Energy Industry Review - February 2019 by Energy Industry Review

COMMENT

A world premiere First-ever International Day of Education

Lavinia Iancu CEO and Publisher

or the first time this year marks a world premiere on January 24: First-ever International Day of Education, which was proclaimed by the United Nations General Assembly last year in celebration of the role of education for peace and development. UNESCO is calling on countries to increase political commitment to education as a force for inclusion driving the achievement of all the sustainable development goals. European leaders also pledge support for universal education that plays a crucial role in resolving the challenges humanity faces. “Only through education will we succeed in eradicating poverty, fighting climate change, and achieving a fairer society enabling people to develop their own projects,” their statement shows. We should not forget that education is a human right for everyone, wherever they live. Moreover, compulsory education should be free everywhere. Education should benefit each individual and strengthen the respect for human rights and fundamental freedoms. In Europe, the first principle of the European Pillar of Social Rights recalls the right to quality and inclusive education, training and lifelong learning for everyone. The Commission is advancing work to build a European Education Area by 2025 to enable all young people to receive the best education and training, and to create a sense of belonging. In addition, the EU’s flagship Erasmus programme is more successful, inclusive and international than ever before. In 2017, Erasmus+ provided support for almost 800,000 people to study, train or volunteer abroad, which is a record. Unfortunately, Romania ranks 44th in the international ranking 2018 Social Progress Index (SPI), conducted by the Social Progress Imperative 3

non-profit organization with the support of Deloitte. Although it went up from the 51st place in 2014, Romania was surpassed by all EU member states in the latest edition of the ranking (2018). The SPI measures people’s quality of life and the well-being of society from 146 countries, analysing three dimensions using indicators covering basic human needs (nutrition and basic medical care, water and sanitation, shelter, personal safety), foundations of well-being (access to basic education, access to communications and information, health and well-being, environmental quality) and opportunity (personal rights, personal freedom and choice, inclusiveness, access to advanced education). The scores registered for each indicator analysed by SPI are compared to the ones of 15 other states registering a similar GDP per capita (including Bulgaria, Croatia, Latvia, Greece, Belarus, Kazakhstan, Turkey or Iran). According to the scores, Romania performs weaker than the 15 states with a GDP per capita similar on chapters like ‘water and sanitation, access to quality medical care, access to advanced education, life expectancy of people over 60 or social inclusion’. Last year, Norway, Iceland and Switzerland were the world’s best performers. Among the Central and Eastern European countries, Slovenia (22) had the best performance, followed by the Czech Republic (26), Estonia (27), Lithuania (31), Poland (32), Slovakia (35), Hungary (36), Croatia (37), Latvia (39), Bulgaria (40) and Romania (44). While the EU is committed to investing in more and better education within the Union and worldwide, Romania needs to do more in terms of setting up a long-term strategy to encourage young people not only to study in Romania but to contribute to the country sustainable development.

Content Nanotechnology and alternative energies

Opinion A significant nanotechnological development has already been observed regarding the production of photovoltaic energy, the transformation of solar light into electricity,.

Government Emergency Ordinance 114/2018

Opinion The author evaluates exclusively the potential impact of the GEO 114/2018 in the energy field.

Gas suppliers in Romania risk insolvency

Gas operators will face the payment of 4% of the turnover achieved in 2018, which will determine the insolvency of about 80% of gas suppliers according to their financial data posted in 2017.

Opinion There are a few good news, some bad and a lot of very bad news.

Interview

Opinion

Stranger things in energy

Historical records and prospects for 2019

Hidroelectrica is leader in electricity production in Romania and the main supplier of technological services necessary in the National Power System (NPS), being a vital company for national energy security. The President of the Management Board Bogdan Nicolae Badea details the restructuring and streamlining process recently underwent by the company, as well as its prospects for the following period.

SGC project - New developments

Oil & Gas

Romgazâ&#x20AC;&#x2122;s strategic objectives

Oil & Gas Exploration works for identifying new reservoirs, the Iernut investment project, acquisition of alternative energy sources and expanding into other markets.

BSOG moving forward with the MGD Project

Oil & Gas

The Southern Gas Corridor project aims to increase and diversify European energy supply by bringing gas resources from the Caspian Sea to markets in Europe.

BSOG have approved the Final Investment Decision to proceed with the USD 400 million Midia Gas Development Project offshore Black Sea.

A tale of two words

Metals & Mining Air quality and climate policies, coal divestment campaigns, phase-out announcements, declining costs of renewables and abundant supplies of natural gas are all putting pressure on coal. As a result, coal’s contribution to the global energy mix is forecast to decline slightly from 27% in 2017 to 25% by 2023.

Key issues to watch in 2019 and beyond

Analysis

Romania’s environmental priorities

With 2018 in the rear-view mirror we are left wondering what comes next in terms of economic growth, labour market conditions, adapting policies to green requirements in order to mitigate climate change, breakthrough technologies in industry, digitalization and Europe’s most important issues to watch out for in 2019.

Environment Deputy Prime Minister and Environment Minister Gratiela Gavrilescu on January 21 presented in the plenary of the European Parliament’s Committee on Environment, Public Health and Food Safety (ENVI) the environmental priorities of the Romanian Presidency of the Council of the European Union.

Hydrogen generation

Environment When hydrogen burns and combines with oxygen, it can produce electricity that delivers zero carbon dioxide emissions, only water and heat. This seemingly perfect marriage has had the energy industry and environmentalists alike excited about hydrogen’s potential as a clean fuel alternative for generating electricity.

Romania at the IRENA General Assembly

Event

Batteries to save the day? Power

We discuss the future of energy storage based on new studies on lithium-ion batteries and technological breakthroughs in the form of water-fuelled batteries to be implemented come 2020, all from the perspectives of feasibility and cost. 5

A session of the IRENA General Assembly took place during 11-13 January, in Abu Dhabi, where Romania was represented by a delegation of the Ministry of Energy, headed by State Secretary Iulian-Robert Tudorache. Several ministerial debates were organized on the side-lines of the event, on universal access to electricity, sustainable development and transformation through innovation of the energy system.

ACCELERATED NEGOTIATIONS FOR BUILDING A NEW ENERGY GROUP AT ROVINARI POWER PLANT

Connect on Google+ +EnergyIndustryReview

Join us on Linkedin Energy Industry Review Publisher: Lavinia Iancu Business Development Manager: Marius Vladareanu

Photo by Valentin Matei

Scientific Board: President: Prof. Niculae Napoleon Antonescu PhD Members: Prof. Lazar Avram PhD; Assoc. Prof. Marius Stan; Prof. Ionut Purica PhD; Alexandru Patruti PhD Senior Editor: Daniel Lazar Journalists: Adrian Stoica, Vlad-Adrian Iancu Digital Manager: Justin Iancu

ccording to the Energy Strategy of Romania for the period 2019 - 2030, realization of the 600 MW energy group at the Rovinari Power Plant is considered a strategic investment of national interest, in order to consolidate the national energy market and the diversified energy mix, by capitalizing on the primary energy resources and stimulating domestic investment to provide equipment and materials. The new group will be a highperformance generation unit, the facility being provided with the best available techniques for reducing particulate matter, NOx and SO2 emissions, with the possibility of adding CO2 capture, transport and geological storage technology, to comply with the regulations in force and to meet the requirements for limiting the emissions of pollutants.

The energy group will use about 5 million tons of lignite annually and will generate about 4,000 jobs during the implementation of the project. The investment was estimated at approximately EUR 1 billion. Negotiations are currently under way to conclude the superficies and coal supply agreements, which are priorities for this year. Oltenia Energy Complex was selected to set up the IPP-type company, while China Huadian Engineering was selected to make the investment following an international tender held in March 2012. The Chinese company is active in the field of design and production of equipment for thermal power plants, hydro power plants, wind power plants, biomass plants, solar power plants, and also in the field of production of equipment for environmental protection. 7

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NEWS

OFFSHORE SERVICE MARKET GROWTH TO OUTPACE SHALE

ystad Energy forecasts offshore spending will outgrow spending on onshore shale activities this year. Service companies exposed to the offshore subsea market and the maintenance, modifications and operations (MMO) sector are set to benefit from this trend reversal. At current oil price levels, spending on land rigs, fracking and other services for the shale industry is likely to stay essentially flat in 2019. The offshore service market, too, will feel the effects of the recent oil price slide, but this sector is nevertheless projected to grow by a robust 4% this year, according to Rystad Energy forecasts.

“Many would expect offshore spending to be cut as drastically as shale, but offshore budgets were at a 10-year low last year, after four years of intense cost focus, and from that level you don’t need much additional activity or inflation to drive up the market,” Rystad Energy head of oilfield services research Audun Martinsen says. Since oil prices fell in the fourth quarter of 2018 and the oil market outlook for 2019 appeared more bearish, shale budgets for this year have been cut drastically to compensate for the anticipated loss of revenues. “We saw the tendency already last month that the shale service market started to hit the brakes. The number of

fracked wells per day dropped from an average of around 50 wells per day to 44 wells per day, and frack service pricing continued to fall in the fourth quarter of 2018. For the full year of 2019 we expect more or less the same number of wells completed, at around 20,000 wells, and we do not anticipate seeing utilization returning to the levels as seen in early 2018,” Martinsen mentions. Rystad Energy expects the uptick in offshore spending to be driven by exploration and greenfield projects. In addition, operational expenditure (opex) budgets will likely swell thanks to cost inflation, more fields coming on stream, and a build-up of work that needs to be completed.

OPEN LETTER FROM ACER FOR MARKET PARTICIPANTS

he European Union Agency for the Cooperation of Energy Regulators (ACER) published on January 8 an Open Letter on the Withdrawal of the United Kingdom from the European Union and implications on the registration of market participants and data collection under Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT). ACER is issuing this open letter in order to raise awareness of all market participants on the importance to prepare for the withdrawal of the United Kingdom (UK) from the European Union.

The European Union and the UK reached a political agreement on a Withdrawal Agreement. If ratified, this Withdrawal Agreement will provide the basis for a smooth and orderly withdrawal of the UK from the European Union. The Withdrawal Agreement, as endorsed by the European Council, can be found on the European Commission Website, along with the Political Declaration agreed between the European Union and the UK on the future relationship. “However, as part of the Agency’s contingency preparations, we consider that it is timely to convey to European Union’s Market Participants, and relevant UK stakeholders, how the Agency will 10

approach issues relating to wholesale energy market integrity and transparency in the event that the Withdrawal Agreement is not ratified and, therefore, that the UK leaves the European Union on 29 March 2019 without such an Agreement,” the document reads. The purpose of the open letter is to give guidance to national regulatory authorities and to inform market participants and the wider market about the views of the Agency with regard to certain repercussions on the implementation of REMIT of the withdrawal of the UK from the European Union on 29 March 2019, in case this were to happen without a ratified Withdrawal Agreement.

Image: ww.lng-wilhelmshaven.com

EXXONMOBIL AND UNIPER INK HOA ON REGASIFICATION CAPACITY IN FSRU PROJECT WILHELMSHAVEN

xxonMobil Gas Marketing Europe Limited and Uniper SE have inked a preliminary agreement for future LNG supplies to a new import terminal in Wilhelmshaven, Germany’s first LNG terminal. It will consist of floating storage and regasification (FSRU) facilities and has already attracted the interest of several LNG suppliers, including the United States and Qatar. “The Heads of Agreement (HOA) is an important step towards the realization of the Wilhelmshaven FSRU project. The FSRU will provide LNG companies from the US, but also other countries from around the world with the opportunity to deliver LNG into the German and European market. This will increase security of supply for customers at competitive price levels. The FSRU technology allows us to realize the project fast and in the most economical way,” Keith Martin, Chief Commercial Officer of Uniper SE, says. Uniper plans to enable the FSRU at their site in Wilhelmshaven, Germany. The FSRU has a planned send-out capacity of 10 bcm/a and an LNG storage

capacity of around 263,000 m³. The facility could be in operation as early as the second half of 2022. The project benefits from the existing site in Wilhelmshaven where required infrastructure is already in place. Wilhelmshaven is the only German deep-water port and can be reached without any tidal constraints. In addition, the favorable location of Wilhelmshaven with regard to the existing pipeline and gas storage infrastructure supports the realization of the project. Uniper is also expanding its LNG business activities in other areas: The company will be supplying up to 1 million tons of LNG from the US to southwestern Europe over the coming three years. The relevant agreements were concluded recently. Uniper is drawing on LNG export volumes from Freeport in the US. An agreement from 2015 grants Uniper the right to export approximately 0.9 million tons of LNG (on a ‘free-onboard’ basis) from the US for a period of twenty years. Since Freeport LNG aims to start initial LNG deliveries in the second half of this year, Uniper has already begun worldwide marketing of the LNG of this agreement. 11

NEWS

ENEL X BECOMES DEMAND RESPONSE LEADER IN POLAND

nel X, the Enel Group’s advanced energy services business line, became Poland’s 2021 – 2023 demand response leader, with around a 70% share in that segment of the country’s new Capacity Market over the period, following the awarding of 546 MW of demand response capacity for 2023 as well as last month’s awards of 446 MW for 2021 and 546 MW for 2022. These MWs were awarded in the first three capacity market auctions ever to be held in Poland. “With these latest awards, we are boosting our global demand response portfolio as well as achieving a leadership position in Poland’s promising market. Our experience with various demand response markets around the world gives

us the confidence to state that Poland’s capacity market can be both a costeffective solution for the electricity grid and a fruitful new business opportunity for the country’s C&I energy consumers. Demand response and, more generally, the participation of the demand side in energy markets, continue to play a central role in all power systems striving for costefficiency and faster decarbonization,” Francesco Venturini, Head of Enel X, commented. Enel X started providing its first demand response services in the Polish market in 2017. In Poland, demand response is increasingly contributing to the security of energy supplies. In 2023, demand response will account for over 3% of contracted capacity in the country’s

capacity market. Demand response programmes are intended to encourage end users to adjust their power consumption to facilitate the stabilisation of the grid when requested by the system. Active demand response ensures greater grid flexibility that can lead to more efficient use of the energy infrastructure, helping to guarantee grid security and contain electricity prices. These programmes pay the participants an annual fee in exchange for their availability to respond to possible grid emergencies. Enel holds the leading position in demand response programmes globally, with over 6 GW of demand response capacity currently managed and assigned in the Americas, Europe, Asia and Oceania.

EU BANK STEPS UP EFFORTS TO FIGHT CLIMATE CHANGE

n the year of its 60th anniversary, the EU bank supported EUR 230 billion of investment, meeting its Juncker Plan targets ahead of schedule and successfully navigating a politically difficult environment. Shifting its focus from Europe’s economic recovery to competitiveness, the European Investment Bank (EIB) Group zoomed in on market gaps identified by its experts, so that its investments would have the biggest impact on Europe’s economy. “Digitalization, SMEs, education and skills, sustainable energy and the modernization of infrastructure are crucial for the European economy

to keep pace with global competition,” EIB President Werner Hoyer said at the EIB Group’s annual press conference in Brussels. Thanks to increased efficiency in crowding in private capital, the amount of total investment supported was close to the level achieved in 2017, balancing a reduction in the EIB Group’s overall financing volume to EUR 64.19 billion in 2018. The number of signed projects reached 854. The EIB’s subsidiary, the European Investment Fund (EIF), even reported a record financing volume of EUR 10.06 billion, benefiting tech pioneers and small and medium-sized companies all over Europe. 12

For 2019, the EIB Board has approved a corporate operational plan with an orientation of slightly above EUR 70 billion of financing by the EIB Group. This would represent an increase of around 10% compared to last year. Climate action is another area in which the EIB Group is instrumental in delivering on EU policy goals. The EIB remains the world’s largest multilateral financier of climate action projects. In 2018, the EU bank increased the proportion of its lending that goes towards combating climate change to close to 30%. The EIB has also just started an energy lending review to adapt its policy to a changing environment.

NEWS

ENGIE BUYS SUEZ’S NUCLEAR MAINTENANCE BUSINESS

ith the acquisition of SUEZ’s nuclear maintenance activity, ENGIE, via its subsidiary ENDEL, completes its range of services for the nuclear and industry sectors. ENDEL recently announced the acquisition of SUEZ’s nuclear mainte nance business (formerly SRA SAVAC), which is changing its name to ENDEL SRA. This strategic acquisition will sup plement ENDEL’s specialized and high added value services for complex environments such as the nuclear sector. It will also enable ENDEL to further extend its territorial presence in France and open up new prospects internationally. A well-established business in the

nuclear sector Specializing in services for nuclear power plant operators, SUEZ’s nuclear activity has been providing a complete portfolio of services for primary and secondary circuits of nuclear power plants for the past 35 years. These services include jetting and inspecting steam generators, conducting televisual inspections and extractions of foreign matters, facility cleaning and decontaminating pressurisers. Based in Vaulx-en-Velin (Rhône-Alpes), SUEZ’s nuclear activity employs 180 people and reached a turnover of EUR 28 million in 2017, EUR 4 million of which were generated abroad. With its training centre based in Vaulxen-Velin, SUEZ’s nuclear maintenance

activity demonstrates the significant importance it attaches to the training of its employees who operate in highlydemanding environments in terms of safety and quality. The services the new ENDEL SRA subsidiary has developed and delivered are particularly well known in the nuclear ecosystem and will provide power plant operators with high added value benefits. By acquiring SUEZ’s nuclear activity, ENDEL will be able to supplement the range of high added-value services that it provides for major components in power plants (tanks, steam generators, pressurisers, etc.), and extend its regional coverage while opening up new prospects internationally.

EC OPENS INFRINGEMENT PROCEEDINGS AGAINST ROMANIA ON ENERGY EFFICIENCY IN BUILDINGS

n January 24, the European Commission decided to refer Czechia and Slovenia to the Court of Justice of the EU for failing to comply with the Energy Performance of Buildings Directive (Directive 2010/31/EU). Under this Directive, Member States must establish and apply minimum energy performance requirements for all buildings, ensure the certification of buildings’ energy performance and require the regular inspection of heating and air conditioning systems. In addition, the Directive requires Member States to ensure that all new

buildings are so-called nearly zeroenergy buildings by 2021. The Directive also requires Member States to ensure that energy performance certificates are displayed in certain buildings frequently visited by the public. This rule should create public awareness of the importance of efficient energy consumption and provide incentives for renovations. The Commission drew the attention of the national authorities to the incorrect transposition of this requirement in 2015 and sent official letters to both Member States in the course of 2017 and 2018. However, to date the Member States legislation 13

on this issue have not been brought in conformity with the Directive. In addition, the Commission decided to open EU infringement proceedings against Croatia and Romania as both Member States have failed to submit progress reports in reaching cost-optimal levels of minimum energy performance requirements for buildings and its elements. The EU is aiming for a 20% cut in Europe’s annual primary energy consumption by 2020. Buildings account for about 40% of the EU’s total final energy consumption and more than one third of its CO2 emissions.

NEWS

FINANCING FOR THE CONSTRUCTION OF THE FIRST NETWORK OF CNG STATIONS IN ROMANIA

n January 23, the Romanian Energy Efficiency Fund (FREE) concluded the 41st financing agreement. The beneficiary is Denisson Energy, company based in Selimbar, Sibiu County. It has obtained a commercial bridge loan, worth USD 1,969,724, to finance an investment with a total value of USD 5,903,338. The investment targeting the ‘Establishment of the first compressed natural gas (CNG) supply network in Romania’ is ensured from the company’s own sources and resources allocated by the European Commission. The general objective of the investment is to support development of a sustainable and efficient transport system and promote decarbonization of road transport along the core network corridors, by introducing an alternative fuel (CNG) in Romania.

The first specific objective is to initially establish in the market a network of CNG stations consisting of 9 functional supply points along the TEN-T Core Network Corridors in Romania (OrientEast - Med & Rhine - Danube). The CNG station network will be developed around the important nodes of the core network to simultaneously cover the potential demand for long-distance and urban transport. It will also ensure a reasonable distance until the next station (around 150km at most, but always less than 300km) for domestic and crossborder traffic. Implementation of the CNG station network is planned in three consecutive phases, resulting in the implementation of 3 CNG stations per year between 2019, 2020 and 2021. The second specific objective is to support market entry and

implementation of CNG in Romania. This objective will be fulfilled by increasing demand and visibility in terms of both CNG and through the pilot station network, by establishing and optimizing the business-customer relationship and by identifying and removing the administrative and legislative barriers. The investment will lead to replacement, in the case of pessimistic evaluations of the development of the fleet operating based on compressed natural gas, of an annual consumption of 386 tons/year of standard gasoline and 917 tons/year of standard diesel, with an annual consumption of 1,175 tons/year of compressed natural gas. Thus, annual energy savings estimated at around 25toe/year will be obtained, as well as annual carbon dioxide emissions reductions of 951 tons/year.

KUWAIT, INTEREST IN RELATIONS IN THE OIL FIELD WITH ROMANIA

uwait wants to relaunch economic relations with Romania, especially in the oil and tourism sectors. This is the conclusion of a meeting recently held at the Prahova Chamber of Commerce and Industry (CCIPH) in Ploiesti, between the Ambassador of Kuwait in Bucharest, E.S. Talal Mansour Alhajeri, and representatives of 20 companies from Bucharest, Constanta, Sibiu and Prahova counties, in fields such as oil equipment,

transport of petroleum products through pipelines, offshore operators, medical, gas transmission, IT and recruitment. In addition, the Ambassador of Kuwait has shown interest in developing academic relations between the Petroleum-Gas University of Ploiesti and similar entities in his country as well as cultural relations, by presenting exhibitions about Kuwaiti culture in Ploiesti or Sinaia. At this time, the annual value of trade 14

between the two countries is only USD 50 million. This is why, at the end of last year, a delegation headed by Prime Minister Viorica Dancila was on a tour in the Gulf countries, including Kuwait, to reconnect Romania to the Gulf countries’ economy, which has fallen steadily after 1989. The representatives of Transgaz, Conpet, Astra Romana Refinery, Petrostar, Tacrom Drilling, Confind, Grup Petrol Marin and RIG Service were also present at the event in Ploiesti.

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OPINION

Nanotechnology and the conversion of alternative energies I

Ioan-Corneliu Dinu Scientific Counsellor at Romanian National Committee of the World Energy Council

n the previous article, ‘Nanotechnology and energy production’ (No vember/2018 edition), I reminded that the energy sector can benefit from nanotechnological approaches to energy in general, but also those focused on energy from renewable sources. We will try to outline some of the concepts presented so far starting from the European Union’s interest in financing nanotechnology research activities. A significant nanotechnological development has already been observed regarding the production of photovoltaic energy, the transformation of solar light into electricity, light found abundantly worldwide. With all these advantages – let’s call them solar and which will last for a temporal infinity - the production of photovoltaic energy represents very little (not more than 0.04%) of the total energy produced worldwide. The main problems are related to costs, although important steps have been taken in the last 20 years, both on the technological line and in terms of infrastructure, equipment etc. which all together led to lower costs. It is expected that scientific efforts for innovation and improvement will continue to lead to the increase in the efficiency of energy 16

production, but also in the volumes of photovoltaic energy produced. For example, in 1980, photovoltaic energy cost USD 2/kWh, which in 2003 was only USD 0.2-0.3/kWh, following to reach only USD 0.06/kWh in 2020. The known technology consists of converting light into electricity based on the use of crystalline silica, considered ‘active material’, a material with a thickness of approximately 150-300 nm (nanometre). This technology is known as the first-generation photovoltaic process, being extremely costly, although it covers 86% of the market of renewable energy currently produced. As far as the second generation of the photovoltaic process is concerned, it uses thin film photovoltaic cells, cells that can reduce costs by allowing the process of photon transformation in electrons to be points of freedom for what we call mechanical flexibility. This process, defined as a second generation, will become dominant in the near future in the photovoltaic market mainly for household use, given the balance between cost and efficiency. Currently, the research activity is focused on defining the parameters of future photon-electron transformation cells with an obvious target: ‘a third photovoltaic generation’. Elements from the sphere of applied nanotechnology

OPINION

will be used in the composition of thirdgeneration photovoltaic cells. Since 1991, inventors Brian Oâ&#x20AC;&#x2122;Regan and Michael GrĂ¤tzel named the new cells with TiO2 (titanium oxide) nanoparticles - dye sensitized solar cells (DSSC). Therefore, the construction of the future cell belonging to the third photovoltaic generation has its roots since the 1990s. Dye molecules have the capability to recover photo electrons generated through an electrolyte solution, iodine solution already present in the photovoltaic cell. The proper functioning of the described system, i.e. the actual transformation of the photons into electrons, but also their recovery with the help of the dye molecules, is made entirely if the cell consists of a film with

titanium oxide nanoparticles. We remind titanium oxide gives a high degree of sun exposure to a large amount of dye molecules, on the one hand, as well as total presence in the electrolytic solution, on the other hand. Obviously, this method is the result of recent research. This research continues in order to identify a wider range of oxides, such as titanium, but also an increase in the dye portfolio whose nanomolecules ensure a continuous and good yield process that, by summing up, leads to increased efficiency of power generation, surpassing the typical yields obtained by using silicon-based cells. Nanotechnology research themes, aimed to improve photovoltaic cell efficiency, are defined at the laboratory level to use the electrochemical

method for converting fuel films to the construction of nanocells that will transform photons into electrons. The respective cells will have an anode (fuel-based) and a cathode (containing oxygen), the two elements being separated by special electrolytes. Generalizing, we can talk about introducing the notions of nanomaterials, nanostructures, nanodevices etc. For example, the use of hydrogen is considered as a nanofuel, the basic idea being not only to increase the efficiency of photovoltaic transformation, but also to reduce the costs, the size of the installations, of the devices etc. The presence of nanotechnology with all components is expected in the manufacture of lithium nano-ion-based batteries for storing electricity.

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OPINION

Potential impact in the energy sector Government Emergency Ordinance no 114/2018 The broad perspective

Daniel Vlasceanu Partner at Vlasceanu, Ene & Partners

On 21 December 2018, the Romanian Government adopted the Emergency Ordinance no 114/2018 (GEO 114). GEO 114 regulates a broad range of industrial activities: sectors of strategic national importance, such as energy, banking and telecom, as well as other essential activities related to constructions, pension funds, public investments etc; nonetheless, the same GEO 114 regulates also aspects related to pensions, fruits and vegetables, kindergarten or social protection (?!)1. All these aspects are considered under GEO 114 as extraordinary and, as such, had to be regulated under an 1 It is by far not the authorâ&#x20AC;&#x2122;s intention to interpret that such aspects are not important. However, for obvious reasons, it would have been recommendable to include them in separate normative acts.

emergency ordinance. We will not dwell into the soundness of such statement, nor (re)open the discussions as to the constitutional role of the Government2, but we will try to analyse exclusively the potential impact of GEO 114 in the energy field.

Main relevant amendments The application of the taxes introduced under Government Ordinances no 5/2013 (i.e. tax applicable on the transport of gas and electricity) and 2 Discussion have been carried out in the public arena with respect to the role of the Governmentâ&#x20AC;&#x2122;s emergency ordinances which are constitutionally designed to regulate exceptional situations; the emergency ordinance has become the customary and quite ordinary tool of the Government to issue legislative measures (i.e. replacing part of the Parliamentâ&#x20AC;&#x2122;s constitutional role as rightful legislator).

OPINION

6/2013 (i.e. tax on revenues from exploiting natural resources, other that gas) are extended until end of 2021. A number of new elements are (re) introduced under the Electricity and Gas Law no 123/2012: • during 1 March 2019 – 28 February 2022, the households will be provided with electricity under regulated conditions (the same applied until end of 2017) – Art 22, para 11; • for the same period, electricity producers must deliver to the last instance suppliers the electricity necessary for the households, while the remaining produced electricity is to be brought on the open market – Art 28, letter b1); • during 1 April 2019 – 28 February 2022, the sale price for the gas produced in Romania will be capped at 68 RON/ MWh. The producers will have to sell their gas to their suppliers first to cover the households’ necessities - Art 124. EO 33/2007 regulating the Romanian Energy Regulatory Authority (ANRE) organization and functioning: • a 2% tariff computed on the turnover obtained from ANRE licensed activities is introduced (Art 2, para 31).

Specific comments Capping the sale gas price The measure was justified by the Minister of Finance based on the immoral/ unfair behaviour against the Romanian economy of the gas producers. It is by no means the government’s right to relax or worsen the country’s fiscal regime. If certain operators do not behave in a fair manner, then rules must be put in place (or existing laws applied) in order to eliminate such behaviour, but capping the sale price is not the way to do it as it is an obvious state’s direct intervention into the free market (which is never acceptable).

Moreover, given the specifics of the Romanian petroleum fields (i.e. old, mature ones), capping the gas price will render part of them (particularly the small ones) non-economic (with immediate negative impact on royalties, income tax, jobs etc). Within this context, it is worth mentioning that the Romanian gas producers must pay royalties at the Vienna hub reference price (i.e. anyhow higher than the obtained price). At the date of writing this material, a large number of gas projects (i.e. drillings, work-overs, interventions etc.) have been put on hold particularly because economics do not fly anymore under the GEO 114 conditions. The 2% tax on revenues from ANRE licensed activities It is beyond doubt that for small actors operating in certain sectors (e.g. power distribution), the 2% tax marks the difference between life and death: most of them will likely go bankrupt. Sometimes, it is good to take out the less productive actors in a market (in order to enable fresh blood to come to surface), but the timing and analysis of such measures are essential (i.e. proper analysis must be made before adopting such measures; otherwise, the results may be overall more detrimental than beneficial). It is beyond doubt that in the case of GEO 114 a proper analysis was not made and the timing of such measure is more than questionable. A text analysis of the respective provision renders that the period of computation of the 2% tax is not mentioned in the GEO 114. Only the ANRE draft methodology (under public debate at the time of writing this material)3 clarifies4 that is will retroactively apply 3 Available at: https://www.anre.ro/ro/presa/ comunicate/proiect-de-ordin-privind-aprobareametodologiei-privind-calculul-si-stabilireacontributiei-banesti-anuale-prevazute-la-art-2alin-3-1-din-ordonanta-de-urgenta-a-guvernuluinr-33-2007-privind-organizarea-si-functionareaanre-aprobata-cu-modificari-si-completari-prinlegea-nr-160-2012-astfel-cum-a-fost-introdusprin-ordonanta-de-urgenta-a-guvernului-nr-1142018-si-de-modificare-a-ordinului-224-2018 - as accessed on 24 January 2019. 4 Please see Chapter II, Article 5 of the proposed methodology.

for the previous year5. The same draft methodology sets forth that licensed operators must submit (by 20 February of the following year) to ANRE the computed revenues subject to the 2% tax.

Conclusions It is worth noting that Romania is not unique when it comes to petroleum resources. In most cases, oil and gas investors literally look across the globe and select between various opportunities. They decide to invest based on certain criteria, one of the most important being the country risk (which involves, among others, regulatory aspects). Regulatory instability ranks very high on the risk matrix of such investors. If Romania keeps changing the rules of the game, the desire to invest in Romanian fields will drop to zero in no time. The large Black Sea gas projects are waiting for final investment decisions, now the GEO 114 worsens their economics. The Romanian energy realm experiences a turbulent period within less than a month from the enactment of GEO 114: with the RON/EUR exchange rate breaking (negative) record after record, the electricity price raising at a level just RON 30 under the all-time historical peak reached in the previous February 2017 the prolonged strike that took place at the coal based Oltenia Energy Complex, several operators struggling to have their 2019 budgets in place, most of the onshore gas projects temporarily suspended and some titleholders analysing legal ways to fight against application of GEO 114. It seems almost the entire (private or state-owned) economic environment waits for the withdrawal of GEO 114. Yet, at the time of writing this material, there are indications that only Oltenia Energy Complex will be excepted from the 2% tax on revenue. The 2019 spring will not be a calm one… 5 The above tax may trigger a matter of legal validity: there is sufficient practice of the international commercial arbitration courts regarding the so-called ‘indirect expropriation’ – i.e. a state interferes in the benefits of an investment without actually taking the property.

OPINION

Gas suppliers in Romania risk insolvency G

Dumitru Chisalita Judicial Technical Expert in Oil & Gas

EO 114/2018 taxing and capping gas prices already produces effects, basically determining retroactive actions. Licensing tariffs are introduced on the gas market, established at 2% of the turnover achieved by companies from activities subject to licenses granted by ANRE. Thus, operators licensed in the gas sector are forced to pay in 2018 a difference to the licensing tariff paid according to the old methodology (which for gas was not related to turnover) up to 2% of the turnover posted in 2018. Thus, gas producers, importers, storage operators, the transmission operator, distribution operators and gas exchanges (BRM and OPCOM) must pay to the Romanian Energy Regulatory Authority (ANRE) in the near future 2% of the turnover posted in 2018 (the difference between the license tariff paid by operators in 2018 and 2% of the turnover posted in 2018) and 2% of the turnover for 2018, related to 2019. In fact, gas operators will face the payment of 4% of the turnover achieved in 2018, which will determine the insolvency of about 80% of gas suppliers according to their financial data posted in 2017 (except for gas producers, importers and operators supplying gas in regulated regime). Basically, about 200,000 household customers and around 3,000 non-household customers will remain without gas suppliers, following the fact that their gas suppliers will go bankrupt. 20

The interpretation (hope) that the new licensing tariff of 2% of the turnover will apply only as of 2019 cannot stand in the way in which GEO 114/2018 was written, as it clearly establishes which articles are applied within 30 days from the entry into force of the GEO and the articles that apply on different dates, explicitly established in the GEO. Moreover, the author of the GEO has anticipated the losses that suppliers (it is true, in the way in which it was written, it was intended that this provision referred exclusively to suppliers that also have the capacity of producers) will incur as early as 2018 (even if the GEO applies for only 3 days in 2018), establishing in art. 61 para. 12 that â&#x20AC;&#x153;Differences of acquisition costs in 2018 and 2019 of suppliers, not recovered from the prices practiced, will be recovered by 30 June 2022, according to ANRE regulations.â&#x20AC;? This article 61 para. 12 of GEO 114/2018 basically makes impossible even the recovery of acquisition costs in 2018 and 2019, suppliers facing the situation of paying licensing tariffs that exceed the gains from the licensing activity for 2018, of resorting to loans and being prohibited to attempt to recover these costs in 2019, being forced to wait for the recovery of these costs gradually, during 2020-2022. An atypical situation will apply to foreign-domestic gas importers, these importers being licensed as gas suppliers in Romania, but selling gas at the import point, without paying duties for gas;

OPINION

they will have to pay 4% of the turnover posted in 2018 (2% related to 2018 and 2% related to 2019). In fact, the increase in licensing tariffs on the gas market is by over 30 times. Given the chain of these costs, a chain price increase should be made for transmission, distribution and storage tariffs to end-end-consumers, even under the conditions of capping gas prices. We believe that ANRE will not perform these increases in the immediate period, using its own legislation and the power it has to amend the secondary legislation, determining in a first phase a significant number of small distribution operators, with Romanian capital, to enter insolvency and probably be taken over by multinational companies and causing an explosion of gas prices within several years (explosion which will be determined by all the delays in the recognition of costs introduced by this GEO taxing and capping prices, plus interests and penalties for the delay period).

Main consequences and questions Under the aspect of capping gas prices, GEO 114/2018, substantiated on a non-existent legal provision, has the technical ‘advantage’ that it can only be challenged by the absent Ombudsman. I will try to show some of the many problems arising from the implementation of the GEO that establishes a cap on gas prices. After the approval of the mentioned document, people are boiling, but waiting. Everyone waits for a move from the ‘adverse’ side (the authorities expecting to be ‘attacked’ by market participants/market participants expect the GEO not to be applied), making the need for the development of a secondary legislation for the implementation of the GEO disappear. GEO 114/2018 raises many questions as to the practical way in which the implementation of this ordinance can be approached from an operational point of view. I believe that

the most confused are the colleagues from ANRE, not the institution itself, but the responsible employees who over the 19 years of existence of ANRGN/ ANRE have faced many challenges determined by directives/laws thrown into the market (most often for populist reasons or to support certain interests) and they had to put them into practice, but I believe that this challenge is ‘the worst’ of all times. Without initiating an analysis, I ask myself the following questions: • Given the introduction of the gas basket, the Network Code must be suspended as of 1 April 2019. What will replace the current Network Code and especially when the new secondary legislation is proposed? • How will the gas basket be established? Will there be a single gas basket or two baskets: one for population and one for nonhouseholds? • What happens with the obligation to store gas? What type of gas will be stored? Gas according to a basket or only gas from domestic production? • How will the obligation to sell a certain share of the gas (from domestic production) on the exchange be applied, given the cap on the price of domestic production and the higher demand than supply on the market? • How will differentiation be made between customers who want to buy gas from domestic production, given that the demand is higher than the supply, and the gas price is capped and well below the price of imported gas? First come, first served? Only some will have access to gas, which they will resell at a much higher price to the other customers! Pro rata? It’s a measure that is applied only in extreme situations, when other methods reach their limits. It determines multiple manipulations in the market. • How will the price for imbalances in 21

the NTS related to the component of domestically produced gas of the gas basket be determined? Gas from domestic production cannot be sold above the capped price and it means that there will be an invitation to imbalance. • What happens with gas contracts signed before 28 December 2018, with delivery in 2019? How about those signed before 31 March 2019 with delivery after 1 April 2019? • Will gas exchanges in Romania be able to give a price reference? • How will the gas exchanges (especially BRM) survive? • Given the freedom of suppliers (other than producers) to sell gas to end-consumers (except for household consumers) at any price, we will probably face the absurdity of an increase in gas prices in conditions of capping the price of gas as commodity. Will prices also be capped to end-consumers? • Romania exports gas. Will this gas be sold by producers at the level of the capped price? • In the situation where a market player requests and obtain in court the suspension of the GEO establishing the cap on gas prices (with great chances of success), for the period when the GEO produced effects, who will pay for the damages? In this regard, to what extent are there chances that the institutions or persons who establish the implementing procedures of the GEO be held liable? • Will ANRE (and maybe even the employees) cope with the numerous lawsuits in which it could be involved after the preparation of the secondary legislation for the implementation of the ordinance? These are only some of the questions raised by the GEO 114/2018 regarding the cap on gas prices. I am convinced there are more - therefore I invite all stakeholders to present them to prepare a blacklist of the implementation of this ordinance.

OPINION

Stranger things in energy Overview of Romania Energy Industry

Text by Mihai Toader-Pasti Chairman Future Energy Leaders Romania

and Teodora Vasalca-Cimpoi Editor-in-Chief NewsEnergy.ro

omania today is facing various challenges on multiple domains, energy being one of them. As the country struggles with corruption problems, a backlash from the private sector for the last fiscal changes, everything appears to fail and the EU presidentship got the country’s representatives as unprepared as this winter. Political, legal and economic instability became the national status quo during the last years, resulting in the lack of investment of any kind, whether we are referring to starting new projects, upgrading existing infrastructure or even performing the necessary preventive maintenance activity. Together with the lack of expertise and leadership at decision levels and too many and abrupt legislation changes without a real understanding of the industry culminated with the biggest crisis in the last 30 years for Romania’s Energy Industry. Ping-ponging responsibility from one public or private entity to the other has also contributed to the overall chaos in the system. Therefore, there are a few good news, some bad and a lot of very bad news. The industry leaders and experts, energy associations and federations were too passive during all these years, while they should have been more vocal and engaged, but fear or the love of status quo kept them and still keep them out of the game. This is not going to end well for anybody. 22

Good news - Romania took, for the first time in its history, the Presidency of the Council of the European Union; - As of 1st of January, prosumers are a reality in Romania as all its laws and regulation in place for that, but utility companies are still struggling to adapt; - The bureaucracy was also reduced for prosumers in terms of fiscal requirements, the adjustments made on the monthly bill; - Prosumers are able to sell the energy with a price of approximately ⅓-¼ from the final price paid in the electricity bill; - EUR 100mn for Romanian households prosumers (approx. 24,000 beneficiaries x EUR 4,200/system) are available in 2019.

Bad news - Romania had the highest annual inflation rate in the EU last year; - We still don’t have a final energy strategy. The last one was deleted before being adopted and a new one was put into public discussion facing big critiques from the experts in the industry; - Our target for 2030 is 27% RES, under 32% target of EU and decarbonization is not the priority of the Government, saving the coal industry jobs is one of them; - Lack of available installed capacity in the system: the data show that we have 24,000 MW, from which only 14,000 MW is operational. Still, some of considered

available installed capacities were unavailable for different reasons (needed repairs, investments, resources). As a result, from the beginning of the year, we were net electricity importers to cover the internal consumption which was below 10,000 MW; - A one-week miners’ strike at the largest coal energy producer forced the company which provides more than 20% of internal production to close some of its units. The risk for further shutdowns is still high, because of insufficient lignite stocks; - In November 2018, the Government decided to postpone until 2021 the implementation of more favourable legislation for vulnerable consumers.

Very bad news - Romania’s Government changed the fiscal laws for 800 times during 2018, the last one on 28th of December, surprising the energy sector with a tax of 2% on turnover without previous consultation with the business environment; - This will generate an increase with at least 5% in monthly electricity bills for consumers, as the tax applies to every sector – from generation, to transport, distribution and sales. - The latest emergency ordinance also radically changed the rules on the gas and electricity market, as it forces the biggest state-owned electricity companies to sell up to 65% of their production with regulated prices. Also, the government put a price cap of 68 RON (EUR 14.5) per MWh for internal gas production, until February 2022. - The measure comes after many other legal changes for gas producers, adopted last autumn by the Parliament, which introduced higher fiscal obligations and forced the companies to sell 50% from their production on the gas centralized market. As a result, the investors in the Black Sea offshore fields postponed the final investment decisions for an undefined data; - We went from a free market to a very regulated one in just one month; - The new surprising fiscal legislation drastically reduced the value of the shares of the main listed energy companies, which were among the biggest losers. OMV Petrom, Electrica, Transgaz, Romgaz and Transelectrica recorded depreciation of about 9% to almost 20%; - Over EUR 3bn has lost Romania in a single day – called ‘the red Wednesday’ – which brought the second highest daily decline of the Romanian stock exchange history; - Half of January we had the most expensive energy on spot market in Europe. Future Energy Leaders Romania is always recruiting, check www.felromania.org/hr and find out how you can join their team. 23

Historical records and prospects for 2019 Hidroelectrica is leader in electricity production in Romania and the main supplier of technological services necessary in the National Power System (NPS), being a vital company for national energy security. While 2017 was a year of records, in 2018 Hidroelectrica recorded new historical performances. The President of the Management Board, Mr. Bogdan Nicolae Badea, details the restructuring and streamlining process recently underwent by the company, as well as its prospects for the following period. 25

Dear Mr. Bogdan Badea, you have been managing the company for relatively little time, since July 2017 only, but your experience in the energy sector allows you to make an objective assessment of the economy in general and of the national power system in particular. How do you assess the latest developments on the energy market at domestic and European level? I wouldnâ&#x20AC;&#x2122;t want to venture into making considerations on the economy in general. I believe there are people better placed than me who can make such analyses. As far as the situation in the energy sector is concerned, this is an interesting discussion. If you had asked me this question in early December last year, I would have told you that, at least from the perspective of energy producers owned by the Romanian state, things look very well. Prices on the free market and profits we have obtained over the past years allowed us to think about investments very seriously. We, at Hidroelectrica, have proposed shareholders a business plan worth around RON 5.4 billion, for the following five years. It is a very ambitious plan, to the extent of companyâ&#x20AC;&#x2122;s power, a plan that would have sold the issue of historical investments and would have ensured the prerequisites for listing on the stock exchange. But the beginning of the year has put us in the situation of rethinking the business strategies and plans. We are in a moment of uncertainty, because we are waiting to see the impact of the Romanian Energy Regulatory Authority (ANRE) regulations in terms of implementation of GEO 114/2018. We are concerned by the prospects of going back to the

regulated market and a profit margin that would mean abandoning the investment plans and the ambitions of becoming players on the regional energy market. We recall that Hidroelectrica distributed annually 90% of its profit to shareholders, the dividends distributed to the Romanian state amounting to RON 829,129,927 in 2016, RON 908,165,272 in 2017 and RON 1,440,000,000 in 2018 respectively. The national energy system is old and investments are absolutely necessary. Romania has, in theory, an installed production capacity of over 21,000MWh. The problem is that - in practice, difficulties may occur when the market requests

HIDROELECTRICA IS THE MAIN PILLAR IN TERMS OF SECURITY OF THE NATIONAL ENERGY SYSTEM. THE COMPANY SUPPORTED, LAST SPRING, OVER 50% OF THE NATIONAL ELECTRICITY CONSUMPTION. 26

over 9,000MWh or even below this value, as we have seen lately. From a technical point of view, the solutions to this problem are the same as those mentioned for a long time in the system: establishing new production capacities, increasing/upgrading the old production capacities - where it is possible, retrofitting, supplementing the interconnection options. At the end of last year, we managed to commission Hydropower Unit II at the Beresti Hydropower Plant and Hydropower Unit I at Calimanesti after extensive upgrading works. These are investments that give a new life to hydropower developments. It is very important to permanently make such works in order to secure the existing capacities. We can think about expansion only in parallel with securing the current portfolio.

In short, what is the companyâ&#x20AC;&#x2122;s business card, in data and figures? How does Hidroelectrica position itself in terms of interconnections on the regional market? Hidroelectrica is the main pillar in terms of security of the national energy system. It is, as we have proven in the recent years, the company called when the situation requires it. I want to recall that the company supported, last spring, in certain moments, over 50% of the national electricity consumption. We have in our portfolio 208 hydropower plants (including 5 pumping stations with energy role), with an installed power of 6,444MW. From a financial point of view, Hidroelectrica has beaten all its own records in terms of profitability: profit of over RON 1.63bn in 2007, figure exceeded by the 9-month situation in 2018. We produce about 14TWh, in an average hydrological year.

In 2017 Hidroelectrica ranked first in the top of the most valuable companies in Romania, with some notable records. What did the restructuring and streamlining process, which led to these results, consist of in particular? Hidroelectrica was evaluated in 2017 to around EUR 3.57bn, which placed it, at the time, at the forefront of the most valuable Romanian companies. The road to this moment has been difficult and involved, as you know, crossing a period of deep restructuring and streamlining. 27

When we took office, we proposed ourselves to implement a strategic management leading to the sustainable development of the company, objective we believe we have successfully achieved, if we take a look at what Hidroelectrica represents today. We acted with priority towards the harmonization of the staff number with the necessities of the company and towards the efficient use of all resources. This means we hired in areas where we considered it was necessary to strengthen the company. We mainly consolidated the technical, design departments etc. We optimized the internal

processes, so as to reduce bureaucracy and boost decision-making and accountability. We paid an increased attention to procurement processes, so as to ensure that prices at which we bought products and services were the correct ones. We also focused on maximizing production and maintaining a high profit level. Thus, we redesigned maintenance plans, for example, so that power production facilities and equipment be available when they are needed and we withdrew them for turnaround mainly in periods when we know, from experience, that the power system isnâ&#x20AC;&#x2122;t so loaded. We are interested in introducing modern technologies, which increase efficiency and yields. We are open to innovation, to new.

Performances continued in 2018... how did you end the year? What is the total production (from how many hydropower plants, including pumping stations)? turnover, estimated net profit at the end of the period etc. It is premature to estimate the financial results for the entire year 2018. What I can say now is that in 2018 we produced over 17TWh, and in November the turnover amounted to around RON 3.9 billion. Under these circumstances, we expect to exceed the historical profit obtained in 2017. 28

The plan for 2019 also includes the diversification of energy generation sources. Do you currently have established the purchases you plan to make? We are interested, as I have stated before, in green production. But we need to consider the impact of GEO 114/2018 and especially that of the related ANRE Order. We want to integrate in the asset structure with priority such energy production sources: wind or solar parks, biomass etc. We could do it either by developing own projects, or by acquiring existing ones. We prefer the second option, because in this way we can burn some stages, overcoming some bureaucratic problems and can advance more quickly towards what we have planned. We pay great attention to what the market has to offer, not only the domestic one, but also the regional one. The business plan is currently under review.

INTERVIEW

THE BEGINNING OF THE YEAR HAS PUT US IN THE SITUATION OF RETHINKING THE BUSINESS STRATEGIES AND PLANS. WE ARE IN A MOMENT OF UNCERTAINTY, BECAUSE WE ARE WAITING TO SEE THE IMPACT OF THE ROMANIAN ENERGY REGULATORY AUTHORITY REGULATIONS IN TERMS OF IMPLEMENTATION OF GEO 114/2018. What is the current status of the project blocked at the end of 2017 by the Bucharest Court of Appeal, which definitively cancelled the construction permits issued by the county councils of Gorj and Hunedoara for developments on Bumbesti - Livezeni sector of Jiu River? We are talking about three hydropower plants (Bumbesti, Dumitra and Livezeni) that are almost completed... It should be noted from the start that Livezeni - Bumbesti project is at a very advanced stage of development: it is completed over 90%. Basically, it already exists physically, as a result of investment made in time and which amounts to over EUR 150 million. Moreover, it is a project declared ‘of public utility’ under Government Decision. Undoubtedly, it is a project that needs to be completed, once bureaucratic obstacles have been overcome. We are in full process of reviewing the environmental permit in order to bring it into line with current requirements involving, inter alia, the construction of a fish ladder to ensure the migration of aquatic fauna. Also, in December last year, Government Decision no. 1032 was issued, on expropriations allowing the implementation of double circuit 110kv overhead line that will connect the Bumbesti hydropower plant to the National Power System. More recently, we have been facing another problem, which took us by surprise. After discussions of more than two years and mediations regarding Dumitra hydropower plant - a completed investment, E-Distributie unilaterally decided, in January 2019, to terminate the connection contract. This happened after repeated attempts to change the technical solution established under the Technical approval for connection (ATR) and to increase the connection tariff. Moreover, there have been several inconsistencies between the site initially established under the ATR and the technical design that had to be developed later. Thus, at this point, we are in the situation of having no time estimate for putting the objective into commercial operation. We are analyzing very seriously the option of suing ENEL for the hostile behavior towards Hidroelectrica, as well as the losses suffered by the company. Unfortunately, the situation is not singular - we have a similar problem with the same distribution operator Enel in the case of Bretea hydropower plant. There, the situation is even more absurd, the power plant being connected to the system since 2017 based on ATRs and contracts signed with ENEL. After commissioning, ENEL refused to issue the connection certificate, thus preventing Hidroelectrica from obtaining market prices for energy produced. We referred to issue to the National Regulatory Authority 29

for Energy but no solution was found for more than a year to solve the situation. We seriously wonder whether the hostility shown by Enel is part of a wider plan to sabotage the activity of Hidroelectrica, which is even more worrying as the National Power System has been facing lately a clear deficit in terms of production.

What were the main challenges/ obstacles of 2018? The main obstacles in making Hidroelectrica’s investments are, in general, of bureaucratic or legislative nature. We are facing contradictory laws or difficulties in advancing with certain projects because we are blocked by petty bureaucracy or by the opposition of local authorities. Sometimes it is frustrating to see what projects worth tens of millions of euros stagnate because a forest district, for example, refuses to issue of a document imposed by Government Decision. And this is a situation much more frequent than you might believe. Also, the public procurement legislation is still impenetrable and involves a lot of time to go through certain stages, which cancels our efficiency as compared to what a private player can do. Basically, to make an investment, our work is twice more intense and requires a much more detailed planning than in the private sector.

Will the company be listed on the stock exchange this year, or there are changes in this regard? The decision to list the company on the stock exchange exclusively belongs to shareholders. What we can do, as management of the company, is to prepare Hidroelectrica for this scenario. We are interested in bringing before investors a profitable, structurally optimized, healthy company, able to develop. This is our role, those who are part of the management. Regarding the opportunity to list it and choosing the most favourable moment, as I said, it is shareholders’ decision.

OIL & GAS

New developments Southern Gas Corridor project In early 2018, Romania stated its desire to participate in one of the most important infrastructure projects for the European energy security. It’s about the Southern Gas Corridor (SGC), which carries gas from the Caspian Sea to Europe via Azerbaijan, Georgia and Turkey, through the Trans-Anatolian Natural Gas Pipeline, and then via Greece, Albania and Italy through the Trans Adriatic Pipeline. This network of pipelines would ensure 20% of European Union’s demand.

Text by Adrian Stoica

he Southern Gas Corridor project aims to increase and diversify European energy supply by bringing gas resources from the Caspian Sea to markets in Europe. The Southern Gas Corridor comprises four projects: operation of Shah Deniz natural gas-condensate field (SD1) and its fullfield development (SD2); the operation of the South Caucasus Pipeline (SCP) and its expansion (SCPX); the construction of the Trans-Anatolian Natural Gas Pipeline (TANAP) and the construction of the Trans Adriatic Pipeline (TAP). The projects have an estimated investment cost of approximately USD 40 billion. Upon completion, the SD2 project will add a further 16 bcm of natural gas per annum to 10.9 bcma (maximum production capacity) already produced

under SD1 project. Total length of the newly constructed SCPX, TANAP and TAP pipelines will be around 3,206 kilometres.

TAP and TANAP: Getting ready to receive gas Speaking at the European Gas Conference in Vienna (January 28 – 30), TAP Executive Director Luca Schieppati mentioned that more than 84 percent of the project, including engineering, procurement and construction, had been implemented to transport natural gas to Europe. He added that 97 percent of TAP pipes in Greece and Albania had already been defined. At the same time, Italy continues to work on construction of the terminal and micro-tunnel. Earlier, Schieppati said that TAP had completed its USD 4.5 billion (EUR 3.9 billion) 30

project financing, paving the way for construction to be completed for startup in 2020. TAP also marked the launch of offshore works mid-October 2018. Overall, offshore construction work is approximately 10% complete, as of endNovember 2018. “2018 was marked by a number of milestones. These included the successful installation of the turbo compressors in Greece and Albania, launching offshore construction works, completing the connection (otherwise known as the ‘golden weld’) with TANAP, completing one of the longest horizontal directional drilling to cross the Axios river in Greece and successfully installing the pipeline at the highest point of the project, 2,100 meters above sea level in the Albanian mountains”. “Despite undertaking such technically

OIL & GAS

challenging work, our safety performance remains world-class. So far, we have worked more than 37 million man-hours and driven over 100 million kilometres without any major accidents and with frequency rates (Lost Time Frequency rate and Total Recordable Frequency Rate) in line with best industry levels. TAP also received the OHSAS 18001, ISO 14001 and ISO 9001 certifications. These were awarded for our integrated quality, health, safety and environment (QHSE) management systems, reinforcing that TAP applies industry best practice, processes and procedures,” he added. Also, in 2018, both the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) each approved loans of over EUR 1bn for TAP gas pipeline. The rest of the financing has come from export credit agencies and a group of 17 commercial banks, which include Bank of China, BNP Paribas, Société Générale and UniCredit. With exit points along the route, TAP has the potential to support new gas infrastructure, integrate the markets of South-East Europe and strengthen the region’s strategic status as a source of energy. For example, TAP’s interconnectivity will form the basis of Albania’s gas market and connect the country to one of Europe’s most innovative and important infrastructure corridors. The pipeline will also make the delivery of energy to end-consumers more reliable and will contribute to a significant reduction in CO2 emissions, providing an alternative to more polluting energy sources, supporting the transition to low-carbon economies, in line with the new energy strategy assumed by the EBRD. The TAP project, however, is subject to a series of environmental and political criticisms, as well as by local communities in Italy, who fear that this pipeline will discourage tourism in the southern area of Italy. However, in October 2018, Italian Prime Minister Giuseppe Conte gave his final approval for this project, which was vehemently disputed by the 5-star Movement (M5S, antisystem), which

together with the League (the far right) formed the ruling coalition in Italy.

Gas supply to Turkey by TANAP to double in 2019 According to AzerNews, Azerbaijan plans to increase the volume of gas transportation via the Trans Anatolian Natural Gas Pipeline to 2 billion cubic meters in 2019, Public Relations Head at Azerbaijan’s state oil company SOCAR Ibrahim Ahmadov stated. Moreover, he noted that the overall progress in TANAP project is nearing 99 percent. The volume of gas transportation through TANAP reached 1 billion cubic meters as of 2018. A ceremony to launch TANAP took place June 12, 2018 in the Turkish city of Eskisehir. The initial capacity of TANAP is expected to be 16 billion cubic meters of gas per year. About six billion cubic meters will be supplied to Turkey, and the rest to Europe.

About TAP Trans Adriatic Pipeline (TAP), 870 km long, is the last section of this corridor, enabling natural gas transportation from Turkey to Italy, via Greece and Albania. In 2020, when the first gas deliveries to Europe are scheduled, TAP will be the first non-Russian gas pipeline to supply Europe, after the Medgaz connection that started delivering gas from Algeria to Spain in 2011.

About TANAP With a length of 1850 km, the TransAnatolian Gas Pipeline (TANAP) connects the Turkish border to Greece and Georgia. The initial capacity of TANAP would be of 16 bcm per year and would increase up to 23 bcm in 2023 and 31 bcm in 2026. The company in charge of the TANAP project is 58% owned by the national oil company of Azerbaijan, SOCAR, and 30% by the Turkish petroleum company Botas. 31

Romania’s involvement On 15 February 2018, Romania’s delegation, led by Iulian-Robert Tudorache, State Secretary within the Ministry of Energy, attended the Fourth Meeting of the Consultative Council of the Southern Corridor, held in Baku. Romania’s participation to this meeting is a first, thus marking a change of vision at the ministry level. Romania has proposed the inclusion in the plans for the expansion of the Southern Gas Corridor of the infrastructure offered by BRUA project, together with the interconnector between Romania and Bulgaria, for the transmission of natural gas from the Southern Corridor, on the Romanian territory, to Central Europe. At the end of the meeting, Romania signed, with the other members, the text of the Ministerial Statement, in which, inter alia, Romania’s support for implementing the Southern Gas Corridor and its contribution to the connection of this project to Central Europe are recognized. On May 29, 2018 Baku hosted the launch ceremony of the first phase of the Southern Gas Corridor project. The gas from the Azerbaijani Shah Deniz field has already gone through the first segment of the Southern Gas Corridor - from the Sangachal terminal to the expanded South Caucasus Pipeline.

BRUA background & updates BRUA gas pipeline (Phase 1) will be completed on 31 December 2019 and will carry resources coming from the Caspian region through the Trans Adriatic Pipeline and through the vertical corridor, Ion Sterian, General Manager of Transgaz, stated on the occasion of Aspen Energy Summit in Ploiesti, held on 28 November 2018. At the time, Ion Sterian announced that the first gas compressor station, in Jupa, was to be completed a year earlier compared to the commissioning of the pipeline (31 December 2019). On 30 July 2019 the second compressor station will be completed, in Podisor, and in October 2019 - the third compressor station, in Bibesti.

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project Phase I are not created,” Transgaz representatives have mentioned. The Director General of Transgaz has mentioned that the source of gas to be carried via BRUA (Phase 1) are the Caspian countries, Iran, Iraq and Kurdistan, gas which will arrive in Europe via TAP and further through the vertical corridor Greece-Bulgaria-Romania.

Bulgarian Government injects BGN 76.2M in Greece-Bulgaria gas interconnector

The transmission capacity to Bulgaria will be 1.5 billion Scm/year, and that to Hungary - 1.75 billion Scm/year, upon completion of Phase 1 of the project; upon completion of Phase 2, the transmission capacity to Bulgaria - 1.5 billion Scm/year, and to Hungary - 4.4 billion Scm/year (according to the NTS development plan for 2018 - 2027). Completion of Phase 2 of the project is estimated for 2022. The total value of the investment amounts to EUR 547.4mln, broken down as follows: Phase 1 - EUR 478.6mln and Phase 2 - EUR 68.8mln. Currently, only 40% of the capacity

necessary for the construction of Phase 2 of the gas pipeline (which would take over Black Sea gas) is booked. For now, the economic tests are negative for both the Romanian gas transmission operator, Transgaz, and for the Hungarian TSO, FGSZ, part of MOL Group. “If no one submits applications for booking additional capacity during 05.02.2019 - 25.02.2019, the binding open season procedure RO-HU ends without the allocation of transmission capacity and the prerequisites for building transmission capacity additional to the one ensured by building BRUA 32

Bulgaria’s Cabinet approved on December 19, 2018 the allocation of BGN 76.2 million, or about EUR 39 million, in EU funds for the construction of the Greece-Bulgaria gas interconnector pipeline. The money will come under the innovation and competitiveness ope rational program for 2014 - 2020, with new gas infrastructure strengthening Bulgaria’s energy security and ‘optimizing the energy mix’ as the country switches to ‘low-carbon economy’, the Government media office said. The goal of the Greece-Bulgaria interconnector, which will cost EUR 240.2 million to build, is to provide the necessary gas transit infrastructure for EU’s Southern Gas Corridor. Bulgaria and Greece signed a final investment decision on the interconnector pipeline in 2015. Although originally slated to finish by mid-2018, the start of construction work was repeatedly delayed and it is now expected to be completed in 2021. The release of funds comes a month after the European Commission approved state aid for the project, including the direct financial contribution by the Bulgarian Government. Additionally, the EC approved the unconditional state guarantee, to be granted by the Bulgarian state, to cover a EUR 110 million loan from the European Investment Bank (EIB), as well as a fixed corporate tax regime that will apply to the pipeline’s operator for 25 years from the start of commercial operations and will be governed by an intergovernmental agreement between Bulgaria and Greece.

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Transgaz signs new financing agreements with EIB for strategic projects SNTGN Transgaz SA, a strategic company in the portfolio of the Romanian Ministry of Economy, and the European Investment Bank (EIB) strengthen their cooperation and consolidate the premises for the operationalization of gas infrastructure projects, aimed to increase the security of gas supply and reduce energy dependency by diversifying gas supply sources and routes.

Text by Adrian Stoica n 24 January, Ion Sterian, Transgaz’s Director General, and Andrew McDowell, VicePresident of the European Investment Bank (EIB), signed in Luxembourg two financing agreements, as follows: • Loan agreement of EUR 100mln representing the second tranche of the loan approved for Transgaz, amounting to EUR 150 million; the agreement for the first tranche of EUR 50mln was signed

on 17 December 2018. The European Investment Bank (EIB) granted EUR 150mln to finance a new gas transmission pipeline, with a length of 308.2km, pipeline which will connect Romania’s gas resources from the Black Sea coast with both the national gas transmission network and BRUA corridor (Tuzla Podisor pipeline), thus interconnecting the gas transmission systems of the South-Eastern, Central and Western Europe. This financing is supported by the European Fund for Strategic 34

Investments (EFSI), the financial pillar of the Investment Plan for Europe (‘Juncker Plan’). • Loan agreement of EUR 38mln through which the European Investment Bank (EIB) grants financing to Eurotransgaz SRL, Transgaz’s subsidiary in the Republic of Moldova, to finance Vestmoldtransgaz SRL for Ungheni Chisinau interconnection project. The project consists of: the construction of a new gas transmission pipeline Ungheni - Chisinau, ND 600, NP 55 bar, L=120

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km; three gas delivery stations (two in Chisinau and one in Ungheni, Semeni locality); equipping the steering and dispatching centre in Ghidighici. The gas transmission network Ungheni Chisinau represents phase II of the Iasi - Ungheni - Chisinau interconnection project. “At a symbolic moment for the European destiny of our country, taking over the presidency of the Council of the European Union, we are making serious and sustained efforts to develop the strategic energy transmission infrastructure, which means, in time, economic development for our country. It is of strategic importance that gas produced in the Black Sea be transported through the national transmission system to the Romanian and European market, to increase gas supply security in Romania and the EU and guarantee gas supply to domestic and regional consumers. I wish that Transgaz will pursue with perseverance and tenacity the fulfilment of the assumed investment objectives,” Romania’s Economy Minister Niculae Badalau has stated. “For our company, the cooperation with the European Investment Bank aims to ensure a competitive financing for Transgaz’ strategic investment projects, projects supported by Romania’s Government and designed to truly contribute to the accomplishment of the EU goals for the sustainable development of the gas transmission infrastructure, the increase in interconnectivity, the diversification of gas supply sources and the consolidation of energy security and solidarity. EIB has so far signed with Transgaz three financing agreements, amounting to EUR 50 million each, two for the implementation of the first phase of the Project of Common Interest (BRUA) and one as a first tranche for the construction of Tuzla Podisor pipeline. Today, the agreement for the second tranche was signed, worth EUR 100 million, of the total loan of EUR 150 million granted for this project. The financial support granted by EIB will substantially contribute

to the expansion of the national gas transmission infrastructure and as far as the Ungheni - Chisinau interconnection project is concerned, EIB financing will have a positive impact and will allow the interconnection of the gas transmission systems of the Republic of Moldova and Romania, ensuring gas supply security by diversifying gas supply sources and routes, reducing the energy dependence and the integration of the Republic of Moldova into the EU Energy Infrastructure Projects. The European Investment Bank is confident in Transgaz’s ability to complete such projects and contributes through the granted financing to boosting confidence and solidarity between the EU countries benefitting from such strategic investments,” Ion Sterian has emphasized. “The innovative projects signed today are important for Romania and Moldova, as well as for the European Union. They contribute to gas supply security and diversification of energy resources. This increases the competitiveness in the energy sector, with positive implications for customers in terms of fair prices and reliability,” EIB President has added. Transgaz has endeavoured to obtain non-reimbursable financial assistance for the financing of investment projects with an impact on the upgrade, retrofitting and development of the NTS infrastructure, in order to obtain a financing mix that would provide the lowest cost in financing the development program. Transgaz also has investments planned for the development of the NTS on new directions of consumption in order to ensure the transmission of gas intended for newly established gas distribution systems and to supply new connected consumers, to upgrade and retrofit the NTS, investments which it supports from own funds.

Works have started at the Ungheni-Chisinau gas pipeline Transgaz has started the construction of the Ungheni - Chisinau gas transmission pipeline, objective declared 35

of national interest in the Republic of Moldova. Transgaz last year took over Vestmoldtransgaz, the technical operator of the national transmission system in the Republic of Moldova. In January this year, the directors of Vestmoldtransgaz signed the work procurement contract for building the Ghidighici administrative complex. The event marked the start of works for the investment objective regarding the construction of Ungheni - Chisinau gas pipeline and the implementation of measures for the operation and maintenance of the Iasi - Ungheni Chisinau gas transmission pipeline. “Building this gas pipeline leads to the sustainable development of the national economy of the Republic of Moldova and allows streamlining the energy sector of this country. At the same time, the construction of the gas pipeline ensures energy security, upgrade and development of the existing energy infrastructure, improvement of energy efficiency and integration into the European energy market,” Ion Sterian, Director General of Transgaz, has stated. “Construction of Ungheni Chisinau gas pipeline is an objective of particular importance for Romania, for the Republic of Moldova and for the entire region. It is a strategic project for Transgaz and for the Ministry of Economy. First of all, because it is a clear and concrete proof of the commitment taken by Romania to support the Republic of Moldova. Secondly, because it is one of the measures contributing to the consolidation of energy security: more gas supply sources mean increased energy security. I urge the company to make sure that all the contractual terms are met for the timely completion of the designed works,” Romania’s Economy Minister Niculae Badalau has stated. The Ungheni - Chisinau pipeline will have a length of 120 km and capacity to transport annually about 1.5 billion m3 of natural gas from Romania to Moldova. The Romanian company has committed to investing in the construction of it up to EUR 93 million.

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New Rompetrol gas station in Chisinau R

ompetrol Moldova, the local subsidiary of the KMG International Group, opened recently a new gas station in Chisinau, located in the Ciocana district – 25 Mircea cel Batran Blvd. Currently, the company operates in the capital of the Republic of Moldova a number of 39 Rompetrol gas stations. “Rompetrol has continued in 2018, as well, to increase its presence in Moldova both by opening new gas stations and by positioning itself as the most important fuel supplier on the national level. The appreciation of our customers of Rompetrol’s products and services has supported us in opening 11 new gas stations over the past two years, and with the involvement of more than 900 employees, we have managed to get closer to them,” said Sergey Sevcenco, General Manager of Rompetrol Moldova. Having a total surface of about 2,600 square meters, the new gas station was designed and built in line with the new

concept of Rompetrol gas stations, which aims to create a distinctive environment generated by combining the needs and expectations of customers with the best technical solutions. Located in the centre of the city, the gas station offers a shop and a cafe, being the space for relaxation and meeting for its clients and those living in the area. The area of over 200 square meters allocated to the cafe and shop areas is the largest in the Rompetrol network, plus an outdoor terrace of about 60 square meters. “The investment will have a social impact, both through the 15 newly created jobs and through the local taxes generated by the activity of the station,” adds Sergey Sevcenco. From 2002 until now, Rompetrol has become one of the most important and appreciated brands in the Republic of Moldova, the Efix fuel range being a quality standard for all drivers in the Black Sea region. The Efix range and Rompetrol card - introduced on the local market in 2008, the implementation of the new 36

concept and the opening of new stations allowed the company to reach a 24% share in the retail market in 2018. The company currently operates a network of 84 gas stations, 60 stores affiliated to Rompetrol stations, and 61 LPG distribution points. Due to the two depots in Chisinau and Giurgiulesti, the Group’s subsidiary became the most important supplier of oil and gas products in Moldova. “With the opening of this station, KMG International continues its development not only in Romania but also in the countries where it is present - Republic of Moldova, Georgia and Bulgaria. The experience and know-how accumulated and tested by the Group in Romania are transposed and offered later to our customers in the other countries. In the next period, we will pay special attention to the development of nonfuels products and services in our stations, where we believe there is a major potential for Moldova, Bulgaria and Georgia,” said Vlad Rusnac, Chief Retail Officer of KMG International.

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Romgazâ&#x20AC;&#x2122;s strategic objectives Accelerating the exploration works for identifying new reservoirs, careful monitoring and active intervention of the management in the works related to the Iernut investment project as well as continuous efforts to diversify the business portfolio by constructing new energy objectives, acquisition of alternative energy sources and expanding into other markets, are some of the strategic objectives of Romgaz management.

Text by Adrian Stoica 38

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The Iernut Power Plant is currently 74% complete and the process is being accelerated by working in two shifts during the cold season, so that the project to be completed in 2020.

Increasing production, ongoing major investments and continuous modernization “Rendering the company’s acti vity more efficient by means of debureaucratisation, streamlining pro cedures and business flows as well as attracting professionals in the field, with expertise and adequate know how, capable to contribute to the achievement of the objectives proposed in the development strategy have also been priorities, and we shall continue the modernization process of the company,” Romgaz CEO Adrian Volintiru states. As regards the natural gas production activity, he talks about a significant production increase in 2019, through exploitation of new production capacities put into operation in Caragele Block. Thus, currently, Romgaz has

the capacity to produce approximately 16 million cubic meters per day. “The increase of production was mainly due to the completion of Caragele – Galbenu collector of 16 km in December, and by putting into production wells Tapu 1, Buza de Nord and Beudiu in Q3 2018, it was possible to increase the daily production of this reservoir by approximately 800 thousand cubic meters. Thus, the total 2018 production of Caragele reservoir was of 225.894 million cm, representing 4.2 % of Romgaz total gas production”. Adrian Volintiru mentions, as priority projects for Romgaz, the identification of onshore resources, as well as the Iernut and Mintia power plants. The management takes also an interest in investments in upgrading and predictive maintenance. As regards the Iernut Power Plant, the project is currently 74% complete and the process is being accelerated by working in two shifts during the cold season as well, so that the project to be completed in 2020. The commercial reservoir exploitation activity aims at achieving the provisions of the production program by continuous rehabilitation operations of the main mature reservoirs, performance of well capitalizable repairs operations and putting into operation new production capacities. In Q4 2018, Romgaz supplies were performed under the contracts concluded both by means of centralized markets in Romania as well under the concluded bilateral contracts (especially with final customers). In addition to the quantities supplied to its customers, Romgaz supported the CET Iernut consumption by supplies in amount of approximately 1,300,000 MWh. The prices applied in Q4 2018 for the gas delivered to customers were constantly around the value of RON 81/ MWh. The same tendencies were also maintained for the gas deliveries during January to date. The quantity scheduled to be delivered to Romgaz customers is of approximately 6.6 TWh, and the average price is within the same range of RON 8283/MWh (estimation to date). 39

Expanding on international markets Following the meeting with SOCAR representatives, Romgaz CEO stated that the implication of the Azeri company next to Romgaz in large projects leads to a major opportunity and opens the way for Romgaz’ expansion on the international markets. “Entering a partnership with a company such as SOCAR, with a perspective on expansion, is important for us as it will bring major benefits not only to Romgaz but also to the energy sector and to the national economy as a whole. Romgaz wishes to widen its activity on the external markets, exploring new opportunities and identifying optimum and efficient ways of expanding with profitable implications on the company,” Adrian Volintiru said. During the meeting, projects of common interest were brought up. Namely, the officials of the Azeri company showed an interest in off-shore exploration and production of Black Sea gas, in partnership with Romgaz, if the Romanian company decides to involve in this project. There with, the representatives mentioned the possibility to cooperate on projects aiming at the Trans-Anatolian Natural Gas Pipeline (TANAP) and Trans-Adriatic Pipeline (TAP), whose project financing procedure completed in December 2018 by gathering Eur 3.9 billion. Adrian Volintiru made an official visit in the Republic of Azerbaijan, at the invitation of SOCAR officials. In Baku, they also discussed about the Romanian company’s intention to cooperate both on the onshore area of Azerbaijan and on the offshore area in the Caspian Sea. “Meetings will be held in the following period in order to materialize the discussed topics. We also identified the possibility to exchange know-how with respect to the gas storage activity as the two companies have a similar situation, we have high storage capacities (3 billion cm) and common intentions to develop this activity in both countries,” Romgaz CEO added.

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BSOG moving forward with the Midia Gas Development Project Black Sea Oil & Gas (BSOG) and its co-venture partners, Petro Ventures Resources and Gas Plus International announced on February 7 that they have approved the Final Investment Decision (FID), to proceed with the USD 400 million Midia Gas Development Project (MGD Project), offshore Black Sea.

ID has been taken in good faith and on the assumption that BSOG and its joint venture partners will successfully be able to restore all of their rights with respect to the removal of any newly imposed supplemental taxes and fees as well as removing any restrictions, in accordance with EU Directives, on the free movement of gas on a fully liberalized market in order to not only make MGD Project a viable investment but also to encourage further gas developments in the Black Sea,” the press release reads. The MGD Project, which is the 1st new offshore gas development project in the Romanian Black Sea to be built after 1989, consists of 5 offshore production wells (1 subsea well at Doina field and 4 platform wells at Ana field) a subsea gas production system over the Doina well which will be connected through an 18 km pipeline with a new unmanned production platform located over Ana field. A 126 km gas pipeline will link the Ana platform to the shore and to a new onshore gas treatment

plant (GTP) in Corbu commune, Constanta county, with a capacity of 1 BCM per year representing 10% of Romania’s consumption. The processed gas will be delivered into the NTS at the gas metering station to be found within the GTP, BSOG representatives also note. BSOG has secured a long-term gas sales agreement with a Romanian subsidiary of ENGIE. The contracted volumes refer to all MGD Project gas production, reduced by the volumes that the producers are currently obliged to sell on the centralized market. BSOG has also secured a gas transmission contract with Transgaz for the transport of the MGD Project production into the National Transmission System (NTS) for a contractual period of 15 years. The entire project infrastructure, including all offshore and onshore facilities, has been contracted to be built, installed and commissioned under an EPCIC Contract with GSP Offshore, with a contracted delivery date Q1 2021. The development drilling of the five production wells will also be performed 40

by GSP for which GSP Uranus jack-up rig will deployed. BSOG confirms that all the contracting activities for this project will, in total, have Romanian content of roughly 70%. In 2019, BSOG anticipates having completed the detailed engineering for the MGD Project, commenced the fabrication of the Ana Wellhead Platform at the shipyard in Agigea, commenced the civil constructions at the GTP site in Corbu and have purchased a number of long lead company items. “This project is very much a pioneering project with many firsts having been successfully achieved in Romania. Together with our joint venture partners we very much appreciate all the help we have received along the way from the many Romanian institutions, contractors, Transgaz and our community of Corbu which were vital for reaching this critical milestone of FID and we look forward to build and operate this game changing project for Romania’s energy industry,” Mark Beacom, BSOG CEO commented.

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ROPEPCA warns against regulatory changes The Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) comes back to the public attention on the negative consequences that provisions of Government Emergency Ordinance no. 114/2018 (GEO 114/2018) will have on the entire economy and the natural gas production sector in Romania. ROPEPCA believes that the new regulations will lead to a double loss for both the petroleum sector and the state budget.

he association expects a decrease in tax paid to the state budget ranging between 30% and 60%, depending on each companyâ&#x20AC;&#x2122;s business model. Assuming a price of 90 lei/MWh (BRM average for transactions with delivery in November 2018) and total gas production in Romania (not only ROPEPCA members), the state budget direct losses will amount to at least 2 billion lei per year (coming from the tax on supplementary incomes resulted from the liberalization of the gas market, royalties and profit tax), without taking into account dividends from state participations in gas producing companies as well as VAT for final household consumers and not including additional losses due to reduction of investments, revisions of staff policies, decrease in gas production and corresponding indirect and induced negative economic impact. ROPEPCA members alone have

contributed with more than RON 22 billion to the state budget in the last four years. The regulated price risks to cut up to 50% of the available funds for investment in gas projects. Companies that depend on external financing for carrying out production and exploration projects have already lost their current financing and are in danger of closing down in case no new investors in their business is found. In general, future investments are significantly impacted by the measures imposed, with projects having only marginal profitability or even worse. As a consequence of GEO 114/2018, the association estimates a reduction of up to 50% in the near term in exploration and development projects. It is worth mentioning that ROPEPCA members have invested more than RON 16.5 billion in Romania in the last 4 years. All gas producing fields operated by ROPEPCA members will be evaluated, 42

in view of deciding about shutting in wells and abandoning gas fields. The field life of some marginal fields is heavily impacted and will force companies to abandon them earlier than planned. Apart from that, companies conducting exploration activities have already deferred or cancelled up to 50% of the wells planned to be drilled in the near future and this percentage will surely increase in the mid to long term due to the provisions of GEO 114/2018. It must be stressed out that any cubic meter of gas not produced any more in Romania, as some fields become uneconomical in such conditions, will need to be imported at a price considerably higher from external sources. As a consequence, the negative effect of GEO 114/2018 will be felt by thousands of employees in the energy sector, who are already confronted with job insecurity. Due to the reduction of drilling activities and other reduction of investments, all ROPEPCA members

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have initiated a hire freeze for the current period. The early shut down of producing gas fields will have a high impact on specialized employees in the oil and gas sector. Some operators have signalled a staff reduction of up to 75% in the near future. Hence, many industry professionals, highly specialized, are looking for alternative employment offers in safer projects in other countries. We recall that only ROPEPCA members maintain 14,000 jobs annually, with the entire industry employing 26,000 people directly and creating opportunities for another 20,000 jobs. Introducing changes to the regulatory framework, after the annual and multiannual budgets of companies have already been approved, has created

strong confusion among investors and has led to the need for urgent revision of all operational and development plans. Reliable and stable legislation is key prerequisite for all market players in the sector and therefore authorities should strive for long-term predictability. In addition to the negative effects outlined above, we cannot but notice that not only companies have been taken by surprise. At the moment, there is a deep lack of understanding of how the provisions will be implemented. The National Authority for Energy Regulation (ANRE), responsible in implementing the adopted measures, will need to integrate them in an extremely short time into the legislative framework, while the Ordinance introduces many inconsistencies with provisions in force.

In order to understand in detail the effects of the new obligations both on the companies directly concerned and on all the other market participants, several independent impact studies are carried out for each affected sector, and all results will be made available as soon as they are completed. We reiterate that this normative act obliges producers to sell natural gas produced, mainly to suppliers, at the regulated price of 68 lei/MWh until 2022, as well as levying a 2% tax on the turnover by the National Regulatory Authority for Energy (ANRE), tax which is to be retroactively applied for 2018. The measures adopted should be seen in the context of a legislative framework unfavourable to the development of the Romanian petroleum sector.

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Uncertainties persisting on the oil market Text by Adrian Stoica

rude oil prices have started the year with signs of growth after the collapse by more than 40% starting with October last year. Since they reached the technical and psychological critical level of USD 50/ bbl, in the first week of the year, they managed to recover strongly due to an improved perspective for both supply and, possibly, demand, according to an analysis published by Saxo Bank. In terms of supply, Dallas Fed, in the Energy Survey

for Q4, shows that this growth of the oil and gas sector has stopped in the context of major decline of oil prices.

The trade war between the US and China amplifies problems The (anonymous) comments from top executives in the oil and gas industry provide important details on the new stress caused by the dramatic price collapse. US shale oil production will most likely slow down following the decrease 44

in prices. But if we consider the liquidity during 2014 - 2016, it could take up to six months until the impact is visible in data, which for now continue to show a year-on-year increase of almost 2 million barrels/day, Saxo Bank analysis shows. Although the doubts on continuing the increase in US production are increasingly high, OPEC has strongly reacted to the deteriorated prospects by reducing oil production in December. Surveys on monthly production conducted by Bloomberg and relating to have shown

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that OPEC had reduced production by approximately 500,000 barrels, to 32.6 million barrels/day. The decrease was determined by a voluntary reduction made by Saudi Arabia (420,000 bpd) and the unplanned reductions in Iran (120,000 bpd) and Libya (110,000 bpd). While the reduction of supply can start providing some support, the demand prospect is also necessary to stabilize. Previous liquidity took place at a time of increase in demand. On that base, producers were able, relatively easily, to cut output and shift the direction of oil prices. This time, the situation is different, the analysts of Saxo Bank, OPEC and other producers point out, as they also have to manage a new increase in US production that could take months. Producers should also be concerned in terms of the global

perspective for growth and demand, an aspect on which they have no control. The fact that China (the largest oil importer in the world) and the US (the largest consumer) are in a trade war is an issue. But this does not reflect yet in the official forecasts of OPEC, EIA and IEA, the quoted analysis also shows.

OPEC to cut more than expected OPEC agreed in December 2018 to shave 800,000 barrels per day off its October production levels, with its nonOPEC allies agreeing to cut 400,000 barrels per day, for a combined 1.2 million barrels per day. But Sadad al Husseini, former executive vice president of Saudi Aramco, told CNBC that the cartel could cut as much as 1.2 million bpd - thatâ&#x20AC;&#x2122;s

in addition to its allies who promised to cut 400,000 bpd. All signs from OPEC end of the last year, following a brutal oil price slide, have all indicated that OPEC was aware that the 1.2 million bpd in promised cuts would not quell the market unrest. The United Arab Emirates Energy Minister said at the beginning of the year that a market rebalance should take place in the first quarter of 2019; he also added that OPEC would cut deeper if it turned out to be an insufficient volume of oil taken off the market. Then news came in that Saudi Arabiaâ&#x20AC;&#x2122;s exports had fallen more sharply than expected, and indications are that fewer OPEC barrels - the fewest in five years, in fact - made their way to the United States in December. Most analysts agree that oil prices will stay low if OPEC and its allies fail to make good on its promise.

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Benzene storage New upgrades at Petrobrazi Refinery OMV Petrom continues upgrading works at Petrobrazi Refinery. Over the past six months, benzene facilities and storage tanks have been upgraded, thus reducing emissions of volatile organic compounds. The total value of the project, which includes investments and expenses for upgrade and decommissioning, exceeds EUR 4 million.

ithin this initiative, three existing tanks have been upgraded and six old tanks, of small sizes, used to store benzene, have been decommissioned. Also, pumps used to deliver benzene were equipped with double seals. These works were part of the project for storage capacity optimization, which has led to alignment of the benzene storage infrastructure with the best technical solutions available at international level, thus complying with commitments to the Ministry of Environment and Prahova Environmental Protection Agency in terms of reduction of fugitive emissions. Within Petrobrazi Refinery, benzene is a secondary product, delivered in closed system, having a share of about 0.5% of the refinery’s total capacity. “The activity of storage and upload of gasoline and other products is the main generator of benzene emissions and similar refinery compounds. This is why, as early as in 2008, we focused

Photo: OMV PETROM

on upgrading the tank park (over 50 upgraded tanks) and equipping the loading platforms of tanker trucks and wagons with modern vapor recovery units. Tank upgrading works result in a reduction in emissions of volatile organic compounds from about 99% to 90% 46

a reduction noticeable in 2018. After upgrading the infrastructure associated with the larger facilities, we can also focus on equipment with a low share in terms of emissions in the current activity of the refinery,” Adrian Mincu, Director of Petrobrazi Administration, said.

ENVIRONMENT

Environmental priorities ROMANIAN PRESIDENCY OF THE COUNCIL OF THE EU Deputy Prime Minister and Environment Minister Gratiela Gavrilescu on January 21 presented in the plenary of the European Parliament’s Committee on Environment, Public Health and Food Safety (ENVI) the environmental priorities of the Romanian Presidency of the Council of the European Union. A few days earlier, the Meeting of General Directors/Directors on Climate Change had taken place in Bucharest.

Text by Daniel Lazar

express my confidence that dialogue and collaboration that we will have will shape up the efforts that we need to make, both separately and especially together, in order to complete the legislative dossiers negotiations. Although we have a limited time for these negotiations, I am convinced that together we will identify the best solutions to move forward with the EU Agenda,” Deputy Prime Minister Gavrilescu told MEPs members of the ENVI Committee. After presenting the priorities – climate change, biodiversity, sustainable development and water management – of the evolution of the main legislative

and non-legislative dossiers, along with the most important events that the Presidency will organize, the MEPs had the opportunity to ask specific questions. They wanted to find out more about the approach of the Romanian Presidency on climate change. In this context, Minister Gratiela Gavrilescu highlighted the intention to finalize the negotiations on the dossier on CO2 emissions standards for new heavy vehicles, as well as the new LIFE Program, the main EU funding instrument for the environment and climate change actions. There were also discussions about shaping up a common vision of the EU on the long-term Climate Change Strategy. Other topics of interest addressed 48

by the MEPs referred to the vision on biodiversity conservation, air quality, the approach regarding endocrine disruptors, the assessment of the 7th Environmental Action Programme and clean vehicles. “We are counting both on your support and on a direct dialogue with all of you in order to complete this mission. It is important to be able to directly clarify any matter of common interest with reference to the European Agenda and to see which can be the solutions to move forward with it,” the Romanian dignitary concluded. During the meeting of the General Directors/Directors on Climate Change, which took place in Bucharest, at the Parliament House between 17 and 18

ENVIRONMENT

January, the representatives of the EU Member States have discussed the results of the 24th Climate Change Conference (COP 24), the adoption of the Program of Implementation on the Paris Agreement (PAWP), as well as future activities in the field of climate change. “The fact that weather, climate, water and environmental conditions influence the social-economic development of countries around the world is well-known; also, the increased frequency and intensity of extreme weather phenomena caused by variability and climate change determine major effects in terms of socio-economic impact. According to the last report of the IPCC, published on the 8th of October 2018, the limitation of the process of global warming to 1.5 degrees Celsius requires specific actions and measures of prevention and reduction of impact in all social-economic areas. Limiting temperature increase and adapting to this change have multiple dimensions which need to be taken into consideration in a simultaneous and systematic manner. The Romanian Presidency of the Council of the EU is aware of these challenges, which is why fighting against climate change is one of the four environmental priorities,” Gratiela Gavrilescu said. The meeting was attended by representatives of the European

External Action Service, the European Environment Agency and the General Secretariat of the Council. The Romanian delegation consisted of experts from the Ministry of Environment, the National Environmental Protection Agency and the National Administration of Meteorology. The following topics were included on the agenda: the assessment of the results of the Program for the Implementation of the Paris Agreement (PAWP), the Restructuring of the Secretariat and Budget of the United Nations Framework Convention on Climate Change, subsequent to COP 24 arrangements regarding means of implementation (strengthening the capacity, the evaluation of the needs and the objective post – COP 25), and also the steps to be followed for 2020 (preparation of the European Union for the implementation of the package adopted at COP 24 – Katowice). At the same time, discussions took place that established the working themes for the continuation of the technical subjects of the expert groups. The Romanian Presidency also focused on the initiation of the preparation of the EU position for the session of international negotiations in the field of climate change, which will take place in Bonn, in June 2019. 49

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ENVIRONMENT

Alliance to End Plastic Waste An alliance of global companies from the plastics and consumer goods value chain launched on January 14 a new organization to advance solutions to eliminate plastic waste in the environment, especially in the ocean.

he cross-value chain Alliance to End Plastic Waste (AEPW), currently made up of nearly thirtymember companies, has committed over USD 1.0 billion with the goal of investing USD 1.5 billion over the next five years to help end plastic waste in the environment. The Alliance will develop and bring to scale solutions that will minimize and manage plastic waste and promote solutions for used plastics by helping to enable a circular economy. The Alliance membership represents global companies and located throughout North and South America, Europe, Asia, Southeast Asia, Africa, and the Middle East. “Everyone agrees that plastic waste does not belong in our oceans or anywhere in the environment. This is a complex and serious global challenge that calls for swift action and strong leadership. This new alliance is the most

comprehensive effort to date to end plastic waste in the environment,” said David Taylor, Chairman of the Board, President and CEO of Procter & Gamble, and chairman of the AEPW. “I urge all companies, big and small and from all regions and sectors, to join us,” he added. “History has shown us that collective action and partnerships between industry, governments and NGOs can deliver innovative solutions to a global challenge like this,” said Bob Patel, CEO of LyondellBasell, and a vice chairman of the AEPW. “The issue of plastic waste is seen and felt all over the world. It must be addressed and we believe the time for action is now.” The Alliance is a not-for-profit organization that includes companies that make, use, sell, process, collect, and recycle plastics. This includes chemical and plastic manufacturers, consumer goods companies, retailers, converters, and waste management companies, also known as 50

the plastics value chain. The Alliance has been working with the World Business Council for Sustainable Development as a founding strategic partner. The Alliance also announced an initial set of projects and collaborations that reflect a range of solutions to help end plastic waste: 1. Partnering with cities to design integrated waste management systems in large urban areas where infrastructure is lacking, especially those along rivers which transport vast amounts of unmanaged plastic waste from land to the ocean. This work will include engaging local governments and stakeholders, and generate economically sustainable and replicable models that can be applied across multiple cities and regions. The Alliance will pursue partnerships with cities located in high plastic leakage areas. The Alliance will also be looking to collaborate with other programs working with cities, such as Project STOP, which is working in Indonesia.

ENVIRONMENT

2. Funding the Incubator Network by Circulate Capital to develop and promote technologies, business models and entrepreneurs that prevent ocean plastic waste and improve waste management and recycling, with the intention of creating a pipeline of projects for investment, with an initial focus on Southeast Asia. 3. Developing an open source, sciencebased global information project to support waste management projects globally with reliable data collection, metrics, standards, and methodologies to help governments, companies, and investors focus on and accelerate actions to stop plastic waste from entering the environment. The Alliance will explore opportunities to partner with leading academic institutions and other organizations already involved in similar types of data collection. 4. Creating a capacity building collaboration with intergovernmental organizations such as the United Nations to conduct joint workshops and trainings for government officials and communitybased leaders to help them identify and pursue the most effective and locallyrelevant solutions in the highest priority areas. 5. Supporting Renew Oceans to aid localized investment and engagement. The program is designed to capture plastic waste before it reaches the ocean from the ten major rivers shown to carry the vast majority of land-based waste to the ocean. The initial work will support the Renew Ganga project, which has also received support from the National Geographic Society. In the months ahead, the Alliance will make additional investments and drive progress in four key areas: Infrastructure development to collect and manage waste and increase recycling; Innovation to advance and scale new technologies that make recycling and recovering plastics easier and create value from all postuse plastics; Education and engagement of governments, businesses, and communities to mobilize action; Cleanup of concentrated areas of plastic waste

already in the environment, particularly the major conduits of waste, like rivers, that carry land-based plastic waste to the sea. “Success will require collaboration and coordinated efforts across many sectors – some that create near-term progress and others that require major investments with longer timelines. Addressing plastic waste in the environment and developing a circular economy of plastics requires the participation of everyone across the entire value chain and the long-term commitment of businesses, governments, and communities. No one country, company or community can solve this on their own,” said Veolia CEO Antoine Frérot, a Vice Chairman of the AEPW. Research from the Ocean Conservancy shows that nearly 80 percent of plastic waste in the ocean begins as litter on land, the vast majority of which travels to the sea by rivers. In fact, one study estimates that over 90 percent of river borne plastic in the ocean comes from 10 major rivers around the world – eight in Asia, and two in Africa. Sixty percent of plastic waste in the ocean can be sourced to five countries in Southeast Asia. “While our effort will be global, the Alliance can have the greatest impact on the problem by focusing on the parts of the world where the challenge is greatest; and by sharing solutions and best practices so that these efforts can be amplified and scaled-up around the world”, said Peter Bakker, President and CEO of World Business Council for Sustainable Development. The following companies are the founding members of the Alliance: BASF, Berry Global, Braskem, Chevron Phillips Chemical Company LLC, Clariant, Covestro, Dow, DSM, ExxonMobil, Formosa Plastics Corporation USA, Henkel, LyondellBasell, Mitsubishi Chemical Holdings, Mitsui Chemicals, NOVA Chemicals, OxyChem, PolyOne, Procter & Gamble, Reliance Industries, SABIC, Sasol, SUEZ, Shell, SCG Chemicals, Sumitomo Chemical, Total, Veolia, and Versalis (Eni). 51

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ENVIRONMENT

A steel mill operated by the Luojing Baosteel Group Co. Ltd. in , Shanghai China, is using electricity from this power plant burning hydrogen-rich steel mill gas as a fuel. Image credit: GE Power.

Hydrogen generation Gas turbines running on the most abundant element in the Universe If you studied chemistry in school, the memory of hydrogen will be a blast from the past — literally. You can’t see or smell hydrogen, but you know it’s there when you hear a squeaky pop when holding a lit match above the test tube. Hydrogen’s easy flammability and unparalleled lightness make it easy to understand why NASA uses it as rocket fuel. (It also happens to be the most abundant element in the universe.)

Text by Chris Noon 52

ENVIRONMENT

amed and safely stored in a container, the gas has another virtue: When it burns and combines with oxygen, it can produce electricity that delivers zero carbon dioxide emissions, only water and heat. This seemingly perfect — albeit potentially explosive — marriage has had the energy industry and environmentalists alike excited about hydrogen’s potential as a clean fuel alternative for generating electricity. “Our turbine customers constantly ask how they can take advantage of hydrogen to generate lowcarbon power,” says Jeff Goldmeer, who works on gas turbine products for GE Power. “I tell those customers: It’s possible right now.” Jeff Goldmeer, who used to work at NASA running combustion tests on its low-gravity research aircraft, says that GE’s gas turbines already boast a long history of burning hydrogen blended with natural gas, which has a long list of benefits, in a wide range of concentrations. GE has installed more than 70 gas turbines in the U.S., Asia and Europe that are currently or have significant past experience burning

fuels that contain hydrogen to generate electricity. Together they have racked up more than 4 million operating hours. For instance, the DLN 2.6e combustion system on GE’s recordbreaking HA machines — the world’s fastest-growing fleet of gas turbines — has the ability to burn fuel that contains up to 50 percent (by volume) hydrogen in certain applications. It’s no happy accident, either. GE developed the combustion technology as part of a U.S. Department of Energy program to make a gas turbine capable of burning high concentrations of hydrogen. And hydrogen is also in ready supply inside many factories. For example, hydrogen is present in the coke oven gas and blast furnace gas that are by-products of the steelmaking process, as well as in the waste gases of an oil refinery. Instead of flaring the hydrogen-rich gas, plant operators can feed this fuel into their turbines to generate power for the plants. Take the Gibraltar-San Roque oil refinery in Spain, where the GE-made 6B.03 turbine has logged thousands of hours burning a blend of fuel gas and hydrogen. This same 6B.03 machine is also working in a South Korean refinery, where it has racked up more than 20 years burning a fuel blend containing more than 70 percent hydrogen. This turbine has even gone all the way up to a 90 percent hydrogen blend. For eight years, a petrochemicals plant in Louisiana has also been feeding a blend of hydrogen and natural gas to its four GE-manufactured 7F gas turbines. These hydrogen-ready turbines allowed the operators of the industrial plants to save millions of dollars on their supplies of natural gas, which would be the ‘traditional’ fuel for the machines. Hydrogen-ready turbines could also have a big role to play in the world’s efforts to reduce carbon emissions. If you blend hydrogen with the natural gas supply to these turbines, you can take a hefty chunk out of a grid’s carbon emissions. For instance, using a 5 percent blend of hydrogen in the natural gas supply to GE’s 9F.03 gas turbine reduces its 53

annual CO2 emissions by nearly 19,000 metric tons. A 50 percent blend saves 281,000 tons, while 95 percent blend cuts CO2 emissions by a whopping 1.04 million tons. That’s equivalent to the annual carbon footprint of nearly 70,000 Americans. “The beauty of these turbines is their fuel flexibility,” Goldmeer says. “They’re part of the solution.” Hydrogen-capable turbines can also help reduce emissions by adding more renewables to the generation mix. The issue of intermittency still hangs over renewable power: The wind doesn’t always blow and the sun doesn’t always shine. These hydrogen-burning turbines can smooth over such gaps by generating reliable power for the grid when there’s a surplus, rather than a deficit, of renewable power. For example, in both 2015 and 2016, Germany and the U.K. together recorded around 5 terawatt-hours of ‘curtailed’ wind power — electricity that could have been produced but wasn’t, due to lack of demand and other factors. That’s enough to power all of India for an entire day. But what if all that that wasted wind power could instead be used for electrolyzing water, a process that uses an electric current to split water — H2O — into its constituent atoms and generate oxygen and hydrogen. This way, you can have hydrogen, a potent fuel with zero-carbon emissions that has itself been produced by harnessing carbon-free wind power that would otherwise have been wasted. “There are many ways to create carbonfree power, including injecting that hydrogen into the entire gas grid to create electricity from existing gas turbines,” says Goldmeer. The GE engineer points to a quote from Jules Verne, the French father of science fiction writing, whose books were full of memorable technological prophecies. Verne said in 1874 that water’s two constituents, hydrogen and oxygen, “used singly or together,” would eventually furnish mankind with an inexhaustible source of heat and light. “It looks like he could have been scarily right,” concludes Goldmeer.

CONSTRUCTION

3D-printing of glass Additive manufacturing technology Scientists from MIT’s Mediated Matter Group have developed a method for the 3D-printing of glass at ‘architectural scale,’ paving the way for its incorporation as a better building material.

Text by Sam Worley

s the team explains in 3D Printing and Additive Manufacturing (AM), glass came into widespread use in windows and other household objects due to manufacturing advances during the Industrial Revolution — but because the technology hasn’t much advanced since then, “processes for the fabrication of complex geometry and custom objects with glass remain elusive.” In short, we haven’t been able to take full advantage of glass’ unique properties as a building material, including its light refraction. They write, “combining the advantages of this [additive manufacturing] technology with the multitude of unique material properties of glass such as transparency, strength, and chemical stability, we may start to see new archetypes of multifunctional building blocks.”

How does it work? The team fabricated a set of 3-metertall glass columns for Milan Design 58

CONSTRUCTION

Week 2017, and have returned with a full technical explanation of how they achieved it: via a â&#x20AC;&#x2DC;three-zone thermal control system,â&#x20AC;&#x2122; including one heated box that holds the melted glass, and another container in which the object is printed.

One of the oldest production materials Advancements in manufacturing during the Industrial Revolution enabled the widespread use of glass in buildings

and household objects. Nonetheless, processes for the fabrication of complex geometry and custom objects with glass remain elusive. Glass involves complex material chemistry and requires extreme working temperatures underlying the persistent challenges associated with its design and production. AM with molten glass presents a potential path toward production of highly complex geometry and custom-designed objects while retaining the optical transparency

The two platforms and dimensions of G3DP on the left, and G3DP2 on the right. Image credit: Mary Ann Liebert, Inc., publishers

Left: part produced on G3DPwith unexplained deviations from the intended CAD, orange highlight indicates convex CAD surface, blue indicates concave CAD surface. Right: plan view of path of base layer, bold line shows deviation from intended profile, dotted lines indicate aberrant generated curvatures. Image credit: Mary Ann Liebert, Inc., publishers

and chemical stability available through traditional manufacturing processes. G3DP2 is a new AM platform for molten glass that combines digitally integrated three-zone thermal control system with four-axis motion control system, introducing industrial-scale production capabilities with enhanced production rate and reliability while ensuring product accuracy and repeatability, all previously unattainable for glass. A series of material characterizations were conducted to evaluate the mechanical properties of the 3D-printed glass products produced by G3DP2. A set of 3-m-tall glass columns was designed, engineered, and digitally fabricated for Milan Design Week 2017, highlighting the geometric complexity, accuracy, strength, and transparency of 3D-printed glass at an architectural scale for the first time and a critical step in utilizing the true structural capacity of the material. Together, the installation and the G3DP2 platform serve as a foundation for future work and suggest exciting possibilities associated with the digital fabrication of glass as well as potential applications in product and architectural design. Glass is one of the oldest production materials. Its earliest appearance as cast glass during 2500 BCE and blown glass in 100 BCE has changed little throughout history constrained by the complex material chemistry and extreme working temperatures required. Innovations in glass blowing and moulding, combined with seminal glass science research, revolutionized glass making and enabled individual production lines to output about 10 million containers per year or 2000 light bulbs per minute. During the same period, the invention of the float glass manufacturing process allowed for faster continuous production of flat glass panels. The rate of flat glass production increased by 25 times, a six-fold increase per capita, between 1899 and 2009, and industrialization brought a new wave of affordable glass products with increased performance. Machine-made bottles, light bulbs, and windows have all contributed to reshaping the world and the built

CONSTRUCTION

Top right: scan of three-axis pen test. Left: scan of four-axis pen test. Nozzle replaced by blue and orange pens capturing relative orientation between nozzle and build plate during motion. Bottom left: test of extrusion with three-axis motion control showing constant wall thickness. Bottom right: test of extrusion with four-axis motion showing increased wall thickness at inflection points as a result of jerk-limited accelerations. Image credit: Mary Ann Liebert, Inc., publishers

environment. Alas, these products were characterized by increased homogeneity and decreased customizability. Since the mid-20th century, glass manufacturing has shifted again, with a diverse group of functionalized products arising from innovations in glass chemistry, including chemical doping for high-strength sheet glass and controlled refractive index for fibre optic data lines. These processes have expanded the applications of glass products, but geometries remain simple as the cost of complexity remains prohibitively high. Recent studies on additive manufacturing (AM) of glass suggest possible intersections of both types of sectors, where creativity and complexity are achieved without limitation by quality, performance, or cost.

Goals for the industrial-scale glass 3D printer G3DP2 The first phase of glass printer development focused on a proof of concept that demonstrated the feasibility

of creating optically transparent objects through the deposition of molten glass. The second phase focused on research and development of an industrial-scale platform, and established a new set of objectives that guided system design, development, and production of parts. With structural applications the goal, dimensional accuracy, and fidelity of both process and product were the measures of feasibility, linking two distinct objectives, which were pursued together. The following objectives served as a backbone for the research: 1.Develop an industrial-scale molten glass feedstock 3D printer by extending the research previously conducted at MIT, enhancing the material properties and range of products that could be produced. 2.Develop an architectural-scale 3D-printed glass structure to evaluate the practical capabilities of the new system in an industrial production.

From prototype to industrial platform Key performance metrics of speed, 60

volume, repeatability, and reliability were identified for improvement in upgrading the platform for industrial and architectural output capability. In addition, the small feed volume and fragility of components in the previous platform (including a mobile ceramic print head and resistive heater) challenged the scale of output. Improving it required addressing even greater physical and thermal inertia and stress on mechanical components, prompting a ground-up machine redesign. The new platform is a two-part vertical assembly: an upper, stationary thermal module with a digitally integrated three-zone heating control system regulating glass flow and a lower, motion module with a four-axis computer numerical control (CNC) system that moves the print bed. In this architecture, the thermal energy applied to the heating system was decoupled from the mechanical load of the motion system. This allowed for improved durability of both systems through careful consideration of material properties and detailed analysis of constituent parts supporting each separate module. Still, critical focus was given to the print head itself, situated at the interface between the modules and requiring the highest thermal and mechanical performance from its material choice.

Printed glass behaviour: understanding and control A critical challenge in developing industrial glass manufacturing is to understand material behaviour across a wide range of temperatures. Glass is a viscous liquid with many nonlinear properties, and its behaviour is highly sensitive to temperature. Furthermore, due to the high-temperature atmosphere and materials involved in fabrication, it is difficult to observe and even harder to measure in situ during the printing process. Only after a part is printed it can be properly analysed, but the result is a product of the compound behaviours of both the machine and the material itself.

POWER

Energy priorities The Clean Energy Package and the Gas Directive

omania officially took over as of 1 January the rotating presidency of the European Commission, being the first time when our country holds this position since its accession to the European Commission. The priorities of the Romanian Presidency of the Council of the European Union (EU), role that our country has officially taken over from Austria, are substantiated on the imperative of cohesion, declining in the four main pillars of action: (1) Europe of convergence: growth, cohesion, competitiveness, connectivity; (2) Europe of safety; (3) Europe, global actor; (4) Europe of shared values. During 1 January - 30 June 2019, Romania will exercise its first mandate at the rotating Presidency of the Council of the European Union, on the background of a European agenda marked by political developments and dossiers with a decisive impact on the future of the Union. Britain’s process of exiting the EU, the negotiation of the Union budget for the period 2021 - 2027, the European Parliament elections in May 2019, preceded by a campaign with major political stakes, are on the agenda of the current EU Council Presidency, the Romanian Ministry of Foreign Affairs has announced. As regards the priority themes that Romania will promote

during this mandate, they have been presented by each minister separately.

Energy priorities On 23 January, Energy Minister Anton Anton presented in the plenary of the ITRE Committee of the European Parliament the priorities in the energy field of the Romanian Presidency of the Council of the European Union. “PRES RO will assume the role of mediator during this mandate, in order to contribute to the consolidation of the Energy Union in the two integrated spheres of energy and climate issues,” the Romanian minister said. Referring to European consumers, he added that PRESS RO vision “places the citizen of each Member State in the centre of our common efforts, focusing actions on energy sources diversification, security of energy supply and price affordability policy. The European Parliament, together with the European Commission, of course, are our reliable partners in achieving this goal.” Of the objectives of the Romanian Presidency of the Council of the European Union, Minister Anton Anton highlighted the attention paid by Romania to the confirmation of political agreements for the dossiers related to the Clean Energy Package, as well as to the constructive action for negotiating the Gas Directive. 62

At the same time, the Romanian Presidency of the Council of the European Union will advance the recent legislative proposals, as well as the Regulation on Tire Labelling and the Adaptation of the Energy Efficiency Directive and the Energy Governance Regulation in the context of Brexit. The Romanian official has also brought to the fore the Regulation on Europe’s Interconnection Mechanism: “Our objective is to achieve as many progresses as possible in the interinstitutional negotiations on this dossier.” As far as the Energy Community is concerned, Minister Anton Anton has stated: “This is one of the success histories of the European foreign policy in the energy field. Romania is a founding member of the Energy Community, since 2005 - 2006, before its accession to the European Union. Thus, the Romanian Presidency hopes to complete as soon as possible negotiations in order to amend the Energy Community Treaty to achieve an important stage in terms of market functioning and security of energy supply.” With regard to nuclear plant decommissioning dossiers, Minister Anton Anton has stressed that decommissioning programs were one of the priorities of PRES RO, for a safer Europe, strengthening nuclear safety and contributing to the safety of European citizens and of the environment.

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From pipes to platforms Success of transition depends on distribution grids According to the Union of the Electricity Industry (Eurelectric), new tools and business models for power distribution system operators (DSO) will be critical for the success of the energy transition. This was the message of Eurelectric conference â&#x20AC;&#x2DC;From pipes to platformsâ&#x20AC;&#x2122;, calling on Member States and Regulators to speed up the development of fit-for-purpose DSOs when implementing the Clean Energy Package. This process will require clarification of a number of legislative provisions that have been left unclear and uncertain.

leven years from now, the European power sector will look very differently than it does today. By 2030, more than half of all electricity is expected to come from renewable assets and the recently agreed transport legislation will bring more than 40 million electric cars on road in the same period, according to European Commission estimates. At the same time,

the amounts of connected electric heat pumps, batteries and other grid edge technologies are expected to rise steeply as well. These developments will result in a much more decentralised electricity system and require the European power distribution companies to move way beyond their traditional role of ensuring network connection and reliability. A new report published by EY indicates 64

that the energy transformation may accelerate at even greater pace. The report notably finds that roof-top solar panels are perceived as becoming economically viable as soon as 2025. Demand-side storage, grid connected storage, EV charging infrastructure are also likely to be in the money ahead of 2030, adding to the urgency for DSO transformation. The Clean Energy Package leaves several provisions concerning the new

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activities of DSOs open to the national interpretation of Member States and scrutiny of national Regulators. A uniform implementation across Member states is important for companies operating in several countries and regulatory barriers to innovation should be minimised. “The energy transition is on fastforward. Distribution companies are the linchpin of the future system, which is more decentral and more interactive. They urgently need the support of regulators and member states to play their role in the new system,” said Kristian Ruby, Secretary General of Eurelectric. With increased reliance on electricity for transport, heating and other critical

consumer services, the DSOs will also be more directly exposed to customers and potentially to public criticism in case of bottlenecks of supply failures. “DSOs need to change mind-set and realise sizeable investments to draw on the full potential of technological advancements and embed digitalisation in network management operations. New functional areas will emerge from such a high magnitude energy transition. European regulators must ensure the right framework is set to incentivise investments and provide market certainty,” added Knud Pedersen Chair of Eurelectric’s Distribution & Market Facilitation Committee. “Energy transformation in Europe

will accelerate at great pace over the next five years. Distribution system operators need to plan for critical adjustments now to create an energy system that is fit for the future”, said EY Global Power & Utilities Advisory Leader, Serge Colle. The event ‘From pipes to platforms’ took place in Brussels, on January 24. Eurelectric is the sector association representing the common interests of the electricity industry at pan-European level and brings together over 3500 companies with an aggregate turnover of EUR 200 billion. It covers all major issues affecting the sector, including electricity generation and markets, distribution networks, customers, as well as environ ment and sustainability aspects.

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POWER

FORATOM priorities for 2019 Climate Change, Sustainability and Jobs FORATOM President Teodor Chirica and Director General Yves Desbazeille highlighted the association’s priorities for 2019.

ast year ended on a high for the nuclear industry. At international level, the IPCC made it clear that nuclear power is essential if the world is to keep global warming to below 1.5 degrees. The IEA also issued a stark warning to the EU that, whilst nuclear is a low-carbon source of baseload electricity capable of ensuring security of supply, current EU policies are discouraging investments in new nuclear power plants and the long-term operation of existing reactors. And the European Commission (EC) confirmed that nuclear will form the backbone of a carbon-free European power system, together with renewables. “But our work is certainly not over. Many political changes are coming over the next 12 months, most notably Brexit, the election of a new European Parliament and the appointment of a new European Commission, all of which will change the EU landscape. In the longer term, it is important for our industry to work together with decision makers to develop an investment-friendly framework which will encourage a significant nuclear new build programme,” FORATOM said.

The association sees many opportunities to engage on key issues of importance to the EU, but their 3 main policy priorities for the year are: • CLIMATE CHANGE: With the pu blication of both the EC’s ‘A Clean Planet for All’ communication and the FTICL Energy Consulting study ’Pathways to 2050: role of nuclear in a low-carbon Europe’ commissioned by FORATOM at the end of 2018, the foundations have been laid for future actions on climate change. The EU now recognises the important role of nuclear in the electricity mix as part of the solution to a lowcarbon future. Over the next 12 months, the association will continue to feed into discussions at EU level, providing reliable facts and data which demonstrate how nuclear will help Europe reduce its CO2 emissions, whilst at the same time providing people with the affordable electricity they need when they need it. • SUSTAINABILITY: Broader en vironmental impacts, including land use, raw materials and air pollution are key questions which FORATOM plans to tackle over the next 12 months. When 66

assessing whether an energy source is sustainable or not, it is essential that a whole life cycle approach be considered to better account for all environmental impacts. Nuclear has a lot to offer, as it does not require vast volumes of land nor raw materials to produce significant amounts of energy. The association will also be working hard to ensure that decisions relating to sustainable finance are based on objective criteria, rather than an ideological list of what people think are, or are not, sustainable. • JOBS: As one of the flagship areas of the current EC, FORATOM will continue to promote nuclear as a European industry which generates a significant number of jobs throughout its value chain. To demonstrate this, FORATOM has engaged an external consultant to conduct a study which will identify exactly what the sector has to offer in terms of jobs in Europe. At the same time, the industry is concerned about the increasing skills shortage. The association will therefore work together with their members, and via EU funded projects such as ENEN+, to attract the young generation towards a career in the nuclear field.

POWER

Cernavoda Nuclear Power Plant modernisation Korea Hydro & Nuclear Power (KHNP) has signed an agreement with USA-based engineering firm Sargent & Lundy to collaborate on a planned modernisation project at Romania’s Cernavoda Nuclear Power Plant (CNPP), World Nuclear News reports.

omania has two 650 MWe (net) pressurised heavy water reactors (PHWRs) at its Cernavoda site, which together provide about 17% of the country’s electricity. As part of a modernisation project, the Cernavoda plant is planning to order tritium removal facilities, radioactive waste storage facilities and pressure channels. The Cernavoda reactors are of the same design as the Wolsong nuclear power plant in South Korea, at which KHNP has already completed a similar modernisation project. Sargent & Lundy has also participated in upgrading Canadian PHWRs. “With this in mind, it is expected that the company will be able to bring new vitality to the domestic nuclear power industry through the joint venture with domestic nuclear power companies and the Romanian nuclear power plant business,” KHNP said. The South Korean company said it plans to focus its efforts on gaining orders in Europe, including in the Czech Republic and Poland. Located in Constanta County, the Cernavoda plant was initially planned as the site for five Candu 6 reactors. Units 1 and 2 started operations in 1996 and 2007, respectively. In October 2017, Nuclearelectrica received shareholder approval to start upgrading unit 1 of the Cernavoda plant. Phase I of the refurbishment project will include “activities necessary to ensure the operation of unit 1 for a period of 30 years, meaning the extension of the operating hours at nominal power in addition to the 210,000 hours initially estimated by the design,” Nuclearelectrica announced. The refurbishment outage at the

The signing ceremony for the agreement between KHNP and Sargent & Lundy (Image: KHNP)

unit is expected to take place between December 2026 and December 2028. KHNP is South Korea’s largest electric power company. It generates approximately 31.5% of the total electric power generated in South Korea. In 1976, construction began on the Wolsong Generating Station in South Korea, Canada’s first thirdgeneration reactor export to Asia. Since then, South Korea has added three more CANDU units to its Wolsong facility. The CANDU nuclear power plants are owned and operated by Korea Electric Power Corporation (KEPCO), a wholly government-owned corporation. KHNP operated 24 nuclear power units and another 8 are under construction. Out of the 20 operational units, four are CANDU-6 reactors at the Wolsong Nuclear Power Site. Nuclear power provided about 30% of total power generation in South Korea in 2014. 67

POWER

Batteries to save the day? Innovation and breakthroughs that will make batteries relevant for years to come We discuss the future of energy storage based on new studies on lithium-ion batteries and technological breakthroughs in the form of water-fuelled batteries to be implemented come 2020, all from the perspectives of feasibility and cost.

Text by Vlad-Adrian Iancu 68

POWER

here did my energy go? This might seem a too farfetched question, but for some it is vital. Energy storage is likely to become equally as important as energy generation itself. While energy production methods are still up for debate, fossil versus green, the world agrees that we do indeed need smarter and more effective energy storing options. Enter batteries. Widely used as a form of energy storage already, they might just show their true potential in years to come by becoming the cheapest option for storing electricity. The technology itself likely just needs a nudge in the right direction. Is science ready to provide it? According to a new study, by 2050 the cheapest way to store electricity from sources like wind farms or solar, will be lithium-ion based batteries. Several methods of storage are comprised in this study, among which feature largescale batteries and pumped-storage hydroelectricity. Of course, the inherent future costs are also calculated. The

winner seems to be the lithium-ion battery especially when talking about consumers managing their bills and making sure energy grids are protected from fluctuations. This new study which was published at the Imperial College London might be exactly what the doctor ordered for investors and policymakers on the lookout for solutions in the energy storage technologies business. What’s different from other forays into the subject is that this specific study focuses not only on investment cost, but also on the full cost of storing, including investment, operation and charging cost, technology lifetime, efficiency and performance degradation. Their model is quite the pioneer, according to Oliver Schmidt: “Our model is the first to project full energy storage costs into the future, allowing predictions of which technology will be most competitive in a particular application at a particular time.”1. Presently, the cheapest solution is advocated to be the pumped-storage hydroelectricity but it does have its drawbacks: over time the cost does not decrease. This is where the lithium-ion gains the upper hand, seeing as costs for this technology actually decrease over time; it is set to become the cheapest option for most needs by 2030. Some exceptions come from situations when the stored energy must be discharged frequently or over a long time period. The fix for these situations is represented by hydrogen storage and flywheel technologies. The main plus for lithiumion and the factor that will eventually see its value decrease for the next decades is the fact that they are manufactured at scale. Dr Iain Staffell adds: “We have found that lithium-ion batteries are following in the footsteps of crystalline silicon solar panels. First-generation solar cells were high performance but very expensive, so cheaper secondand third-generation designs were developed to supersede them. However, sheer economies of scale mean these

first-generation panels now cannot be beaten on price.”2 It stands to reason that more common place a resource is, the cheaper it will be. Schimdt goes on to add that other technologies should not be immediately considered obsolete as a result, rather an optimization of efficiency and performance is required if they are to be deployed globally. The model is openly available for all to use and run their own simulations with specific data. Another interesting development is the water-fuelled battery. Log 9 Materials, an Indian company, branch of the Indian Institute of Technology Roorkee, has brought forward a metal air battery with and energy density ten times that of conventional lithium-ion. The battery uses graphene and its fuel is water, as a result requiring refilling every 100 kilometres. The only component that has to be regularly replaced is the aluminium anode, every 1000 kilometres, and even better news - it is recyclable. This would allow for circumventing the need for recharging, charging stations and inherent infrastructure, as well as assuring zero emissions. But it does not stop here: other benefits include smart energy generation and storage as well as decreased reliance on cobalt. This concept is already present in our thoughts for the future, with companies already researching similar technologies. As expected, the leader in EV vehicle market, namely Tesla, has already shown interest. The drawbacks for this technology include the inevitable loss of battery performance due to corrosion and as such plans for prototype use in mobility applications are scheduled for 2020. Allegedly, this technology is expected to be cheaper or equal to the current lithium-ion offer. Luckily, 2020 and indeed 2030 are just around the corner and we’ll get to see these improvements in action. Plans sound good, but experience will tell if this is indeed the best option. However, we never know what’s around the corner. Who’s to say we will not find something better in the meantime?

1 www.imperial.ac.uk/news/189691/batteries-predictedbecome-cheapest-option-storing

2 www.imperial.ac.uk/news/189691/batteries-predictedbecome-cheapest-option-storing

RENEWABLES

Sunliquid pre-commercial plant in Straubing, Germany. Image credit: Clariant.

Joint research into cellulosic biofuel ExxonMobil and REG partner with Clariant ExxonMobil and Renewable Energy Group (REG) announced that they have signed a joint research agreement with Clariant to evaluate the potential use of cellulosic sugars from sources such as agricultural waste and residues to produce biofuel, which has the potential to play a role in reducing greenhouse gas emissions.

he new partnership exÂ pands a previously announced agreement for joint research between ExxonMobil and REG,

in which the companies successfully validated the ability of REG Life Sciences bio-conversion technology to convert sugars from cellulosic biomass into biodiesel through a single-step process. 70

The new agreement with Clariant allows ExxonMobil and REG to further optimize REGâ&#x20AC;&#x2122;s bio-conversion process using previously tested and benchmarked cellulosic sugars created

RENEWABLES

through Clariant’s sunliquid® process. The companies’ ultimate objective is to combine Clariant’s and REG’s processes into a seamless cellulosic biomass-tobiodiesel technology. “Over the past three years, our work with REG has led to important advances in genetically improving REG’s proprietary microbes for a beneficial use in facilitating the conversion of cellulosic sugars into biodiesel,” said Vijay Swarup, Vice President of Research and development at ExxonMobil Research and Engineering Company. “Applying Clariant’s expertise and knowledge will help us better understand and advance a key stage in the overall cellulosic conversion process, and hopefully lead to the development of scalable biodiesel technology.” Clariant is a leading company offering integrated technologies and solutions for converting agricultural residues such as wheat straw, rice straw, corn stover and sugar cane bagasse. Clariant’s sunliquid® process features chemical-free pretreatment, the integrated production of feedstock and process-specific enzymes and thus high yields of fermentable C5 and C6 sugars. Clariant will conduct trials at its pre-commercial plant in Straubing, Germany using different types of cellulosic feedstock that will be converted into sugars for conversion by REG and ExxonMobil into high-quality, low-carbon biodiesel. “We are committed to innovation and R&D, together with a focus on sustainability, as main pillars of Clariant’s strategy,” said Christian Kohlpaintner, Member of Clariant’s Executive Committee. “Our sunliquid® technology platform is a key outcome of this commitment. We are proud that two strong allies in the biofuels industry have selected Clariant as their partner and are excited to work with them on further leveraging this unique technology for converting cellulosic biomass to fuels and chemicals, including biodiesel.” REG Life Sciences technology has proven its broad applicability to industries as diverse as flavor and fragrance,

specialty chemicals and transportation fuels. Through its partnership with ExxonMobil, REG has developed proprietary technology that utilizes industrial microbes to convert complex cellulosic sugars into low-carbon biodiesel in a one-step fermentation process. “ExxonMobil has been an exceptional partner in developing this promising technology,” said Eric Bowen, Vice President of REG Life Sciences. “We are delighted to be able to add Clariant to the team with its market leading sunliquid® technology. We believe we have assembled a dream team for conversion of cellulosic biomass to low carbon biofuels and are excited about the promise of this collaboration.” The partners will also work on a conceptual engineering study to validate the feasibility of the integrated process comprising the technologies of all parties. A breakthrough in cellulosic biodiesel production could have broad implications for the transportation sector. Global demand for transportationrelated energy is projected to increase by about 25 percent through 2040, and accelerating the reduction in emissions from the transportation sector through technologies like biodiesel will play a critical role in reducing global greenhouse gas emissions.

About Renewable Energy Group Renewable Energy Group is a leading provider of cleaner, lower carbon intensity products and services. It is an international producer of biomass-based diesel, a developer of renewable chemicals and North America’s largest producer of advanced biofuel. REG utilizes an integrated procurement, distribution, and logistics network to convert natural fats, oils, greases and sugars into lower carbon intensity products. With 14 active biorefineries, a feedstock processing facility, research and development capabilities and a diverse and growing intellectual property portfolio, REG is committed to being a long-term leader in bio-based fuel and chemicals. 71

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RENEWABLES

New energy age A world of power, security, energy independence and prosperity Global Commission on the Geopolitics of Energy Transformation says the new energy age will reshape relations between states and regions; bringing â&#x20AC;&#x2DC;A New Worldâ&#x20AC;&#x2122; of power, security, energy independence and prosperity. 72

RENEWABLES

olitical and business leaders from around the world have outlined the far-reaching geopolitical implications of an energy transformation driven by the rapid growth of renewable energy. In a new report launched on January 11 at the Assembly of the International Renewable Energy Agency (IRENA), the Global Commission on the Geopolitics of Energy Transformation says the geopolitical and socio-economic consequences of a new energy age may be as profound as those which accompanied the shift from biomass to fossil fuels two centuries ago. These include changes in the relative position of states, the emergence of new energy leaders, more diverse energy actors, changed trade relationships and the emergence of new

alliances. The Commission’s report ‘A New World’ suggests that the energy transformation will change energy statecraft as we know it. Unlike fossil fuels, renewable energy sources are available in one form or another in most geographic locations. This abundance will strengthen energy security and promote greater energy independence for most states. At the same time, as countries develop renewables and increasingly integrate their electricity grids with neighbouring countries, new interdependencies and trade patterns will emerge. The analysis finds oil and gas-related conflict may decline, as will the strategic importance of some maritime chokepoints. The energy transformation will also create new energy leaders, the Commission points out, with large investments in renewable energy technologies strengthening the influence of some countries. China, for instance, has enhanced its geopolitical standing by taking the lead in the clean energy race to become the world’s largest producer, exporter and installer of solar panels, wind turbines, batteries and electric vehicles. Fossil-fuel exporters may see a decline in their global reach and influence unless they adapt their economies for the new energy age. “This report represents the first comprehensive analysis of the geopolitical consequences of the energy transition driven by renewables, and a key milestone in improving our understanding of this issue,” said Commission Chair Olafur Grimsson, the former President of Iceland. “The renewables revolution enhances the global leadership of China, reduces the influence of fossil fuel exporters and brings energy independence to countries around the world. A fascinating geopolitical future is in store for countries in Asia, Africa, Europe and the Americas. The transformation of energy brings big power shifts.” “The global energy transformation driven by renewables can reduce energyrelated geopolitical tensions as we know 73

them and will foster greater cooperation between states. This transformation can also mitigate social, economic and environmental challenges that are often among the root causes of geopolitical instability and conflict,” said Adnan Z. Amin, Director-General of IRENA. “Overall, the global energy trans formation presents both opportunities and challenges,” continued IRENA Director-General. “The benefits will outweigh the challenges, but only if the right policies and strategies are in place. It is imperative for leaders and policy makers to anticipate these changes, and be able to manage and navigate the new geopolitical environment.” The Commission says countries that are heavily reliant on fossil fuel imports can significantly improve their trade balance and reduce the risks associated with vulnerable energy supply lines and volatile fuel prices by developing a greater share of energy domestically. With energy at the heart of human development, renewables can help to deliver universal energy access, create jobs, power sustainable economic growth, improve food and water security, and enhance sustainability, climate resilience and equity. The report was launched by the Commission at IRENA’s ninth Assembly in the presence of ministers and senior policymakers from more than 150 countries. The Global Commission on the Geopolitics of the Energy Transformation was established as an independent initiative by the International Renewable Energy Agency (IRENA) in January2018 during the eighth IRENA Assembly. Chaired by Olafur Grimsson, the former President of Iceland and supported by the governments of Germany, Norway and the United Arab Emirates, the Commission was mandated to raise awareness and deepen understanding of the geopolitical implications of the energy transformation driven by renewables. The Commission is made up of experienced leaders from the worlds of energy, politics, trade, environment and development.

METALS & MINING

USD 100 billion by 2024 Growth forecast for mining equipment market According to Global Market Insights report, mining equipment market is expected to be around USD 100 billion by 2024. Increasing investments in developing innovative and smart solutions will drive the mining machinery market. Rising demand for advanced extraction solutions is encouraging the players to increase their R&D activities to cater to the requirement of the customers.

he industry is witnessing a growing demand for connected technologies for monitoring the industrial processes. Several players are engaged in developing IoT-based equipment for remote monitoring and control. It was estimated that around 40% of the manufacturers in the industry are planning to implement IoT-connected technologies for performing extraction activities. Increasing health & safety concerns about

the workers are propelling the adoption of automated solutions in the mining equipment market. Several countries including the U.S., Germany, and France are developing machine safety regulations for the safety of the industrial laborers. For instance, the European Act of 1986 on health and safety outlines several guidelines for the protection of workers from hazardous industrial environments. Such regulations are promoting companies to adopt effective solutions developed for reducing the chances of workplace accidents. The manufacturers in the 74

mining machinery market are providing several safety features and functions in these machines including gas detection system, wireless personnel tracking, conveyor belt monitoring and ground control, and strata management systems. Drills & breakers are experiencing a high adoption in the mining equipment market with an increase in surface and underground extraction activities. The application of rotary blasthole drills for coal and metal mining processes is growing rapidly. Manufacturers

METALS & MINING

in the mining machinery market are developing customized solutions based on the specifications of the companies. For instance, Sandvik AB is providing 1190E Rotary Blasthole Drill Rig, which is an electricpowered equipment designed specifically for coal extraction processes. The Asia Pacific region is witnessing a high adoption of these solutions owing to the favourable policies regarding the export of metals and minerals. Countries including India, China, and Australia are among the largest coal producing economies of the world. The applications of these machines for mineral extraction are expected to grow owing to the rising demand for fossil fuels in several application areas. Growing demand for crude

oil, natural gas, and coal for energy generation is expected to drive the extraction process. Countries including China, Ukraine, Colombia, Australia, and Russia are the largest producers of fossil fuels. These countries are witnessing a high adoption of mineral processing machinery thereby driving the mining equipment market. The global production and consumption of these minerals are increasing rapidly. Crude oil is the largest energy source that accounts for around 39% of fossil energy. Major companies participating in the mining machinery market are Atlas Copco AB, Caterpillar Inc., Metso Corporation, Komatsu Ltd., Joy Global, Inc, Hitachi Co., Ltd., Sandvik AB, AB Volvo, Doosan Group, Astec Industries Incorporated, Wirtgen Group Holding GmbH,

Bell Equipment Limited, Liebherr Group, Bradken Limited, CNH Industrial N.V., China Coal Energy Company Limited, Hyundai Heavy Industries Company Limited, Corum Group , RCR Tomlinson Limited, Kopex SA, Terex Corporation, and Techint Group. among others. The players in the mining equipment market are offering their solutions to several regions where a high availability of mineral resources is being witnessed. Companies are adopting several strategies to capture a widespread customer base in the mining machinery market. For instance, in June 2011, Caterpillar, Inc. announced the acquisition of Bucyrus International, Inc. to expand its business operations.

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METALS & MINING

A tale of two words Coal’s contribution to the energy mix to decline slightly by 2023 While global coal demand looks set to rise for the second year in a row in 2018, it is forecast to remain stable over the next five years, as declines in Europe and North America are offset by strong growth in India and Southeast Asia, according to the International Energy Agency’s latest coal market report, Coal 2018. Air quality and climate policies, coal divestment campaigns, phase-out announcements, declining costs of renewables and abundant supplies of natural gas are all putting pressure on coal. As a result, coal’s contribution to the global energy mix is forecast to decline slightly from 27% in 2017 to 25% by 2023. 76

METALS & MINING

needs with global and national climate ambitions. To help build a new momentum behind the technology, the IEA and the Government of the United Kingdom co-chaired an international summit where ministers, senior governmental officials across the world, CEOs from major energy companies and the financial community came together to identify practical steps to accelerate investment and deployment of CCUS. “Tackling our long-term climate goals, addressing the urgent health impacts of air pollution and ensuring that more people around the world have access to energy will require an approach that marries strong policies with innovative technologies,” underlines Sadamori. “It must rely on all available options – including more renewables, of course – but also greater energy efficiency, nuclear, CCUS, hydrogen, and more.” Photo by Valentin Matei

ut coal demand grows across much of Asia due to its affordability and availability. India sees the largest increase of any country, although the rate of growth, at 3.9% per year, is slowing, dampened by a large-scale expansion of renewables and the use of supercritical technology in new coal power plants. Significant increases in coal use are also expected in Indonesia, Vietnam, Philippines, Malaysia and Pakistan. Coal in China accounts for 14% of global primary energy, the largest around in the world. Developments in the Chinese coal sector have the potential to affect coal, gas and electricity prices across the world, for instance through inter-fuel substitution or regional arbitrage. This puts China’s coal sector at the centre of the global energy stage. While China accounts for nearly half of the world’s coal consumption, its clean-air measures are

set to constrain Chinese coal demand going forward. IEA forecasts Chinese coal demand to fall by around 3% over the period. Meanwhile, in a growing number of countries, the phase out of coal-fired generation is a key policy goal. But market trends are proving resistant to change. “The story of coal is a tale of two worlds with climate action policies and economic forces leading to closing coal power plants in some countries, while coal continues to play a part in securing access to affordable energy in others,” says Keisuke Sadamori, Director of Energy Markets and Security at the IEA. “For many countries, particularly in South and Southeast Asia, it is looked upon to provide energy security and underpin economic development.” This is why the IEA sees technologies like Carbon Capture, Utilisation and Storage (CCUS) as essential tools to bridge current and future energy 77

Key findings After two years of decline, global coal demand grew by 1% in 2017 to 7585 Mt as stronger global economic growth increased both industrial output and electricity use. Driven by strong coal power generation in China and India, coal demand is expected to grow again in 2018. • Global coal demand is forecast to be stable through 2023 Global coal demand in the next five years is set to be stable, with declines in United States and Europe offset by growth in India and other Asian countries – though China, the main player in the global coal market, will see a gradual decline in demand. In terms of the total energy mix, coal’s contribution will decline from 27% to 25%, mainly due to growth of renewables and natural gas. In particular, global coal power generation increased by over 250 TWh, or around 3%, and accounted for about 40% of the additional power generation

METALS & MINING

worldwide. Coal kept its share in the power mix at 38% after some years of decline. • The seaborne coal trade experien ced a rebound in 2017 Chinese coal imports grew by 15 Mt in 2017, and most other large importers, including Korea, Chinese Taipei, Malaysia, Turkey, Philippines, Brazil, Mexico, Vietnam, Pakistan and Morocco had record imports. Japan, Thailand and Chile were very close to their historical highs. With such sustained demand, prices remain high. However higher prices aren’t triggering new investments. Risks associated with climate policy, potentially stranded assets, local opposition and the memories of the last downturn have cooled investor appetite to invest in new production. It appears that banks, insurance companies, hedge funds, utilities and other operators in advanced economies are exiting the coal business. • A tale of two Europes Western Europe is accelerating its coal exit - action on climate change and air pollution combined action to specifically phase out coal-fired power generation, are all impacting coal demand. Along with the expansion of renewables, these policy efforts will eventually push coal out of the Western European power mix. By contrast, most countries in Eastern Europe have not announced phaseout policies and a handful of new coal power plants are under construction in Poland, Greece and in the Balkans. Some countries in Eastern Europe are among the few places in the world where lignite remains the cornerstone of the electricity system. • Blue skies in China? Environmental policies, and in particular clean-air measures, are set to constrain coal demand in China. Yet for now, one out of every four tonnes of coal used in the world is burned to produce electricity in China.

This makes China power sector the largest user of coal in the world by far, and as such, any fluctuation in China’s domestic power system can push global coal demand up or down significantly. For example, if power demand in China remains stable, global coal demand is set to decline more than 1% per year. But with power demand growth of 10% – similar to the first decade of this century – global coal demand would grow over 3% per year. Or, with annual growth in hydro output in China of about 1.5%, global coal demand grows at 0.2% per year. But 10% annual growth in hydro output would lead to a decline in global coal demand. As another example — a shutdown in 2017 of small boilers in China, owing to clean air policies, triggered gas demand in China which in turn pushed up LNG prices in China and around the world. Given that coal in China is the largest single source of primary energy in the world by far, the interlinkage between fuels and geographies sets Chinese coal in the centre of the energy stage. • Coal’s engines of growth Meanwhile, the unmatched period of coal power generation growth in India is set to continue, having grown continuously since 1974. With the Indian economy expected to grow over 8% per year to 2023 and the electrification process continuing, power demand is forecast to rise by more than 5% per year over the period. Indonesia, Pakistan, Bangladesh, Philippines and Vietnam have more than 800 million people combined, yet their average annual per capita electricity consumption is just one seventh of that in Europe. Increasing coal power generation, supported by new coal plants under construction, will be the main driver of coal demand growth in those countries. • Uncertainty for future demand Over the past few years, uncertainty 78

has been a major feature of the import forecast – for example imports to China have been swinging wildly from year to year. Forecasts for India are also uncertain because imports are used to balance a much bigger domestic market, with both coal production and demand growing significantly. Despite this uncertainty, Colombia and South Africa have proved over the years that exports are more the result of domestic circumstances than the market conditions. Meanwhile, most producers in Australia and Russia are also well placed with expansion in export capacity. In the case of Indonesia and United States, we see many producers on the right side of the supply curve. This is confirmed by the price sensitivity of exports from both countries. • CCUS: The future of coal Over the past few years, coal’s shift to Asia has resulted in the emergence of two worlds: one with coal power generation and the other without. This has made it difficult to build agreements on coal and emission reductions. Some countries have committed to end unabated coal power generation by 2030, while in others, the end of coal generation is unlikely given the role that coal plays for securing access to affordable energy. Carbon capture, utilisation and storage (CCUS) is the bridge between these two worlds. However, while 2018 brought some good news in terms of policies and projects, the world’s progress with deploying CCUS remains woefully off-track with what is required for a sustainable energy future. The IEA is committed to continue to build momentum on this crucial technology, as evidenced by 2018 International CCUS Summit, co-hosted by the IEA and the United Kingdom in Edinburgh on 28 November. The Summit contributed to significant new momentum for CCUS and the IEA will continue to support these efforts in 2019 and beyond.

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TECH

3D metal printing The next revolution If you haven’t heard of it by now, you will soon. 3D printing is taking the world by storm. It’s an innovative new technology that can be used in a variety of industries, including health, automotive, tech, finance, even agriculture. There are even 3D printers you can buy for personal use at home. You can make anything from trophies to toys for your children. Within the next few years, 3D printing will be as ordinary as laser printing. 3D printing is evolving at a rapid pace, so much so that we are now at the point where metal is starting to be used. Here’s what you need to know about 3D metal printing.

Text by Anna Kurcikova

What is 3D printing? So, what exactly is 3D printing? In simple terms, you’re using a digital file to create a three-dimensional object. With 3D printing, you’re using what’s called the additive process. With the additive process, you’re laying down layer after layer until the object is created. This is unlike the traditional method of the subtractive method which takes material away until the object is created. Picture grabbing a piece of wood and carving away the wood until you have your object. That’s the subtractive method. 3D

printing allows you to create structures with less waste, thus using fewer materials than you would with the subtractive method. With 3D printing, instead of starting with a piece of wood or plastic, you’re starting with a digital design. Then the 3D printer reads that design, and layers the materials until the structure is complete.

What is 3D metal printing? When you use a 3D printer, there are several different types of materials you 80

can use to print. The most common filaments right now are different types of plastic. The plastics are cheap and easily accessible, making them popular for business and consumer use. Plastics aren’t the only option though. People have started 3D printing concrete to build houses and are even 3D printing food! 3D printing with metal is another option. 3D metal printing can indeed revolutionize mass production and change the way things are done. People have been expecting 3D printing to take over for years now, but it hasn’t broken

TECH

through yet. When the process to make metal printing affordable and fast is figured out, it will be a game changer.

How does it work? 3D metal printing starts out like any other 3D printing would, with a digital design and a machine the deposits the material. However, 3D metal printing works one of three ways. First is Metal Binding. With metal binding, a metal powder is rolled on in thin layers, and a glue-like substance is put on top of each layer. The alternating layers of the powder and glue begin to come together and build upwards to form the structure. The process repeats until the construction is finished which can take several hours. Metal powder that isn’t used during the process helps support the structure and is separated once the job is complete. Once the job is done, your structure is very fragile. You put your finished project in an oven at 350 degrees for 34 hours to remove all the moisture and hardens the binding. The second way is Powder Bed Fusion. Powder bed fusion is very similar to metal binding, except that instead of the glue substance, an energy source such as a laser is used. The laser heats up the powder in the design, fusing the metal powder and creating a solid layer. The process repeats itself until the entire design is complete. The final way metal 3D printing works is called Directed Energy Deposition. This process uses metal wire or metal powder. A nozzle that moves multiple directions puts out the metal wire or powder layer by layer until the design is complete. Once complete, it’s melted with a laser or electron beam. This process is typically used to repair existing metal objects, but it can also be used to build new objects from scratch.

How fast is it? There are a lot of factors that will influence the speed of your printing. The size of the object you’re printing is an

obvious factor, along with the capabilities of your printer. The type of material will also affect your printing speed. Projects can take from several minutes up to several hours and more. With 3D metal printing, there are plans to make it much, much faster to print. Desktop Metal, a company based in Boston, has a machine that they say can print 100x faster at 1/20th of the cost. The increase in speed is due to the inkjet technology rather than the laser technologies. Right now, metal printing is only used to manufacture prototypes because of the speed and cost of the materials. With Desktop Metals new machine, they are claiming that it will be cheaper to mass produce with their production machine once it’s released.

How cheap is it? 3D metal printing is more expensive than its plastic counterparts. The metal powder and wires are more expensive than the plastic, and the machine itself is costlier. Metal printing is also more expensive because you also need the furnace for the structures once they’ve been printed. The size of the project will also influence your cost because you’ll have to use more material to produce your design. Desktop Metals printer will set you back USD 120,000. Most metal printers you will see online won’t even display a price. You have to contact them and request the price. There are also companies now that are selling kits to make any ordinary 3D printer print metal. Those kits will cost you around USD 10,000. So, as you can see, 3D metal printing isn’t to the point where it’s affordable for the masses just yet.

What companies are selling 3D metal printers? There are a few companies that sell 3D printers that can print metal. The most well-known is the one I’ve already talked about, Desktop Metal. They don’t just want to sell 3D printers. They want to change the game. They want to change the entire manufacturing process. They 81

plan to do so with their industrial scale Production System. Their Production System will be used to mass produce metal parts quickly and efficiently. They aren’t looking to beat out the standards set for 3D printers, they’re looking to set the standard for manufacturing in general. In one of their case studies, they produced 20,000 hinges, the type you’d see on a metal watch strap, in just 4 hours.

What are the applications of this technology? Once the technology is suitable, the applications for metal printing are endless. Anything you can dream of is possible. Auto parts, dental accessories, hospital supplies, office supplies, drill bits, anything made of metal can be produced with a 3D printer. Boeing could even save USD 3 million per airplane with 3D printed titanium parts. Jet engines, rockets and missiles, nuclear components, marine propulsion and much, much more. The list could go on and on. One of the more exciting projects that have used metal 3D printing is a bridge in Amsterdam. The bridge was built in mid-air! The bridge is 41 feet long and took 4 robots to complete. It took 9,920lbs of stainless steel and six months to complete. The staff at MX3D combined an industrial robot, a welding machine, and their 3D printing software to make the 3D printers. They also plan to install sensors on the bridge that will monitor its ‘health’ overtime. It will be installed in Amsterdam’s Red Light District in early 2019. 3D printing is about to revolutionize the way things are produced. Right now, they are mainly used for prototyping and small batch production, but the technology is catching up to allow for more extensive use of the printers. Metal 3D printing specifically has a tremendous upside. It will change the way entire industries will have their products developed and produced. The speed of production will increase, and the cost of production will decrease, impacting everyone involved. If you’re interested in 3D printing, now is the time to get on board.

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Opening of the Integrated Operations Center in Bergen. Egil Hustvedt demonstrating the digital twin of Aasta Hansteen. Photo by Ole Jørgen Bratland for Equinor

Equinor’s digital operations support centres to help boost production In just a few months the support centres established to help create higher value, improve safety and reduce emissions from Equinor’s installations on the Norwegian continental shelf (NCS) have led to good results from the first onshore-supported fields. 82

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n 7 January 2019, two cen tres were formally opened at Sandsli in Bergen by the petroleum and energy minister, Kjell-Børge Frei berg. Equinor has set an ambition of increasing the value creation from NCS fields by more than USD 2 billion from 2020 to 2025 through measures such as onshore operations support (Equinor share before tax). New this year is that monitoring of the energy consumption to reduce CO2 emissions from NCS operations will be improved by support of the digital centres. By 2021, all Equinor fields on the NCS will be supported by manned onshore centres in Bergen, Stavanger and Stjørdal. “So far, we see higher production and earnings from the Grane, Gina Krog and Åsgard fields, which have been supported by the integrated operations support centre (IOC) since September. After that the Aasta Hansteen and Norne fields have also been connected to the centre. This marks that we have just started phasing in our 40 installations to the IOC, revealing a great potential,” says Arne Sigve Nylund, executive vice president for Development and Production Norway. “The good results are achieved by production optimisation, improved condition monitoring and operations support for safe offshore operation. IOC will also be relevant for our onshore installations and international activities,” says Nylund. The IOC centre will be central in reducing CO2 emissions from the NCS. Equinor has implemented more than 300 energy efficiency measures on NCS installations from 2008 and up to the present, reducing annual CO2 emissions by almost 1.6 million tonnes so far. The company aims to reduce CO2 emissions by 3.2 million tonnes per year by 2030. Further energy efficiency measures and new energy solutions will help reach this goal. “We have set ambitious goals for changing and transforming the NCS to maintain high value creation and low emissions for the next decades. We

WHAT IS IOC (INTEGRATED OPERATIONS CENTRE): • •

• • •

IOC is a support centre based on digitalisation that aims to help improve production efficiency, production potential and energy efficiency on fields we operate on the NCS. IOC will work proactively by gathering interdisciplinary resources who can use enhanced data integration, visualisation, analysis and new technology to support Equinor’s installations to an even larger extent than today. The centre will make data available in a more user-friendly format offering the offshore and onshore operations organisations an even better basis for decision-making and support. The Gina Krog and Grane fields in the North Sea and Åsgard in the Norwegian Sea were connected to the IOC in September. In January, the Aasta Hansteen and Norne fields in the Norwegian Sea were also connected to the IOC. All Equinor-operated fields will eventually be supported by the centre.

WHAT IS GOC (GEO OPERATIONS CENTRE): • Geo-operations monitoring has traditionally been carried out on offshore installations and various office locations. All these monitoring tasks will now be gathered in a joint centre. • The GOC will lead to higher personnel safety and cost saving due to reduced need for transport and stay on the installations. Safety during drilling is maintained and strengthened by access to qualified personnel at the centre around the clock. • All NCS fields will be gradually phased in to the GOC, except from highpressure/high-temperature (HPHT) fields. • During 2019 all production wells on the NCS will be monitored by the GOC.

have improved our operating efficiency, increased production, reduced our CO2 emissions and developed a highly profitable project portfolio. Digitalisation, innovation and use of new technology will allow us to recover resources that are not profitable now,” adds Nylund. “The IOC gives us new digital tools ensuring faster and better decisions through close interaction between offshore operations and onshore support centre. Our main goal is to operate our installations safely and optimally every single day while identifying challenges and preventing shut-downs before they occur,” says Kjetil Hove, head of operations technology on the NCS. The other centre formally opened on 7 January, the Geo Operations Centre 83

(GOC), will ensure more efficient and better geoscience control of drilling operations as well as higher cost saving and personnel safety. Monitoring and control of offshore well path drilling will be moved from offshore installations and the various onshore units to a joint geoscience operations centre. The GOC is expected to save NOK 270 million per year. “This is a completely new way of working and represents one of the biggest changes we have made in petroleum technology and geology during the last 20 years. The GOC will utilise new technology and help form a digital future, where tasks are carried out and experience gained and shared in smart ways,” says Hove.

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ExxonMobil and IBM to advance application of quantum computing ExxonMobil announced on January 8 that it has signed a partnership agreement with IBM to advance the potential use of quantum computing in developing nextgeneration energy and manufacturing technologies. The new partnership was formally announced during the 2019 Consumer Electronics Show (CES) in Las Vegas.

s part of the agreement, ExxonMobil becomes the first energy company to join the IBM Q Network, a worldwide community of Fortune 500 companies, start-ups, academic institutions and national research labs working to advance quantum computing and explore practical applications for science and business. “The scale and complexity of many challenges we face in our business surpass the limits of today’s traditional computers,” says Vijay Swarup, Vice President of Research and development for ExxonMobil Research and Engineering Company. “Quantum computing can potentially provide us with capabilities to simulate nature and chemistry that we’ve never had before. As we continue our own research and development efforts in the areas of energy and chemical manufacturing, our agreement with IBM

will allow us to expand our knowledge base and potentially apply new solutions in computing to further advance those efforts.” Advances in quantum computing could provide ExxonMobil with an ability to address computationally challenging problems across a variety of applications, including the potential to optimize a country’s power grid, and perform more predictive environmental modelling and highly accurate quantum chemistry calculations to enable discovery of new materials for more efficient carbon capture. “The advancement of new breakthroughs, coupled with the creative application of current technologies available to us from outside the energy sector, will be critical in addressing the dual challenge of producing energy to fuel economies and meeting consumers’ needs while managing the risks of climate change,” Swarup adds. “Much 84

of the success in our own ingenuity is facilitated by the innovation of others outside our industry, from threedimensional printing to quantum computing. The many partnerships we lead or participate in around the world provide us with opportunities to exchange ideas and collaborate, applying our own unique experiences, knowledge and strengths toward a potentially successful breakthrough in lower-emission energy production or a more efficient manufacturing process.” ExxonMobil’s partnership with IBM expands the company’s collaborative efforts with other companies and academic institutions that are focused on developing an array of new energy technologies, improving energy efficiency and reducing greenhouse gas emissions. The company currently works with about 80 universities in the United States, Europe and Asia to explore nextgeneration energy technologies.

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Cutting-edge pipeline practices at Saudi Aramco T

he worldwide adoption of Reinforced ThermoÂ plastic Pipe (RTP) in construction projects dates back to the early years of the 21st century as the technology drove cost saving initiatives by providing sustainable corrosion control measures. However, the early uses of RTP technology were constrained by the application limitations of the manufactured pipes, which was reflected in maximum sizes, fluid pressures, and temperatures of the process designs. These application limitations have been progressively eased by advances in materials and manufacturing technology, requiring companies to stay abreast of developments in the field. At Saudi Aramco, this is not necessarily a straightforward process. In larger companies, interdependent departments play various roles to validate, approve, and collaborate with vendors in an effort to reassure the safety and reliability of adopted technologies. In this context, Project Management and Engineering Services have had success in progressively deploying RTP in Onshore Maintain Potential Projects Department (OMPPD) oil and water service projects, working with vendors and other departments to introduce proven technological advancements that have produced significant savings for Saudi Aramco.

Early adoption OMPPD first deployed RTP back in 2015 in the Khurais and Central Arabia areas. The project scope included a 142-kilometer (km) length of 4-inch fibre reinforced RTP pipe with two suppliers where the oil applications required low design conditions (i.e., 1,500 pounds per square inch (psi) and 140 degrees Fahrenheit). As a result of prudent economic analysis, significant savings were achieved by avoiding a single 6-inch pipe, which was available from a single supplier, and using dual 4-inch pipes. The savings were increased further by a three-week reduction in the construction schedule relative to the use of solid corrosion resistant alloy. However, due to the constraints of technology and manufacturer capabilities, RTP could not be adopted in water service projects where the parameter envelop is as high as 3,000 psi.

Applications expansion The forecast of 150-km length of RTP pipe in water injection applications for the Southern Area Oil Operations (SAOO) and Khurais areas laid the foundation for OMPPD to search the market for suppliers to provide 6-inch pipe that could withstand 3,000 psi. With the support of the Consulting Services Department (CSD), the Pipelines Project Department, and other organizations, a supplier was introduced to expand the applications that can leverage the cost savings of RTP 85

using steel reinforcement technology. However, the sole source strategy did not support the economic business case of an RTP alternative as more suppliers were needed to reduce the cost through competitive bidding and to increase the bargaining power of the company. Not long after, in 2017, the extensive research and capabilities verification efforts resulted in another supplier being qualified and added to RTP approved vendors. After a competitive bidding process, an order was successfully placed.

Continuous cycle Project Management and Engineering Services continues to work to increase RTP applications in OMPPD, but it requires continuous market intelligence of technological advances and being aware of vendorsâ&#x20AC;&#x2122; current capabilities â&#x20AC;&#x201D; all in coordination with other organizations. By doing this, a new supplier has been identified that can produce an application to handle up to 2,250 psi at 221 degrees. CSD is currently working with the vendor to ensure completion of the required qualification tests and arrange a field trial in collaboration with SAOO. As the importance of project performance in terms of schedule and capital expenditure remain critical to Saudi Aramco business, facility life cycle costs are a paramount requirement for OMPPD. Progressively adopting RTP is a definite means to helping meet these scheduling and cost improvement goals.

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Nokia and Open Fiber bridge the digital divide in Italy Open Fiber, the sole wholesale-only player in the Italian broadband market, selected Nokia for a fiber-to-the-home (FTTH) rollout that will bring ultra-broadband services to the small towns and rural areas of Italy. The Open Fiber network will bring optical fiber from a point of presence to the customer’s home and deliver speeds of up to 1 Gigabit per second (Gbps). In line with the founding principles of the Gigabit Society, the new fiber deployment provides Open Fiber with a future-proof network that can support next generation fiber technologies.

hile drawing up its ultrabroadband strategy in 2015, the Italian govern ment identified four types of clusters (A, B, C and D) in the country: where each municipality was assigned to one cluster based on factors including lower or higher housing density, presence of broadband coverage and market size. Nokia has been selected as the sole supplier for clusters C and D (white areas) and will deliver products, services and software needed to plan, design, deploy and support the end-to-end active network infrastructure based on GPON technologies. “We have selected Nokia as our supplier in clusters C and D to deliver giga-services and pave the way for future ultrabroadband technology evolutions. We are sure that Nokia’s extensive experience in fixed networks will enable us to build an efficient network that uses best-ofbreed components and technologies. With Nokia’s solutions we will be able to offer

services at 10 Gigabit per second (Gbps) and in the future at 40 Gbps on the access network. We will also have the opportunity to adopt the SDAN (Software Defined Networking) paradigm and therefore to maximize the potential of a new generation access network, with high automation, programmable and integrated with cloud environments,” Stefano Paggi, Network & Operations Director at Open Fiber, said. “As a worldwide leader in telecommuni cation solutions, and a long-time frontrunner in fiber technologies, Nokia has the products and delivery capability to support Open Fiber in this deployment journey. Our end-to-end solutions, professional services, consulting, maintenance and support services reduce risk and accelerate deployments, giving Open Fiber the confidence to adopt new technologies, enter new markets and extend the performance of existing networks,” Alessandro Manno, Director Global Enterprise Italy, added. Nokia will also offer its professional services and customer engineering 86

experience to fulfil solution validation and integration, installation and commis sioning, on-site support, solution training and project management. The Nokia solution includes 7360 ISAM FX-16 and FX-4 platforms, 7362 DF - 16GW, 7368 ISAM ONTs and the 5520 AMS Element Manager. The Nokia 7360 FX platform already supports new technology such as XGSPON, NG-PON2 and will evolve towards a transformation into Software Defined Access Networks (SDAN), perfectly fitting the aim and needs of Open Fiber to build a network that will be open to provide access to other operators. Open Fiber was created to build high-speed fiber optic electronic communication networks distributed nationwide to help recover the competitive edge of the national economic system and evolve towards ‘Industry 4.0’. Open Fiber is a company jointly owned by Enel and CDP, operating only in the wholesale market and offering access to all interested market operators.

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Saudi Arabia’s first hydrogen fuel cell vehicle fuelling station Saudi Aramco and Air Products recently announced the signing of an agreement to jointlybuild the first hydrogen fuel cell vehicle fuelling station in Saudi Arabia. The collaboration between the two companies will combine Air Products’ technological know-how and experience in the field of hydrogen with Saudi Aramco’s industrial experience, facilities and R&D capabilities. Saudi Aramco and Air Products will establish a pilot fleet of fuel cell vehicles for which high-purity compressed hydrogen will be dispensed at the new fuelling station.

ir Products’ proprietary SmartFuel® hydrogen fuel ling technology will be incorporated into the new station to supply the vehicles with compressed hydrogen. The collected data during this pilot phase of the project will provide valuable information for the assessment of future applications of this emerging transport technology in the local environment. The hydrogen refuelling station, the first in the Kingdom, is expected to be operational in the second quarter of 2019. “Hydrogen fuel cells offer an effective means for the electrification of transport while maintaining easy, 5-minute refuelling

and long driving ranges,” said Ahmad O. Al Khowaiter, Chief Technology Officer of Saudi Aramco. “The use of hydrogen derived from oil or gas to power fuel cell electric vehicles represents an exciting opportunity to expand the use of oil in clean transport,” he added. “We are honoured to work on another venture with Saudi Aramco to establish and develop a sustainable hydrocarbonbased hydrogen supply system for pilot demonstration of a fuel cell vehicle fleet in Saudi Arabia,” said Dr. Samir Serhan Executive Vice President at Air Products. He added: “It further illustrates our commitment to the Kingdom’s 2030 vision.” The hydrogen refuelling station will be located within the grounds of Air Products 87

world-class Technology Center in the Dhahran Techno Valley Science Park. Toyota Motor Corporation will supply Toyota Mirai Fuel Cell Vehicles for testing in this pilot project. Toyota has been investing in hydrogen for over 20 years and in 2014 introduced the Mirai, its first mass-produced hydrogen fuel cell vehicle. The Mirai is a zeroemission vehicle which runs on compressed hydrogen gas and only emits water. The car is powered through a fuel cell which creates electricity by combining oxygen from air with hydrogen from the fuel tank. Toyota has long maintained that hydrogen fuel cell technology can offer a sustainable zero emission solution across a broad spectrum of vehicle types.

ANALYSIS

Key issues to watch in 2019 and beyond Adapting policies to breakthrough technologies With 2018 in the rear-view mirror we are left wondering what comes next in terms of economic growth, labour market conditions, adapting policies to green requirements in order to mitigate climate change, breakthrough technologies in industry, digitalization and Europe’s most important issues to watch out for in 2019.

Text by Vlad-Adrian Iancu

ultiple companies and influent opinion-swayers are throwing in their two cents regarding 2019 and how it shall unfold. And don’t you just absolutely hate reruns? Seeing the same movie over and over again or reading the same book for the umpteenth time might seem like a drag, but it certainly depends on who you ask. Some people find comfort in reliving the same thing over and over again, whilst others just want to move on. Is the planet big enough for both types of people? Moving from 2018 to 2019 is really just a matter of minutes. If we didn’t keep account of time, like all the

other species on Earth don’t, this event would be meaningless. As years keep flowing one into the other, we compare achievements, draw imaginary lines and hold ourselves accountable or plan for the future, sometimes in such a naïve way that it is laughable. Still, people keep tabs and evaluate. Will the social construct that is 2019 be any different than 2018 in terms of industrial, digital, green or economic strides? It will if we make it so. But to do is foremost to plan and imagine. According to Pricewaterhouse Coopers and their Global Economy Watch, 2019 will drag its feet a little bit in what pertains to global economic growth. As we all know, what goes up must 88

necessarily come down again, and the economy is no different: having boasted a couple of successful runs in 2016 and early 2018, analysts expect 2019 to be nothing more than average, which is of course not a bad thing. The economies of the G7 will most likely be impacted by a strong dollar and uncertainty regarding Brexit and trade tensions moving forward. The labour market may also face some challenges: even if job creation slows down, the labour market is expected to tighten. As a result, wages may increase, but also put businesses looking for talent in a difficult position. 2019 might see further drops in unemployment rates in the US and Germany where job creation

ANALYSIS

WORLD PRIMARYprimary ENERGY DEMANDenergy BY FUEL, 2018demand - 2040 World

by fuel, 2018 - 40 10%

5,000 4,500

8% 6%

Mtoe

3,500 3,000

2,500 2%

2,000 1,500

CAGR 2015-35

4,000

1,000 -2%

500 0

Coal 2018

Oil 2020

Gas 2025

Nuclear 2030

Hydro 2035

Renewables 2040

OSF*

-4%

CAGR 2018-2040

Source: Wood Mackenzie

is still going strong. But for many other economies, it might just be a different story; Canada for example has already reached a 40-year low in unemployment in 2017, but it failed to fall any further, which triggered acceleration in wage growth. Economies like The Netherlands, Belgium and Denmark are close to hitting their respective structural floors as the pace of decline in unemployment is slowing down drastically. It all hangs in the balance as the UK faces Brexit. If everything goes smoothly, the UK might see unemployment settling around current levels, but if the ‘no deal’ (which seems to be the case) way is approached, it might lead to an important rise in joblessness. Also, another grim prediction is that approximately 40 countries will have a shrunken workforce come 2019 and beyond. ‘War’ might be a strong word for it, but it seems that this is what will happen to

trade in 2019, and it will certainly further confound businesses and policymakers. While policymakers will try to deduce the impact of potential tariffs on growth and inflation, businesses will be more concerned with handling of their supply chains and customers. The US-China trade continues to be the hot topic and if things were to escalate worldwide, businesses beware. Talking about climate change, 2019 is envisioned to be one of the ten hottest years on record. And high temperatures aren’t the only issue, according to the insurance firm Munich Re, the total value of USD 320 billion was reached in relation to all disaster losses caused by climateassociated events in 2017. Taking this into account, a faster decarbonisation sounds like a well needed miracle. But for this to happen, some milestones have to be reached: oil demand should peak by 2031, by 2040 renewables (mainly wind and 89

solar) should account for about 40% of total power supply, electric vehicles should become mainstream, displacing 11 billion barrels of oil per day and autonomous vehicles should reach 64 million in circulation by 2040. Gas should continue to have a positive influence through 2040 but fall afterwards in favour of renewables and coal consumption should become obsolete in the long run.

Technology to have a bigger role than policy It seems like technology will have a bigger role than policy, but the two won’t make any headway separately. Will policy makers adapt to breakthrough technologies fast enough? The four drivers of change will be represented by maturing economies (and their energy efficiency results), disruption in the transportation sector (vehicle electrification), an

ANALYSIS

SHARES OF PRIMARY ENERGY CONSUMPTION

and promoted, still remain somewhat of a rarity. Still another issue - pricing. We’ve all seen what higher energy costs can do to a country’s population.

Digitalization, are we doing it right?

increased demand for electricity (with power demands at an average of 2% per year) and finally the growth of renewables (780GW should be installed globally come 2040). It may sound easy on paper but it will definitely be more arduous to perform in real life. Daniel Raimi and Alan J. Krupnik think that “there are still numerous economic and societal barriers to rapid decarbonization.”1 This means that while it is a great idea, it will by no means happen overnight. Firstly, we consider the economic aspects, since wind and solar only account for 1% of the global energy supply, as opposed to fossil fuels which provide around 80%. The authors argue that even an unbelievable growth spur would mean nothing if we are to consider changing the entire system. Even if the resource is available, it would take potentially decades to successfully place it around the globe. Furthermore, even with the current subsidies and cost competitive options that renewable energy boasts, there are many areas around the globe, including the US, where fossil fuels continue to offer the lowest cost option for generating electricity. Ironically enough, wind and solar energy come with some environmental concerns of their own:

“According to MIT’s Future of Solar Energy study, solar to power one-third of the US 2050 electricity demand would require 4,000 to 11,000 square kilometers (for context, Massachusetts’s area is 27,000 square kilometers). Wind farms take more land for the same power - 66,000 square kilometers, although only a small portion of that is actually disturbed by installations (TheEnergyCollective has an insightful discussion on this topic). Even for relatively modest (from a national perspective) proposals - such as Texas’s goal for 14 to 28 gigawatts of new solar by 2030 - there are concerns about habitat fragmentation, loss of endangered species and other impacts on the environment.”2 Electricity generation via nuclear power should also be taken into account, with fast aging plants needed to be retired or replaced but no real plans in action, the brunt of energy generation may fall back again on traditional sources like fossil fuel. We should also mention the other sectors that cut deep in energy generation, like transport, industry and heating. It’s true that most of these can be figured out via electrification, but at the same time, wind and solar energy can’t currently replace some industrial and transport needs. Electric vehicles, while greatly subsidized

Another interesting topic for 2019 is digitalization and whether or not we’re doing it right. According to PWC’s survey3, it is mindset as opposed to resources or time that proves to be the obstacle in the path to success. But the responders are kind enough to give us some hints. Firstly, there is efficiency: working smarter and faster. But, as any innovation, disruption and digitalization are an ever-changing and ongoing process, so consistency is a key factor. This also calls for redefining what digital means, with 37% of responders associating it only with IT. In order to fully embrace the digital movement, change has to happen from top leadership all the way down to the employees and training has to take into account the future rather than the ‘now’. Also, digital should be a part of every aspect of the business, not just the obvious ones. Secondly, we have modernizers, not only looking to get the best out of what they have but also create new capabilities. To this end they are committed to innovation at all levels and hiring a digitally-savvy workforce. But modernizers also see only half the equation. In focusing only on customer experience (74% see it as critical to digital transformation), they forget the employee angle. In order to address employee experience as well, they should improve collaboration, raise the skill level of the current staff and explore flat ways of working. Again, senior leadership should also be on the receiving end of digital education. Thirdly, we deal with re-definers, the most ‘dangerous’ of disruptors, the ones who want to change the business at its core. But is it more than just words, words, words? Actually, 69% of responders

1 www.rff.org/blog/2018/decarbonization-it-aint-easy

2 www.rff.org/blog/2018/decarbonization-it-aint-easy

3 www.digitalpulse.pwc.com.au/report-globaldigital-iq-survey-2018/

Sources: US Energy Information Administration (US) and the International Energy Agency (world)

ANALYSIS

SOLAR CAPACITY GROWTH AND COSTS COMPARED TO PROJECTIONS a

b PV installed capital cost, projected (EIA IEO 2009)

Residential PV system price, observed (MIT Solar Study)

Utility PV system price, observed (MIT Solar Study)

Note: The International Energy Agency (IEA) and the Energy Information Administration (EIA) projections for cumulative PV and CSP installed capacity are represented by empty colored circles and squares; actual historical data for cumulative PV and CSP installed capacity are represented by filled black circles. Dotted lines are given as guides to the eye. Projections are from the IEA World Energy Outlook reports over the period from 2006 to 2014 and the EIA Annual Energy Outlook reports over the period from 2010 to 2013. Source: Massachusetts Institute of Technology

say that their digital investments are delivering less than what they expected. This comes from a lack of universality among staff members in what pertains to digital knowledge and an absence of the term from the corporate dictionary. Only by embracing new ways of working, managing and using cross-functional teams will companies see the much sought after returns. Last but not least, we talk about the industry explorers, the people who break through new markets. Ironically, most of them still equate digital with IT, which puts them at great risk of outside disruption while they pursue their outward expansion. According to responses, industry explorers haven’t incorporated digital into their businesses at all the levels, showing a massive lack of experience strategy and digital know how from leadership to employees and customers. Only 31% of this group has seen profit growth in the last three years and the whole clique faces the danger of being disrupted before they can disrupt themselves. In a climate where only 8% of a pool of 2,200 survey responders

are actually top financial performers, it’s time to address the change.

Top Ten points on the European Watch list Presented by the European Parliamen tary Research Service, these top ten points focus heavily on this year’s agenda of the European Union. Firstly, the institutional cluster deals with the prospect of a new European Parliament and a new European Commission, highlighting the institutional implications brought about by the new political landscape to be birthed by the public, come the May 2019 European elections. Mainly, it focuses on the differences between current and previous Parliaments as opposed to the new one, and how the European Commission will be appointed. ‘The way forward’ deals with the current Brexit debate and how the future will shape up in view of a Union of 27 Member States. The ‘Future Financing of the Union’ highlights the content and objectives of the Commission’s proposals for the financial framework for the next seven years without forgetting the 91

Parliament’s stance and ambitions in the negotiations. Secondly, the report tackles geopolitical issues: the relationship between the EU and Africa (the ‘twin continent’), the current relations between Europe, the US and China and the economic and legal implications, the increasingly digital nature of crime and how to respond to it and lastly, a policy for the oceans that analyses the benefits and pressures as well as EU and global policies and likely developments in the coming year. The report is rounded up by focusing on technological issues, the actions EU is taking in supporting the growing market of electric road vehicles and views on the digital transformation in what pertains to building a digital economy and shaping the legal, ethical and regulatory framework it requires. In theory at least, we seem to have the tools that will allows us to make 2019 at least a little different than 2018. Whether we can give it a turn for the best, it remains to be seen. One thing is certain: time will continue to pass, no matter what we do about it. So why not make the best of it?

EVENT

Romania at the ninth session of the IRENA Assembly A

session of the IRENA General Assembly took place during 11-13 January 2019, in Abu Dhabi, where Romania was represented by a delegation of the Ministry of Energy, headed by State Secretary Iulian-Robert Tudorache. Several ministerial debates were organized on the sidelines of the event, on universal access to electricity, sustainable development and transformation through innovation of the energy system. During the plenary session, issues related to geopolitics and energy transition, social and economic benefits of using renewable energy sources and hydropower were addressed. Romania, as President of the EU Council, chaired the EU MS Coordination meeting on 11 January 2019, where an important aspect of coordination was the appointment of IRENA’s new DirectorGeneral and the coordination of Member States to support the European candidate for IRENA. At the IRENA plenary session on 13 January 2019, following the vote expressed by members of IRENA’s General Assembly, Francesco La Camera, an Italian official, was selected to be the next Director-General of IRENA for 4 years, replacing in office the current DirectorGeneral, Adnan Z. Amin, who has held this position since 2011. On 14 January, State Secretary IulianRobert Tudorache delivered a keynote opening address at the European Union Energy Day on sectoral integration and

the clean energy transition (during the World Future Energy Summit – part of Abu Dhabi Sustainability Week), in which he presented Romania’s energy sector priorities during EU Council Presidency and highlighted the need for investment to achieve the objectives of reducing pollution and access for as many people as possible to energy sources. “The issue of ensuring energy for all citizens, in line with environmental policies, should, in our view, focus on three directions: energy security, energy poverty and the environmental problems faced by each country. But to achieve these goals, it is not enough that efforts to combat the effects of climate change be made only by the EU Member States, a global effort of all nations being needed. At the same time, in order to get where we plan, we need to attract considerable investment, and much of this will have to come from the private sector. Energy transition will deeply transform the current economic model and will have strong effects on society. In order for this transition to be successful, it is necessary that the inherent technological challenges of adapting to the new energy system and the socio-economic challenges be carefully analysed,” State Secretary Iulian-Robert Tudorache said. The ninth session of the Assembly of IRENA took place at the St Regis Saadiyat Island, Abu Dhabi, United Arab Emirates. The Assembly is the Agency’s supreme decision-making body and brings together Heads of State, Ministers, government officials, and representatives from the private sector, civil society and other 92

international organizations to reaffirm the global renewable energy agenda and make concrete steps to accelerate the global energy transition. Two ministerial roundtables took place during the Assembly, featuring Ministers and high-level participants. They discussed the role of renewables in achieving universal energy access and the transformative impact innovation is having in the renewable energy sector. A special evening event on ‘Gender in the Energy Transformation’ marked the launch of a new IRENA publication on the topic and feature an interactive discussion on the gender dimension of the energy transformation. The Assembly’s Plenary discussions featured presentations and provided opportunities for contributions from IRENA Member delegations, stakeholder groups and the private sector. Plenaries focused on aspects of the Agency’s work and actions by countries in the development and deployment of renewables. The Assembly also considered the conclusions of 16th Council and provided guidance on specific administrative and institutional matters. The thematic meetings organized by IRENA raise awareness of the importance of renewable energy and its impact on sustainable development. They also connect policy makers, experts and innovators from many countries to learn from each other, share good practices and inform decision makers by identifying shared needs and finding common ground on shared priorities.

EVENT

Energy poverty, clean energy and the European energy divide 23 percent of consumers in Romania affected by energy poverty The second ENGAGER conference took place in Bucharest, between the 22nd and 24th of January 2019. The event was organized by the Babes-Bolyai University, through the Centre for the Study of Democracy (CSD) at the beginning of the Romanian presidency of the EU Council, in partnership with the Romanian Regulatory Authority for Energy (ANRE) and with the support of the Representation of the European Commission in Romania and Enel.

study was presented during the conference, conducted by CSD, which shows that 23% of households in Romania are affected by energy poverty. According to the Vice-President of the National Regulatory Authority for Energy (ANRE), Zoltan Nagy-Bege, a first step necessary is to identify those who need support to ensure the energy demand. Then, financing solutions should be found, compatible with the European rules. Then, funds should be identified to be directed to these consumers. According to CSD study, 23% of consumers in Romania, i.e. 1,732,257 households, are in energy poverty. At EU level, it is estimated that up to 150

million people are in this situation. At the same time, the quoted study shows that, in Romania, a number of 287,434 houses are not connected in any way to the power grid, according to the census conducted in 2011. The mentioned report also shows that the total amount granted for heat aids in 2017 accounted for approximately 0.33% of the total budget for 2017 of the Ministry of Labor. Only 27.53% of the aids reach the poorest households and the number and value of heat aids have fallen over the last four years, as the income thresholds havenâ&#x20AC;&#x2122;t been updated since 2011. Also, less than 30% of those who should receive aids according the adjusted income per family member actually receive them. 94

CSD study has centralized several measures taken in EU countries to protect vulnerable consumers. Romania has resorted to the introduction of a social tariff and the limitation of disconnection in case of failure to pay the bills, as several other states, such as Austria, Cyprus, Belgium, France or the UK. But other countries have gone further and have granted free energy (Greece and Italy), additional social allowances for energy (Austria, Czech Republic, Germany, France, Hungary, Denmark), free consultation for energy saving methods (Austria, France, Hungary), free replacement of inefficient household appliances (France), financial subsidies to replace the inefficient appliances (Austria, Cyprus, France).

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EVENT

Cities of Tomorrow Communities in focus The seventh edition of Cities of Tomorrow, organized by the German-Romanian Chamber of Commerce and Industry (AHK Romania), will take place on the 26th March 2019 at JW Marriott Bucharest Grand Hotel and will be dedicated to communities, the business community as well as the civil society, and the importance of their engagement in the sustainable development of regions and cities.

his year the organizer will add a new dimension to the event concept: the civil society. A dialogue between public authorities and the business environment is important, but the involvement of the civil society is as necessary. Therefore, AHK Romania considers that the key element in shaping the sustainable development is the TRIALOGUE. Moreover, the event will focus on the role of communities in developing a city, a region – a country. The functionality of a community is not only determined by its inside, but more by how it collaborates with other communities. The way we understand to engage as a community, to have a unitary voice and to constantly get involved, defines our future. The novelty of this year is the pitching competition ‘Communities in

trialogue’. 9 participants of 3 categories, public administration, civil society and business environment, will each have 5 minutes to present their city/regionbased project, which contributes to urban development, investment location development and city/region marketing, the implementation of smart city solutions, the enhancement of life quality or the improvement of the dialogue between stakeholders. These projects will be evaluated by a jury of experts, and the winners will be awarded prizes by AHK Romania that will support the future development of their projects. Similar to previous years, the event will also host a project marketplace, where sponsors will have the opportunity to present their solutions and technologies for cities and regions, while representatives of local authorities (regional development agencies, 96

county councils, municipalities) and communities will present concrete projects, for which they seek support of private actors. Moreover, during the second part of the event, AHK will continue the World Café concept, consisting of 8 roundtables, which will allow participants higher involvement in interactive discussions and the identification of problems and solutions. The conclusions and insights of the roundtables will then be the foundation of future actions. A relevant aspect for the success of this project is not only the day of the event itself, but also what happens afterwards – how do participants use the exchange of ideas, experience and contacts acquired at Cities. Brochures of past editions and concrete initiatives that were born at the event can be found at www. citiesoftomorrow.ro.

We make the cities.

26.03.2019 | JW MARRIOTT BUCHAREST GRAND HOTEL

w w w.cit iesof tomorrow.ro There comes a time when we have to think global and act local. We. The community. Communities in TRIALOGUE: public authorities, business environment, civil society.

FEBRUARYâ&#x20AC;&#x2122;S READING

Lessons from European electricity for global oil & gas What can the global oil and gas sector learn from the decline of the European electricity sector after 2007? The story of the decline of the European electricity sector in the decade after 2007 is a complex one. Nevertheless, the authors of this paper - Kingsmill Bond and Mark Lewis (from Carbon Tracker Initiative), believe that it is possible to draw out some aspects most relevant to the environment facing the oil and gas sector today.

Key Findings Rapid technology-driven change disrupts a complacent slow-growing incumbent. The energy transition that has caused havoc in the European electricity sector over the last decade now threatens the global oil and gas industry. The experience of the European electricity sector. Policy support and new technology enabled new competition which drove down demand for incumbents, leading to over USD 150bn of write-downs, replacement of management teams and sector restructuring. The five errors of the European electriÂ city sector. They followed consensus thinking and expected continued growth. They underestimated the fall in the costs of challenging technologies. They underestimated the ingenuity of engineers at finding ways to solve bottlenecks. They misunderstood the threat to their business model from marginal change. They thought incumbency was an asset, but it

turned out to be a liability. Investors lost money early. Investors in the European electricity lost half their money by the time the renewable challengers made up just 4% of electricity supply, and underperformed the rest of the European market dramatically in the decade after 2007. Some companies like RWE and E.ON have lost four-fifths of their value since 2007. The similarities for oil and gas. The challenging technologies of EV, wind and solar are on technology-driven learning curves. The cost tipping-point is right now. Anticipated annual demand growth is low at 0.4% for oil and 1.6% for gas. Efficiency is chipping away at demand growth and policymakers are stepping up the pressure. The industry believes in business as usual and is sceptical about the challenges from outside. The differences are not so great. Technology is reducing the significance of the areas where oil and gas believes it is different. Electric vehicles smooth 98

the difference between a molecule and an electron and encourage crosssectoral competition. Decline rates only help incumbents in a sellerâ&#x20AC;&#x2122;s market. Petrochemicals and other hard-to-solve sectors are an endgame issue which will be unable to counter falling demand in larger sectors like electricity (40% of gas demand) and light transportation (23% of oil demand). In some ways oil and gas are more vulnerable. Electricity has long-term growth and domestic support; while oil and gas have a limited long-term future, and 80% of people live in countries that are net importers of oil and gas and would like to reduce their import dependency. Implications for the oil and gas sector. Business as usual approaches simply do not work when confronted by disruptive change. Peak demand is a systemic threat to incumbents. Lip service is no protection against reality. Source: www.carbontracker.org