UPI Energy Watch WASHINGTON, (UPI) Dec. 3 , 2004 -
Vice chairman of the China National Coal Association, Pu Hongjiu, said market forces should set coal prices instead of the government. Pu added that current government coal pricing mechanisms distort coal prices and cannot reflect its value. China consistently suffers electric power shortages. Most of their electricity plants are generated by thermal power. Although Chinese output of coal increased 19.1 percent in 2003, government pricing has left most coal companies in difficulties. According to the statistics of the China National Coal Association, the profit margin of net assets of the coal industry averaged 2.57 percent from 1998 to 2003. In 1998 and 1999, the profit margin was negative; even in 2003, the industry's best year, the industry's profit margin was 6.04 percent, only half of the overall level of the country's industries. According to the statistics from China Coal Industrial Association, leading state mines sold coal to power plants at an average price of $18.80 per ton in late September, a price nearly one-third less than the best price market deals. Market-regulatory mechanisms can bring reasonable prices and sound profit margins for mines, said Peng Jianxun, chairman of Datong Coal Mine Group Co. Ltd., a leading coal company in China. Peng said, "We, the coal companies, hope that the government will open the price."
ChevronTexaco Corp. is building a hydrogen dispensing station in Chino, Calif., for fueling experimental cars. ChevronTexaco, the United States' second-largest oil company, has started exploring hydrogen after winning a federal contract in early 2004 to build as many as six hydrogen-fueling stations to demonstrate how such stations would work. The Chino station will power experimental cars from Hyundai Motor Co. Another station will be built in Oakland for AC Transit for three hydrogen-powered buses, which will enter service in the fall of 2005. The stations will make their own hydrogen on the premises, extracting hydrogen out of natural gas. Greg Vesey, president of ChevronTexaco Technology Ventures said, "We look to natural gas as a product we're going to be producing for a long time, so this fits in with the natural gas strategy." Extracting hydrogen from natural gas emits carbon dioxide as a byproduct. In 2005, the federal government will spend nearly $228 million on hydrogen research and demonstration projects, much in collaboration with the private sector. In addition to ChevronTexaco, Shell and ConocoPhillips have contracts with the Department of Energy to test hydrogen technologies. In October, BP opened a hydrogen-fueling station at Los Angeles International Airport.
The Czech power utility CEZ has asked the government's Anti-Monopoly Office to annul a provision requiring the sale of its majority stake in the North Bohemian regional power distributor Severoceska energetika. In 2003, CEZ merged with the country's eight regional power distributors. The Anti-Monopoly Office approved CEZ's merger with the understanding that CEZ would sell the minority stakes it gained in JCE, JME and PRE distributors and its majority stake in one of the five it acquired. CEZ subsequently chose to sell Severoceska energetika. The deadline for the sale is March 2005. CEZ claims the majority stake in Severoceska energetika is likely to be acquired by a stronger European company, which would "not contribute to the development of the market." CEZ is Europe's 9th biggest energy company, controlling 2 percent of the market. CEZ owns 51 percent of Severoceska energetika; its other major shareholders are Envia Mitteldeutsche Energie AG (29.16 percent) and E.ON Czech Holding AG (5.92 percent). During the period January to September 2004, Severoceska energetika's net profit rose by $15.92 million to $28.74 million. The Czech government holds a 67.6 percent stake in CEZ.
The 24-megawatt Khador GES hydroelectric station began operation in Georgia's Pankisi Gorge Georgia on Nov. 20. The Sichuan Electric Power Import and Export Co. is the project's contractor and major shareholder, with an investment of about $30 million. The Khadori hydropower project is China's biggest investment in Georgia and Sichuan Electric Power Import and Export's first overseas investment. Sichuan Electric Power Import and Export will operate the station for 25 years as specified in the contract, with financial returns primarily from power generation. If the power station turns out to be profitable after the 25-year contract period expires, Sichuan Electric Power Import and Export may opt to retain its ownership. Sichuan Electric Power Import and Export has two additional overseas build-operation-ownership projects, both in Pakistan -- one for the construction of a transformer substation and the other for building a power grid.
Midland Resources Holding Ltd. will sell Electric Networks of Armenia -- known as ArmElNet -- Armenia's national electricity distribution company. Among the potential buyers is Russia's Unified Energy System. ArmElNet General Director Yevgeny Glandunchuk said, "The problem is in the price which buyers might offer." Midland Resources Holding has not received any offers yet and Glandunchuk believes that it could take a year to sell the network. Glandunchuk said that a company purchasing ArmElNet now could be safe in the knowledge that the outlay would be recouped in eight years. Midland Resources has the right to sell 25 percent of ArmElNet on its own and needs approval from the Armenian government to sell its remaining 75 percent. Midland Resources bought ArmElNet for $12.15 million in November 2002, pledged an additional $27.99 million to clear ArmElNet's debts.
SK Corp, South Korea's biggest oil refiner, is establishing a $30 million petrochemical joint venture with Chinese oil major Sinopec Corp. in an effort to increase its presence in China. SK, which controls nearly a third of South Korea's oil market, has been attempting to expand its business in China to overcome a static domestic market. SK, and Sinopec Corp. are setting up a 50-50 joint venture to build a solvent plant in Shanghai.
Closing oil prices, Friday, 3 p.m. London
Brent crude oil: $39.41
West Texas intermediate crude oil: $42.64
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