation (2010-11-4) After one year' s construction, CNOOC(China National Offshore Oil Corp)' s New Energy Dongfangsigeng wind farm was put into operation, integrated into grids and successfully generated power recently. This is CNOOC' s first offshore wind farm since its initial investment on wind farms and this project will provide about 0.11 billion kwh on-grid electric power for Hainan province. Spokesman for New Energy Dongfang Company said that it invested 0.665 billion yuan on this project and the total installed capacity of this project hits 45 megawatts and this project owns one 110-kv substation. This project was successfully integrated into grids on October 28 this year. This wind farm extended for 12 kilometers along coastline and it covers 3.2 square kilometers. It's approved by NDRC (National Development and Reform Committee) in December, 2008 and commenced the construction in May, 2009. On March 7, 24 wind turbines all finished their lift work. In the period of construction, the project team accomplished the land expropriation work, overcame a number of difficulties such as storms and typhoon, completed the lift, single-unit debugging and finally realized the on-grid generating. Moreover, this project has won NDRC' s approval as the CDM (Clean Development Mechanism) project and it' s estimated to reduce around 88, 000 tons of CO2 equivalent every year.

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http://en.wikipedia.org/wiki/China_National_Offshore_Oil_Corp

ALTERNATIVE ENERGY


The development and construction of this wind farm is an effective supplement to China' s provincial energy supply system and it' s favorable to ease the environmental protection pressure from Hainan province' s electricity industry and to promote the sustainable regional economic development. Nuclear power capacity to rise (2010-11-04) China plans to increase nuclear power capacity to 112 gigawatts (gW) by 2020, according to the National Development and Reform Commission (NDRC). Nuclear power may make up 7 percent of the nation's 1,600 gW electricity generation capacity by then, Geng Zhicheng, senior researcher at NDRC's Energy Research Institute, said at a conference in Beijing on Nov 1. China's nuclear capacity target for 2020 was 70 gW, Zhang Guobao, head of the National Energy Administration, said in May. SAIC, GM to boost cooperation in new energy vehicle development (2010-11-04) General Motors Co.（GM） and its China partner, SAIC (Shanghai Automotive Industry Corporation) Motor Corp., Ltd., said on Nov 3 they have agreed to boost cooperation in the development of new energy vehicles. The two auto giants will also increase the role of their joint engineering and design group, the Pan Asia Technical Automotive Center, to work on future vehicles and powertrains. The signing of the memorandum of understanding followed the two companies' efforts to explore cooperation in Asia's emerging markets, led by India, and to co-develop two efficient next-generation powertrain families, they said in a statement. "It represents an extension of SAIC and GM's plans to build a closer strategic alliance," the statement noted. The core of the cooperation is to jointly develop more new energy vehicles and components. SAIC and GM also expect to share vehicle architectures and powertrain applications to help reduce development costs and improve energy efficiency, it said.

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ALTERNATIVE ENERGY


In the first 10 months of 2010, SAIC GM, the two auto manufacturers' passenger car venture, sold more than 840,000 vehicles in China. Atlantis eyes tidal interest (2010-11-04) Atlantis Resources Corp, an ocean-current turbine maker, plans to expand in China, India and South Korea, after winning a bid in the United Kingdom to build the world's largest tidal-power project. "China is the next big market for tidal energy," CEO Timothy Cornelius said on Nov 3. "It has the most natural tidal resources in the world and can be home to more than 1,000 megawatts of tidal energy." Datang's renewable energy unit said to seek $1 Billion in Hong Kong offer (2010-11-04) .China Datang Corp., the nation’s second-largest power producer, is seeking a $1 billion initial public offering in Hong Kong for its renewable energy unit, according to two people familiar with the plan. China Datang Corp. Renewable Power Co. has applied to list its shares on Hong Kong’s stock exchange and a hearing is expected this month, said the people, who declined to be identified because the information is private. The unit may list its shares in late December, one of the people said. The IPO would add to the record $40.6 billion that companies have raised through initial offerings in Hong Kong this year, Almost 60 percent of the sales have come from mainland Chinese companies. The government intends to favor developers of energy efficiency and renewable energy projects in its electricity pricing system, according to a statement released by the National Development and Reform Commission on Oct. 21.

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STATISTICS


STATISTICS

Inner Mongolia Jan-Sep import 10.94 Mt coal from Mongolia (2010-11-02) Inner Mongolia, north China’s major coal producer, imported 10.95 million tonnes of coal from Mongolia in the first nine months this year. Of that, coal imports through Ceke and Ganqimaodao border crossing to Inner Mongolia totaled 5.86 million and 5.02 million tonnes in the first three quarters, rising 145 percent from the same period last year. And Inner Mongolia imported 72,100 tonnes through Erenhot border crossing between Jan and Sep, a dip of 61 percent year on year, data show. Besides, China, top coal consumer in the world, imported 15.32 million tonnes of coal in Sep of the current year, totaling 122.24 million tonnes in Jan-Sep, a rise of 22 percent and 42.2 percent from the previous year, the Customs data show.

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POLICY


POLICY

China may start 3-5% sales tax on coal （2010-11-01） A 3 to 5 percent tax on sales of coal is likely to replace the current tax on output as China expands its resource tax reform program. Experts interviewed said it is a trend for the government to include coal in the new resource tax mechanism to boost local government coffers, and conditions have matured for expanding the tax reform to more regions. Currently, a tax of 3- 8 yuan ($0.45-1.19) per ton of output is levied on coal producers, roughly equal to 1 percent of their sales revenue. Market expectation about including coal into the resource tax reform became stronger after a proposal for China's economic and social development in the next five years (2011-15) was adopted at a plenary session of the Central Committee of the Communist Party of China last month. The proposal said that China will continue to push forward its resource tax reform and sort out price relations of resource products including coal, electricity, oil, gas, water and minerals. The 5 percent tax, on price instead of volume, as was the case before, was aimed at increasing the resource-rich region's government revenue, and is part of a support package unveiled at a central work conference held in Beijing in May. An unidentified executive of Shenhua Group Corp Ltd, China's largest coal producer said that the company was keeping a close watch on the latest development in resource tax reform. A 3-5 percent sales tax would have "pretty great implications" for the company's production, "especially in terms of costs," the executive said. An industry insider predicted that coal producers would raise prices to shift the extra tax burden to consumers and the tax reform could also lead to a consolidation of the whole industry as some weaker coal enterprises could have difficulty maintaining their profit margin.

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POLICY


China to unveil 5-yr energy plan in March (2010-11-01) China's energy plan for the five years from 2011 to 2015 will be published in March at the earliest, a senior government official was quoted as saying. The plan would be unveiled only after the disclosure of an overall plan for national economy. China's National People's Congress is expected to formally endorse the overall economic and social development plan drawn by the government in March when parliament meets in an annual session. China's primary energy consumption will be kept to between 4 to 4.2 billion tons of standard coal by 2015, Jiang Bing, director of the development and planning department of the National Energy Administration (NEA), said on Oct 30. It also wants to raise the proportion of non-fossil fuels in total primary energy use to 15 percent by 2020 from less than 9 percent in 2009. China's per capita energy consumption now stands at 2.5 tons standard coal per capita and, if left uncontrolled, China might see its energy consumption top 7 billion tons of standard coal in 2030, Jiang said. Thus, the nation's economic growth mode transformation is quite necessary and it would be a strategic choice for China to control its total energy consumption in the 15 years, Jiang said. China's primary energy consumption topped 3.07 billion tons of standard coal in 2009, up 30 percent from 2005, according to the NEA. China will also control the addition of coal-fired power generation capacity in eastern regions during 2011-2015 to curb coal consumption. China to limit coal production to 3.6-3.8 Bt (2010-11-02) China plans to limit its coal output and step up mines consolidation in its next five-year plan though power capacity is expected to exceed 1.4 billion kilowatts by the middle of the next decade, local media reported. China plans to limit annual coal production to between 3.6 and 3.8 billion tonnes in its next five-year development plan, compared with 3.2 billion tonnes mined in 2009 according to China Coal Research Institute's director He Youguo.

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POLICY


He said under the blueprint, large coal miners should account for around 66 percent, or about 2.5 billion tonnes, of the target yearly production, while total output for mid-sized mines with a capacity of above 300,000 tonnes would be limited at 800 million tonnes. Total output from small mines, classed as those with annual capacity of lower than 300,000 tonnes, would be limited to 500 million tones. He said coal mines consolidation would remain as a key focus for the government and it plans to establish 8-10 major coal firms with annual capacity of above 100 million tonnes and another 8-10 companies with output of around 50 million tonnes. Further consolidation efforts to cut outdated capacity and limit output would continue to boost coal import volumes, which have increased strongly since 2008 when Beijing first launched the consolidation drive. Rapid growth in China's power demand will also boost the country's new-found voracious appetite for imported coal.

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ANALYSIS


ANALYSIS

Coal costs a burning issue this winter (2010-11-04) China's coal prices are expected to rise further in the fourth quarter due to seasonal storage and the possibility of a colder-than-usual winter, analysts said. Coal prices at Qinhuangdao port, a benchmark for China, rose to the highest since Feb 8 and 13 percent higher than the same time a year ago. The price of power-station coal with an energy value of 5,500 kilocalories per kg rose 2.7 percent to between 755 yuan ($113) and 775 yuan a ton this week, according to data from the China Coal Transport and Distribution Association. Coal prices have gained 7 percent since the start of September, when power stations started stockpiling fuel for the winter, data from the association showed. "Coal prices will continue the upward momentum and are likely to rise as much as 10 percent by the end of this year," said industry analyst Song Zhichen from China Investment Consulting. However, the increase may slow down by the end of this year, Song added. The possibility that China is likely to experience severely low winter temperatures has also fueled the price surge. Australia's thermal coal price, a benchmark for Asia, also remains high, climbing to $100.48 per ton this week, up over $1 from a week ago. Coal inventories at Qinhuangdao port decreased by 6 percent to 7.1 million tons from a week ago as power producers stockpile enough fuel for 21 days for consumption, China International Capital Corp said in a research note. China Shenhua Energy Co, the nation's biggest coal producer, posted an 11 percent increase in third quarter profit after the company increased production to benefit from higher prices, according to its statement on Wednesday. According to the National Energy Administration (NEA), energy demand growth in the fourth quarter is expected to slow as government steps up efforts to save energy and cut

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ANALYSIS


emissions, and the overall energy demand in 2010 is stable. However, China's coal market saw supplies tighten recently and many participants believe the market is undersupplied in the quarter. Meanwhile, coal producers are likely to pay between 3 and 5 percent on the actual selling price of coal as China expands its resource tax reform program. "The country is changing its attitude toward the usage of natural resources as the government continues to sort out the price relations of resource products including coal, electricity, oil, gas, water and minerals," said Zhou Dadi, a researcher with the Energy Research Institute under the National Development and Reform Commission (NDRC). "For limited resources, the more you use, the more you should pay." China plans to cap coal output during the 12th Five-Year Plan (2011-2015), and to establish mega-sized corporations as the industry consolidates, according to the NEA. Meanwhile, the country is likely to limit annual coal production to between 3.6 and 3.8 billion tons in its next five-year development plan, according to China Coal Research Institute.

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Documents

OVERSEAS BULLETIN OIL&GAS ALTERNATIVE ENERGY …eshop.chinadaily.com.cn/e-reports/pdf/2010/11/20101108_6d23d8_.pdfIndia's Mahindra to introduce e-vehicles into China next year (2010-11-01)