2012 Top250RUKN Insight

www.platts.
com November 2012

Platts JKM and LNG
Spot Contracts
page 30
Coal Weathers
the Storm
page 26
Exclusive
2012 Platts
Top 250 Global
Energy
Company
Rankings
www.platts.com November 2012

2013 Asia Energy Outlook
insight
November 2012 insight 1
Publishers Note
Guest Editors Note
Martin Daniel
Patsy Wurster
Welcome to the 2012 Asia Energy Outlook issue of Platts Insight. This issue, high-
lighted by an assessment of the 2012 Platts Top 250 Global Energy Company
Rankings
TM
by Ross McCracken, Platts editor of Energy Economist, showcases
Asias resilience in times of economic and political challenges.
In the following pages other distinguished Platts editors review some of those
challenges and identify the most promising opportunities for shaping a new
energy landscape.
Platts Top 250 Global Energy Company Rankings
TM
ranks the worlds top energy
companies by nancial performance, identies whos up and whos down, who are
the fastest growing, and who are biggest upward movers from the previous year.
The Rankings also 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
Ill blows the wind that prots nobody, wrote English author William Shake-
speare in a particularly blood-stained scene from Henry VI, Pt. 3. And the senti-
ment remains just as true 420 years later, in an economic landscape that bears
more than a passing resemblance to Shakespeares depiction of a society and polity
under intense pressure.
Almost every loser has a countervailing winner, Shakespeare was saying. And
the articles in this issue of Platts Insight bear this out in their analysis of key devel-
opments in the Asian and global energy markets.
Take Chinas willingness to take advantage of the opportunities thrown up by
the 2008 nancial crisis and other global developments, in a story told from dif-
ferent angles by Song Yen Ling and Henry Edwardes-Evans. The impact is also
evident in Ross McCrackens analysis of the rise of Chinese and other Asian enter-
prises within the ranks of the top 250 global energy companies
The devastating impact of the March 2011 disaster on Japans nuclear indus-
try also resulted in opportunities with, for example, renewables securing a major
boost and a marked acceleration in the evolution of the Asian LNG market.
There are of course exceptions that prove the general rule. Thomas Hogues
graphic analysis of the South China Sea disputes is a case in point, in a situation
which has the potential to be a very ill wind indeed.
What these articles and the others carried here illustrate is that grasping market
opportunities is impossible without seeing the whole story and its consequences
and this is where Platts plays an important role day in, day out. We cant always
promise you Shakespearean prose, but we do promise insights and analysis worthy
of the bard himself.
Martin Daniel
Editor, Platts Power in Asia
2 insight November 2012
Inside
Authors
1 Publishers Note
Patsy Wurster
1 Guest Editors Note
Martin Daniel
4 Europe: Chinas New Backyard
Henry Edwardes-Evans
8 South China Sea: Best Case Scenario
Thomas Hogue
12 Crossed Wires: Indias Power Failure
Martin Daniel
20 Test Year for Chinese
Coal-Based SNG
Ross McCracken
26 Coal Weathers the Storm
James OConnell
30 Platts JKM and LNG Spot Contracts
Hong Chou Hui
36 Japan Looks to Renewables
Martin Daniel
42 Chinas Quest for Hydrocarbons
Song Yen Ling
50 Asia Gains Traction
(Platts Top 250 Global Energy
Company Rankings
)
Ross McCracken
Martin Daniel
Thomas Hogue Ross McCracken James OConnell Song Yen Ling
Henry Edwardes-Evans Hong Chou Hui
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.
Henry Edwardes-Evans has a bachelor of arts degree from Oxford
University, where he studied English Literature. As a trainee
journalist at Financial Times Business, he worked on a number of
energy-related publications before being appointed editor of EC
Energy Monthly in 1996. Henry launched and edited the FT news-
letter Power in East Europe, which subsequently became Platts
Energy in East Europe. In 2000, he took over editorship of FTs
agship energy newsletter, Power in Europe, now Platts Power in
Europe, developing power plant trackers and managing three other
highly-regarded Platts newsletter titlesEnergy in East Europe,
Power UK and Power in Asia.
Hong Chou Hui graduated from the National University of Singa-
pore. He is a multiple-award winning news editor and analyst who
helped launch Platts spot LNG Japan Korea Marker benchmark in
2009. The JKM has grown into Asias leading spot LNG index. He
has developed further LNG price points for Asia, while overseeing
the start of Platts LNG market coverage in Europe.
Thomas Hogue is the associate editorial director for Asia, head-
ing up and directing Platts oil and gas coverage for the region
since September 2010. His work in Asia as reporter and editor
has spanned nearly 20 years, during which time he has written
about oil and gas for Dow Jones and Bloomberg, covered general
business news for The Associated Press, and helped to launch
and lead the lifestyle desk for Indonesias English-language daily
Jakarta Globe. He holds an MA in mathematics from the University
of Oklahoma.
Ross McCracken, editor of Energy Economist, joined Platts in 1999
to run the European and West African crude desk. He was previ-
ously an editor with an Oxford University-based political and eco-
nomic 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.
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 Communica-
tions from the National University of Ireland.
Song Yen Ling is Platts chief China correspondent covering up-
stream and downstream oil, natural gas and energy policy. Based
in Singapore, she joined Platts in March 2012 after over six years
with Energy Intelligence, also writing about Chinas energy sector.
She has a degree in communications from Singapores Nanyang
Technological University.
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ISSN 2153-1528 (print)
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Chinese energy investors moved into
Europe in 2012, some seeking long-
term asset plays in utility and network
operations, others new markets for
thermal power generation equipment.
Beyond the value of diversifying into
well-established European businesses,
Chinese entrants are keen to benet
from Iberian utility positions in Latin
America and hydro/renewable portfo-
lios that t with their own. Then there
is the opportunity to gain fresh insight
into European research and develop-
ment and benet from the chronic
need for regulated infrastructure in-
vestment.
In return, the Chinese bring much-
needed cash, excellent ratings and the
ability to raise funds cheaply. Growth
may have slowed in their home market
but cashow has been strong compared
to that of European utilities facing de-
mand destruction since 2008.
Political considerations may yet con-
strain Chinese incursions into Euro-
pean energy interests. In August 2012
both Spanish and UK authorities indi-
cated that stakes sold in strategic as-
sets would have to remain below cer-
tain thresholds. And in one specialist
boom market, solar PV, European sup-
pliers are seeking anti-dumping mea-
sures to stem the tide of Chinese pan-
els. Nevertheless Chinese investment
already committed in Europe is signif-
icant and likely to engender goodwill
in economies where, frankly, beggars
cannot be choosers.
Hydro Marriage
The China Three Gorges Corporation
(CTG) set the ball rolling in December
2011, defeating rival bids from E.ON of
Germany and Brazils Eletrobras and
CEMIG to take a 21% stake in Energias
de Portugal, Portugals dominant power
utility.
The Chinese company agreed to pay
Eur2.69 billion ($3.512 billion) for the
stake, a premium of 53% on EDPs stock
price at the time, to become the groups
largest single shareholder.
Beyond the sale price, CTG is to in-
vest Eur2 billion in stakes of between
34% and 49% in 1.5 GW of EDPs re-
newable energy capacityEur800 mil-
lion in 2012 and the remainder by
2015. EDP said 900 MW would be in
plants already in operation and 600
MW in ready-to-build projects. Most
of the investment is expected to be
channelled into EDPs wind power de-
velopment pipeline in the US, Brazil
and Europe.
Further, CTG has lined up a commit-
ment from an unnamed Chinese bank
to provide EDP with up to Eur2 billion
in long-term corporate debt with ma-
turities of up to 20 years. EDP said this
would cover its nancing needs by an
additional two years, to mid-2015, and
should raise earnings per share from
2012 onwards.
Finally, the Chinese group raised
the possibility of a supply chain part-
nership between EDP and Goldwind,
Chinas second largest wind turbine
China energy
Europe: Chinas
New Backyard
Henry Edwardes-Evans, Managing Editor, Platts Power in Europe
China energy
producer, potentially installing a pro-
duction plant in Portugal with the ca-
pacity to manufacture 800 turbines a
year.
But at heart the deal makes most
sense because of shared hydro exper-
tise. EDP is half way though an ambi-
tious program to increase its installed
capacity by 42% to 7 GW through the
delivery of 2.1 GW of new hydro plant,
but has had to delay some fringe proj-
ects because of nancial constraints.
Those constraints may now be lifted.
Strong Rating
Speaking at an investor day in May
2012, EDP executive board member
Joao Marques da Cruz underlined the
nancial benets of having CTG as a
key shareholder. Last time CTG went
to the market was in March this year
for seven billion Chinese yuan, the
coupon was 4.71%. The conclusion is
very strong nancials, with access to
long term funds, he said.
The acquisition marks the begin-
ning of the end of a period of massive
domestic investment by Chinese utili-
ties, who can now use the huge cash
ow generated to invest internation-
ally, a Lisbon banker close to the EDP/
CTG deal told Platts. EDP now has the
funding available not only to weather
the medium-term nancial storms that
will hit Portugal, but also to invest in
attractive international projects over
the long term.
The possibility of EDP buying back
control of renewables subsidiary EDP
Renovaveis remained a possibility,
but not a priority for CTG, the Lisbon
banker said. Spains Iberdrola and EDF
of France have already bought back
their renewable spinoffs in an effort to
lift their growth prole.
Three Gorges was seen as having
made the best offer in terms of inde-
pendence for EDPs strategy and the de-
leveraging of its balance sheet, accord-
ing to analysts at Banco BPI.
Perhaps aware of political and pub-
lic perception issues that have arisen
in Spain and the UK, CTG has sought
to portray its Portuguese investment as
purely commercial, supporting the cur-
rent management and saying it would
not seek to increase its stake in EDP un-
der a standstill clause in the acquisi-
tion agreement.
This is not to say that the Chinese
company is not an active partner in
EDPs investment plans.
Under a joint steering committee and
liaison ofce, the partners have already
set up ve teams focused on partner-
ship execution, co-investment, nanc-
ing, best practice and special initiatives.
In addition, CTG is looking at invest-
ing and participating in EDPs Venture
Capital system to develop technology
Plant Start up date Type MW Output (GWh) Output net of pumping (GWh)
Picote II 2011 Nov Repowering 246 239 239
Bemposta II 2011 Dec Repowering 191 134 134
Alqueva II 4Q 2012 Repowering, pumping 256 381 30
Ribeiradio 1H 2014 New plant 77 134 134
Baixo Sabor 2H 2014 New plant, pumping 171 405 230
Venda Nova III Mid-2015 Repowering, pumping 740 1,337 18
Salamonde II Mid-2015 Repowering, pumping 207 274 81
Foz Tua 2H 2015 New plant, pumping 251 585 275
Total n/a n/a 2,139 3,489 1,141
1. Energias de Portugals new hydro program.
Source: Energias de Portugal
Perhaps aware of political and public perception
issues that have arisen in Spain and the UK, CTG
has sought to portray its Portuguese investment
as purely commercial ....
China energy
and innovation, as well as establishing
a joint venture for operation and main-
tenance.
Premium for REN Stake
Two months after CTGs deal with
EDP, State Grid Corporation of China
took a 25% in Portugals transmission
system operator Redes Energeticas Na-
cionais (REN). The Oman Oil Corpora-
tion took a further 15% in a deal that
valued the 40% sold by the Portuguese
state at Eur592 million.
The Chinese group agreed to pay
Eur2.9 a share for 25% of REN, valuing
the stake at Eur387 million, a 40% pre-
mium on the February 1, 2012 closing
price. State-owned Oman Oil offered
Eur2.56 a share for 15% of the Portu-
guese group, a premium of 23%.
Portugals treasury secretary Maria
Luis Albuquerque said the higher pre-
mium paid by State Grid reected its fu-
ture role as RENs principal industrial
and strategic partner and the bigger
stake it was acquiring.
This deal opens up China for REN
and Portuguese suppliers and will pro-
vide technical and nancial muscle for
the group to develop in Africa and Bra-
zil, a Lisbon-based analyst told Platts.
In return, it will move State Grid fur-
ther ahead with its international ex-
pansion, with a bridgehead into Europe
and Africa.
State Grid, Chinas biggest wires util-
ity, has guaranteed nance of Eur1 bil-
lion, to be provided through the China
Development Bank, to help renance
RENs debt at competitive rates. The
Portuguese groups short-term renanc-
ing requirements to 2015 amount to
about Eur1.6 billion.
Its offer included large-scale com-
mitments to support the expansion of
REN in Portugal and overseas. REN is
to become a strategic service provider
to State Grid in Brazil, with an initial
project due to be launched in 2012.
Joint ventures are also to be set up in
the former Portuguese colonies of An-
gola and Mozambique. In addition, the
Chinese group has agreed to support
investment in a research center in Por-
tugal and to assist REN in opening up
new overseas markets, including China.
State Grid is committed under the
deal to help REN build relationships
in China, including an initial project
in 2012 related to renewable energy,
for which REN will be the sole service
provider. It is also to help REN in se-
curing new trans-European grid inter-
connections.
International expansion is a key goal
for State Grid, which already owns
transmission assets in the Philippines
and Brazil. The group is looking at oth-
er transmission companies in Europe,
including stakes in Spains Red Electrica
and Enagas, and Irelands Eirgrid.
Spain, however, is reported to have
already turned down two offers from
State Grid for a 20% stake in Red Elec-
trica, the rst at Eur35 ($43) per share
and the second at Eur43 per share. Un-
der the company statutes of Red Electri-
ca and its gas network counterpart Ena-
gas, no individual shareholder with the
exception of the Spanish state may hold
more than 10% of the company given
the strategic nature of the business.
Franco-Sino Bid for Horizon
Turning to opportunities in genera-
tion, the Chinese are again active in
bidding for west European opportuni-
ties. In July 2012 French nuclear en-
gineering company Areva said it was
considering submitting a joint bid with
China Guangdong Nuclear Power Cor-
poration for Horizon Nuclear Power,
the UK development company being
sold by Germanys E.ON and RWE.
Also reported to have looked at Ho-
rizon are Toshiba/Westinghouse and
State Nuclear Power Technology Corpo-
ration, its Chinese partner in AP1000
technology transfer that is building the
rst AP1000s at Sanmen and Haiyang.
Horizon is developing proposals to build
two nuclear power plants at Wylfa in Ang-
lesey and Oldbury in Gloucestershire.
Joint ventures are also to be set up
in the former Portuguese colonies of Angola
and Mozambique.
China energy
Areva ofcials called CGNPC a cen-
tral partner for France. The Chinese
utility is building two EPR units at
Taishan in Chinas Guangdong prov-
ince, in a joint venture in which French
utility EDF has a 30% stake. The two
1,700-MW units are on target to be the
rst EPRs to start up, before those at
Olkiluoto in Finland and Flamanville
in France.
EDF, which is building Flamanville-3,
is co-applicant with Areva for Generic
Design Acceptance of the EPR design in
the UK, and plans to build four EPRs
there beginning with Hinkley Point
C. At the time of writing a decision on
that project was scheduled before the
end of 2012.
EDF and Areva are also working with
CGNPC to develop a third-generation
1,000-MW-class PWR for the Chinese
market. CGNPC and EDF favor develop-
ing the Chinese utilitys CPR1000 de-
sign, derived from the three-loop PWRs
in operation in France. Meanwhile Are-
va has sought to promote the Atmea1
PWR, also of around 1,000 MW, it
has developed with Japans Mitsubishi
Heavy Industries.
The UK government has made much
of the potential for specialist Chinese
nuclear operators to foster competition
in the market. Department of Energy
and Climate Change ofcials, however,
were reported in August to have warned
that a Chinese holding in Horizon
would be limited to a minority stake
due to public and political acceptance
issues. Going further, UK Conservative
MP Mark Pritchard, a member of the
parliamentary joint national security
committee, said state-owned Chinese
company involvement could create
major security concerns.
East European Thermal
Meanwhile the Balkans cash-
strapped utilities and governments are
hoping to secure a share of the $10.5
billion in credit lines that Chinese Pre-
mier Wen Jiabao announced in April
2012 would be available for investment
in infrastructure projects in Central
and Eastern Europe.
The single biggest investment thus
far is a Eur1 billion, 500-MW plant
that the China Huadian Engineering
Company will build at the site of the
Rovinari thermal complex in Romania,
according to a July statement by the
countrys Ministry of Economy. The
China Huadian Corporation subsidiary
won a tender over a rival bid from Ja-
pans Marubeni Corporation to build
the project. The project will be the rst
new coal-red power plant built in Ro-
mania in the last 20 years.
Meanwhile Chinas Gezhouba Group
International Engineering is preparing
a feasibility study for construction of
two coal-red units totalling 350 MW
in northern Montenegro, according to
the countrys Ministry of Economy.
The Montenegrin government and
power company EPCG have dened the
main parameters of the project, while
the Chinese experts will structure the
project. If an agreement is reached on
implementation, the project proposal
will be submitted to Montenegros par-
liament for nal approval, the minis-
try said.
Finally in neighboring Serbia, talks
are underway with the China National
Machinery and Equipment Import &
Export Corporation (CMEC) regarding
construction of a new 350-MW unit
at the Kostolac coal-red complex and
the possible expansion of the feeder
Drmno coaleld in eastern Serbia. TPP
Kostolac is a subsidiary of the Serbian
state-owned power company EPS.
A preliminary agreement has been
signed and a nal technical proposal
for the new unit could be forwarded to
the Serbian government for approval
before the end of 2012, TPP Kostolac
said. Construction of the unit could
start as early as 2014 with commission-
ing planned in 2018 or 2019.
Meanwhile Chinas Gezhouba Group
International Engineering is preparing a
feasibility study for construction of two
coal-red units totalling 350 MW in
northern Montenegro ...
If this were a B-grade thriller, a su-
per villain would have stolen a nuclear
bomb, tted it on the end of a string of
pipe reaching far below the ocean oor
in the South China Sea, and threatened
to blow up all the oil and gas there unless
the six claimants to the area paid up bil-
lions of dollars.
The usual cheap and unrealistic com-
puter graphic would show the warhead
getting closer and closer to a two-toned
blob representing the oil and gas, and, of
course, if it were a really smart thriller,
the villains devious plan never would
have been about blowing up the oil and
the gas anyway.
It would have been about driving up
oil prices by creating an energy crisis,
pushing countries toward greater use of
coal or sowing even more distrust among
those claiming sovereignty over the seas
and starting a war.
Unfortunately, this is not a second-tier
Hollywood movie, and an aging Steven
Seagal wont be along to shut down the
warhead with seconds to spare and kick
the villains all about the place. What we
have instead is a situation thats just as
dangerous and volatile and in which the
contenders for the prize seem ever ready
to poke a nger in the eye of the other guy.
Thats how we get naval stand-offs over
atolls to the west of the Philippines, com-
peting oil and gas licensing rounds off
the east coast of Vietnam, and dueling
editorials condemning the latest insults
to sovereignty.
Ostensibly, its all about territory and
national pride. But the surmise of most
observers is that its also largely about
the oil and gas reserves that might be
out thereespecially considering the
energy shortfalls expected over the com-
ing years in the worlds fastest-growing
economies.
Some estimates put the potential hy-
drocarbon resources in the South China
Sea at least as high as 200 billion barrels
of oil equivalentwith some Chinese
estimates running higheralthough
due to the lack of exploratory drilling
there are no estimates of proven oil or
gas reserves. But the 200 billion boe g-
ure would be enough energy to fuel the
economies of Southeast Asia and China
for decades and, at a monetized value
of $100/barrel, represents a $20 trillion
treasure.
No wonder countries are loathe to give
up any fair claim to the riches.
The mostly hotly contested disputes
over the last couple of years have been
between China and Vietnam, and be-
tween China and the Philippines, al-
though Brunei, Malaysia and Taiwan all
stake claim to some of the island territo-
ries in the region as well.
China itself claims sovereignty over
South China Sea
South China Sea:
Best Case Scenario
Thomas Hogue, Associate Editorial Director for Asia, Platts
In the South China Sea, the best case scenario is for cool heads
and more of the same, because at least that means there hasnt
been an escalation beyond a war of words.
South China Sea
as much as 80% of the South China
Sea as outlined by its so-called nine-
dashed line, which ropes in the Paracel
and Spratly islands as well as island and
shoals closer to the Philippines.
One strategy of the Southeast Asian
claimants, meanwhile, is to try to buddy
up to the US to counter the weight and
might of China, and the other is to try
to use regional organizations such as the
Association of Southeast Asian Nations
(ASEAN) and Asia-Pacic Economic Co-
operation (APEC) to face China on the
issue collectively instead of individually.
Neither of those strategies has been
particularly effective.
For one thing, while the US keeps call-
ing for peace, cool heads and the easing
of tension in the region, the State Depart-
ment also ofcially makes it clear that it
doesnt back any particular partys claims.
Now is the time for everyone to
make efforts to reduce the tensions and
strengthen diplomatic involvement for
resolving these tensions, Secretary of
State Hillary Clinton said on September
9 in Vladivostok, Russia, in a media brief-
ing at the American consulate following
the APEC-2012 Leaders Week meetings.
Its not in the interests of any of the
Asian countries, its certainly not in the
interest of the United States or the rest of
the world to raise doubts and uncertain-
ties about the stability and peace in the
region, she said, according to comments
posted on the State Department website.
Ironically, some of the most recent
heated rhetoric has come out of the
US. Lawmakers there in mid-September
used harsh words in a hearing held by
the House Committee on Foreign Affairs
that focused on Chinas designs on the
region and its growing ability to intimi-
date its smaller neighbors.
While the worlds attention was
turned to other crises, including Irans
nuclear program and concerns over the
faltering Euro, China has upped the
ante, playing the role of a schoolyard
bully towards its maritime neighbors,
Committee Chairwoman Ileana Ros-
Lehtinen, Republican-Florida, said in an
opening statement.
Even that rough language was followed
by the adoption of a bill expressing the
sense of the Congress that the US should
strongly support peaceful resolution
of maritime territorial disputes in the
South China Sea, the Taiwan Strait, the
East China Sea, and the Yellow Sea and
pledge continued efforts to facilitate a
collaborative, peaceful process to resolve
these disputes.
The non-binding resolution also con-
demns the use of force by China and
supports the role of the US military to
defend navigation and air space rights
in the area. But its clear that the US and
other interested parties would like to see
the regional claimants work their way to
a peaceful solution on all the disputes.
While China has stressed that it has no
plans to disrupt shipping in the area and
is committed to free navigation through
the disputed waters, its standard response
to any other claims in the South China
Sea is that there is no questioning its sov-
ereignty over the region or over other ar-
eas that are in dispute with Japan.
The standard Chinese line is that there
is plentiful jurisprudential and his-
torical evidence of Chinas sovereignty
over South China Sea islands and waters,
as well as over the Diaoyu or Senkaku is-
land that are in dispute between China
and Japan.
Members of ASEANmost of whom
are not claimants to the seasare wor-
ried not only that tension between China
and the other contending parties might
break out into war, but that things might
simply escalate to the point where ship-
ping lanes through the seas are affected.
Singapores Prime Minister Lee Hsien
Loong might have been speaking for all
of ASEAN when he said in a pre-APEC
speech on September 6 at the Central
Party School in Beijing: Trade is the
lifeblood of our economy. Our foreign
trade is three times our GDP. Freedom
of navigation is therefore a fundamental
interest, especially along our sea lanes of
communications.
He went on to say: Therefore the
South China Sea is strategically impor-
tant for our survival and development.
However the South China Sea disputes
play out, freedom of navigation must be
maintained. Ships of many nations use
the South China Sea, so I am sure these
South China Sea
countries would share Singapores con-
cern on this point.
Lee, however, was also clear that Singa-
pore was not a claimant country, take(s)
no sides in any of the territorial disputes,
nor can (it) judge the merits of the vari-
ous claims.
He was just as clear that ASEAN should
remain unied in its dealings with China
on the issue. This did not happen in July
2012 in Cambodia, when the group could
not agree on the language for a joint state-
ment on the development of a code of
conduct for the South China Sea.
For ASEAN not to address [the issue]
would severely damage its credibility,
Lee said. ASEAN must not take sides
on the various claims, but it has to take
and state a position which is neutral, for-
ward-looking, and encourages the peace-
ful resolution of issues.
We also hope that ASEAN and China
will start talks on a Code of Conduct
soon, Lee said.
China, however, has been adamant
that ASEAN and other regional organi-
zations are not the proper forums for
dealing with the territorial disputes. It
wants to deal with its counter-claimants
on a bilateral basis instead of dealing
with any collective grouping, and fre-
quently makes statements to that effect,
as well as telling other countries that the
territorial issues are Chinas to work out
with its neighbors.
That was its clear response to ASEAN
in July, and also during the recently con-
cluded APEC meetings, where Chinas
president Hu Jintao declined to meet
with his Philippine counterpart, al-
though Hu did meet with Vietnamese
president Truong Tan Sang.
As we all know, since its inception in
1989, APEC is an organization to discuss
economic cooperation issues instead of
political issues or territorial disputes,
said La Yifa, director general of the De-
partment of International Organizations
and Conferences, a division of Chinas
Foreign Ministry, in a press brieng dur-
ing the APEC week in Vladivostok.
Nevertheless, some hope that econom-
ic cooperation and integration such as
that advocated by APEC will eventually
lead countries toward peaceful resolu-
tions to regional territorial disputes, if
only by putting a positive example be-
fore the contending parties.
That was a point made on September
8 in Vladivostok by Yutaka Yokoi, press
secretary for Japans Ministry of Foreign
Affairs. He said that APEC economic
integration might eventually make
countries realize that if you have any
dispute, it will just hinder your [com-
mercial] cooperation.
Asked if there was any concrete progress
in this direction during the weeks meet-
ings, he said: This is not easy, but we try.
On the other hand, Yutaka also dem-
onstrated just how entrenched a position
countries can outline for themselves
over some of the disputed territories. Ja-
pan is involved in three territorial dis-
putes of its own, with China, Russia and
South Korea.
Senkaku is an integral part of Japan,
based on international law and historic
facts, he said, in response to a question
about the dispute over the islands that
China calls the Diaoyu islands.
The classic solution that observers like
to throw out as the most rational solution
to maritime disputes is that reached by
Malaysia and Thailand over a disputed
section of the Gulf of Thailand, in which
the two countries recognized the ter-
ritorial claims as intractable and agreed
to joint commercial development while
putting the question of sovereignty aside.
But, so far, none of the claimants in
the South China Sea or other East Asia
waters have seemed willing to accept
that as an approach.
As Singapores Lee said in his speech:
Sovereignty disputes are complex and
hard to resolve. No side can easily aban-
don their claims without high political
costs. The many overlapping claims by
multiple claimants in the South China
Sea are unlikely to be resolved any time
soon. Hence in Singapores view, the in-
volved parties must manage the disputes
responsibly. All sides should avoid esca-
lating tensions or precipitating confron-
tations that will affect the international
standing of the region.
And given recent events and state-
ments, thats likely the best that can be
hoped for in the foreseeable future.
The grid failure that affected much
of India at the end of July 2012 was un-
precedented in scale. More than half of
Indias 1.2 billion people were without
electricity after the northern regional
grid collapsed on July 30, followed by
the failure of the eastern and northeast-
ern grids the next day.
While unprecedented in scale, the
failure was not unprecedented in occur-
rence. And while the immediate causes
may differ, power transmission failures
in India, the rest of Asia and beyond re-
sult from the same underlying problem
insufcient transmission, generation or
power station feedstock capacity caused
more often than not by inadequate fund-
ing and price signals in electricity mar-
kets where prices reect the priorities of
politicians rather than input costs.
Background
An enquiry into the grid failures or-
dered by the power ministry and pub-
lished in mid August found that that no
single factor was responsible for grid dis-
turbances [but] identied several factors
which led to the collapse of the power
systems on both the days. The fac-
tors included weak inter-regional links
due to multiple outages of transmission
lines, which effectively left the 400-kilo-
volt Bina-Gwalior-Agra line as the only
available line; overloading of this line
by unscheduled withdrawals by north-
ern region utilities, while some western
utilities were under-drawing power; the
failure to stop this continuing by state-
level authorities; and the tripping of the
link and subsequent grid collapses.
The problem of unscheduled with-
drawals is far from new with some In-
dian states persistently drawing more
power from the grid than their alloca-
tion, in spite of warnings from the re-
gional load dispatch centers (RLDCs).
The ve RLDCs come under the Nation-
al Load Dispatch Center and coordinate
the activities of the dispatch centers in
individual states.
On July 10 the countrys Central Elec-
tricity Regulatory Commission had, at the
behest of the Northern RLDC, directed
utilities in the northern states to stop
overdrawing power if frequency fell below
49.5 Hertz. This came after June month
data submitted by the Northern RLDC
showed that frequency fell below 49.5
Hertz for 70% of the time on some days.
But data from the Northern RLDC
showed the excessive drawdown contin-
ued after July 10 and up to the time of
the outage.
This was not surprising. Local analysts
have pointed out that the RLDCs lack in-
dependence and fail to disconnect states
that draw excessive power from the grid,
particularly if they are governed by rul-
ing political parties or their allies.
The position of the RLDCs is further
weakened by the fact that the main pen-
alty for unscheduled withdrawals is to
charge a higher price for the power than
normal. However, the penalty charges
can be less than the cost of buying elec-
tricity from the spot market.
While state indiscipline in power with-
drawals from the grid may have been
the immediate cause of the grid failure,
it merely reected underlying problems
India
Crossed Wires:
Indias Power Failure
Martin Daniel, Editor, Platts Power in Asia
India
in the market. On the demand side these
center on the fact that Indian electricity
consumption consistently and substan-
tially exceeds available supplies, espe-
cially at peak periods.
The gap between peak demand and sup-
ply across India in the nancial year end-
ing March 31, 2012 was 11.1%, up from
the 10.3% reported by the government-
run Central Electricity Authority (CEA)
for the previous nancial year. The short-
fall varied across India, with the southern
and western regions seeing the highest
decits at 15.6% and 13.8%, respectively,
compared with a relatively modest gap of
3.7% in the eastern region.
The shortfall at peak periods was par-
alleled by the inability to meet electric-
ity demand overall. For the year ending
March 2012 Indian electricity require-
ments were 936.57 TWh, according to
the CEA, whereas the available supplies
were 8.5% lower at 857.24 TWh.
Moreover, the shortfalls exclude sig-
nicant suppressed demand, since a large
proportion of the population does not
have access to grid electricity. About a
third of Indias 246 million households
did not have access to grid electricity in
March 2012, according to the latest cen-
sus data, with the gure rising to 45% for
the 168 million rural households.
Conversely, existing electricity con-
sumption is in some respects higher
than it should be. This reects the fact
that many customers get electricity at
below cost and in cases for freewith
agricultural consumers in some states
being notable in this regardunder a
system where retail electricity prices are
set by state agencies and regulators rath-
er than by market mechanisms.
The below-cost provision of a large
proportion of electricity supplies means
that some consumption is not economi-
cally justied. The situation is exacer-
bated by high technical and economic
losses in much of the country, with
losses resulting from aging and poorly-
maintained wires networks being com-
pounded by power theft.
The upshot is that sales revenue is in-
sufcient for many state power distribu-
tion and supply utilities to meet their op-
erating, let alone nancial costs, with the
debt burden of most utilities mounting
fast. A late 2011 government-sponsored
report on the utilities put their combined
losses in the year to March 2011 at Indian
Rupee 277.6 billion ($5.2 billion). Worse
still, average costs and revenues were es-
timated at the equivalent of $90/MWh
and $70/MWh, respectively in the year
ending March 2010, when average trans-
mission and distribution losses were put
at 27.15%.
Supply-Side Issues
None of this means that the strong
recent and projected growth in Indian
electricity demand is unjustied. But the
nancial woes of the state power utili-
tieswhich are the wholesale buyers and
onward retailers of the great majority of
power in Indiado have implications for
the electricity sectors ability to invest in
new transmission and generation capaci-
ty or pay the market rate for fuel supplies
for fossil energy-red generating plants.
R V Kanoria, the president of the Feder-
ation of Indian Chambers of Commerce
and Industry, has summarized the sup-
ply-side issues as follows: While main-
taining grid discipline is important, we
Region Peak demand
MW
Peak supply
MW
Decit
MW
Decit
%
Requirement
TWh
Availablilty
TWh
Decit
TWh
Decit
%
Northern 40,248 37,117 3,131 8 276 258 18 6
Western 42,352 36,509 5,843 14 290 257 33 11
Southern 38,121 32,188 5,933 16 260 237 23 9
Eastern 14,505 13,971 534 4 99 95 5 5
Northeastern 1,920 1,782 138 7 11 10 1 10
National 130,250 115,847 14,403 11 937 857 79 9
1. Indian electricity demand in year ending March 2012.
Source: Central Electricity Authority, India
India
[must] ramp up capacity in the power sec-
tor, he said after the grid failure, adding
that reforms that would help make coal
and gas available as per the nations re-
quirement must no longer be held back.
India has in fact added a substantial
amount of generating capacity in recent
years. In the year ending March 2012 a
record 26,250 megawatts (MW) was com-
missioned, with grid-connected capacity
nationwide now exceeding 200,000 MW.
The capacity installed at the end of March
2012 included 112,022 MW of coal,
18,381 MW of gas and almost 1,200MW
of oil-red plant, as well as 38,990 MW of
hydroelectric, 24,503 MW of renewable
and 4,780 MW of nuclear plant.
By region, western India hosted most
capacity at 64,394 MW, followed by the
northern region with 53,925 MW and the
south with 52,740 MW. In terms of own-
ership, private investors held 54,276 MW
of the capacity installed at March 2012,
while central government-owned enter-
prises held 59,682 MW and state-owned
companies operated a further 85,919 MW.
The privately-owned capacity includes in-
dependent power producer and merchant
projects, but not the 30,000 MW and
more of captive generating plant.
The impact of the recent increase in
capacity can be seen from the CEAs
analysis of Indian electricity generation
in June 2012, which at 76.31 TWh was
8.1% higher than in June 2011an im-
pressive year-on-year increase by Indian
standards. With hydroelectric output
down 5.5% on year due to depleted dam
water levels against the background of
low rainfall, fossil-fueled generation rose
TWh % on year % of total
Coal 52.78 16.75 69.2
Lignite 2.69 18.58 3.5
Gas 6.26 -20.28 8.2
Liquid 0.01 -84.31 0.1
Diesel 0.16 -0.05 0.1
Nuclear 2.72 8.83 3.6
Hydro 11.23 -5.47 14.7
Imports 0.44 -29.68 0.6
Total 76.31 8.08 100
2. Indian power generation in June 2012.
Coal Lignite Gas Liquid Diesel Nuclear Hydro Imports
3. India power generation by fuel.
India
11.37% from June 2011 to 61.91 TWh in
June 2012, within which coal and lig-
nite-red production was up more than
17% on year at 55.47 TWh.
Fuel Supply Issues
However, while coal-red generation
was well up on year it could have been
higher, with the CEA noting that the 33
million metric tons (mt) of available coal
during the month of June was only 82%
of power plant requirements. The situa-
tion for gas-red plants was even worse,
with national gas shortages meaning that
the 6.26 TWh of output in June 2012 was
20.28% lower than in June 2011.
This situation continued into July,
with the CEA observing that just prior to
the grid failure more than a fth of the
180,361 MW of grid capacity that it moni-
tors was not operating. While 12,433 MW
was closed for scheduled maintenance or
other reasons on July 29, a further 27,032
MW was ofine because of forced outages.
Ashok Khurana, the director general
of the Association of Power Producers
(APP), amplied the position by noting
that 35,000 MW of coal-red plant was
working at less than 40% of its design
capacity due to the lack of coal supplies
and more than 9,000 MW of gas-based
plantabout half the national total
was idle because of the lack of gas. On
top of that, he noted that rm fuel sup-
ply agreements remain to be signed for
another 55,000 MW of plant which is
scheduled to enter operation by 2015.
While both fuels fall short of demand,
there are signicant differences between
the problems confronting the Indian
coal and gas supply sectors. On the
coal front, new mines being developed
both by state entities such as the central
government-owned Coal India Limited
(CIL) and by private investors on a cap-
tive mining basis have been heavily de-
layed or cancelled.
This is a result of changes to, and more
stringent enforcement of, policies re-
lated in particular to securing environ-
mental approvals. Land and water avail-
ability issues are also becoming acute for
coalmine developers.
As a result the annual output of CIL,
one of the worlds largest coal miners, has
been stagnant against the background of
surging demand. CILs output rose only
1% to 435.8 million mt in the year to
March 2012, following unchanged pro-
duction the previous year.
The problem can be seen from the fact
that 34,373 MW of coal-red capacity was
commissioned in India in the three years
to March 2012. That amount of capacity
would require some 70 to 100 million mt
of coal each year, whereas CIL added only
32 million of annual production in total
over the same period.
CIL delivered 311 million mt of coal to
power plants in the year ending March
2012, about three-quarters of the elec-
tricity generation sectors 417.56 million
mt of coal consumption for the year.
While CIL is targeting the delivery of
about 36 million mt more in the year
ending March 2013, this is well below
potential requirements.
Private production of coal from re-
sources dedicated to supplying specic
generation projects on a captive basis
is even worse placedwhile 57 blocks
have been awarded to private power gen-
erators since 2004, only one has started
production. Moreover, the award of the
blocks faces legal and nancial scrutiny
following the publication of an audit by
the Comptroller and Auditor General
of India in August 2012, meaning that
power plants with 18,300 MW of capac-
ity face likely further delays.
On the domestic gas supply front, the
shortages center on problems facing the
KG-D6 block off the coast of Andhra
Pradesh state. Production from what was
expected to be Indias biggest gas pros-
pect by far had reached 61 million cubic
meters per day in 2010.
But instead of then rising to 80 mil-
lion cu m/d by April 2012, as envisaged
in the eld development plan, produc-
tion has fallen to about half this level
because of the geological complexity of
the gas reservoir.
Moreover KG-D6s operator, the local
Reliance Industries Limited, has pro-
jected that the elds production will fall
further to 22 million cu m/d by 2014.
This is less than the 32 million cu m/d
then allocated from the block to the
power sector alone.
India
The collapse in KG-D6 production has
dragged down overall Indian gas pro-
duction. In the year ending March 2012
total gas output fell by 8.9% on year to
47.549 billion cubic meters, or around
130 million cu m/d.
The countrys gas-red plants require
about 82 million cu m/d of gas to run at
90% capacity, but were getting less than
53 million cu m/d in early 2012. And the
power ministry has said that availability
is likely to drop to 28 million cu m/d in
the year ending March 2014, with the
average load factor of Indias gas-red
plants having already fallen from 62.46%
in June 2011 to 46.86% in June 2012.
Not only are many operating gas-red
plants working at a low load factor, but
much of the sizeable amount of plant
under construction has no committed
gas in spite of having signed fuel supply
agreements. This has led to an effective
moratorium on the approval of new gas-
red capacity, at least where based on
indigenous gas supplies, with the power
ministry seeing no approvals until at
least 2015 unless the situation changes.
Imports to the Rescue?
The problems facing Indias domestic
gas and coal industries are multifarious
and only partly reect the fact that they
sell their output to generators at regulat-
ed and low prices. But the low domestic
feedstock prices do mean the nancially-
pressed power utilities are unwilling to
replace electricity generated from indig-
enous supplies with that produced from
imported coal or liqueed natural gas,
whose market-set prices were respectively
about double and triple those of indige-
nous supplies in mid 2012.
CIL has thus been unwilling to accede
to government requests that it should
import coal to meet the shortfall in do-
mestic supplies unless the onward sales
are at international prices rather than
the regulated prices paid by generators.
It has been suggested that this could in-
volve some form of pooling of domestic
and imported coal prices to spread the
cost of higher-priced imports across all
power producers.
But the generators argue that state
utilities would rather impose power cuts
than buy electricity at the higher prices
resulting from the use of imported coal.
Evidencing this, the APP has pointed out
that distributors have not bought all the
electricity offered through the countrys
power exchanges, which for much of
2012 has cost more than that supplied
under long-term contract, in spite of the
shortfall in national electricity supplies.
Generators with rm long-term fuel
supply contracts are also unwilling to
lose their lower-priced supplies, arguing
that they receive xed power sales tariffs
predicated on the contract prices. And
several states, including West Bengal,
Chhattisgarh, Haryana and Gujarat, said
in mid August that they would not pay
more for power generated from domestic
and imported coal where priced partly
against international benchmarks.
The aversion to letting imports ll the
widening gap between coal and gas re-
quirements and domestic fossil fuel sup-
plies applies in spite of the fact that, in
terms of geography, India is one of the
best placed international energy import-
ers. It is located between the Gulf and
Southeast Asian LNG exporters, among
others, while it is well positioned to draw
on thermal coal supplies from South Af-
rica, Indonesia and elsewhere.
Resolving the fuel supply problems will
be essential if Indian electricity demand
forecasts are to be met. The base case pro-
jections in the CEAs National Electricity
Plan issued in early 2012 see peak demand
reaching 199,540 MW and consumption
rising to 1,355 TWh in the year to March
2017, before rising to 283,470 MW and
1,905 TWh in the year to March 2022.
About 210,000 MW of new capacity is
planned to enter operation in India be-
tween April 2012 and March 2022, ac-
cording to the CEA, with 98,190 MW
due to be built in the ve-year period
starting April 2012. But because of the
moratorium only 1,086 MW of new gas-
fueled capacity is planned by March
2017, with no new gas-red additions
thereafter, whereas 66,600 MW of identi-
ed coal-red plant is planned by March
2017, with a further 49,200 MW due to
be added by March 2022.
The projected additions to March 2017
also include 18,500 MW of renewable,
India
9,204 MW of hydroelectric and 2,800
MW of nuclear plant, with private in-
vestors expected to install about 50%
of the total capacity and the overall in-
vestment cost put at $120 billion. The
109,700 MW of capacity tentatively
planned for installation from April 2017
to March 2022 also includes 18,000 MW
of nuclear, 12,000 MW of hydroelectric
and 30,500 MW of renewable energy-
based plant, with the latter including
16,000 MW of solar and 11,000 MW of
wind turbine capacity.
The projections also assume that hy-
droelectric power imported from neigh-
boring Himalayan countries such as
Bhutan and Nepal will reach 1,200 MW
by March 2017 and 8,040 MW by March
2022. In the high gas case they also as-
sume, that if gas became available, a fur-
ther 25,000 MW of identied gas-red
plant could be built by March 2017
this would take gas supply requirements
then to 188.4 million cubic meters per
day compared with 98 million cu m/day
in the base case.
Given the emphasis on additional
coal-red plant, CEA has unsurprising-
ly agged up the fact that coal supply
issues are of particular concern. It has
projected power station coal require-
ments in the year ending March 2017 at
842 million mt.
After taking into account the antici-
pated output from CIL and other state-
owned entities such as Singareni Collier-
ies, as well as production from captive
coal blocks, CEA anticipates that 164
million mt of imports will be needed to
cover a shortfall in domestic supplies.
Moreover, this is in addition to the 54
million mt of overseas coal needed for
power stations specically designed to
run on imported coal, giving an overall
import requirement of 218 million mt.
Recent Trends
Whether India will achieve its ambi-
tious targets for capacity additions is a
moot point. Power purchasers with poor
creditworthiness together with severe
power station fueling issues do not offer
an attractive framework for investment
in new generating capacity.
The problems are apparent from a Platts
analysis of project activity throughout
Asia in the rst half of 2012. This found
that while there was signicantly less ac-
tivity in Asia as a whole during the rst
six months of 2012 compared with the
same period of 2011, the difference was
more than accounted for by plummeting
activity in the Indian market.
The analysis, which uses data from
the project tracker published monthly
in Platts Power in Asia newsletter, is
an aggregation of individual projects
which are included in the tracker for a
particular period only when they pass
key milestones in the project develop-
ment pipeline (as opposed to the much
larger number of total projects under de-
velopment in Asia). The analysis found
that just over 103,800 MW of capacity
registered a change in status throughout
Asia in the rst half of 2012down 11%
compared with the same period of 2011.
However, the fall in activity across
Asia was more than accounted for by
the near-halving of Indian activity. At
20,000
40,000
60,000
80,000
100,000
120,000
1997-2002 2002-2007 2007-2012 2012-2017 2017-2022
MW
Coal Gas Diesel Nuclear Hydroelectric Renewables
4. Indian actual and planned capacity additions.
India
19,558 MW, activity was down from the
38,174 MW registered in the same peri-
od of 2011, with reduced activity at all
points in the project development pipe-
line apart from that of capacity entering
operation.
Thus almost no capacity was reported
to have started construction in India
during the period, while the amount of
capacity which was announced or se-
cured government and company approv-
als fell by more than a half and about
four-fths, respectively. Meanwhile
the amount of Indian capacity signing
equipment or engineering, procurement
and construction (EPC) contracts was
down on year by about a third in the
rst half of 2012.
India was not alone in registering a
decline in activity with China, for in-
stance, also showing signicantly less
activity in the rst half of 2012 than in
the same period of 2011. However, there
were differences across the project de-
velopment pipeline and between fuels,
with the dearth of Indian gas-red activ-
ity not repeated in China.
In this respect the analysis found a
notable difference at the Asia-wide lev-
el between activity in the rst halves
of 2011 and 2012in the latter pe-
riod much more gas-red capacity was
predicated on the use of imports, or im-
ports in combination with indigenous
gas supplies, than on domestic supplies
alone. Across Asia, about 47% of the
gas-red capacity had been predicated
on the sole use of indigenous supplies
in the rst half of 2011, whereas the g-
ure dropped to 22% in the same period
of 2012.
A similar Asia-wide trend was appar-
ent for coal, with more generators ap-
pearing to seek multiple sources of fuel
for their projects. But India was again
an exception to the rule, with slumping
Indian activity one of the main reasons
why there was a reduction in the overall
amount of activity in the coal-red gen-
erating sector and especially in plants
predicated solely on domestic supplies.
Across Asia, the amount of coal-red
capacity changing status throughout
the project development pipeline fell
from 61,371 MW in the rst half of
2011 to 57,265 MW in the same period
of 2012, according to the Platts analy-
sis. However, the fall was more than
accounted for by a reduction in the
amount of announced capacity, which
dropped from 14,100 MW in the rst
half of 2011 to 8,480 MW in the same
Announced Approved Contract signed Construction Operation Total
Coal - domestic 12500 10450 11018 6440 3760 44168
Coal -imported 1600 2600 8388 1400 960 14948
Coal - both 0 800 135 1320 0 2255
Oil 370 150 505 100 560 1685
Gas - local 0 3412 4018 806 1132 9368
Gas - LNG 1900 700 1013 570 0 4183
Gas - either 1600 1422 2966 510 0 6498
Oil/gas 150 0 0 560 0 710
Hydro 0 3399 5362 5253 1030 15044
Nuclear 3590 2000 0 0 0 5590
Wind 806 809 2536 1026 700 5877
Solar 2040 352 229 735 0 3356
CSP 200 0 0 0 0 200
Geothermal 302 455 171 0 0 928
Other 50 0 0 0 0 50
Total 25108 26549 36341 18720 8142 114860
5. Asian projects changing status in the rst half of 2011 by fuel, MW.
Source: Platts
India
period of 2012, with the drop in Indian
activity again prominent.
The analysis thus indicates that on
current trends India could fail to meet
its ambitious program for adding gen-
erating capacity during the coming de-
cade. With limited potential for adding
hydroelectric, renewable and nuclear
plant, it will be reliant on building more
fossil-fueled capacity.
This effectively means building much
more coal-red capacity, unless the
moratorium on gas-red capacity is
lifted. But with the indigenous coal and
gas industries both facing problems,
and an aversion on cost grounds to the
use of imported fossil energy, building
and fueling the capacity will be a big
ask, unless there is a thoroughgoing
program of market liberalization and
price reform.
Conclusions
Major grid failures can have a pivotal
impact on electricity markets. Blackouts
are unpopular with voters and investors,
and have on occasion led to major shifts
in national electricity policies. Witness
the severe blackouts in Malaysia in the
early 1990s, which led to the shift from
monopoly state electricity provision to
the generation of a large part of electricity
by independent power producer plants.
Whether the July 2012 outages will
have a similar transformative impact on
Indias electricity sector remains to be
seen. Ownership of Indian electricity
and energy assets is divided between na-
tional, regional and state entities, with
their operation being less than seam-
less as a result of the plethora of agen-
cies and companies existing even at the
same level.
Reform of the sector would thus re-
quire root and branch restructuring for
which the political will and, perhaps
more pertinently, parliamentary support
remains unclear. And the track record
is not promising since, while India has
enacted sweeping energy market reforms
over the past two decades, implementa-
tion of many of the measures has been
patchy at best.
At root, though, the outcome will de-
pend on popular support for the mea-
sures and there is certainly consider-
able public outrage over the grid failure
which will result in some form of action.
But how effective the actions are will
depend primarily on whether the same
public is willing to pay an economic
price for its power.
Announced Approved Contract signed Construction Operation Total
Coal - domestic 3580 2835 7370 0 4875 18660
Coal -imported 3500 11298 6820 0 800 22418
Coal - either 1400 5732 4940 1200 2915 16187
Oil 0 306 0 0 0 306
Gas - domestic 500 1900 1537 0 550 4487
Gas - imported 2376 0 6000 0 251 8627
Gas - either 450 4514 2587 0 0 7551
Oil/gas 450 0 800 0 339 1589
Hydro 9954 1300 1740 0 901 13895
Nuclear 0 0 0 2800 650 3450
Wind 1000 829 377 420 1028 3654
Solar 470 266 968 5 387 2096
CSP 0 0 250 0 0 250
Geothermal 5 440 0 130 0 575
Other 0 0 60 0 0 60
Total 23685 29420 33449 4555 12696 103805
6. Asia power trends in the rst half of 2012, MW.
Source: Platts
While Chinas shale gas prospects
have grabbed the headlines recently,
less attention has been paid to the coun-
trys efforts in coal gasication. Coal is
Chinas number one hydrocarbon re-
source and the Chinese coal industry is
the largest in the world. Further exploit-
ing the countrys reserves, particularly
coals unsuitable for power generation
or inaccessible with traditional mining
techniques, provides China with an ad-
ditional means of offsetting its growing
import dependency on oil and gas.
The syngas produced by coal gasica-
tion is versatile. It can be used as a direct
burn energy source for power and heat,
or be upgraded to Synthetic Natural Gas
that can be fed into existing natural gas
pipelines. It can also be used to make
chemicals and via Fischer-Tropsch pro-
cesses into liquid fuels.
There is also an environmental angle.
Coal gasication allows pre-combustion
separation of carbon dioxide from the
syngas, which is cheaper than current
methods of post-combustion separation
from power plant ue gas. As a result,
coal gasication reduces the overall cost
of Carbon Capture, Storage. However,
for coal gasication to be classied as
low carbon it must be combined with
CCS, an as yet unproven and economi-
cally challenging process.
Supply Contribution
According to data from the state-
owned China National Petroleum Cor-
poration, Chinas annual gas demand is
expected to rise to 350 Bcm by 2020 and
550 Bcm by 2030 from 130 Bcm in 2011.
Other forecasts suggest demand could
top 400 Bcm by 2020, while estimates
made by the National Development and
Reform Commissions Energy Research
Institute last year put the 2020 gure
lower at 270-330 Bcm.
China has contracted for imports of
Central Asian pipeline gas to rise to 65
Bcm/yr by the end of the decade and ex-
pects to receive a further 12 Bcm/yr from
China energy
Test Year for Chinese
Coal-Based SNG
Ross McCracken, Editor, Platts Energy Economist
Coal-based Synthetic Natural Gas production in China may be
on the brink of a step-change in the industrys development.
New projects coming on-stream this year promise the start of
commercial scale production, moving the sector away from its
traditional base in chemicals. SNG could provide a signicant
contribution to the countrys gas supply, one that may outstrip
shale gas in both quantity and timing.
China energy
Myanmar by pipeline. Domestic output
is expected to double between 2009 and
2020, with unconventional gas sources
playing a key role. Based on the NDRC
gureswhich are at the conservative
end of the spectrumLNG should be
able to ll the gap between expected sup-
ply and demand in 2020.
It is unclear where SNG sits within
this framework. CNPC does not appear
to take SNG production into account,
focusing instead on conventional gas,
tight gas, shale gas and coalbed meth-
ane. US bank JP Morgan provides a mod-
el which assumes Chinese gas demand of
400 Bcm in 2020, but specically omits
SNG production, owing to the technical,
economic and infrastructural risks as-
sociated with the sectors development.
However, the bank does see a potentially
signicant additional contribution to
Chinas domestic gas supply from SNG,
one currently not incorporated within
the banks models.
Existing Gasication
China already produces signicant
amounts of coal gas, but the syngas pro-
duced is used almost entirely in the chem-
icals industry. Of total installed capacity,
66 of 69 gasication facilities are directed
towards syngas for chemicals production,
representing 95% of syngas output by
nameplate capacity, according to the Gas-
ication Technologies Council database.
The predominant gasication feedstock
is coal, which accounts for 55 projects
or 89% of syngas output capacity. The
remainder is made up primarily of pe-
troleum residues, where there has been
a marked slowdown in new projects, the
last being built in 2009 and the one be-
fore that in 2003. However, 2012 should
mark a new direction for the gasication
sector in China, with the start up of two
projects designed to produce upgraded gas
that can be put into natural gas pipelines.
JP Morgans research lists 15 coal gas-
ication projects under construction in
China through to 2016. If rst phase
completion is achieved under the time-
tables described, total SNG output would
reach 21.24 Bcm/yr of pipeline qual-
ity gas by 2016. If full target capacity
is reached, coal gasication could sup-
ply 89-96 Bcm/yr, not far short of 25%
of total gas demand in 2020. According
to the World Clean Coal Week confer-
ence total projects under construction,
planned and proposed amount to some
150 Bcm/yr gas, although many of these
projects are unlikely to be realized.
The rst two commercial coal gasica-
tion projects are Qinghua Coal Groups
project in Yili, Xinjiang. First phase ca-
pacity is 1.38 Bcm/yr, rising eventually to
full potential capacity of 5.5 Bcm/yr, al-
though the timeline for future expansion
is unclear. The second project is Xinjiang
Guanghuis 0.5 Bcm/yr capacity plant,
also in Xinjiang. Four more projects are
slated for completion in 2013, two in In-
ner Mongolia and two more in Xinjiang.
Combined, these represent rst-phase ca-
pacity of an additional 7.36 Bcm/yr, with
scope for expansion to 22 Bcm/yr.
Although it is hard to assess the timing
of project completion, as many of the
proposed projects lack approvals, as well
as likely operational levels, there have
25
50
75
2011 2007 2003 1999 1995 1991 1987 1983
Gas Petroleum Coal
1. Number of Chinese gasication projects by feedstock (cumulative).
Source: Gasication Technologies Council
China energy
been some concrete developments in ad-
dition to the two plants expected to start
up this year. The China Power Invest-
ment Corporations 2-6 Bcm/yr project
in Yili, for example, which is expected
to produce rst SNG in 2015, has eight
coal gasiers on order from Siemens En-
ergy. Each gasier uses up to 2,000 tons
of coal a day.
Transportation
A notable aspect of these projects is
the high level of involvement in the
SNG upstream of coal and power com-
panies rather than Chinas traditional
oil and gas producers. However, Chinas
big state oil and gas companies do have a
crucial role to play. Producing potential-
ly large volumes of SNG in Inner Mongo-
lia and Xinjiangareas far from Chinas
demand centersmeans the gas has to
be piped long distances to consumers.
Neither the coal nor power companies
involved have the capacity to build the
necessary pipelines.
Sinopec announced last year that it
would invest in two pipelines with to-
tal transmission capacity of 30 Bcm/yr
to transport coal-based synthetic gas to
Chinas eastern coast. The rst will be
7,373 kilometers long and link Xinjiang
with Guangdong and Zhejiang provinc-
es. The expected cost is over Yuan 130
billion ($20.4 billion), including ve
trunk lines. The second pipeline will also
start in Xinjiang and run to Shandong
and Jiangsu provinces, spanning over
4,463 km. The pipelines are expected to
be operational by 2015.
Sinopec said that the longer pipeline
would serve 13 provinces and municipali-
ties including Gansu, Ningxia, Shaanxi,
Shandong, Jiangxi, Zhejiang, Guangdong
and Fujian, while the second pipe will pass
through seven major areas, including He-
han, Anhui, Tianjin, Jiangsu and Beijing.
Sinopec signed a deal with the Xinji-
ang government and nine local compa-
niesincluding state power company
Huanengin December to procure syn-
thetic gas for the pipelines. Of the 15
projects listed by JP Morgan that are ex-
pected to complete by 2016, seven are in
Xinjiang, with one each in Shanxi and
Gansu, which could be connected to the
longer of Sinopecs two proposed pipes.
Sinopec is also interested in SNG produc-
tion itself and has a project in Xinjiang
which is slated to start up in 2015the
same schedule as for the pipelinewith
capacity of 8.0 Bcm/yr.
Sinopecs Xinjiang SNG pipeline
project was reported by local media to
have been submitted to the NDRC for
approval in August 2011. The pipeline
appears to have rst been proposed in
2009, but no mention is made of it in
the groups 2011 annual report as a
company priority. It is not clear wheth-
er it forms part of the blueprint for the
natural gas sector under the 12th Five
Year Plan, which was submitted for ap-
proval by the NDRC to the State Coun-
cil in May, but has yet to be publicly
released. SNG production comes under
the chemical coal sector in the 12 th
Five Year Plan, which was released in
March. It only mentioned that syngas
from coal should be developed but did
not specify any output targets.
25
50
75
2011 2007 2003 1999 1995 1991 1987 1983
Motor fuels Gaseous Fuels Chemicals
2. Number of Chinese gasication projects by product (cumulative).
Source: Gasication Technologies Council
China energy
Supply Competition
Media reports give the impression that
there is some competition between Sino-
pec and CNPC in Xinjiang to secure SNG
volumes. Xinjiang has traditionally been
the preserve of CNPC. The companys
subsidiary PetroChina built the West-
East pipelines that take Central Asian
imports and Xinjiangs own production
to Chinas east.
The rst West-East pipeline has capacity
of 12 Bcm/yr and runs 3,843 km from the
western Tarim Basin in Xinjiang to Shang-
hai. It started operations in 2003. The 30
Bcm/yr Second West-East pipeline brings
in Turkmen gas. It was fully commis-
sioned in May, when the link to Shenzhen
city in southern Guangdong province was
launched. It was built at a cost of Yuan
142.2 billion, with a total length, includ-
ing trunk lines, of 8,704 km and is already
said to be operating close to capacity.
The third line is expected to cost Yuan
116 billion, according to The China Secu-
rities Journal . The new pipeline will link
with the Central Asia-China gas pipeline
network and start in Horgos in western
Xinjiang province on the border with
Kazakhstanthe same start point as the
Second West-East pipeline. It will pass
through 10 provinces. The main trunk
line will be more than 5,000 km long,
according to CNPC.
Construction of the third West-East
pipeline may provide capacity for SNG to
be taken east. CNPC signed framework
agreements with local state-owned and
private companies to secure funding for
the 30 Bcm/yr Third West-East pipeline
end-May. The company said then that
construction would begin within a year,
with commercial operations targeted to
begin in 2015.
According to a report in July from Inter-
fax , quoting a company source, the King-
ho Energy Group will start trial output
from its coal-to-gas project in Xinjiang
this year before moving to the produc-
tion phase in 2013. The project has even-
tual capacity of 5.5 Bcm/yr. The report
said key equipment for the rst phase of
the project has been installed. According
to the report, CNPCs West-East gas pipe-
line network will take the output. Other
local media sources say 14 coal-to-gas
projects were started in 2011 in Xinjiang.
The China National Offshore Oil Com-
pany also has an interest in coal gasica-
tion, both upstream production and in
transportation. Local media have report-
ed that the company wants to build a 30
Bcm/yr capacity pipeline to take SNG from
Operator Location First phase (Bcm/yr) Target (Bcm/yr) Year of rst phase
Qinghua Yili, Xinjiang 1.38 5.50 2012
Xinjiang Guanghui Xinjiang 0.50 0.50 2012
Datang Inner Mongolia 1.40 4.00 2013
Xinwen Yili, Xinjiang 2.00 10.00 2013
Huineng Ordos, Inner Mongolia na 2.00 2013
Huaneng Zhundong, Xinjiang 4.00 6.00 2013
Shenhua Ordos, Inner Mongolia na 2.00 2015
Sinopec Xinjiang na 8.00 2015
Guodian Ulanhot, Inner Mongolia 2.00 10.00 2014
Xinjiang Guanghui Fuwen, Xinjiang 4.00 4.00 2015
Datang Fuxin ,Liaoning na 4.00 2016
China Power Investment Corp Yili, Xinjiang 2.00 6.00 2015
CNOOC New Energy Investment Shanxi 4.00 6 to 15 2015
Gansu Hongshengqi Gansu na 4.00 2015
Sichuan Petrochemical/Linde Sichuan na 15.00 MOU
3. Coal gasication projectsunder construction and proposed.
Source: Company data, JP Morgan
China energy
Inner Mongolia to more central and east-
ern demand centers. CNOOC New Energy
Investment has plans for a rst phase coal-
to-gas project with capacity of 4.0 Bcm/yr
in Shanxi, a province south of Inner Mon-
golia, starting up in 2015.
Comparison with Shale
Based on the projects outlined by JP
Morgan, SNG output from coal gasica-
tion could outstrip the contribution of
shale gas to Chinese gas supply in the
period to 2020. According to CEO Chris
Faulkner of US independent Breitling
Oil and Gas, Chinas shale gas targets are
over ambitious, owing to the size of the
investments required and infrastructural
constraints such as pipeline connections
and water supply and disposal. These
concerns have also been highlighted by
ofcials from Chinas state-owned oil
and gas companies.
Beijing is targeting annual output of
6.5 Bcm/yr of shale gas output by end-
2015, although state oil companies Pet-
roChina and Sinopec have only outlined
output targets of less than half that.
Sinopecs target of 2 Bcm includes shale,
coalbed methane and tight gas.
Investment capital is also likely to be
a constraint. Despite a number of coop-
eration agreements with International Oil
Companies, Chinas Ministry of Land and
Resources, which controls the countrys
shale acreage, launched its rst bid round
last year, with only a handful of local state-
related companies allowed to participate.
Of the four areas offered, only two at-
tracted bids, and those were awarded
to Sinopec and Henan Provincial Coal
Seam Gas Development and Utilization
Co. A second round is expected this year,
but participation is again expected to be
limited to domestic companies.
Speaking at the Shale Gas World confer-
ence in Singapore in July, Faulkner said,
Theres a massive gap between the activ-
ity in the country and full-scale develop-
ment Thats why I really dont think
China is going to get anywhere by 2015
or 2020, for that matter. Its going to be a
2022, 2025 play for them The pace at
which China is moving is not going to al-
low it to create the amount of production
it needs by 2015.
Complementary Technologies
Chinas initial push for SNG produc-
tion is based on traditional coal min-
ing, with the innovative phase coming
in the gasication and methanization
that produces syngas and then upgrades
it to SNG. The advantages include the
more efcient extraction of coals energy
value, the potential use of poorer quality
coals and the prevention of pollution in
densely-populated areas.
Piping gas produced in Xinjiang or In-
ner Mongolia to eastern and southern
demand centres saves on rail and truck
transport of coal to power stations in those
areas. However, any SNG produced is as
likely to displace oil products as much as
direct coal burn because Chinas expects
a rapid increase in city gas consumption
over the next decade and is putting the
infrastructure in place to facilitate this.
Other technologies complement the
expansion of coal gasication. Foreign
companies involved in Underground
Coal Gasication, for example, ap-
pear to be migrating from their home
patches, where resistance to coal-relat-
ed technologies is stronger and envi-
ronmental controls more stringent, to
jurisdictions in Asia.
Australias Linc Energy, a leader in
the UCG sector, recently agreed a joint
venture with GCL Projects, a subsidiary
of Hong Kong-based Golden Concord
Holdings, to build its rst multi-gasier
project in China. Linc offers integrated
UCG to Gas-to-Liquids technology to
produce transport fuels from coal.
Another Australian rm, Cougar En-
ergy, is also reported to be in talks with
local Chinese partners to use its UCG
technology on prospective coal areas in
Inner Mongolia. Focusing on UCG for
power generation, Cougar is currently
involved in site selection for a UCG proj-
ect in the Wu Ni Te coal basin. Cougar
saw its Kingaroy UCG pilot project in
Australia shut down in July 2010 on en-
vironmental grounds that it is still con-
testing in court.
In July last year, at a UK-China sum-
mit, a $1.5 billion partnership was an-
nounced between UK UCG developer
Seamwell International and the state-
owned China Energy Conservation and
China energy
Environmental Protection Group to de-
velop a 1,000 MW UCG project in China
on the Yi He coal eld in Inner Mongo-
lia. If built, the project would be the larg-
est of its kind.
UCG involves the combustion of coal
underground to produce syngas. It avoids
the need both for traditional mining
and an above ground gasication plant,
but is struggling to prove itself on envi-
ronmental and operational grounds. If it
can be made to work reliably at scale, it
could hugely extend the exploitable coal
resource. Given Chinas vast coal reserves,
UCG could represent a second develop-
ment phase to complement current ef-
forts in SNG production that, in theory
at least, could create a new industry on
a scale commensurate with existing con-
ventional gas production.
The second complementary technol-
ogy is Carbon Capture and Storage. Ow-
ing in part to its heavy coal use, Chinas
greenhouse gas emissions are rising fast.
As a developing country, China is not
bound by any emissions reduction tar-
gets other than those it sets itself. Coal
gasication is often portrayed as a clean
coal technology, but its main claim in
this area is its efciency and its sepa-
ration of CO
2
pre combustion, which
makes it easier to capture and store CO
2
.
Without CCS, it represents a means of
extending coal use rather than lowering
its carbon impact. It may produce clean
burning gas, but the CO
2
is emitted ear-
lier on in the process.
China has a number of CCS projects, but
as in Europe and the United States, com-
mercial deployment remains at least a de-
cade away. For projects such as the Seam-
well joint venture or that announced with
US company CoalTek last year for a clean
coal processing facility in Inner Mongo-
lia, the focus is on energy production and
the efcient use of coal rather than cap-
turing and storing CO
2
.
According to an MIT report on one
of the most advanced projects, Shen-
huas Direct Coal Liquefaction Produc-
tion Line at Ordos, Inner Mongolia, CO
2

liquefaction in preparation for storage,
as well as some pilot storage, has been
achieved, but full-scale operation is not
expected until 2020 at a cost of $1.46
billion. Similarly, the Tianjin GreenGen
coal gasication plant is behind sched-
ule and is only the rst of three phases,
the last being a CCS project, which is
scheduled for 2015-2020.
Two projects announced in 2011 were
also based on CCS enabling projects
rather than CCS itself. Alstom Power in
July last year said it was in discussion
with China Datang Power to build a
350 MW Oxyfuel plant in Daqing, Hei-
longjiang, Chinas historic center of oil
production. The plan is to use CO
2
for
enhanced oil recovery.
A second project under discussion was
a partial post-combustion capture proj-
ect for a proposed 1,000 MW plant in
Dongying, Shandong, near the Shengli
oil eld. At the time, Climate Change
Minister Xie Zhenhua noted that cost
effective uses for CO
2
were essential and
that anything beyond that would require
international nance.
As a result, coal-based SNG production
can be seen from two viewpoints. First,
as a means for China to exploit more ful-
ly its coal resource and thus ultimately to
use more coal and make more emissions.
Second, as a preliminary stage on the
road to creating a genuinely low carbon
process for the use of coal, which in its
initial phase makes some emission gains
through using coal more efciently.
Clearly, as in other countries, other
motivations ride alongside environmen-
tal concerns. China needs energy to de-
velop and economic development is a
key priority. It also wishes to reduce its
growing dependence on imported oil
and gas. As a domestic resource, SNG
allows it to do both by substituting for
imported gas and oil products in heating
and cooking.
Based on the projects under construc-
tion, the next 18 months are likely to
demonstrate whether coal-based SNG
can deliver commercial scale quantities
of pipeline quality gas. If they do, and
the oil and gas companies are sufciently
condent to move ahead with their am-
bitious pipeline proposals, there is a real
possibility that SNG will make as big, if
not a larger, contribution to Chinese gas
supply than shale gas out to 2020, and
possibly beyond.
But as we enter the nal stretch of
2012 news of a far more depressing na-
ture is dominating the headlinescol-
lapsing demand, rising costs and addi-
tional taxes nd the industry in a state
of turmoil. Add to this the declining
reliability of long established bench-
marks as liquidity shifts to lower calo-
ric value (CV) or off-spec markets
and the winds of change have twisted
into a Category 5 hurricane.
Its not all doom and gloom. 2012 has
seen the launch of several assessments
that underpin the new lower CV mar-
kets, buyers are increasingly happy that
after several years of runaway prices
the tables have turned in their direc-
tion and, as the fourth quarter gets un-
der way, market sentiment is turning a
little more positive, looking forward to
an increase in Chinese consumer buy-
ing and a more stable Indian Rupee.
Maybe it is time to downgrade that
storm to a Category 4?
The changing trade ows in recent
years have been well documented. Eu-
rope had long been the destination of
a majority of thermal coal from South
Africa, or Richards Bay to be more pre-
cise. But India, China and Korea now
dominate this market.
This year has seen the trend of ex-
ports from Richards Bay to Asia accen-
tuate with an interesting anglemore
and more of the tonnage is not standard
specication 6,000 kilocalories per ki-
logram net as received (NAR) material.
There has been a huge increase in the
off-spec marketmaterial with a value
of 5700 kcal/kg NAR or even lower.
Some sources suggest that this now
accounts for between 40% and 50% of
the total. And when you consider that
this is a 65-70 million metric ton an-
nual export business, this represents a
signicant amount of coal that is under
represented in the pricing market.
Much of this specic product is nd-
ing its way to India which has been
quietly active and possibly one of the
stronger drivers of the lower caloric
value markets.
2012 also saw a huge surge behind
an off-spec Australian productFOB
Newcastle 5500 NAR or the higher-
ash Newcastle coal that has complete-
ly taken over in the spot market from
the traditional 6000 NAR benchmark.
coal
Coal Weathers
the Storm
James OConnell, Senior Managing Editor, Platts Coal
What a difference a year makes. This time last year the coal
industry was on a highChina and India were voracious
consumers of the fuel and even up to February 2012 the
market was characterized by traditionally high spot prices.
coal
With thermal coal exports of around
110 million mt, and with Japan taking
more than 50 million mt of the stan-
dard grade, the off-spec market consti-
tutes the greater majority of the most
liquid high quality coal market in Asia.
With Japan buying almost exclusive-
ly on an annual or term contract ba-
sis, the change has left the traditional
benchmark spot market devoid of both
customers and liquidity. The new New-
castle 5500 NAR market is most active
and favored by Chinese, Korean and
Taiwanese buyers.
The other lower caloric value market
that bloomed in 2012 is for Indonesian
coal with an FOB value of 4200 gross
as received (GAR). The market has been
growing steadily in recent years, and
as higher quality material gets sucked
up into contracts liquidity has shifted
down to 5000 GAR and lower material.
As long ago as 2010, Platts was asked
by major industry players to launch a
3,600 GAR Indonesia marker, but the
transparency and liquidity in this seg-
ment was, and remains, too opaque
for truly accurate pricing. The market
at the 4200 GAR level has, however,
matured signicantly in the last 12
months and Platts has been publishing
pricing at this level since mid-2012.
Another change blowing in the wind
is the huge increase in United States
thermal coal exports. These have hit a
20-year high.
The high quality US coal comes at
a price in the international markets
high sulfur. With the US coal-red pow-
er generation industry in what is popu-
larly described as terminal decline, US
producers have actively sought export
markets and discovered that Europe
likes their product.
The US miners have also turned to
Asia and to their delight China has
also enthusiastically embraced the
specications. Employing their exper-
tise at blending coal varieties they dis-
covered that high caloric value, high
sulfur US coal and low caloric value,
low sulfur Indonesian coal are good
boiler buddies.
Since the end of the rst quarter of
2012, end users have been spoiled for
choice in terms of coal origin. With
the US, Colombia, South Africa, Indo-
nesia and Australia all competing for
the same few buyers, something had
to give.
Just as strained relations and defaults
occurred at the top of the market, when
the oor fell out of the price boom the
relative newcomers to the international
seaborne coal tradethe Chinese
were quick to spot an opportunity to
knock a few more dollars off the price.
A trickle of defaults turned into a tor-
($/mt)
65
75
85
95
105
24-Sep 11-Sep 29-Aug 15-Aug 02-Aug 20-Jul 09-Jul 26-Jun
Kalimantan Richards Bay Newcastle 6300 Newcastle 5500 CIF ARA
1. Daily coal price trends (physical).
Source: Platts
coal
rent and, while it may have affected
only US producers at the start, the ood
enveloped Colombian, Indonesian and
eventually even Australian producers.
With literally dozens of defaults on
coals of all varieties, a separate mar-
ket as good as cropped up for a num-
ber of months up to mid-2012, with
sources constantly telling Platts that
were only interested in defaulted
cargoes. The demand was there, it
was just opportunistic.
With a hefty year-on-year jump in
Chinese imports, stockpiles at the
countrys ports were at historic highs
and overowing onto adjacent roads
in many instances. Meanwhile stocks
at utilities were good for a record 30+
days, twice the norm, with one utility
reporting enough stock for an incred-
ible 72 days.
Indeed, having paid high prices the
last couple of years and more there was
an element of frustration that, at a time
when prices were falling, China-based
end users couldnt take full advantage.
Not only have the traditionally high
prices seen in recent years been instru-
mental in creating the off-spec market,
they have also contributed to wide-
spread price sensitivity. Where once In-
dia was the only country where price
sensitive buyers were reported, now
purchasers in Korea, Taiwan and China
have swelled the ranks.
In mid-2011 one major Singapore-
based trader dismissed the Newcastle
5,500 NAR market, suggesting that it
was a ash in the pan. Once prices of
the standard Newcastle spec fell back
to more realistic levels, consumers
would return to the quality material,
the argument went.
While producers are not earning a
premium for this specic material, they
are saving money on treatment pro-
cesses and should also experience labor
and capital expenditure economies of
scale in the short term. A well-respect-
ed industry analyst has crunched the
numbers and, after taking lower royalty
payments into consideration, estimated
a production cost saving of $7/mt for
Newcastle 5500 higher-ash material
over the benchmark grade product. A
not inconsiderable amount, especially
in these straitened times.
It must also be noted that Australian
producers benet from annual contract
sales in Japan. Agreed in February 2012
at $115/mt, the deliveries made at this
annual contract price cushion the steep
falls seen since for other sales. Even
more so since the March 2011 earth-
quake and tsunami, and the subsequent
nuclear disaster, Japanese utilities place
a signicant premium on security of
supply and would appear to be content
to pay a 20-30% premium to spot pric-
es for this benet.
Given this kaleidoscope of frenetic
and rapidly-evolving activity it is ap-
parent that the thermal coal market is
maturing, and another indication of
this is that the spot window is short-
ening. Once upon a time, when serious
volatility in the coal markets was but a
gment of the imagination, a 180-day
window existed. And it wasnt that long
ago, either.
The 90-day spot window has domi-
nated the market for the last decade
or so. But the increasing hand-to-
mouth buying trend that now prevails
amongst the major consumers dictates
that this is going to shorten.
In fact, the two thermal coal price
assessments launched by Platts in
2012 have specied a seven- to 45-
day forward window. Truly replicating
buying behavior and embracing the
need for change, Korean and Taiwan-
ese utilities are launching prompt ten-
ders that are allowing two weeks no-
tice for the winners to begin shipping
their cargos. China as a very prompt
buyer needs no introduction.
As the sun sets on 2012, the weather
forecast is suggesting the storm may
well just blow itself out. But it might
take a little longer than expected.
Once upon a time, when serious volatility
in the coal markets was but a gment of the
imagination, a 180-day window existed.
And it wasnt that long ago, either.
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Platts daily Asian spot LNG price as-
sessment, the Japan Korea Marker, is
used as the outright pricing basis for up
to two-fths of the spot LNG deals in
the region. About 25% to 40% of Asian
spot LNG deals are now priced off the
JKM assessment and, if the marker is
used in deals, they are priced directly
to the JKM rather than in combination
with other assessments, according to a
prominent industry energy lawyer.
Platts launched the JKM on Febru-
ary 2, 2009. The marker assesses the
delivered price of spot LNG to Japan or
South Korea on a daily basis.
The two north Asian nations bought
almost half the 221 million metric
tons (mt) of LNG sold worldwide in
2010. Japan bought more than 30% of
the total, at about 70 million mt, while
South Korea purchased around 15%,
or 33 million mt.
Market observers estimate that spot
LNG deals account for up to 20% of
LNG volumes produced each year. The
trade includes bilateral deals, inter-
regional diversions, tenders, chained
cargoes and a variety of other trans-
actions. As much as 45 million mt of
LNG, equivalent to 750 cargoes a year,
is being traded on a spot basis.
The remaining 80% in volume terms
is transacted under long-term con-
tracts that typically run from 10 to 30
years. By contrast, in many other ener-
gy commodity markets, such as crude
oil and naphtha, spot trades typically
make up about 10% of the total vol-
umes transacted.
Before Platts started assessing the
JKM, spot trades were reported at prices
as high as $25/MMBtu at the end of
2008, representing a signicant premi-
um over oil-linked term contract prices
of $15/MMBtu for shipments sent to Ja-
pan at the same time. Long-term LNG
contracts in Asia have traditionally
been priced against oil, with many in
the last few years yielding a delivered
LNG price at about 15% of the JCC
crude oil price.
The JKM was thus launched to serve
an unfullled segment of the LNG mar-
ket that did not have a clearly dened
pricing mechanism, while providing
market participants with an index that
would allow them to trade LNG ship-
ments at prices based purely on the
fundamentals of the LNG market. The
new index enabled the nascent spot
LNG market to break away from the
industrys long-established links to oil
production and prices that arguably are
no longer relevant to LNG.
The JKM began to gain traction in
2010 when Taiwans CPC Corporation
liqueed natural gas
Platts JKM and LNG
Spot Contracts
Hong Chou Hui, Managing Editor, Platts Asia LNG
liqueed natural gas
awarded some spot buy tenders for car-
goes delivered across that summer at
prices matching or close to the JKM
values for the same month of delivery.
Matching Assessments to Market
Prices
Platts assesses the JKM for physical
LNG cargoes delivered to Japan and
South Korea in the third, fourth and
fth half-month cycles forward from
the date of trade. For example on Jan-
uary 3, the rst working day of 2012,
Platts assessed cargoes for delivery in H1
February, H2 February and H1 March,
with the JKM assessment being the av-
erage of the two half-month cycles that
comprise the rst full month of deliv-
ery. On January 3, the JKM month as-
sessed was thus February 2012.
In the case of Japan, the countrys
customs authorities release data regard-
ing LNG imports almost three months
after Platts completes the assessment
for a particular month. In the example
of February 2012, Japanese customs
published the data for LNG shipments
delivered to Japan at the end of March.
Platts assessed the February JKM from
December 16, 2011 through January 15,
and then rolled over to the March JKM
on January 16.
An analysis of JKM spot monthly av-
erage assessments and Japan customs
data for the past three years showed a
high correlation of spot cargo prices
matching the published JKM values for
the same month of delivery.
Prices of spot cargoes from Peru, Ye-
men, Trinidad & Tobago, Algeria, and
Norway coincided closely with JKM
values for the same physical month of
delivery. Peru LNG, Yemen LNG, Trini-
dads Atlantic LNG, Norways Snohvit
LNG and Algerias Sonatrach do not
have any term contracts with Japanese
buyers, limiting their commercial op-
portunities to the spot market.
Nigeria LNG does have offtakers such
as the UK-based BG and the Anglo-
Dutch Shell who have term contracts
with Japanese buyers, but the project
held several spot sell tenders in 2011 for
cargoes that were originally meant for
delivery to Atlantic destinations.
Japan lost 12 gigawatts of nuclear
plant in the immediate aftermath of
the March 11, 2011 earthquake and
2
4
6
8
10
12
14
16
18
20
JKM spot (against delivery)
Nigeria customs
Equatorial Guinea customs USA customs
Trinidad customs Algeria customs
Yemen customs Peru customs Norway customs
3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11
1. JKM vs Japan.
Source: Platts
liqueed natural gas
tsunami and replaced much of the re-
actor output with gas-red capacity,
resulting in additional spot demand of
15 cargoes every month. Some nuclear
plants located close to earthquake fault
lines were shut down from June 2011,
while facilities that were shut for main-
tenance before the disaster and subse-
quently were not allowed to restart due
to safety concerns.
By the end of 2011 this left Japan
with 7.98 GW, or 16.3% of the pre-crisis
nuclear capacity of 48.96 GW at 54 re-
actors. By May 2012 this capacity had
been shuttered too, with only two re-
actors allowed to restart by September
2012, leaving a very large gap to be
lled with oil and LNG.
As Japanese power generation de-
mand for LNG increased, the JKM
commanded a premium of more than
$8/MMBtu over UK National Balanc-
ing Point gas hub prices on several
occasions. Japanese buyers purchased
spot cargoes from Nigeria at or close to
the JKM values for the same month of
delivery.
Japan also bought spot cargoes from
its term LNG suppliers in Russia, Qa-
tar, Indonesia and Australia. However,
these are not considered in this analysis
as the spot prices and shipments were
mingled within the larger contract vol-
umes and values.
In South Korea an analysis of JKM
spot monthly average assessments and
South Korean customs data from late
2009 through end 2011 similarly re-
vealed a high incidence of spot cargo
prices matching the published JKM
values for the same month of delivery.
The South Korean customs authorities
publish the data for imported LNG car-
goes two months after Platts completes
the assessment for a particular month
of delivery.
Prices of 28 spot cargoes from Nige-
ria, Peru, Norway, Algeria and the US
mostly matched JKM values for the
same physical month of delivery. Nige-
ria LNG, Peru LNG, Snohvit LNG and
Sonatrach do not have term contracts
with the South Korean buyersKorea
Gas Corporation, POSCO, SK E&S and
GS Caltexlimiting their commercial
opportunities to the spot market.
Five reloaded LNG cargoes from Loui-
sianas Sabine Pass terminal in the US
were delivered to South Korea at or
close to the JKM values for the same
month of delivery.
Spot LNG buying activity in South
2
4
6
8
10
12
14
16
18
Nigeria customs
Trinidad customs Algeria customs
Yemen customs Peru customs Norway customs
3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11
2. JKM vs Korea.
Source: Platts
liqueed natural gas
Korea was especially intensive during
the winter months of late 2009 and ear-
ly 2010. Thirteen cargoes from Nigeria,
the US, Peru and Norway were delivered
to the country as freezing temperatures
swept across north Asia.
This was repeated during the win-
ter of late 2010 and early 2011. South
Korean buyers purchased several spot
cargoes from Nigeria, the US, Peru and
Norway matching the JKM values for
the same month of delivery.
Thus Nigerian cargoes sent to South
Korea in November 2010 and Febru-
ary 2011 at $9.25/MMBtu and $9.84/
MMBtu, respectively were virtually
an exact match to the assessed JKM of
$9.25/MMBtu and $9.85/MMBtu for
the same periods.
In December 2010, South Korea re-
ceived a Norwegian cargo at $9.49/
MMBtu, priced only slightly below the
December average JKM assessment of
$9.55/MMBtu.
In Taiwan and China Platts includes
a $0.1/MMBtu freight discount from
the JKM for cargoes delivered to the
two jurisdictions, as both Taiwan and
China are slightly closer to LNG pro-
ducers in southeast Asia, the Middle
East and Australia. Despite the dis-
count, Taiwanese and Chinese buyers
have paid prices close to or matching
the JKM over the past three years to
secure shipments.
Taiwan with a 5% share and China
with 4% of the market together ac-
counted for purchases of almost 20
million mt of global LNG supplies in
2010. Taiwans Directorate General of
Customs publishes its LNG import data
two months after Platts completes the
assessment for a particular month of
delivery, while China releases the same
information three months later.
Taiwans CPC issued several buy ten-
ders for more than a dozen cargoes de-
livered across the summer months of
April through August 2010. Customs
data from the country revealed that car-
goes from Trinidad & Tobago, Russia,
the United Arab Emirates and Norway
were transacted at or close to JKM values
for the same physical month of delivery.
Prior to the countrys peak summer de-
mand of 2010, CPC bought two Russian
cargoes delivered in October and No-
vember 2009 at prices of $5.14/MMBtu
2
4
6
8
10
12
14
16
18
20
3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11
Nigeria customs
Equatorial Guinea customs
Egypt customs
Trinidad customs UAE customs Yemen customs
Peru customs
Norway customs Russian customs Spain customs
3. JKM vs Taiwan.
Source: Platts
liqueed natural gas
and $5.43/MMBtu, respectively. These
lined up with JKM monthly average val-
ues of $5.13/MMBtu and $5.39/MMBtu
for the same periods.
China imported cargoes across a
three-year period from the UAE, Peru,
Belgium, Russia, the US and Oman at
values matching or close to JKM val-
ues for the same physical month of
delivery. Neither of the countrys state-
owned buyers, the China National Off-
shore Oil Corporation and PetroChina,
have long-term supply contracts with
the UAEs Adgas, Peru LNG, Omans
Oman LNG and Qalhat LNG projects
or Russias Sakhalin 2 facility.
Two reloaded spot LNG cargoes from
Louisianas Sabine Pass terminal in the
US and one reloaded spot shipment
from Belgiums Zeebrugge terminal
were also sold to China.
Use of JKM in Spot and Term Contracts
An upcoming liquefaction project,
which would serve Asia, would price
all its commissioning cargoes directly
to the JKM, according to the earlier-
cited industry energy lawyer. Two liq-
uefaction projects are coming online
in 2012Angola LNGs 5.3 million mt/
year facility in Angola and Woodside
Petroleums 4.8 million mt/year Pluto
project in western Australia.
Moreover, Woodside Petroleums ex-
isting North West Shelf (NWS) LNG
project introduced the JKM as one of its
pricing bases in June 2012 for the rst
time. It tendered three LNG cargoes for
delivery in August, September and late
October to early November.
Previous NWS sell tenders have not
listed JKM before, according to a Japa-
nese trader, although buyers still had
the nal decision on which pricing ba-
sis they wanted to use.
Bidders into the NWS tender had the
option of bidding on the basis of Platts
Asian Dated Brent, the JKM or a xed
price, a Singapore-based trader said. The
use of JKM in sell tenders could be not
only the rst for NWS, but also a rst
for the LNG industry. This is the rst
time I have seen JKM in an LNG tender
document. It has never happened be-
fore, the Singapore-based trader said.
Besides crude oil, [the UKs] National
Balancing Point and [NYMEX] Henry
Hub, this is probably the rst time Im
2
4
6
8
10
12
14
16
18
20
3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11
JKM spot (against delivery) Nigeria customs
Trinidad customs
UAE customs
Yemen customs Peru customs
Belgium customs Russian customs
Egypt customs
Oman customs
4. JKM vs China.
Source: Platts
liqueed natural gas
hearing JKM being quoted in a tender,
Tony Regan, principal consultant at Sin-
gapore-based Tri-Zen International, said.
In another indication of its increas-
ing usage, Japans Chubu Electric Power
Company signed a sales and purchase
agreement with BP Singapore in Febru-
ary 2012 for the supply of around eight
million mt of LNG over a 16-year pe-
riod on an ex-ship delivery basis. The
contract uses JKM spot prices for up to
10% of supply volumes.
Deliveries will start from the Japa-
nese scal year ending March 2013
with the LNG being sourced from BPs
global LNG portfolio. A Chubu Electric
spokesman declined to comment on
any details of the term contract as part
of its condentiality agreement with
BP, while a BP spokesman in London
declined to comment on commercial-
ly condential information when con-
tacted by Platts.
Sources said the deal could be the rst
time Chubu Electric and BP have used
spot LNG prices in their mid-term con-
tracts. Market sources also said the deal
includes a price linkage to the JKM for
5-10% of the Nagoya-based power util-
itys lifting volumes.
A further indication was provided by
Thailands PTT, which concluded a one-
year, 500,000-mt LNG supply agree-
ment in 2011 with Spains Repsol. The
contract, which started delivery in July
2011, was concluded using a formula of
the JKM plus 50 US cents per MMBtu,
various sources said.
The JKM in Financial Transactions
The rst nancial LNG swap settled
against the JKM was done by CitiBank
with an international oil major in Janu-
ary 2011. Several more such JKM swaps
have since been concluded by Citi with
various other counterparties.
The LNG swaps have been transact-
ed using small parcels in the range of
100,000 to 500,000 MMBtu. A full-sized
LNG cargo has 3.5 million MMBtu.
Platts started assessing JKM swaps
assessments for three forward months
from June 1, 2012. And the CME Group
and ICE started to clear JKM swaps from
August 13 and August 28, respectively.
Besides north Asia, the JKM has had
an impact on spot prices in India,
which bought around 5% [11 million
mt] of the worlds LNG in 2010. Before
Platts launched the DES West India as-
sessment on August 1, 2011, buyers and
sellers in India would typically apply a
discount of around $2/MMBtu to the
JKM for their spot LNG transactions.
2
4
6
8
10
12
14
16
18
20
January March May July September November
$/MMBtu
2009 2010 2011 2012
5. JKM monthly average.
Source: Platts
With overcapacity in the global solar
and wind power equipment manufac-
turing sectors, and with many of the
countries that previously led in the pro-
motion of renewable energy now slash-
ing their targets and tariffs, Japans in-
troduction of generous feed-in tariffs in
July 2012 has made it one of the hottest
renewable energy markets worldwide.
Solar projects are expected to benet in
particular, given that the feed-in tariffs
are higher than for some other Japanese
renewable sources and technologies, and
are much higher than for solar installa-
tions in most European, North American
and other Asian economies.
Japan is well placed to host renew-
able energy projects, with its high retail
electricity tariffs allowing the accom-
modation of capital-intensive renewable
energy systems. And it has a dearth of
indigenous fossil fuel resources, making
renewable energy an attractive option
for supply diversity and increased energy
self-sufciency.
However, renewable energy has tradi-
tionally played second ddle in Japan to
nuclear power, which up to 2011 provid-
ed about 30% of total electricity supplies
compared with well under 10% for re-
newable energy. And nuclear power was
seen as the main way of achieving more
diversied, secure and low carbon energy
supplies in the future.
The Strategic Energy Plan issued by the
Ministry of Economy, Trade and Industry
(Meti) in June 2010 envisaged that at least
14 more nuclear plants would be built by
2030. The plan expected that the 68,060
megawatts of total projected nuclear ca-
pacity would generate 52.6% of the 1,012
TWh of overall output forecast for 2030.
The strong growth expectations for
atomic energy ended with the March 11,
2011 earthquake and tsunami, and sub-
sequent disaster at the Fukushima nucle-
ar complex, which saw a substantial shift
in public and political opinion against
nuclear power. While the countrys elec-
tric power companies remain supportive
of a signicant, albeit reduced role for
nuclear power, a large proportion of the
population is opposed to a long-term role
for nuclear power and in cases even to
the resumption of operations at existing
nuclear plants.
Most mainstream politicians are in
favor of the resumed operation of some
or all of the fty existing nuclear plants,
although only after stringent stress tests.
All fty plants had stopped operating in
May 2012 after their mandatory closure
for scheduled maintenance, but the rst
reactors reopened in July 2012 after two
units at the Kansai Electric Power Com-
panys Oi nuclear complex passed the
tests and received reactor restart approv-
al from the relevant local authorities.
However, many politicians are skepti-
cal about the longer term role of nuclear
power, and are against building new reac-
tors or operating existing ones for more
than forty years. In September 2012 a
government paper conrmed this posi-
tion, saying that it wanted to see nuclear
power phased out over the next three
decades with the reactor output to be
replaced by production from renewables
and clean energy technologies as well as
demand-side conservation measures.
renewables
Japan Looks
to Renewables
Martin Daniel, Editor, Platts Power in Asia
renewables
At the time of writing, Meti had not
issued detailed revisions to the Strategic
Energy Plan to achieve these policy goals.
But the pursuit of more renewable energy
was kick-started by the introduction of
very generous feed-in tariffs in July 2012.
Under the tariff rules, Japans incum-
bent power companies must buy the out-
put from solar, wind, geothermal, small
hydro and some biogas and biomass-fu-
eled plants at premium prices. The addi-
tional cost to the power companies can
be passed on to nal users.
The feed-in tariffs vary by energy
source, contract duration and plant size.
The tariffs will be reviewed annually by
Meti, although once an individual proj-
ect has signed a power purchase agree-
ment the tariff will be xed at the speci-
ed level for that year for the duration of
the contract.
Meti approved tariffs in June 2012 for
an initial period running from July 2012
to the end of March 2013. They include
a 20-year tariff of Yen 42/kWh ($530/
MWh) for solar photovoltaic plants with
more than 10 kilowatts of capacity, while
the same tariff will apply to smaller solar
facilities, but only for 10 years.
The tariffs for electricity generated from
wind farms with more or less than 20 kW
of capacity will both run for 20 years. But
the tariff is only Yen 23.1/kWh for the
larger plants whereas facilities smaller
than 20 kW will get Yen 57.75/kWh.
Tariffs were also set for geothermal,
small hydro, biogas and biomass-red
plants as tabulated in exhibit one. The
government has also indicated that it
will ease the usually stringent restric-
tions on land use for some renewable en-
ergy technologies, including solar, wind
and small hydropower projects.
While the feed-in tariffs may be high,
the prospect of a substantial stock of gen-
erating capacity that does not rely on im-
ported fossil fuels is currently very attrac-
tive to Japanese politicians and planners.
The temporary, and in four cases perma-
nent, closure of nuclear reactors following
the March 11, 2011 disaster has thrown
Japans reliance on internationally-traded
oil, gas and coal into sharp relief, with
particular emphasis on oil and gas.
Coal is less at issue because the coun-
trys coal-red plants generally already
operate on baseload and have thus been
unable to increase production and help
replace the lost nuclear output. The
members of the Federation of Electric
Size, kW Years Yen/kWh
Solar photovoltaic:
<10 10 42
>10 20 42
Wind:
<20 20 57.75
>20 20 23.1
Geothermal:
<15,000 15 42
>15,000 15 27.3
Hydro:
<200 20 35.7
200-1,000 20 30.45
1,000-30,000 20 25.2
Biogas: 20 40.95
Waste (excluding wood) 20 17.85
Wood waste, various 20 13.65-33.60
1. Japanese feed-in tariffs to March 31, 2013.
Source: Meti
renewables
Power Companies Japan (FEPC) burnt
3.559 million metric tons (mt) of coal in
June 2012, much the same as the 3.963
million mt they consumed in June 2010
prior to the disaster.
Instead, the output lost from the closed
reactors has been replaced by liqueed
natural gas (LNG) and crude and fuel
oil, as well as by energy savings on the
demand side. The International Energy
Agency noted in the rst half of 2012 that
LNG had replaced 56% of the lost nuclear
output in 2011, rather than the 40% it had
originally projected. But the Paris, France-
based agency added that gas constraints
including both LNG import capacity and
gas-red generating plantwould put an
effective cap on LNG usage and require
more oil use as 2012 progressed.
This was borne out by FEPC members
use of 4.262 million mt of LNG in June
2012, or about 38% more than in June
2010. But their fuel oil use increased al-
most threefold to 1.177 million kiloliters
in June 2012 compared with June 2010,
while crude oil consumption jumped
more than fourfold to 1.060 million kl.
The use of more fossil fuels for power
generation was a key reason why Japan
posted a record trade decit of Yen 2.9
trillion ($37.3 billion) in the rst half of
2012. Much of the increased burden of
imports occurred because of rising LNG
and oil purchases.
Hence the willingness to offer gener-
ous incentivesat least in the initial
yearsto renewable plants that may be
expensive to build but will replace power
generated from imported fuels with in-
digenous energy. The government esti-
mated in April 2012 that renewable ca-
pacity could increase by 2,500 MW as
early as March 2013, with about 2,000
MW of the capacity projected to come
from solar power complexes.
And the approval of the high solar tar-
iffsaround double those paid in Ger-
manyhas resulted in a surge in project
announcements. For instance the local
Toshiba Corporation said after the an-
nouncement that it would install 100
MW of solar photovoltaic capacity by
March 2015.
Toshiba will install the capacity at
Minami Soma city in Fukushima prefec-
ture, which suffered severe damage as a
result of the March 11, 2011 earthquake
and tsunami. The company said the so-
lar plants will cost about Yen 30 billion,
equivalent to $3,800/kW.
Meanwhile the SB Energy Corporation,
the energy subsidiary of the local Soft-
bank Corporation, has said it will build at
least 200 MW of capacity at Tomakomai
on Hokkaido. And a 70-MW complex is
planned by a consortium led by the local
Kyocera Corporation at Kagoshima City in
Kagoshima prefecture at an estimated cost
of about Yen 27 billion, or $4,930/kW.
Some of the proposed projects involve
Jun-10 Jun-12 Difference
Power generation, TWh:
Thermal 35.653 49.569 13.916
Nuclear 22.479 0 -22.479
Hydroelectric 6.732 5.612 -1.12
New energy etc 0.195 0.206 0.011
Purchases 13.352 15.493 2.141
Total 77.712 70.459 -7.253
Fossil fuel use:
Coal (million mt) 3.963 3.559 -0.404
LNG (million mt) 3.083 4.263 1.18
Heavy fuel oil (million kl) 0.401 1.177 0.776
Crude oil (million kl) 0.263 1.06 0.797
2. FEPC generation and purchases.
Source: Federation of Electric Power Companies
renewables
dispersed installations rather than mega-
solar plants at one location. For instance
the local Mitsubishi Corporation and Na-
tional Federation of Agricultural Coop-
erative Associations have agreed to install
solar plants on the rooftops of facilities
owned by farmers and on shared facili-
ties owned by the Federation.
Mitsubishi said it will cost about Yen
60 billionor $3,835/kWto install up
to 200 MW of solar capacity on facilities
owned by the Federation at up to 600 lo-
cations in every prefecture from Hokkai-
do to Okinawa by the end of 2014. And,
as with Toshibas plan to site its project
in the disaster-hit Fukushima prefecture,
Mitsubishi said the initiative will have a
socio-economic element since it will seek
to reactivate the agricultural sector and
revitalize farming communities as well
as to expand renewable energy options.
Mitsubishi also said that, given Japans
land space constraints, the effective use
of the roofs of existing facilities would
be a very desirable way to enter the solar
power business, while at the same time
conserving agricultural land.
Elsewhere the Tokyo-based leasing and
nancial services conglomerate Orix
Corporation said in late August that it
plans to spend Yen 54 billion ($680 mil-
lion) on both solar power stations and
rooftop projects over a three-year period.
The 200 MW of proposed capacity will
be split about equally in capacity terms
between mega-scale plants costing about
Yen 30 billion and PV arrays costing
about Yen 24 billion.
In late August the Tottori Yonago So-
lar Park Corporation, a consortium com-
prising SB Energy and Mitsui & Co., Ltd,
said it had agreed to build and operate a
39.5-MW solar plant. The Softbank Tot-
tori-Yonago Solar Park in the Sakitsu dis-
trict of Yonago City in Tottori prefecture
is scheduled to operate from July 2013.
Tottori Yonago Solar said that it had
concluded agreements pertaining to the
534,000-square-meter plant with Tottori
prefecture, Yonago city and the Tottori
Prefecture Housing Supply Public Cor-
poration. The power will be sold to the
Chugoku Electric Power Company with
output estimated at 39.5 GWh/year.
Foreign companies are also announc-
ing their entry into the Japanese solar
market both as investors in solar genera-
tion plants and manufacturing facilities.
For instance Canadian Solar Inc has said
it plans to build a manufacturing plant
with up to 150 MW/year of capacity, pos-
sibly in Fukushima prefecture.
The scale of the solar proposals can be
gauged from the fact that in September
2008 the ten electric power companies
grouped under the FEPC together com-
mitted to build only 140 MW of large-
scale solar plant at thirty sites by 2020
a fraction of the capacity proposed under
the current plans.
Solar capacity apart, high feed-in tar-
iffs are expected to result in additional
geothermal and especially wind capac-
ity. Japan hosted 537 MW of geothermal
capacity and 2,557 MW of wind capacity
at March 2012.
The Environment Ministry said in
late August that it is targeting a six-fold
increase in offshore wind, geothermal,
tidal, wave and biomass-red capacity to
19,410 MW by 2030. The targets include
8,030 MW of offshore wind, 3,880 MW of
geothermal power, 6,000 MW of biomass
plant and 1,500 MW of ocean energy.
The Japan Wind Power Association
(JWPA) said in February 2012 that wind
capacity could rise to 50,000 MW in
2050, split equally between onshore and
offshore capacity and supplying more
than 10% of national power demand.
Prior to that, it estimates that the capac-
ity could reach 11,300 MW by 2020 and
28,800 MW by 2030.
However, the JWPA said in June 2012
that additions will be limited until at
least 2015. The ending in 2010 of a pre-
vious subsidy payment system for new
wind farms meant that only 85.1 MW
of new capacity was installed in the year
ending March 2012, compared with
303.6 MW in the year ending March
2010. The JWPA added that planning
and construction requirements mean
that the new feed-in tariffs will only re-
sult in capacity being added to the grid
from the middle of the decade.
Hence the emphasis on solar power
projects, which can be installed rela-
tively quickly. The large number of near-
term solar proposals is both intended,
renewables
given that the government wants to add
a large amount of renewable capacity as
soon as possible, and expected, given the
high level of the feed-in tariffs and possi-
bility that Meti will reduce the tariffs of-
fered for projects agreed in future years.
But some in the electricity industry are
urging caution over the extent of the po-
tential additions.
For instance the chairman of the FEPC,
Makoto Yagi, has said the governments
renewable energy goals are very ambi-
tious. He added that I nd their feasi-
bility questionable.
He noted that estimating grid stabili-
zation costs to accommodate the large-
scale introduction of photovoltaic and
wind power generation requires more
detailed research, and comprehensive
discussions are needed on the heavy ad-
ditional burden that would be placed on
the public, specically a signicant in-
crease in electricity rates and a negative
impact on the micro economy. Yagi also
said that nuclears share of total pow-
er supplies should be in the 2025%
range as the minimum requirement.
Much of the debate has revolved around
the cost of renewable energy, and in the
long run that will certainly inuence how
much capacity Meti allows to be built
through its control of feed-in tariff levels.
In this context gures published by the
Cost Review Committee of the Energy
and Environment Council in December
2011 have been used by proponents of
both nuclear power and renewable energy
to argue their case.
The gures indicate the lifetime cost of
output from nuclear plants could remain
low up to 2030. At the same time the cost
of the output from solar installations
in particular is projected to fall sharply
over the period. However, analyses by lo-
cal bodies such as the Institute of Energy
Economics Japan note that the gures
in all cases are critically dependent on
assumptions such as the discount rate,
plant life and capacity factor, and do not
include extraneous expenses such as grid
integration costs.
How much renewable capacity Japan
will install in the longer term is thus
unclear, as are the long-term implica-
tions and outlook for the countrys nu-
clear and fossil-fueled generating sectors.
However, it is certain that the amount
will be substantial in the rst few years at
least, with the competition to enter what
could potentially be one of the most lu-
crative global renewable energy markets
now well and truly under way.
2010 2020 2030
Nuclear (70% load) 9.0+ 9.0+ 9.0+
Coal (80%) 9.5 10.2 10.3
LNG (80%) 10.7 10.4 10.9
Oil (10% load) 36 36.4 34.9
Oil (50% load) 22.1 22.5 21
Hydro 10.6 10.6 10.6
Small hydro 20.6 20.6 20.6
Solar (mega) 38 19.1 16
Solar (residential) 35.9 15.4 12
Onshore wind 13.6 13.3 13.1
Offshore wind - 16.2 15.9
Biomass 24.8 24.8 24.8
Gas cogneration 10.6 11.1 11.5
Oil cogeneration 17.1 18.6 19.6
Fuel cells 101.9 20.4 11.5
3. Estimated generation costs for new plants, Yen/kWh.
Source: Energy & Environment Council Decision June 29, 2012 (National Policy Unit)
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There is no rest for the weary in
China. The countrys state-controlled
oil and gas companies have been busy
acquiring assets all over the globe,
from Australia to Africa, from Europe
to North America, with no sign of any
satiation.
The fruit of their labor has been
signicant. Chinas three state com-
paniesChina National Petroleum
Corp. (CNPC) and its listed entity Pet-
roChina, Sinopec and China National
Offshore Oil Corp.more than tripled
their overseas oil and gas equity output
from just over 500,000 barrels of oil
equivalent/day in the mid-2000s to al-
most 1.7 million boe/d in 2011, accord-
ing to Platts estimates.
The expansion program is driven by
Chinas desire both to internationalize
and offset declining domestic hydrocar-
bon production, and is backed by strong
cash reserves, the deep pockets of state-
linked banks and a government eager
to secure foreign energy resources at a
time when crude imports account for
over half of total Chinese oil demand.
Overseas oil and gas acquisitions
started gathering pace in 2005, the
same year that CNOOC made its am-
bitious but ultimately unsuccessful
$18.4-billion bid for the US-based and
Asian-focused Unocal Corp.
Total transactions almost doubled to
more than $11 billion the following
year. But they then tapered off as in-
ternational oil prices rose above $140/
barrel in 2007-2008 and the companies
retreated to focus instead on domestic
projects and increasing output from
mature elds.
All that changed with the global -
nancial crisis. This was seen as repre-
senting a unique opportunity for the
companies to take advantage of lower
asset prices and reduced competition
from other buyers, and acquisitions in-
creased signicantly.
The escalation in oil prices since the
2008-2009 recession has strengthened
conditions for increased corporate con-
solidation, particularly with the diver-
gence between strong crude oil and in-
ternational LNG prices, and depressed
North American natural gas prices,
said IHS Herold in a July 2012 report.
In 2010, close to $25 billion worth of
Chinese acquisitions were announced.
Almost $15 billion was spent in Latin
America and much of the rest on the
acquisition of North American oil
sands and shale.
Acquisitions in 2012 up to the time
of writing (September) have already
racked up a record total of $26.1 bil-
lion. According to nancial analytics
company Dealogic this compares with
$17 billion in 2011 and has been largely
driven by CNOOCs proposed acquisi-
tionannounced in July and valued at
China energy
Chinas Quest
for Hydrocarbons
Song Yen Ling, Senior Writer, China, Platts
China energy
almost $17 billion including debtof
the Calgary, Canada-based Nexen.
The China Petroleum and Chemical
Corp., known commonly as Sinopec,
has been the most active of the three
companies in the last few years. This
is primarily because, as the dominant
rener at home, its upstream growth
is limited.
Most of its overseas activities are un-
dertaken through subsidiary Sinopec
International Petroleum Exploration
and Production Corporation (SIPC). Its
overseas production has been heavily
skewed towards crude, but turned more
toward unconventional gas and LNG in
the last two years.
Since early 2010, Sinopec has spent
over $22 billion on acquisitions. This
included the $7.1 billion purchase of
deepwater assets in Brazil from YPF in
2011; buying a 9% stake in Syncrude
from ConocoPhillips for $4.7 billion;
the purchase of producing proper-
ties in Argentina from Occidental
Petroleum for $2.5 billion; and a to-
tal investment of $3.6 billion in the
Australia-Pacic LNG project in the
Australian state of Queensland.
Sinopec wants to more than double
its overseas equity production from
475,000 boe/d in 2011 to 1 million
boe/d by 2015. In the rst half of 2012,
its equity output rose by 24% on year to
523,600 boe/d.
CNOOC is the smallest of the three
companies, but its listed unit has maxi-
mized protability because it has no
downstream exposure and does not suf-
fer poor margins like its compatriots. It
is now (late September) in the process
of closing the Nexen deal, which is be-
ing reviewed by the US, Canadian and
other governments.
CNOOCs target is for a third of its to-
tal output to come from foreign projects
by 2015. Analysts say that this would
translate to 400,000 boe/d, double the
current production of 200,000 boe/d.
Meanwhile PetroChinas aim is that
production from foreign projects will
make up about half its total output
within the next ve yearsup from the
current 9.4% and the 5% or so posted
in 2005. This could mean that over-
seas production will potentially reach 2
million boe/d compared with 343,400
boe/d in the rst half of 2012.
In 2012 alone, PetroChina plans to
invest a third of its Yuan 300 billion
($47.3 billion) capital expenditure bud-
get on foreign projects.
PetroChina is owned 86.4% by
CNPC, which owns and operates assets
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 YTD
$ billion
40
50
60
70
80
90
100
110
120
total deal val ue brent pri ce
1. China outbound M&A volume in oil and gas sector.
Deal values include debt.
Source: Dealogic, Platts
China energy
in potentially politically risky coun-
tries such as Sudan and Venezuela.
CNPC said that its total overseas equity
oil and gas outputincluding its share
in PetroChinahit 1 million boe/day
in 2011, up from under 500,000 boe/
day in 2005.
Given these lofty targets, acquisi-
tions have increased despite oil prices
staying high.
In 2011, Sinopec was the fourth-larg-
est oil and gas sector spender globally,
splashing out more than $8.5 billion to
acquire 413 million boe of proved and
probable (2P) reserves, according to IHS
Herold. CNOOC ranked eighth with
$4.8 billion of expenditure to buy 543
million boe of 2P reserves.
The IHS Herold data indicates that
Chinese companies are not paying ex-
cessively for assets compared with their
peers. PetroChinas reserve replacement
cost, which includes acquisitions, aver-
aged almost $20/boe in 2011, while
CNOOCs was more than $22/boe. This
compares with $19.50/boe for Royal
Dutch Shell, but was higher than the
$16.30/boe for the USs Exxon Mobil
and $17/boe for the UK-based BP, ac-
cording to IHS.
Information for Sinopec is unavail-
able. SIPC is held by the parent com-
pany rather than the listed unit, and
data on its foreign assets is not publicly
available.
Evolving Strategies
While the visible backing of the Chi-
nese government and other state in-
stitutions has proved useful, as with
numerous oil-for-loans deals in Russia
and Latin America as well as gas sup-
ply agreements in Central Asia, Chi-
nese companies are warming to West-
ern-style wheeling and dealing to help
them meet their ambitious growth
plans overseas. Their strategies have
evolved in various ways over the years.
Following the failure of the Unocal
bid, Chinese companies briey irted
with the idea of teaming up for deals.
Sinopec and CNPC formed Andes Pe-
troleum to acquire projects in Ecuador,
while the latter company and CNOOC
agreed to explore offshore Kazakhstan
in 2006.
The companies also formed consor-
tiums with other Asian national oil
companies (NOCs) for joint bids, al-
though in Indias case this was more
a consequence of its state-owned com-
panies not being able to match the
Chinese companies in competitive
bids. CNPC and Indias Oil and Natu-
ral Gas Corp. (ONGC) jointly acquired
Petro-Canadas assets in Syria for $575
million in 2006, while Sinopec and
ONGC later teamed up to buy Omi-
mex in Colombia.
In 2010, PetroChina formed an alli-
ance with Shell to acquire Arrow Ener-
gys Australian coalseam gas assets for
an LNG export project in Queensland.
The deal was seen as mutually bene-
cial, allowing the Chinese company to
make inroads in the unconventional
gas business while giving Shell a ready
market into which to sell LNG.
PetroChinas president and vice-
chairman, Zhou Jiping, summarized
the companys modus operandi in Au-
gust 2012. He said it would increase
overseas production in three ways
corporate acquisitions, organic growth
from existing assets and joint ventures
with other companies.
Eschewing outright competition with
other companies, Chinas NOCs origi-
nally targeted projects in regions their
western rivals found too politically
risky to operate, including countries in
Central Asian, Africa and Latin Ameri-
ca. While they are now targeting more
regions and resource plays, their ap-
proach is unlike the haphazard, scatter-
gun strategy of before.
Prior to Nexen, CNOOC had shied
away from corporate deals. It chose
While the visible backing of the Chinese
government and other state institutions has
proved useful ... Chinese companies are
warming to Western-style wheeling and
dealing to help them meet their ambitious
growth plans overseas.
China energy
instead to made gradual inroads into
North America through asset deals
both onshore US and in the Gulf of
Mexicoto familiarize itself with the
operating environment and host gov-
ernment as well as its partners and
competitors.
Aware of Chinas increasing impor-
tance in the global geopolitical sphere,
there is also an increasing desire for
acreage in politically stable environ-
ments with relatively little regulatory
and scal risk.
Sinopecs Talisman deal marked not
only its entry into the UKs North Sea
but also displayed its opportunistic ap-
proach in targeting smaller companies
with stated divestiture plans for their
conventional assets in order to focus on
newer, more valuable unconventional
plays, according to Christopher Shee-
han, IHS Herolds M&A Director. In a
presentation made in July 2012, Shee-
han said that Sinopecs deal ... was at a
favorable price per boe and does high-
light that larger international compa-
nies have pricing leverage when buying
conventional assets from smaller E&Ps
with stated divestiture plans.
The companies are also not content
to be silent minority stakeholders in
projects and are striving for wholly- or
majority-owned operated stakes.
In Iraq, PetroChina has shown that
it can work alongsideand compete
withits western peers. It is operator
of the Halfaya eld partnering Frances
Total and Malaysias Petronas.
The eld started production in June
2012 at 70,000 b/d and is expected to
reach 200,000 b/d by 2013. PetroChina
is also a partner with BP in the Rumai-
la oil eld and operates the Al-Ahdab
project on its own.
In 2011, PetroChina also acquired the
remaining interest in the MacKay River
oil sands project in Canada, becoming
the rst Chinese company to fully con-
trol an oil sands project overseas.
While previously their interest was
in producing or development projects,
the Chinese companies recognize the
value that exploration breakthroughs
can have in boosting reserves. This is
evidenced by the large swathe of off-
shore and deepwater blocks they have
acquired in the last few years.
The companies are also becoming
more adept at post-merger integration
and operational management. More
importantly, they are seeking to dispel
the stereotype of China as a predator
intent on stripping foreign countries of
their energy resources, and instead to
educate stakeholders about the benets
of the deals to the countries and their
governments.
Zhou has said that PetroChina is now
focused on building three central op-
erational hubs to oversee its foreign as-
sets. And CNOOCs chief executive, Li
Fanrong, said in August 2012 that the
Nexen acquisition would be of ben-
et to local communities, adding that
CNOOC would retain Nexens opera-
tional team and pledging to make To-
ronto CNOOCs North American base.
Unconventional resources have be-
come a decided target. All three Chi-
nese companies have a growing pres-
CNPC PetroChina Sinopec* CNOOC
2005 453.3 147.5 NA 40.5
2006 630.7 156.1 NA 47.8
2007 663.9 159.9 138 62
2008 694.7 252.7 180.9 64
2009 786.5 287.8 256.9 108
2010 906.7 273.4 369.3 149
2011 1059.7 331 443.2 145
2. Chinese national oil companies overseas production (kboed).
*Sinopec data refers only to equity crude output, data unavailable for 2005-06.
Source: Company data
China energy
ence in oil sands and shale acreage,
particularly in liquids-rich areas in
North America.
According to Dealogic, oil and gas has
been the top sector for Chinese acquisi-
tions in the US since 2011. In the rst
eight months of 2012, the value of Chi-
nese oil and gas deals in the US totaled
$2.9 billion, more than double the $1.3
billion recorded during the same pe-
riod of 2011.
The focus on unconventional re-
sources will also increasingly skew their
incremental reserves towards gas. The
fuel accounted for almost half of Petro-
Chinas reserves at the end of 2011, as
well as a third of CNOOCs reserves and
over a fth of Sinopecs.
Beyond the Big Three
While the three state companies have
led the majority of mergers and acqui-
sition activity, sovereign wealth fund
China Investment Corp. (CIC) has also
come to the fore. In August 2012 it
agreed to pump $500 million into the
US-based Cheniere Energys planned
LNG export project.
In 2011, CIC took a 30% stake in GDF
Suezs upstream division, which in-
cludes signicant assets in Europe, for
$3.2 billion. Its other investments since
2009 have included stakes in the Singa-
pore-based trader Noble, Kazakhstans
Kazmunaigas Exploration Production
and Russias Nobel Oil. It also has pow-
er and mining holdings.
Worth more than $480 billion, CIC
was created in 2007 and has part of
Chinas $3.2 trillion of foreign ex-
change reserves at its disposal. But
Chairman Lou Jiwei has said that,
rather than acting as a vehicle for
Beijing to control foreign energy re-
sources, the funds main aim is to se-
cure long-term investments to act as a
hedge against ination and currency
depreciation.
Sinochem, which is commonly known
as Chinas fourth state oil and gas com-
pany, has also ventured overseas, albeit
starting from a relatively modest base.
While new to the upstream sector, in
2009 it acquired the UK-listed Emerald
Energy for $875 million.
A big chunk of Sinochems over-
seas production now comes from the
100,000 b/d Peregrino eld offshore
from Brazil, where it acquired a 40%
stake from Norways Statoil in 2011 for
$3 billion. It said in 2010 that it want-
ed to almost quadruple its output to
300,000 b/d by the end of the decade.
Despite their successes, there have
been speed bumps along the way, with
a few signicant deals failing to take
off. In 2011 PetroChina cancelled its
$5.5-billion offer to farm into Encanas
Cutbank Ridge assets in Canada after
both sides reportedly could not agree
on post-merger operations and other
terms. In Africa, too, China has failed
to conclude a number of deals follow-
ing opposition from governments and
other stakeholders.
New regulations and oversight im-
posed by the Chinese government on
outbound deals could also complicate
matters. The State-owned Assets Su-
pervision and Administration Com-
mission said in 2011 that it planned to
issue more rules on outbound invest-
ments in order to protect the value of
state-owned enterprises and assets.
Sometimes overseas targets are a bit
cautious about the approvals processes
in China, because they dont neces-
sarily understand it and the process,
says David Clinch, who is head of the
China energy practice at international
law rm Herbert Smith. The rm has
advised the Chinese companies on nu-
merous transactions.
Another Beijing-based M&A lawyer
noted that they have developed a
perceived reputation for being eager
to pay so they receive hundreds of op-
portunities every year. But that means
they need to invest more in due dili-
gence in order to sieve out the value-
accretive deals.
In the rst eight months of 2012, the value of
Chinese oil and gas deals in the US totaled
$2.9 billion, more than double the $1.3 billion
recorded during the same period of 2011.
G
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SPECIAL ADVERTISING SECTION
Cairn India is one of the largest independent oil
and gas exploration and production companies in
India with a market capitalization of approximately
US$ 12 billion. Cairn India and its joint venture
partners account for ~25% of Indias domestic crude
oil production.
Cairn has been operating in India for more than 15
years and has played an active role in developing oil
and gas resources. The company discovered the Man-
gala eld in Barmer, Rajasthan in 2004. This discovery
is considered to be the largest onshore oil discovery in
India in more than two decades.
Cairn has a strong record of exploration rsts to its
credit. To date, the company has opened three new
frontier basins with over 40 discoveries, including 25
in the Rajasthan block. Four out of the eight signicant
discoveries in India since 2000 were made by Cairn.
Cairn India has over 1 billion barrels of reserves/
resources base. The company is focused on exploiting
their full potential.
The company has always been a front runner in
innovative application of advanced technologies to
mitigate risks as well as maximizing hydrocarbon
recovery. Cairn introduced for the rst time in India
the campaign of hydraulic fracturing for enhanced
productivity, drilling Extended Reach Drilling wells
in shallow unconsolidated formations, drilling with
casing technology and usage of non-damaging mud
systems amongst other innovations.
Cairn India has a portfolio of 10 blocksone block
in Rajasthan, two on the west coast, ve on the east
coast of Indiaand one each in Sri Lanka and South
Africa (Farm-in agreement signed on 16 August 2012;
subject to South African regulatory approvals).
Cairn India produces oil and gas from three assets
in India: Rajasthan and Cambay on the west coast of
India and Ravva on the east coast of India. It is one of
the lowest cost producers in South Asia.Cairn India
places huge emphasis on health, safety and environ-
ment and is committed towards making a positive
contribution to the local community, wherever it oper-
ates. The companys Health, Safety, and Environment
(HSE) philosophy is based on commitment to protect
its people, assets and the environment. All production
sites operated by Cairn are ISO 14001 certied. Cairn
India maintains good relationships with local govern-
ments, its joint venture partners and employees.
P. Elango, CEO
Mr. Elango has over 25 years of experience in the oil
and gas sector. He started his career with ONGC in
1985 and over a span of 10-years had served in diverse
roles. He has been with Cairn since 1996.
Elango has spearheaded the planning for the stra-
tegic growth of the company and led various depart-
ments including Procurement and Supply Chain
Management, Corporate Communications, Corporate
Social Responsibility, Health, Safety, Environment and
Quality, Security, Land Acquisition, Commercial &
New Business and Business Transformation. He is on
the boards of various fully-owned subsidiary groups
of companies of Cairn India Ltd.
Mr. Elango holds an MBA from Annamalai Univer-
sity and is a well known name in the oil & gas sector
and various industry forums. He is a strong believer
in people and values based decision making for cor-
porate excellence.
For more information visit us at www.cairnindia.com.
Cairn India Limited
P. Elango
CEO
Cairn India Limited
Milestones
MangalaLargest onshore discovery in India since 1985,

largest in the world for the year 2004
Responsible for 4 out of 8 signicant discoveries in

India since 2000
KG-ONN-2003/1 Block discovery is the largest onshore

discovery in the KG Basin to date
Built the worlds longest continuously heated and

insulated pipeline ~590 km from Rajasthan to
Gujarat in India
First company in the world to discover hydrocarbons

in Sri Lanka
Potential resource for the Rajasthan block now

estimated at 7.3 bn boe in-place
SPECIAL ADVERTISING SECTION
The Singapore International Energy Week (SIEW)
2012, in its fth year, continues to address pertinent
global energy issues facing the world today. Held at the
Sands Expo and Convention Centre, Marina Bay Sands,
on 22-25 October 2012, SIEW brings together top gov-
ernment leaders, industry captains and academics to
debate how governments and private companies could
work together to Shape a New Energy Landscape.
Global growth, expanding populations and in-
creased urbanisation will drive up energy needs in
coming decades. Asias energy demand is expected to
double over the next 20 years. Emerging trends in the
energy space, like the unconventional gas revolution
in North America, are expected to change the global
energy mix. Advances in technology are also reshap-
ing our views on energy use and deployment.
As with previous SIEW events, the SIEW 2012
programme encompasses high-level strategic discus-
sions held on the rst day, and industry-level business
activities, including conferences, roundtable discus-
sions, trade exhibitions and networking events, which
run concurrently throughout the week.
Highlights from SIEW 2012 include:
1. The SIEW Opening Keynote Address, where
Maria van der Hoeven, Executive Director of
the International Energy Agency (IEA), shares
her perspectives on new policy frameworks and
policy directions needed to tackle the worlds
energy challenges, as well as steps which govern-
ments and businesses can take to shape a new
energy landscape.
2. The Singapore Energy Summit, a senior-level
forum bringing together Ministers, policymak-
ers, business leaders and academics, including
Jose Maria Figueres, President of the Carbon War
Room; and Ruth Cairnie, Executive Vice-Presi-
dent Strategy and Planning, Royal Dutch Shell.
These eminent speakers come together to share
their views on the following topics:
Options for the Future Energy Mix
Financing Tomorrows Energy Needs
Keeping the Door to 2C Open
Connecting the Dots: EnergyWaterFood Nexus

3. Specialist and Think-Tank Roundtable sessions
on opportunities and challenges in the electric-
ity sector in Asia and the world; the potential
of LNG hubs in Asia; the latest developments
and technologies in offshore renewable energy
generation, transmission and distribution; and
natural gas in transportation.
4. Business-to-Business conferences & exhibitions
covering the entire spectrum of the energy in-
dustry from oil and gas to clean and renewable
energy, smart grids, electricity markets, carbon
abatement and energy trading:
Asia Future Energy Forum23 to 24 October
Asia Smart Grid23 to 24 October
Downstream Asia24 to 25 October
EMART Asia23 to 24 October
PV Asia Pacic Expo23 to 25 October
Gas Summit Asia24 to 25 October

5. Networking receptions and online business-
matching systems for delegates to strengthen
existing relationships and foster new contacts.
The Energy Market Authority (EMA) hosts the Singa-
pore International Energy Week, which runs from 22 to 25
October 2012 at the Sands Expo and Convention Centre,
Marina Bay Sands, Singapore. More information can be
found at www.siew.sg.
Shaping a New Energy Landscape
at Singapore International
Energy Week 2012
Asia-Pacics energy companies have
improved their relative position in the
Platts 2012 top 250 rankings, placing
12 companies in the top 50 in com-
parison with 9 in the 2011 listing. De-
spite the number of Asian companies
remaining the same, at 70, their aver-
age rank rose to 130.6 in 2011 from
131.3 in 2010, a lower number denot-
ing a better score.
There was a signicant shift in com-
position within the 70 companies rep-
resented. The number of Chinese com-
panies has increased every year since
2008, but in 2011 it leapt from 18 to 23,
making it by far the best represented
country in Asia-Pacic. China now has
more companies in the top 250 than
any other country except the United
States, overtaking both Canada and Ja-
pan in 2011.
The strength of Chinese representa-
tion is evident from the diversity of
the new entrants. Two were from the
coal sectorInner Mongolia Yitai Coal
Co Ltd and Yangquan Coal Industry
(Group) Co Ltd; there were two inde-
pendent power producers (IPPs)Hua-
dian Power International Corp Ltd and
Shenergy Co Ltd; and one Hong Kong-
listed E&P company, Kunlun Energy
Co Ltd, which is controlled by majority
shareholder PetroChina Co Ltd.
Out of the eight industry categories,
Chinese companies are the regional
leaders in no less than four. PetroChi-
na tops the Asia-Pacic leader board
for integrated oil and gas companies,
CNOOC Ltd in the E&P eld, China
Shenhua Energy Co Ltd in coal and
consumable fuels, and Hong Kongs
CLP Holdings Ltd in electric utilities.
Perhaps more indicative of the re-
gions performance than overall posi-
tion in the top 250 is its total domina-
tion of the category of fastest-growing
companies. Asia-Pacic accounts for 30
of the top 50 companies in this catego-
ry, based on 3-year compound growth
rates (CGRs), showing that if it is fast
and sustainable growth that is required,
Asia is the place to be.
Of Chinas 23 companies in the top
250, no less than 20 appear in the top
50 fastest-growing company list. This
provides almost too many rising stars
to mention, but high amongst a strong
eld in terms of growth is the 44.9%
3-year CGR delivered by independent
top 250 global energy companies
Asia Gains
Traction
Platts Top 250 Global Energy
Company Rankings
Reviewed
Ross McCracken, Editor,
Platts Energy Economist
Platts Top 250 Global Energy
Company Rankings measures
nancial performance by examin-
ing each companys assets, revenue,
prots and return on invested capi-
tal. All ranked companies have as-
sets greater than (US) $4 billion.
The underlying data comes from
S&P Capital IQ, a business line of
the McGraw-Hill Companies.
power producer and trader GD Power
Development Co Ltd.
China is exceptional in more ways
than one, but key aspects that stand
out include the astonishing growth of
the countrys IPPs, which make up ve
of Chinas eight fastest-growing com-
panies based on 3-yr CGRs. Second, is
the leading position of Chinas coal and
consumable fuels (C&CF) companies.
Occupying a central role in the worlds
largest coal industry, these companies
demonstrate growth rates seemingly un-
achievable elsewhere.
Top performer in terms of growth is
Shanxi Xishan Coal and Electricity Pow-
er Co Ltd with a 3-year CGR of 31.1%.
This enabled the company to move up
the overall top 250 rankings from 192nd
to 158th place.
Success is not limited to the coal and
power sectors. In oil and gas, Chinas
three giantsPetroChina, China Pe-
troleum & Chemical Corp (Sinopec)
and CNOOChave all performed
well. These companies growth rates
stand out amongst their global peers.
CNOOC, in particular, recorded a 3-yr
CGR of 38.5%, while PetroChina post-
ed 23.2% and Sinopec 20%, all well
above the global industry average.
Smaller companies are also breaking
into the scene. Hong Kongs Kunlun En-
ergy recorded a remarkable 69.6% 3-year
CGR, making it Chinas fastest-growing
company by this measure, not just in oil
and gas but across the countrys energy
sector as a whole.
Indian Honors
India took honors in both the IPP and
Gas Utility categories, with NTPC Ltd
and GAIL (India) Ltd coming top of their
respective regional segments. India also
took honors with the fastest-growing
company not just in Asia but the world.
Cairn India Ltd posted an astonishing
119.8% 3-yr CGR to put it far in front of
the eld.
In total, of the 12 Indian companies
represented in the top 250, six are in the
top 50 list of fastest-growing companies.
Of all Indian companies in the top 250,
Power Grid Corp of India Ltd has im-
3-year
CGR %
Platts
Rank
Rank Company Country Industry
1 Cairn India Ltd India E&P 119.8 121
2 Kunlun Energy Co Ltd Hong Kong E&P 69.6 133
3 YTL Power International Bhd Malaysia DU 51.2 173
4 GD Power Development Co Ltd China IPP 44.9 132
5 YTL Corp Bhd Malaysia DU 41 196
6 CNOOC Ltd Hong Kong E&P 38.5 13
7 Reliance Industries Ltd India R&M 33.3 27
8 China Resources Power Holdings Co Ltd Hong Kong IPP 31.4 134
9 Shanxi Xishan Coal & Electricity Power Co Ltd China C&CF 31.1 158
10 Banpu Pcl Thailand C&CF 30.5 149
11 China Yangtze Power Co Ltd China IPP 30.2 120
12 PT Adaro Energy Tbk Indonesia C&CF 28.7 154
13 Huaneng Power International Inc China IPP 25.2 143
14 Datang International Power Generation Co Ltd China IPP 25.1 145
15 NHPC Ltd India IPP 24.7 195
16 China Longyuan Power Group Corp Ltd China IPP 23.6 213
17 China Shenhua Energy Co Ltd China C&CF 23.4 16
18 PetroChina Co Ltd China IOG 23.2 9
19 Reliance Infrastructure Ltd India EU 23.2 215
20 Yanzhou Coal Mining Co Ltd China C&CF 23 86
1. Fastest growing Asia companies.
Source: S&P Capital IQ/Platts
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 22, 2012.
Platts
Rank
2012
Assets Revenues Prots
Return on
invested capital
3-year
CGR%
Industry
code
Company State or country Region $ million Rank $ million Rank $ million Rank ROIC % Rank
1 Exxon Mobil Corp Texas Americas 331052 2 433526 2 41060 1 23 9 1 IOG
2 Royal Dutch Shell plc Netherlands EMEA 345257 1 470171 1 30918 3 15 28 1 IOG
3 Chevron Corp California Americas 209474 10 236286 6 26895 4 20 13 -2 IOG
4 BP plc United Kingdom EMEA 293068 5 375917 4 25698 5 16 21 1 IOG
5 OJSC Gazprom Russia EMEA 327675 3 139391 10 39289 2 14 31 12 IOG
6 Statoil ASA Norway EMEA 128698 17 108101 17 13192 9 19 14 -0 IOG
7 Total SA France EMEA 205485 11 208618 8 15377 8 12 42 1 IOG
8 ConocoPhillips Texas Americas 153230 16 235265 7 12436 11 13 36 1 E&P
9 PetroChina Co Ltd China Asia/Pacic Rim 301261 4 310291 5 20889 6 10 65 23 IOG
10 Rosneft Oil Co Russia EMEA 105968 21 90102 19 12452 10 14 34 10 IOG
11 OJSC LUKOIL Oil Co Russia EMEA 91192 23 133650 12 10357 14 14 35 8 IOG
12 China Petroleum & Chemical Corp China Asia/Pacic Rim 179810 14 393585 3 11504 12 10 60 20 IOG
13 CNOOC Ltd Hong Kong Asia/Pacic Rim 60370 34 37853 39 11037 13 23 7 38 E&P
14 Ecopetrol SA Colombia Americas 51609 49 36774 43 8642 16 24 6 25 IOG
15 OAO TNK-BP Holding Russia EMEA 35057 75 53404 30 9098 15 32 3 16 IOG
16 China Shenhua Energy Co Ltd China Asia/Pacic Rim 63011 31 32709 49 7176 18 14 31 23 C&CF
17 Eni SpA Italy EMEA 179051 15 137931 11 8593 17 8 91 0 IOG
18 Petrleo Brasileiro SA - Petrobras Brazil Americas 290582 6 118423 15 16156 7 7 107 4 IOG
19 Occidental Petroleum Corp California Americas 60044 35 23939 61 6629 20 15 24 0 IOG
20 Surgutneftegaz Russia EMEA 49701 51 22678 67 7009 19 15 25 9 IOG
21 Suncor Energy Inc Canada Americas 72797 28 38295 38 4190 27 9 73 11 IOG
22 Oil & Natural Gas Corp Ltd India Asia/Pacic Rim 40551 65 25623 59 4927 24 18 18 12 E&P
23 PTT Plc Thailand Asia/Pacic Rim 44080 59 76321 22 3310 32 10 59 7 IOG
24 Marathon Petroleum Corp Ohio Americas 25745 103 73583 23 2385 41 19 16 7 R&M
25 OAO AK Transneft Russia EMEA 55858 41 20148 75 5640 21 12 48 35 S&T
26 SK Innovation Co Ltd South Korea Asia/Pacic Rim 30232 89 59012 28 2735 36 13 36 9 R&M
27 Reliance Industries Ltd India Asia/Pacic Rim 57276 38 62757 26 3453 31 8 97 33 R&M
28 BG Group plc United Kingdom EMEA 61382 33 21073 72 4236 26 10 65 2 IOG
29 Valero Energy Corp Texas Americas 42783 60 125095 14 2096 49 9 73 6 R&M
30 Apache Corp Texas Americas 52051 46 16672 87 4508 25 12 41 11 E&P
31 Imperial Oil Ltd Canada Americas 24756 109 28382 54 3282 33 23 8 -1 IOG
32 Exelon Corp Illinois Americas 55092 42 18924 79 2495 39 9 71 0 EU
33 RWE AG Germany EMEA 116059 20 61963 27 2336 43 5 147 1 DU
34 Repsol SA Spain EMEA 88880 24 77036 21 2747 35 4 165 5 IOG
35 National Grid plc United Kingdom EMEA 73656 27 21523 70 3168 34 6 118 -4 DU
36 Enterprise Products Partners LP Texas Americas 34125 77 44313 33 2047 50 8 91 8 S&T
37 Enel SpA Italy EMEA 212695 9 98459 18 5196 22 4 203 9 EU
38 Husky Energy Inc Canada Americas 31567 82 22745 66 2165 46 10 58 -2 IOG
39 Iberdrola SA Spain EMEA 121381 18 39642 35 3513 30 4 173 8 EU
40 Electricite de France SA France EMEA 290232 7 81802 20 3770 28 4 203 1 EU
41 Hess Corp New York Americas 39136 68 38513 37 1703 57 7 106 -2 IOG
42 GDF Suez SA France EMEA 267314 8 113576 16 5014 23 3 224 10 DU
43 JX Holdings Inc Japan Asia/Pacic Rim 83064 25 133142 13 2118 47 4 187 R&M
44 Sasol Ltd South Africa EMEA 21101 121 16888 86 2347 42 16 23 3 IOG
45 TonenGeneral Sekiyu KK Japan Asia/Pacic Rim 13825 166 33238 48 1649 60 31 4 -6 R&M
46 Canadian Natural Resources Ltd Canada Americas 46026 55 13427 108 2573 38 8 78 -1 E&P
47 Southern Co Georgia Americas 59267 36 17657 84 2203 45 6 125 1 EU
48 Coal India Ltd India Asia/Pacic Rim 18722 131 10926 123 2587 37 35 2 15 C&CF
49 Inpex Corp Japan Asia/Pacic Rim 38071 71 14734 98 2409 40 7 98 3 E&P
50 OAO Tatneft Russia EMEA 18872 130 18495 82 1847 53 12 42 12 E&P
Notes: C&CF = coal and consumable 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 22, 2012.
Platts
Rank
2012
Return on
invested capital
3-year
CGR%
Industry
code
51 OMV Aktiengesellschaft Austria EMEA 35590 73 42654 34 1332 79 6 122 10 IOG
52 Marathon Oil Corp Texas Americas 31371 83 14717 99 1707 56 8 85 -41 E&P
53 NextEra Energy Inc Florida Americas 57188 39 15341 92 1923 52 5 143 -2 EU
54 CEZ, a.s. Czech Republic EMEA 29079 92 9914 132 1982 51 10 62 4 EU
55 Cenovus Energy Inc Canada Americas 21606 120 15280 93 1439 70 10 61 -4 IOG
56 JSOC Bashneft Russia EMEA 13573 170 16549 88 1572 61 15 25 63 E&P
57 Devon Energy Corp Oklahoma Americas 41117 63 10573 127 2111 48 7 107 -9 E&P
58 Gas Natural SDG SA Spain EMEA 58248 37 26399 58 1660 59 4 196 16 GU
59 American Electric Power Co Inc Ohio Americas 52223 44 15116 94 1568 63 5 151 2 EU
60 Fortum Oyj Finland EMEA 28807 93 7717 158 2216 44 10 62 3 EU
61 China Coal Energy Co Ltd China Asia/Pacic Rim 25126 105 13790 106 1540 64 8 85 20 C&CF
62 NTPC Ltd India Asia/Pacic Rim 27179 97 11371 118 1718 55 8 91 15 IPP
63 S-Oil Corp South Korea Asia/Pacic Rim 11395 186 27545 56 1028 89 13 38 11 R&M
64 Chesapeake Energy Corp Oklahoma Americas 41835 62 11635 117 1570 62 5 129 0 E&P
65 Public Service Enterprise Group Inc New Jersey Americas 29821 90 11079 122 1407 73 8 88 -4 DU
66 Entergy Corp Louisiana Americas 40702 64 11229 121 1346 78 6 114 -5 EU
67 Duke Energy Corp North Carolina Americas 62526 32 14236 104 1702 58 4 187 3 EU
68 Idemitsu Kosan Co Ltd Japan Asia/Pacic Rim 33300 81 53515 29 799 100 4 173 4 R&M
69 PPL Corp Pennsylvania Americas 42648 61 12737 114 1487 66 5 143 18 EU
70 YPF SA Argentina Americas 12599 177 12894 112 1204 81 17 20 18 IOG
71 EDP-Energias de Portugal SA Portugal EMEA 51707 48 18940 78 1409 71 4 196 3 EU
72 Dominion Resources Inc Virginia Americas 45614 56 14379 101 1408 72 4 165 -3 DU
73 Sempra Energy California Americas 33356 80 10036 131 1357 77 6 109 -2 DU
74 OAO Novatek Russia EMEA 11526 184 5292 187 3597 29 36 1 30 E&P
75 Centrais Eltricas Brasileiras SA Eletrobras Brazil Americas 79122 26 14323 103 1810 54 3 221 -0 EU
76 Polska Grupa Energetyczna SA Poland EMEA 17207 136 8232 150 1445 69 11 50 13 EU
77 Centrica plc United Kingdom EMEA 30450 88 35515 44 688 117 4 157 3 DU
78 Murphy Oil Corp Arkansas Americas 14138 163 27689 55 741 110 8 83 0 IOG
79 HollyFrontier Corp Texas Americas 10315 200 15440 91 1023 90 14 30 38 R&M
80 Consolidated Edison Inc New York Americas 39214 67 12938 111 1051 88 5 151 -2 DU
81 Plains All American Pipeline LP Texas Americas 15381 153 34275 47 730 112 6 109 4 S&T
82 Indian Oil Corp Ltd India Asia/Pacic Rim 38482 69 71288 24 740 111 3 218 12 R&M
83 Polski Koncern Naftowy Orlen SA Poland EMEA 17198 138 31324 51 692 116 6 119 10 R&M
84 CLP Holdings Ltd Hong Kong Asia/Pacic Rim 27610 96 11807 115 1197 82 5 132 19 EU
85 Turkiye Petrol Ranerileri AS Turkey EMEA 8124 236 22814 65 684 118 18 17 11 R&M
86 Yanzhou Coal Mining Co Ltd China Asia/Pacic Rim 15263 154 7394 162 1403 74 12 49 23 C&CF
87 EOG Resources Inc Texas Americas 24839 108 9007 137 1091 87 6 114 12 E&P
88 Cia Energetica de Minas Gerais Brazil Americas 18118 134 7670 160 1171 83 9 72 13 EU
89 Formosa Petrochemical Corp Taiwan Asia/Pacic Rim 15435 152 26713 57 751 108 5 132 -3 R&M
90 Enbridge Inc Canada Americas 33434 79 18888 80 965 95 4 196 6 S&T
91 Woodside Petroleum Ltd Australia Asia/Pacic Rim 22740 116 4802 191 1507 65 8 81 -8 E&P
92 TransCanada Corp Canada Americas 47698 53 8897 139 1487 67 4 196 2 S&T
93 MOL Hungarian Oil & Gas Co Hungary EMEA 21732 117 23258 64 669 121 4 157 15 IOG
94 PG&E Corp California Americas 49750 50 14956 95 844 98 3 217 1 DU
95 OJSC RusHydro Russia EMEA 24402 110 10900 125 1013 92 5 135 50 EU
96 Peabody Energy Corp Missouri Americas 16733 140 7974 153 1017 91 8 78 7 C&CF
97 FirstEnergy Corp Ohio Americas 47326 54 15772 90 885 96 3 224 6 EU
98 Tesoro Corp Texas Americas 9892 206 29927 53 546 142 10 64 2 R&M
99 Xcel Energy Inc Minnesota Americas 29497 91 10655 126 835 99 4 157 -2 EU
100 JSC KazMunaiGas Exploration Production Kazakhstan EMEA 10327 199 4833 190 1400 75 15 25 6 E&P
Platts
Rank
2012
Return on
invested capital
3-year
CGR%
Industry
code
101 Spectra Energy Corp Texas Americas 28138 95 5351 185 1159 85 6 125 2 S&T
102 CenterPoint Energy Inc Texas Americas 21703 118 8450 146 770 105 6 124 -9 DU
103 Talisman Energy Inc Canada Americas 24226 111 8266 147 776 104 5 135 -1 E&P
104 Federal Grid Co of Unied Energy System JSC Russia EMEA 34980 76 4233 208 1477 68 5 147 25 EU
105 Galp Energia SGPS SA Portugal EMEA 12721 176 21176 71 542 143 6 109 4 IOG
106 Williams Companies Inc Oklahoma Americas 16502 142 7930 154 793 101 7 103 -13 S&T
107 JSC Interregional Distribution Grid Companies Holding Russia EMEA 26425 101 19076 77 672 120 4 203 17 EU
108 DTE Energy Co Michigan Americas 26009 102 8897 139 711 115 5 151 -2 DU
109 GAIL (India) Ltd India Asia/Pacic Rim 8934 221 7713 159 778 103 12 42 21 GU
110 ONEOK Partners LP Oklahoma Americas 8947 220 11323 120 682 119 9 68 14 S&T
111 Tokyo Gas Co Ltd Japan Asia/Pacic Rim 23141 115 21780 69 572 136 3 218 2 GU
112 Canadian Oil Sands Ltd Canada Americas 8392 233 3772 219 1114 86 21 11 -5 E&P
113 Snam S.p.A. Italy EMEA 26492 100 4486 201 990 94 5 155 23 GU
114 CONSOL Energy Inc Pennsylvania Americas 12526 178 5991 180 632 125 9 67 9 C&CF
115 CPFL Energia SA Brazil Americas 13295 172 6190 175 742 109 7 103 10 EU
116 SSE plc United Kingdom EMEA 30631 87 49364 31 308 186 2 256 8 EU
117 Osaka Gas Co Ltd Japan Asia/Pacic Rim 18322 132 16075 89 561 138 4 202 -1 GU
118 Saudi Electricity Co Saudi Arabia EMEA 56912 40 8151 151 590 129 2 247 11 EU
119 The AES Corp Virginia Americas 45333 57 17274 85 458 158 1 267 4 IPP
120 China Yangtze Power Co Ltd China Asia/Pacic Rim 24883 107 3250 234 1210 80 5 146 30 IPP
121 Cairn India Ltd India Asia/Pacic Rim 9357 213 2076 264 1390 76 16 21 120 E&P
122 Showa Shell Sekiyu KK Japan Asia/Pacic Rim 15003 157 34408 46 287 192 4 182 -5 R&M
123 Progress Energy Inc North Carolina Americas 35059 74 8907 138 580 130 2 239 -1 EU
124 GS Holdings Corp South Korea Asia/Pacic Rim 8998 218 7331 165 668 122 8 76 -40 R&M
125 Ultrapar Holdings Inc Brazil Americas 6665 261 23600 63 412 171 8 91 20 S&T
126 ELETROPAULO-Metropolitana Eletricidade de Sao Paulo SA Brazil Americas 5221 299 4770 192 762 106 24 5 9 EU
127 Enbridge Energy Partners LP Texas Americas 11370 187 9110 135 520 147 5 141 -3 S&T
128 AGL Energy Ltd Australia Asia/Pacic Rim 9738 208 7103 166 561 139 7 98 9 DU
129 The Hong Kong & China Gas Co Ltd Hong Kong Asia/Pacic Rim 10963 192 2890 242 792 102 8 76 22 GU
130 Power Assets Holdings Ltd Hong Kong Asia/Pacic Rim 12206 180 1314 298 1169 84 11 52 -7 EU
131 Santos Ltd Australia Asia/Pacic Rim 15883 149 2541 249 756 107 6 114 -3 E&P
132 GD Power Development Co Ltd China Asia/Pacic Rim 28622 94 7852 156 573 135 2 243 45 IPP
133 Kunlun Energy Co Ltd Hong Kong Asia/Pacic Rim 10832 194 3272 233 723 113 8 88 70 E&P
134 China Resources Power Holdings Co Ltd Hong Kong Asia/Pacic Rim 21693 119 7822 157 573 133 3 221 31 IPP
135 Thai Oil Pcl Thailand Asia/Pacic Rim 4875 314 13130 110 467 156 11 50 2 R&M
136 Ameren Corp Missouri Americas 23645 112 7337 164 519 148 3 210 -2 DU
137 ONEOK Inc Oklahoma Americas 13697 167 14806 97 358 177 4 194 -3 GU
138 Polskie Gornictwo Naftowe I Gazownictwo SA Poland EMEA 11117 189 6736 170 476 154 6 125 8 IOG
139 Wisconsin Energy Corp Wisconsin Americas 13862 165 4486 200 513 150 6 125 1 DU
140 Kinder Morgan Inc Texas Americas 30717 86 8265 148 478 153 2 256 -12 S&T
141 Southwestern Energy Co Texas Americas 7903 240 2953 239 638 124 12 46 8 E&P
142 Companhia Paranaense de Energia Brazil Americas 9274 214 3771 220 561 137 8 81 12 EU
143 Huaneng Power International Inc China Asia/Pacic Rim 40441 66 20885 74 185 230 0 285 25 IPP
144 E.ON AG Germany EMEA 191485 13 142134 9 -2797 327 -3 309 9 DU
145 Datang International Power Generation Co Ltd China Asia/Pacic Rim 38344 70 11354 119 300 190 1 279 25 IPP
146 Penn West Petroleum Ltd Canada Americas 15171 155 2926 241 621 127 5 135 -10 E&P
147 Tullow Oil plc United Kingdom EMEA 10634 196 2304 259 649 123 8 80 21 E&P
148 OJSC Moscow United Electric Grid Co Russia EMEA 7502 244 3889 215 540 145 11 56 26 EU
149 Banpu Pcl Thailand Asia/Pacic Rim 7072 253 3533 226 631 126 11 55 30 C&CF
150 Shanxi Lu'an Environmental Energy Development Co Ltd China Asia/Pacic Rim 5431 294 3441 227 603 128 19 15 10 C&CF
Platts
Rank
2012
Return on
invested capital
3-year
CGR%
Industry
code
151 CMS Energy Corp Michigan Americas 16452 144 6503 173 413 170 4 184 -2 DU
152 Inner Mongolia Yitai Coal Co Ltd China Asia/Pacic Rim 4698 318 2664 245 863 97 20 12 21 C&CF
153 Korea Gas Corp South Korea Asia/Pacic Rim 31081 85 24593 60 157 245 1 284 7 GU
154 PT Adaro Energy Tbk Indonesia Asia/Pacic Rim 5659 282 3987 213 550 141 12 42 29 C&CF
155 Cheung Kong Infrastructure Holdings Ltd Hong Kong Asia/Pacic Rim 9898 205 525 325 998 93 10 57 13 EU
156 Sunoco Logistics Partners LP Pennsylvania Americas 5477 291 10905 124 259 200 9 69 2 S&T
157 Denbury Resources Inc Texas Americas 10184 202 2292 261 573 134 8 88 19 E&P
158 Shanxi Xishan Coal & Electricity Power Co Ltd China Asia/Pacic Rim 6071 274 4689 195 442 162 11 54 31 C&CF
159 Veolia Environnement SA France EMEA 63137 30 37136 41 -611 315 -2 300 -6 DU
160 Red Elctrica Corporacin SA Spain EMEA 10979 191 2074 265 577 132 7 103 14 EU
161 Tokyo Electric Power Co Inc Japan Asia/Pacic Rim 192892 12 66416 25 -9704 331 -9 326 -3 EU
162 Pacic Rubiales Energy Corp Canada Americas 5449 293 3381 230 554 140 14 31 80 E&P
163 Nexen Inc Canada Americas 19537 128 6260 174 385 176 3 218 -3 E&P
164 Korea Electric Power Corp South Korea Asia/Pacic Rim 117787 19 37573 40 -2909 329 -3 310 11 EU
165 Northeast Utilities Connecticut Americas 15647 151 4466 202 395 174 4 173 -8 EU
166 VERBUND AG Austria EMEA 14855 161 4882 189 442 163 4 187 1 EU
167 Neweld Exploration Co Texas Americas 8991 219 2471 252 539 146 8 85 4 E&P
168 Chubu Electric Power Co Inc Japan Asia/Pacic Rim 70112 29 30409 52 -1145 321 -2 302 -1 EU
169 Acciona SA Spain EMEA 25461 104 9267 134 253 203 1 267 -5 EU
170 Tauron Polska Energia SA Poland EMEA 8320 234 6066 178 357 178 6 119 EU
171 Kansai Electric Power Co Inc Japan Asia/Pacic Rim 93381 22 34905 45 -3008 330 -4 314 0 EU
172 PowerGrid Corp of India Ltd India Asia/Pacic Rim 16480 143 1805 274 578 131 4 163 22 EU
173 YTL Power International Bhd Malaysia Asia/Pacic Rim 11037 190 4591 198 427 168 5 155 51 DU
174 Yangquan Coal Industry (Group) Co Ltd China Asia/Pacic Rim 4385 327 4427 203 442 164 17 19 18 C&CF
175 Energy Transfer Equity LP Texas Americas 20897 122 8241 149 309 185 2 262 -4 S&T
176 Noble Energy Inc Texas Americas 16444 145 3568 225 453 161 4 187 -1 E&P
177 Manila Electric Co Philippines Asia/Pacic Rim 4950 310 6043 179 288 191 13 39 10 EU
178 Bharat Petroleum Corp Ltd India Asia/Pacic Rim 13622 168 37105 42 137 256 2 258 16 R&M
179 Origin Energy Ltd Australia Asia/Pacic Rim 26756 98 10389 128 187 229 1 273 8 IOG
180 NRG Energy Inc New Jersey Americas 26715 99 9079 136 188 227 1 270 10 IPP
181 SCANA Corp South Carolina Americas 13534 171 4409 204 387 175 4 182 -6 DU
182 Neste Oil Corp Finland EMEA 9109 216 17799 83 198 221 3 215 1 R&M
183 OGE Energy Corp Oklahoma Americas 8906 222 3916 214 343 180 6 119 -1 EU
184 NiSource Inc Indiana Americas 20708 125 5956 182 304 187 2 243 -12 DU
185 Exxaro Resources Ltd South Africa EMEA 4377 328 1479 289 720 114 23 10 -3 C&CF
186 Chugoku Electric Power Co Inc Japan Asia/Pacic Rim 35846 72 14667 100 31 288 0 289 0 EU
187 Whiting Petroleum Corp Colorado Americas 6046 275 1860 272 491 151 11 52 12 E&P
188 Edison International California Americas 48039 52 12760 113 -34 294 -0 292 -3 EU
189 Cimarex Energy Co Colorado Americas 5429 295 1758 278 518 149 15 29 -4 E&P
190 EQT Corp Pennsylvania Americas 8773 225 1640 284 480 152 8 91 1 E&P
191 Cosmo Oil Co Ltd Japan Asia/Pacic Rim 20797 124 38609 36 -113 298 -1 296 -3 R&M
192 The Abu Dhabi National Energy Co PJSC United Arab Emirates EMEA 31224 84 6585 171 203 218 1 282 13 DU
193 Pinnacle West Capital Corp Arizona Americas 13111 175 3241 237 328 181 4 163 0 EU
194 Electric Power Development Co Ltd Japan Asia/Pacic Rim 25034 106 8127 152 200 220 1 279 -2 IPP
195 NHPC Ltd India Asia/Pacic Rim 10554 197 1186 304 540 144 6 112 25 IPP
196 YTL Corp Bhd Malaysia Asia/Pacic Rim 15114 156 5748 184 324 182 2 236 41 DU
197 Pioneer Natural Resources Co Texas Americas 11524 185 2347 254 396 173 5 147 5 E&P
198 EnBW Energie Baden-Wuerttemberg AG Germany EMEA 44868 58 23610 62 -1086 320 -6 321 5 EU
199 Alliant Energy Corp Wisconsin Americas 9688 209 3665 221 302 188 5 143 0 DU
200 Concho Resources Inc Texas Americas 6850 256 1740 279 461 157 9 69 52 E&P
Platts
Rank
2012
Return on
invested capital
3-year
CGR%
Industry
code
201 Tenaga Nasional Bhd Malaysia Asia/Pacic Rim 23364 114 10085 130 156 246 1 273 9 EU
202 Cameco Corp Canada Americas 7595 242 2321 257 438 165 7 100 3 C&CF
203 Kyushu Electric Power Co Inc Japan Asia/Pacic Rim 54977 43 18724 81 -2066 325 -5 316 -0 EU
204 Encana Corp Canada Americas 33918 78 8467 145 128 258 0 285 -26 E&P
205 Tohoku Electric Power Co Inc Japan Asia/Pacic Rim 52105 45 20919 73 -2879 328 -8 323 -3 EU
206 Pepco Holdings Inc District of Columbia Americas 14910 160 5920 183 260 198 3 228 -10 EU
207 INA-Industrija nafte d.d. Croatia EMEA 5128 304 5047 188 302 189 8 91 3 IOG
208 Continental Resources Inc Oklahoma Americas 5646 283 1680 282 429 167 12 46 20 E&P
209 Integrys Energy Group Inc Illinois Americas 9983 203 4709 194 228 211 4 173 -30 DU
210 UGI Corp Pennsylvania Americas 6663 262 6091 177 233 208 5 135 -3 GU
211 ATCO Ltd Canada Americas 12123 181 3885 216 318 183 4 203 7 DU
212 Hindustan Petroleum Corp Ltd India Asia/Pacic Rim 14981 158 32400 50 31 289 0 287 13 R&M
213 China Longyuan Power Group Corp Ltd China Asia/Pacic Rim 14156 162 2539 250 414 169 3 210 24 IPP
214 Enagas SA Spain EMEA 9667 210 1401 296 457 159 5 129 -3 GU
215 Reliance Infrastructure Ltd India Asia/Pacic Rim 10750 195 4138 209 278 195 4 196 23 EU
216 Terna SpA Italy EMEA 15891 148 1998 268 410 172 3 210 11 EU
217 El Paso Pipeline Partners LP Texas Americas 6297 267 1425 293 472 155 8 83 10 S&T
218 Anadarko Petroleum Corp Texas Americas 51779 47 13882 105 -2649 326 -8 323 -0 E&P
219 Fortis Inc Canada Americas 13203 174 3648 222 310 184 3 224 -1 EU
220 QEP Resources Inc Colorado Americas 7443 246 3159 238 267 197 5 132 11 E&P
221 MDU Resources Group Inc North Dakota Americas 6556 265 4050 210 225 212 5 129 -7 DU
222 Grupa Lotos SA Poland EMEA 5980 277 8568 142 190 225 4 173 22 R&M
223 TECO Energy Inc Florida Americas 7322 250 3343 232 271 196 5 141 -0 DU
224 Ultra Petroleum Corp Texas Americas 4870 315 1102 311 453 160 13 40 0 E&P
225 Hellenic Petroleum SA Greece EMEA 9005 217 11659 116 143 252 2 245 -3 R&M
226 Linn Energy LLC Texas Americas 8000 239 1173 306 434 166 6 122 15 E&P
227 Huadian Power International Corp Ltd China Asia/Pacic Rim 23418 113 8512 143 12 290 0 289 22 IPP
228 Edison SpA Italy EMEA 19837 127 14336 102 -333 309 -2 306 4 IPP
229 TransAlta Corp Canada Americas 9502 212 2592 248 282 193 4 194 -5 IPP
230 National Fuel Gas Co New York Americas 5285 297 1779 276 258 201 9 73 -10 GU
231 Atmos Energy Corp Texas Americas 7283 252 4348 205 197 222 4 173 -16 GU
232 EVN AG Austria EMEA 8606 230 3419 228 238 206 4 196 4 EU
233 Qatar Electricity & Water Co Q.S.C Qatar EMEA 6175 271 1228 299 357 179 6 112 25 DU
234 PT Bumi Resources Tbk Indonesia Asia/Pacic Rim 7368 249 4001 212 221 214 4 187 6 C&CF
235 EDP - Energias do Brasil SA Brazil Americas 6626 263 2620 247 238 205 5 147 5 EU
236 Hawaiian Electric Industries Inc Hawaii Americas 9593 211 3242 236 138 255 4 165 0 EU
237 Sunoco Inc Pennsylvania Americas 11982 182 44610 32 -1528 323 -29 331 -2 R&M
238 Essar Energy Plc United Kingdom EMEA 16259 147 14905 96 -509 313 -5 315 R&M
239 NuStar Energy LP Texas Americas 5881 278 6575 172 181 231 4 203 11 R&M
240 Westar Energy Inc Kansas Americas 8683 227 2171 263 228 210 4 187 6 EU
241 Energen Corp Alabama Americas 5237 298 1458 290 260 199 7 102 -2 E&P
242 Esso SAF France EMEA 5197 302 19946 76 58 280 3 231 2 R&M
243 Acea SpA Italy EMEA 8289 235 4032 211 177 234 3 210 2 DU
244 Emera Inc Canada Americas 6740 259 2010 267 235 207 4 157 16 EU
245 Public Power Corp SA Greece EMEA 20849 123 6906 168 -187 302 -1 298 -2 EU
246 Alpiq Holding AG Switzerland EMEA 18197 133 13291 109 -1422 322 -11 327 -1 EU
247 Shenergy Co Ltd China Asia/Pacic Rim 5538 289 3586 224 223 213 4 165 21 IPP
248 Interconexin Elctrica SA E.S.P. Colombia Americas 14910 159 2443 253 188 226 2 258 11 EU
249 Shikoku Electric Power Co Inc Japan Asia/Pacic Rim 17074 139 7352 163 -116 299 -1 296 -2 EU
250 ARC Resources Ltd Canada Americas 5183 303 1187 303 279 194 7 100 -4 E&P
proved its overall ranking most, rising
from 232nd in 2010 to 172nd in 2011, a
gain of 60 places.
Other signicant moves include a
rise of 21 places for leading power pro-
ducer NHPC Ltd to 195th and amongst
the electric utilities Reliance Infra-
structure Ltd gained 17 places to come
215th in the overall top 250. Although
these represent the bright spots for -
nancial performance in 2011, 2012
may prove more challenging for In-
dias power generators. Faced by fuel
shortages, growing dependency on ex-
pensive imports and regulated domes-
tic retail electricity prices, the widely
reported blackouts in northern India
in July suggest 2011s performance
may prove hard to sustain.
The resilience of Indian companies
should, however, not be underestimat-
ed. A perhaps surprising entry at num-
ber 2 in the return on invested capital
(ROIC) rankings is Coal India Ltd with
an ROIC of 35.3%. A new entrant to
the rankings in 2010, when the compa-
ny listed, Coal India has posted strong
returns on invested capital in both
years, a remarkable achievement given
the challenges it faces. Dominating as
a near monopoly its domestic market,
Coal India is struggling to keep pace
with output targets, while its overall
protability is constrained by regulated
domestic coal prices, which is forcing it
to look abroad for new assets and also
to import more expensive coal.
In contrast to Indian advances, Ja-
pan saw two of its smaller electric
utilities leave the top 250. The num-
ber of Japanese companies in the list
fell from 18 to 16, and the average
ranking of those companies dropped
from 132.1 in 2010 to 142.7 in 2011.
Seven of the companies are electric
utilities, which showed a negative or
zero return on equity invested in the
Japanese scal year 2011, which ended
in March 2012.
The countrys power generation com-
panies continue to suffer from the af-
termath of the devastating earthquake
and tsunami that hit the country in
March 2011, and which resulted in the
countrys entire nuclear eet coming
off-line by May 2012. Without doubt
worst hit was Tokyo Electric Power Co
Inc, which has fallen to 161st in the
current rankings from 131st in the pre-
vious year.
However, other Japanese companies
have managed to improve their posi-
tions. Despite high crude prices and
an enormously competitive environ-
ment that saw a swathe of refinery
closures in the US and Europe, Ja-
pans biggest movers are both from
the oil refining and marketing sector.
Showa Shell Sekiyu KK was the big-
gest improver, gaining 43 places in
the overall top 250 rankings to come
122nd, while TonenGeneral Sekiyu
KK moved up an impressive 36 spots
to 45th.
3-year
CGR %
Platts
Rank
Rank Company State or country Industry
1 Pacic Rubiales Energy Corp Canada E&P 80.1 162
2 Concho Resources Inc Texas E&P 52.3 200
3 HollyFrontier Corp Texas R&M 38.1 79
4 Ecopetrol SA Colombia IOG 24.7 14
5 Continental Resources Inc Oklahoma E&P 20.2 208
6 Ultrapar Holdings Inc Brazil S&T 19.8 125
7 Denbury Resources Inc Texas E&P 19 157
8 YPF SA Argentina IOG 17.6 70
9 PPL Corp Pennsylvania EU 17.5 69
10 Emera Inc Canada EU 15.7 244
2. Fastest growing Americas companies.
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 22, 2012.
Top
Asia
Platts
Rank
2012
Return on
invested capital
Industry
code
Company State or country $ million Rank $ million Rank $ million Rank ROIC % Rank
1 9 PetroChina Co Ltd China 301261 4 310291 5 20889 6 10 65 IOG
2 12 China Petroleum & Chemical Corp China 179810 14 393585 3 11504 12 10 60 IOG
3 13 CNOOC Ltd Hong Kong 60370 34 37853 39 11037 13 23 7 E&P
4 16 China Shenhua Energy Co Ltd China 63011 31 32709 49 7176 18 14 31 C&CF
5 22 Oil & Natural Gas Corp Ltd India 40551 65 25623 59 4927 24 18 18 E&P
6 23 PTT Plc Thailand 44080 59 76321 22 3310 32 10 59 IOG
7 26 SK Innovation Co Ltd South Korea 30232 89 59012 28 2735 36 13 36 R&M
8 27 Reliance Industries Ltd India 57276 38 62757 26 3453 31 8 97 R&M
9 43 JX Holdings Inc Japan 83064 25 133142 13 2118 47 4 187 R&M
10 45 TonenGeneral Sekiyu KK Japan 13825 166 33238 48 1649 60 31 4 R&M
11 48 Coal India Ltd India 18722 131 10926 123 2587 37 35 2 C&CF
12 49 Inpex Corp Japan 38071 71 14734 98 2409 40 7 98 E&P
13 61 China Coal Energy Co Ltd China 25126 105 13790 106 1540 64 8 85 C&CF
14 62 NTPC Ltd India 27179 97 11371 118 1718 55 8 91 IPP
15 63 S-Oil Corp South Korea 11395 186 27545 56 1028 89 13 38 R&M
16 68 Idemitsu Kosan Co Ltd Japan 33300 81 53515 29 799 100 4 173 R&M
17 82 Indian Oil Corp Ltd India 38482 69 71288 24 740 111 3 218 R&M
18 84 CLP Holdings Ltd Hong Kong 27610 96 11807 115 1197 82 5 132 EU
19 86 Yanzhou Coal Mining Co Ltd China 15263 154 7394 162 1403 74 12 49 C&CF
20 89 Formosa Petrochemical Corp Taiwan 15435 152 26713 57 751 108 5 132 R&M
21 91 Woodside Petroleum Ltd Australia 22740 116 4802 191 1507 65 8 81 E&P
22 109 GAIL (India) Ltd India 8934 221 7713 159 778 103 12 42 GU
23 111 Tokyo Gas Co Ltd Japan 23141 115 21780 69 572 136 3 218 GU
24 117 Osaka Gas Co Ltd Japan 18322 132 16075 89 561 138 4 202 GU
25 120 China Yangtze Power Co Ltd China 24883 107 3250 234 1210 80 5 146 IPP
26 121 Cairn India Ltd India 9357 213 2076 264 1390 76 16 21 E&P
27 122 Showa Shell Sekiyu KK Japan 15003 157 34408 46 287 192 4 182 R&M
28 124 GS Holdings Corp South Korea 8998 218 7331 165 668 122 8 76 R&M
29 128 AGL Energy Ltd Australia 9738 208 7103 166 561 139 7 98 DU
30 129 The Hong Kong & China Gas Co Ltd Hong Kong 10963 192 2890 242 792 102 8 76 GU
31 130 Power Assets Holdings Ltd Hong Kong 12206 180 1314 298 1169 84 11 52 EU
32 131 Santos Ltd Australia 15883 149 2541 249 756 107 6 114 E&P
33 132 GD Power Development Co Ltd China 28622 94 7852 156 573 135 2 243 IPP
34 133 Kunlun Energy Co Ltd Hong Kong 10832 194 3272 233 723 113 8 88 E&P
35 134 China Resources Power Holdings Co Ltd Hong Kong 21693 119 7822 157 573 133 3 221 IPP
Reners in South Korea also proved
to be their countrys star performers.
SK Innovation Co Ltd gained a full 30
places to come 26th overall in the top
250, and in the R&M segment came
second only to the newly demerged
US company Marathon Petroleum
Corp. While SK Innovation was South
Koreas top mover, S-Oil Corp came a
close second, gaining 28 places to 63rd
overall.
The Korea Gas Corp also did well,
moving up from 176th in 2010 to 153rd
in 2011. Meanwhile back in Japan, Osa-
ka Gas Co Ltd also bucked the trend
in the gas sector by gaining 23 places
to come 117th, while in the E&P seg-
ment Inpex Corp put in a strong perfor-
mance to move from 76th place in 2010
to 49th in 2011.
However, some of Asia Pacics big-
gest movers come from further south.
Although it was a mixed picture over-
all for Southeast Asia, Indonesias PT
Asian companies in 2012 Top 250
Top
Asia
Platts
Rank
2012
Return on
invested capital
Industry
code
Company State or country $ million Rank $ million Rank $ million Rank ROIC % Rank
36 135 Thai Oil Pcl Thailand 4875 314 13130 110 467 156 11 50 R&M
37 143 Huaneng Power International Inc China 40441 66 20885 74 185 230 0 285 IPP
38 145 Datang International Power Generation Co Ltd China 38344 70 11354 119 300 190 1 279 IPP
39 149 Banpu Pcl Thailand 7072 253 3533 226 631 126 11 55 C&CF
40 150 Shanxi Lu'an Environmental Energy Development Co Ltd China 5431 294 3441 227 603 128 19 15 C&CF
41 152 Inner Mongolia Yitai Coal Co Ltd China 4698 318 2664 245 863 97 20 12 C&CF
42 153 Korea Gas Corp South Korea 31081 85 24593 60 157 245 1 284 GU
43 154 PT Adaro Energy Tbk Indonesia 5659 282 3987 213 550 141 12 42 C&CF
44 155 Cheung Kong Infrastructure Holdings Ltd Hong Kong 9898 205 525 325 998 93 10 57 EU
45 158 Shanxi Xishan Coal & Electricity Power Co Ltd China 6071 274 4689 195 442 162 11 54 C&CF
46 161 Tokyo Electric Power Co Inc Japan 192892 12 66416 25 -9704 331 -9 326 EU
47 164 Korea Electric Power Corp South Korea 117787 19 37573 40 -2909 329 -3 310 EU
48 168 Chubu Electric Power Co Inc Japan 70112 29 30409 52 -1145 321 -2 302 EU
49 171 Kansai Electric Power Co Inc Japan 93381 22 34905 45 -3008 330 -4 314 EU
50 172 PowerGrid Corp of India Ltd India 16480 143 1805 274 578 131 4 163 EU
51 173 YTL Power International Bhd Malaysia 11037 190 4591 198 427 168 5 155 DU
52 174 Yangquan Coal Industry (Group) Co Ltd China 4385 327 4427 203 442 164 17 19 C&CF
53 177 Manila Electric Co Philippines 4950 310 6043 179 288 191 13 39 EU
54 178 Bharat Petroleum Corp Ltd India 13622 168 37105 42 137 256 2 258 R&M
55 179 Origin Energy Ltd Australia 26756 98 10389 128 187 229 1 273 IOG
56 186 Chugoku Electric Power Co Inc Japan 35846 72 14667 100 31 288 0 289 EU
57 191 Cosmo Oil Co Ltd Japan 20797 124 38609 36 -113 298 -1 296 R&M
58 194 Electric Power Development Co Ltd Japan 25034 106 8127 152 200 220 1 279 IPP
59 195 NHPC Ltd India 10554 197 1186 304 540 144 6 112 IPP
60 196 YTL Corp Bhd Malaysia 15114 156 5748 184 324 182 2 236 DU
61 201 Tenaga Nasional Bhd Malaysia 23364 114 10085 130 156 246 1 273 EU
62 203 Kyushu Electric Power Co Inc Japan 54977 43 18724 81 -2066 325 -5 316 EU
63 205 Tohoku Electric Power Co Inc Japan 52105 45 20919 73 -2879 328 -8 323 EU
64 212 Hindustan Petroleum Corp Ltd India 14981 158 32400 50 31 289 0 287 R&M
65 213 China Longyuan Power Group Corp Ltd China 14156 162 2539 250 414 169 3 210 IPP
66 215 Reliance Infrastructure Ltd India 10750 195 4138 209 278 195 4 196 EU
67 227 Huadian Power International Corp Ltd China 23418 113 8512 143 12 290 0 289 IPP
68 234 PT Bumi Resources Tbk Indonesia 7368 249 4001 212 221 214 4 187 C&CF
69 247 Shenergy Co Ltd China 5538 289 3586 224 223 213 4 165 IPP
70 249 Shikoku Electric Power Co Inc Japan 17074 139 7352 163 -116 299 -1 296 EU
Adaro Energy Tbk managed to gain 84
places, moving up to 154th place and
grabbing the title of most-improved
ranking in Asia-Pacic. Although
up against tough competition from
China, the Indonesia coal miner also
managed to edge itself into the last
spot in the top ten in the C&CF seg-
ment, a major achievement compared
with 2010.
The power sector in Malaysia pro-
vided that country with some big im-
provers. YTL Power International Bhd
gained 36 places to come 173rd overall,
while YTL Corp Bhd jumped 31 spots
to 196th. In Thailand, it was again the
rening and marketing sector that gave
the country its star performer; Thai Oil
Pcl came in at 135th in 2011, up from
182nd in 2010.
But it was the emergent LNG giant
Santos Ltd and multi utility AGL En-
ergy Ltd in Australia that proved to be
the second and third biggest movers
Asian companies in 2012 Top 250 (continued)
in Asia-Pacic. The former jumped 76
spots to 131st position and the latter 71
places to 128th.
Russia Sustains Momentum
The representation of companies
from Europe, Middle East and Africa
in the Platts 2012 top 250 ranking
fell to 67 from 79 the year before. Two
Russian companies dropped from the
table, but only because Gazprom Neft
and Mosenergoboth full or nearly
full subsidiaries of OJSC Gazprom
have been incorporated within the
latters nancial results. The most se-
vere attrition came in other parts of
Europe, where ten companies left the
rankings as a result of mergers and the
stronger performance overall of com-
panies elsewhere.
Gas giant Gazprom slipped two
places in the rankings to fth, but re-
mains Russias and one of the worlds
leading energy companies. Overall,
Russian companies performed well on
both a global and regional basis. The
average ranking of the 13 companies
has improved to 55.4, with eight mov-
ing up and only one company losing
any signicant ground. OJSC RusHy-
dro was the countrys best improver,
gaining 68 places to come 95th, ow-
ing to a sharp jump in prots despite
lower revenues, which also improved
its ROIC.
Independent gas company OAO No-
vatek, which has risen in the rankings
progressively in recent years and has
just signed a raft of new gas supply
agreements, jumped 30 places to 74th.
In terms of ROIC, the company came
not simply rst in Russia but in the
world, posting a 36% return. JSC Inter-
regional Distribution Grid Companies
Holding also put in a strong perfor-
mance in the overall rankings, moving
up 26 places to 107th.
State oil producer Rosneft Oil Co
again proved the top performer
amongst the countrys oil majors,
placing 10th in the overall rankings,
followed closely by OJSC Lukoil Oil
Co at 11th. Both slipped one place
from last year, but perhaps only be-
cause of the re-emergence of BP in
the top ten. Surgutneftegaz was top
performer in terms of improvement
in the oil and gas sector, jumping 15
places from 2011 to secure itself a po-
sition in the top 20 energy companies
globally. OAO Tatneft and JSOC Bash-
neft also improved their standings,
while oil pipeline monopoly OAO AK
Transneft moved up an impressive 16
places to 25th.
OAO TNK-BP Holding claimed sec-
ond place in terms of ROIC, posting
32%, which also meant it came third by
this measure in the entire top 250. The
companys revenues jumped in 2011
to $53,404 million from $40,280 mil-
lion in 2010, while its prots increased
to $9,098 million from $6,540 million.
Overall, TNK-BPs performance earned
it an extra ve places in the overall
rankings, moving it into the top 20 en-
ergy companies worldwide.
Industry Company Country Platts Rank 2012
IOG PetroChina Co Ltd China 9
E&P CNOOC Ltd Hong Kong 13
C&CF China Shenhua Energy Co Ltd China 16
R&M SK Innovation Co Ltd South Korea 26
IPP NTPC Ltd India 62
EU CLP Holdings Ltd Hong Kong 84
GU GAIL (India) Ltd India 109
DU AGL Energy Ltd Australia 128
3. #1 in Asia by industry.
All rankings are computed from data assessed on June 22, 2012.
Industry Company Country 3-year CGR % Platts Rank 2012
E&P Cairn India Ltd India 119.8 121
DU YTL Power International Bhd Malaysia 51.2 173
IPP GD Power Development Co Ltd China 44.9 132
R&M Reliance Industries Ltd India 33.3 27
C&CF Shanxi Xishan Coal &
Electricity Power Co Ltd
China 31.1 158
IOG PetroChina Co Ltd China 23.2 9
EU Reliance Infrastructure Ltd India 23.2 215
GU The Hong Kong & China Gas
Co Ltd
Hong Kong 22.0 129
4. Fastest growing Asian companies by industry.
Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. All rankings are computed from data
assessed on June 22, 2012.
North America
North Americas stellar list of per-
formers remains pretty much the same
at the top end of the rankings, led by
global number one, Exxon Mobil Corp,
but the real shift in the regions repre-
sentation came further down the list.
The total number of North American
companies fell in last years rankings
to 84 from 91 the year before. But this
year, North American companies have
come back in force, with a total of 102
companies in the top 250. Six names
have slipped from the list, but there
were 23 new entrants and returnees.
Of these, reecting the strength of oil
prices in 2011, 16 were in oil and gas.
These included ten E&P, four rening
and marketing, and two storage and
transportation companies. Of the oth-
ers, six were utilitiesfour electric, one
diversied and one gaswhile the nal
new North American entrant was an
IPP. Canada provided ve of the new
entrants and the United States the oth-
er 18. Texas alone accounted for nine,
all in the oil and gas segments.
South America
Colombias national oil company
Ecopetrol SA has grabbed the highest
ranking amongst South American en-
ergy companies for the rst time, push-
ing long-time record holder Brazils
Petrobras into second place. The Co-
lombian oil company rst entered the
Platts rankings in 2009 at 30th, slipped
the next year to 34th, but has since
made signicant headway on the back
of strong gains in crude output.
Ecopetrol was ranked 23rd in 2010
and has now moved into the top 20
overall to become the 14th highest
ranked company globally. Petrobras, by
contrast, slipped six places in the rank-
ings to 18th.
A further oil and gas success for Co-
lombia was Canada-listed Pacic Rubia-
les Energy Corp. The company, which
operates mainly in Colombia, is a new
entrant to the Platts top 250 rankings
and posted ROIC of 14%, placing it 31st
by that measure and 162nd overall.
The number of South American
companies represented in the top 250
fell from 17 to 11 as a swathe of Chil-
ean, Brazilian and Colombian electric
utilities slipped from the list. Others
moved down, but Interconexion Elec-
trica SA E.S.P. of Colombia became a
new entrant at 248th. Centrais Eletri-
cas Brasileiras SAEletrobras gained 4
places to place 75th.
However, the biggest mover across
the continent was Brazils Companhia
Paranaense de Energia which jumped
19 places to 142nd. Another notable
strong performer was oil and gas stor-
age and transportation company Ultra-
par Holdings Inc. The company gained
nine places to move into 125th position
in what represents a succession of up-
ward moves since the company entered
the rankings at 202nd in 2009.
3-year
CGR %
Platts
Rank
Rank Company Country Industry
1 JSOC Bashneft Russia E&P 63.3 56
2 OJSC RusHydro Russia EU 49.9 95
3 OAO AK Transneft Russia S&T 34.6 25
4 OAO Novatek Russia E&P 30.5 74
5 OJSC Moscow United Electric Grid Co Russia EU 25.6 148
6 Qatar Electricity & Water Co Q.S.C Qatar DU 25.3 233
7 Federal Grid Co of Unied Energy System JSC Russia EU 24.7 104
8 Snam S.p.A. Italy GU 23.4 113
9 Grupa Lotos SA Poland R&M 21.5 222
10 Tullow Oil plc United Kingdom E&P 20.7 147
5. Fastest growing EMEA companies.
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 22, 2012.
Oil to the Fore
Throughout the foregoing regional
analysis it is apparent that the oil and
gas sector extended its lead-ranks com-
mand of the worlds top 250 energy
companies in 2011, and a single fact
does much to explain why. The average
price for the international Dated Brent
crude marker was $111.26/barrel.
That may not sound much when set
against the nancial panic of 2008,
which saw Dated Brent soar momen-
tarily to a record $144.23/b. But prots
over the year depend on 365 days of
production, rather than headline-grab-
bing price spikes.
Contrast the average price for 2011
with that of 2008. In 2008, the aver-
age price of Dated Brent was $97.26/b,
then a record. In 2011, average crude
prices were 14.4% higher than 2008,
and 39.9% up on 2010.
Given price trend differences, no oth-
er energy sector came close to match-
ing oil and gas for revenues and prots.
The revenue and prot growth of the
top ten companies in 2011all of them
in oil and gasstands apart, with the
companies showing $2.6 trillion in rev-
enue, up 21.8% on 2010 and 11.6% up
on the former record year of 2008.
Prots showed a similar noteworthy
year-on-year rise. At $238 billion, the
top ten companies saw their prots ad-
vance 28.5% from the previous year
and exceed the 2008 level by 11.3%.
The higher plateau in oil prices also
had an impact on the companies asset
valuations, as these are based primarily
on hydrocarbon reserves. The top tens
asset value in 2011 was $2.4 trillion, up
8.7% from 2010 and 28.7% higher than
in 2008.
Looking beyond the top 10 to the
top 50 and the dominance of the oil
and gas sector becomes even clearer. In
3-year
CGR %
Platts
Rank
Company
1 Cairn India Ltd 119.8 121
2 Pacic Rubiales Energy Corp 80.1 162
3 Kunlun Energy Co Ltd 69.6 133
4 JSOC Bashneft 63.3 56
5 Concho Resources, Inc 52.3 200
6 YTL Power International Bhd 51.2 173
7 OJSC RusHydro 49.9 95
8 GD Power Development Co Ltd 44.9 132
9 YTL Corp Bhd 41 196
10 CNOOC Ltd 38.5 13
11 HollyFrontier Corp 38.1 79
12 OAO AK Transneft 34.6 25
13 Reliance Industries Ltd 33.3 27
14 China Resources Power Holdings Co Ltd 31.4 134
15 Shanxi Xishan Coal & Electricity Power Co Ltd 31.1 158
16 OAO Novatek 30.5 74
17 Banpu Pcl 30.5 149
18 China Yangtze Power Co Ltd 30.2 120
19 PT Adaro Energy Tbk 28.7 154
20 OJSC Moscow United Electric Grid Co 25.6 148
21 Qatar Electricity & Water Co Q.S.C 25.3 233
22 Huaneng Power International Inc 25.2 143
23 Datang International Power Generation Co Ltd 25.1 145
24 Ecopetrol SA 24.7 14
25 Federal Grid Co of Unied Energy System JSC 24.7 104
3-year
CGR %
Platts
Rank
Company
26 NHPC Ltd 24.7 195
27 China Longyuan Power Group Corp Ltd 23.6 213
28 China Shenhua Energy Co Ltd 23.4 16
29 Snam S.p.A. 23.4 113
30 PetroChina Co Ltd 23.2 9
31 Reliance Infrastructure Ltd 23.2 215
32 Yanzhou Coal Mining Co Ltd 23 86
33 The Hong Kong & China Gas Co Ltd 22 129
34 PowerGrid Corp of India Ltd 21.9 172
35 Huadian Power International Corp Ltd 21.8 227
36 Grupa Lotos SA 21.5 222
37 GAIL (India) Ltd 21.1 109
38 Shenergy Co Ltd 20.9 247
39 Tullow Oil plc 20.7 147
40 Inner Mongolia Yitai Coal Co Ltd 20.6 152
41 China Petroleum & Chemical Corp 20.2 12
42 Continental Resources Inc 20.2 208
43 China Coal Energy Co Ltd 19.8 61
44 Ultrapar Holdings Inc 19.8 125
45 CLP Holdings Ltd 19.1 84
46 Denbury Resources Inc 19 157
47 Yangquan Coal Industry (Group) Co Ltd 18.3 174
48 YPF SA 17.6 70
49 PPL Corp 17.5 69
50 JSC Interregional Distribution Grid Companies Holding 16.8 107
6. Top 50 fastest growing companies.
Fastest Growing is based on a 3 year compound growth rate (CGR) for revenues. All rankings are computed from data assessed on June 22, 2012.
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2010, 16 electric and diversied utilities
gured in the top 50, but in 2011 only
eight were left. All ve that made the
top 30 in 2010 have sunk to the latter
regions of the top 50. Gains were evi-
dent across the board in oil and gas, not
just from integrated oil and gas compa-
nies and those focused on exploration
and production, but also in the rening
and marketing and in the transporta-
tion and storage segments. All served to
edge out the utilities.
While oil and gas companies led, coal
suppliers followed them up the rank-
ings buoyed by high international and,
in cases, domestic prices. The most
notable aspect of the C&CF segment
in 2011 was that, almost without ex-
ception, each company in the top ten
improved their position signicantly
in the overall 250 rankings, indicating
the strong performance in the segment
relative to many other parts of the en-
ergy industry.
The leaders in the C&CF segment re-
ected above all the continued strong
growth of the Chinese coal industry.
Number one in the rankings, as in the
previous year, was China Shenhua En-
ergy, while in all China had ve of the
companies in the top ten. Coal India
came in second, while there were also
a Thai and an Indonesian company
and two US miners, demonstrating the
Asian dominance of the sector.
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2012 Top250RUKN Insight

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www.platts.

com November 2012

www.platts.com November 2012

MangalaLargest onshore discovery in India since 1985,

Responsible for 4 out of 8 signicant discoveries in

KG-ONN-2003/1 Block discovery is the largest onshore

Built the worlds longest continuously heated and

First company in the world to discover hydrocarbons

Potential resource for the Rajasthan block now

Options for the Future Energy Mix

Financing Tomorrows Energy Needs

Keeping the Door to 2C Open

Connecting the Dots: EnergyWaterFood Nexus

Asia Future Energy Forum23 to 24 October

Asia Smart Grid23 to 24 October

Downstream Asia24 to 25 October

EMART Asia23 to 24 October

PV Asia Pacic Expo23 to 25 October

Gas Summit Asia24 to 25 October

family of products from Dow Electrical & Telecommunications

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