Fossil fuels demonstrating their unreliability

Fossil fuels demonstrating their unreliability

As oil markets fluctuate wildly, how can the world economy still be running on a commodity that not only wreaks havoc on the planet when extracted and burned, but is unpredictable and volatile?

In April 2020, oil prices entered negative territory for the first time in history

In April 2020, oil prices entered negative territory for the first time in history

On 20 April, the West Texas Intermediate (WTI) oil futures contract for May 2020 delivery defied logic and settled for the first time ever in negative territory at minus-US$37.63 a barrel.

This was after an unprecedented fall in world aviation fuel consumption by 64.3 per cent so far for the month of April and, more importantly, a 32.8 per cent decrease in fuel consumption by cars and trucks around the world for the same period.

Facing the sudden contraction of the market, oil companies are producing a surplus of barrels and must now pay to get rid of their inventories.

After five to seven weeks of global lockdown, with air traffic down 97.1 per cent in Singapore, 94.5 per cent in Hong Kong, 91.7 per cent in France and 83.7 per cent in Australia, airline bail-outs are springing up all over Asia and Europe—Virgin Australia, Thai Airways, Air France-KLM and Korean Air, to name a few.

Refineries are the first of the fossil fuel supply chains to shut down. In Asia, home to more than a-third of global refining capacity, India’s top refiner Indian Oil Corp (IOC) said in a letter to crude suppliers that it had reduced its operations by up to 40 per cent because of sliding demand.

Operators in Japan, South Korea and Thailand—already running at reduced rates—are looking at more cuts even as they shut plants for maintenance.

According to consultancy firm Rystad Energy, given the oil market oversupply, as of today the market may only have around five days left of practical onshore storage capacity for crude oil worldwide, including two million barrels per day (bpd) additional storage in tankers anchored at sea.

The International Energy Agency (IEA) estimates low sulphur fuel oil (LSFO) or fuel oil components to be already seven to eight million tons in floating storage around the larger Singapore area. Last week, major Singapore oil trader Hin Leong Trading collapsed with US$3.85 billion in debts and US$800 million in hidden losses. This could only be the beginning.

As the crude oil market is expected to be in oversupply of 21 million bpd during the second quarter, the 10 million bpd production cut announced by OPEC+ for 1 May will not be large enough to avoid the market hitting physical storage constraints and the WTI future price to be possibly negative again.

If this unfolding energy crisis follows the economic textbooks, a classic boom-bust cycle will take place with the oil industry cutting all investment for several years until demand meets production again.

Offshore exploration should be cut first, then oil sands, shale oil and tight gas, followed by the most extreme onshore locations. Millions of jobs will be gone, financial losses for banks and investors will be massive until the next upswing.

Anyone who can remember the year 2007 might remember that oil prices crossed US$80/barrel in November that year to hit an all-time high of US$143.68/barrel in July 2008, propelling the Toyota Prius hybrid to its best year ever (180,000 cars sold in the United States alone) and spurring some panic investments by oil companies in renewable energy (M&A volumes top only reached again in 2012). The peak oil theory, which postulated the point at which the world’s oil production go into irreversible decline, made headlines and advanced economies were envisioning a post-oil world.

Twelve years and one fracking technology revolution later, the words of former Saudi oil minister Sheikh Yamani on the fate of oil seem to be more valid than ever. He said: “The Stone Age didn’t end for lack of stone, and the oil age will end long before the world runs out of oil.”

How can the world economy be still running on a commodity that is so unpredictable and volatile?

Even without taking into consideration the environmental impact of its extraction (regular offshore spills, shale contamination of potable water and pipeline leaks) and its burning (air pollution, global warming, ocean acidification), the economic cycles linked to its utilisation are far from supporting sustainable development, rational long-term capital utilisation and even peace in this world.

Compared to the regular economic and political chaos brought by fossil fuels, renewable energy sources are the exact opposite. Solar, wind and hydropower are the only ones to warrant a fixed selling price on 25 to 30 years, most of the time non-inflation linked.

Their distributed and local nature reinforce each country’s energy independence, nullifying any Blue Stream, North Stream Pipeline or Belt & Road diplomacy. In open tenders, wind and solar are now the lowest-cost energy providers without subsidies in Western countries and China. The world after has already begun to be built by the power sector.

With their wildly fluctuating prices, oil and liquefied natural gas—with or without the pandemic, with or without geopolitical tensions—cannot be the foundation of 21st-century world economic activity. The current situation is demonstrating oil’s unreliability. Alternatives are readily available: Wind, hydro, and solar energy offer an unbeatable power price stability for 25 years, without air and water pollution, and without global warming impact.

With transport-linked oil consumption expected by Rystad Energy to be down around 24 per cent in the United States and Europe in Q2 after a plunge of 25 per cent in China in Q1, the current oil demand and pollution situation could be a fast-forward image of the world when electric cars are finally mainstream.

BloombergNEF, Bloomberg’s primary research service that covers clean energy, advanced transport and commodities, estimates that electric cars could represent 35 per cent of global new car sales by 2040. The current level of air pollution improvement—PM2.5 levels this month are down 60 per cent in New Delhi, 54 per cent in Seoul and 51 per cent in Los Angeles—could be easily replicated in a future with mass deployment of electric cars fueled by renewable energy.

Blue skies in large metropolises could be the norm again, and transportation users will even save costs by cleaning dirty air. This is the post-oil world that needs to be built.

Olivier Duguet - Chairman and Chief Executive Officer - The Blue Circle.

Earth Day - 50 Years for Nothing?

Earth Day - 50 Years for Nothing?

Image: Markus Spiske

Image: Markus Spiske

These are contemplative times that we are living in. The world is seemingly holding itself up on fragile stilts, still trying to support itself despite a pandemic and major climate crises that seem to be building up. It is during these hours that it is vital to realise that every little effort done by every single one of us is integral to create a positive chain reaction for a healthier tomorrow. Just like how staying home and social distancing done individually are adding up to a greater cause, all our small efforts to help heal our Mother Earth can make a difference as well.

How is it that we have celebrated Earth Day for half a century and there is still much left to be desired when it comes to major actions and accomplishments to protect our planet? Perhaps the execution of measurable actions is not tallying with our intent. 

How can we fix this? We can start by identifying what we might be doing wrongly.


Mistake #1: Sorry, you might be recycling your items wrongly.

Not everything that looks recyclable actually is (this includes your to-go coffee cup that has a plastic film on the inside and toothpaste tubes that are made with more than one type of material).

How do we fix it?

As a rule of thumb, items created with multiple materials are not recyclable as each material requires its own way of recycling. All items - such as food cartons, cans and packaging - need to be thoroughly cleaned before dumping them into recycling bins. Only packaging and material with specific symbols are 100% recyclable. And no, plastic bags are not advised to be recycled. 


Mistake #2: Your call-to-actions might be falling on deaf ears.

Being climate change advocates is step zero towards making an impact, as shared words amongst friends and family do help to increase community spirit and grow the awareness of the condition of our planet and the ways of which that lessen impact. It is not enough to stop there as the key change-makers are the ones driving your city’s or country’s legislation. These are the people that can facilitate change on a bigger scale.

How do we fix it?

Write to your local town council or environmental agents to suggest ways of improving conservation around your estate. Social media makes contacting local authorities much easier, even if just to voice your concerns. Have a conversation with decision makers and game changers to move towards actual results - make the authorities work for you. Create petitions against mandates that impede climate change within your community, such as a lack of recycling bins on your community. Vote for sizable changes that benefit the community and the environment, such as the availability of shared electric cars and bicycles for your city. Move forward from being a change advocate to a change activist.


Mistake #3: Staying with non-renewable energy power suppliers.

Electrification is a development that is a necessity - it is something that most of us cannot stay away from. We need power to turn on our lights, to run our washers, to watch our television, to turn on our laptops, and so on. It is something that comes so naturally to a lot of people that most forget that while it is accessible, it is also a luxury. It is a luxury that is given to the privileged who can afford it and most of the time, we don’t stop to think about where our electricity comes from. Going on the internet also requires power. While we all are now staying at home and moving our activities online to activate climate change, why don’t we kill two birds with one stone by using a renewable energy source?

How to fix it?

Renewable energy is an excellent alternative to fossil fuels and is fundamentally sustainable and clean. Wind and solar power are the two supplies that are more accessible to most cities. Check your local energy supplier options to ascertain where your energy comes from. If you can switch to a renewable energy provider, why not do that?


If we march towards helping our earth in correct and impactful ways individually, hopefully in the next 50 years, our collective efforts will bear its fruits in bountiful ways. Then, perhaps, we can stop humming to the same tunes as we are now.

Largest Wind Turbines in Asia to Power Vietnam

Largest Wind Turbines in Asia to Power Vietnam

The Blue Circle and AC Energy have ordered the first GE 5MW-158 from General Electric (GE) for the second phase of the Mui Ne project in South Vietnam.

The Blue Circle and its partner AC Energy, the power generation arm of Philippine conglomerate Ayala Corporation, have signed Asia’s first Notice to Proceed with General Electric Renewable Energy (GE Renewable Energy) for its new Cypress platform wind turbines.

“The Blue Circle and its partner AC Energy are one of the premier renewable energy companies in the Asia Pacific, and we are thrilled they’ve selected our brand-new Cypress platform turbines. GE remains deeply committed to Vietnam’s energy future - our 5MW Cypress turbines are ideally suited to make the best use of the Vietnam's tremendous wind energy potential,” said Deepak Maloo, Regional Sales Leader of GE Onshore Wind.

The GE Renewable Energy 5MW Cypress turbine

The GE Renewable Energy 5MW Cypress turbine

The eight turbines with a unit capacity of 5MW for a total of 40MW will carry the largest rotor diameter for an onshore project in Asia (158 meters) and will be the first to transport blades in two pieces before assembly on site.

“This technology is a game-changer for onshore sites as it will allow larger capacity machines, lowering our cost of energy and enhancing competitiveness of wind energy,” said Hervé Grillot, Chief Construction Officer of The Blue Circle.

Despite the general suspension of master plan approvals in Vietnam related to the new Planning Law implementation, The Blue Circle has succeeded in securing the land and grid connection for the Project in a difficult context.

“The Binh Thuan province is a very complex and challenging environment to implement a wind power project,” explains Olivier Duguet, Chief Executive Officer of The Blue Circle. He adds, “We are now extending the Mui Ne Project with a second 40MW phase to be commissioned in 2021.”

The Mui Ne Wind Project site has a total expansion potential of up to 170MW in one of the best wind resource areas in continental Vietnam. The Project’s estimated cost is around US$80M, which will be financed by debt and equity, and is planning to qualify for the wind feed-in-tariff of 8.5 US cents per kWh.

“This latest addition to the Mui Ne Project is a significant stride towards AC Energy’s 2025 goal of reaching 5GW of renewables capacity in the Philippines and around the region,” said Patrice Clausse, Chief Operating Officer of AC Energy International. “We have strongly pushed for the adoption of new technologies and best practices to grow our assets in renewables with the continuous support to pursue innovation from partners like The Blue Circle,” he added.

AC Energy (through its wholly-owned subsidiary, AC Energy Vietnam Investments 2 Pte. Ltd.) will participate in this Project with a 50% voting stake. GE Vietnam will provide a Full Service Agreement for up to 15 years, and The Blue Circle will manage operations through an Asset Management Services contract
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About The Blue Circle

Founded in 2013, The Blue Circle identifies, develops, finances, owns and operates renewable energy projects in complex and challenging geographies in the Asia-Pacific region. The Blue Circle uses the most advanced technology to build responsible and sustainable projects. With offices in Singapore, Ho Chi Minh City, Bangkok and Phnom Penh, The Blue Circle is the leading renewable energy company of Southeast Asia. Its team is committed to changing the world one green electron at a time. www.thebluecircle.sg

About AC Energy

AC Energy is the energy platform of Ayala, one of the largest business groups in the Philippines. AC Energy is one of the fastest growing energy companies with over US$1 billion of invested and committed equity in renewable and thermal energy in the Philippines and around the region. From a strong local base, AC Energy is expanding rapidly around the region through strategic partnerships and greenfield initiatives. The company aspires to exceed 5 GW of attributable capacity and generate at least 50% energy output from renewables by 2025. In 2019, AC Energy’s power portfolio registered an attributable capacity of over 1.8 GW in operation and under construction, spanning projects in the Philippines, Indonesia and Vietnam. The company increased its attributable energy output in 2019 by 25% to 3,500 Gigawatt hours, of which 50% came from renewable energy sources. www.acenergy.com.ph

About GE Renewable Energy

GE Renewable Energy is a $15 billion business which combines one of the broadest portfolios in the renewable energy industry to provide end-to-end solutions for our customers demanding reliable and affordable green power. Combining onshore and offshore wind, blades, hydro, storage, utility-scale solar, and grid solutions as well as hybrid renewables and digital services offerings, GE Renewable Energy has installed more than 400+ gigawatts of clean renewable energy and equipped more than 90 percent of utilities worldwide with its grid solutions. With nearly 40,000 employees present in more than 80 countries, GE Renewable Energy creates value for customers seeking to power the world with affordable, reliable and sustainable green electrons. Follow us at www.ge.com/renewableenergy, on www.linkedin.com/company/gerenewableenergy, or on www.twitter.com/GErenewables.

For further information, please contact:

The Blue Circle
Ain Aziz
Tel: +65 6358 3414
ain.aziz@thebluecircle.sg

AC Energy
Irene Maranan
Tel: +63 917 5298339
maranan.is@acenergy.com.ph

GE Renewable Energy
Adeline Teo
Tel: +65 8725 3027
adeline.teo@ge.com

Vietnam: The Missed Wind Power Opportunity?

Vietnam: The Missed Wind Power Opportunity?

In November 2018, the Vietnam 14th National Assembly passed a new Planning Law, amending 37 existing regulations and codes, aiming at creating a unified legal system on planning activities. Instead of boosting construction and streamlining administrative procedures in a country infamous for its bureaucracy, the implementation of this new Planning Law stopped all inclusion approvals in the National Master Plans, a decision that stands until today. 

Without this key approval process, grid connection of about 1,645MW of wind power projects with Power Purchase Agreement (PPA) signed and construction permits of about 2,700MW of wind power projects without PPA (source EVN Jan. 2020) will not materialise.

Even if the legal situation is resolved and the Master Plan Approvals from the Prime Minister were to resume in the coming weeks, the situation looks unpromising as wind power projects typically take 16 months to be constructed and would face a worldwide shortage of turbines for delivery next year. As the 2018 wind feed-in-tariff (FiT) is only valid for projects entering commercial operations before November 1st 2021, any project entering construction now takes the risk not to have any fixed price for its electricity. 

New Planning Law impedes the materialisation of 4,345MW of wind energy in the country which could result in serious national power implications. Image: The Blue Circle (Dam Nai wind farm)

New Planning Law impedes the materialisation of 4,345MW of wind energy in the country which could result in serious national power implications. Image: The Blue Circle (Dam Nai wind farm)

“Wind power projects are not like solar which could be built in 6 months,” explains Olivier Duguet, Chief Executive Officer of The Blue Circle. ”We have to order turbines 10 months before delivery and have at least four to six months of construction time. Therefore, we need a minimum of two years of visibility on the FiT to invest, which is not the case today,” he adds. 

Vietnam has been the first country in Southeast Asia to establish a FiT to promote wind power development. It was set up in 2011 at US$7.8c./kWh at a time when the average turbine size was still under 2MW. During the following seven years, Vietnam has connected only 200MW of wind power to the national grid, prompting comments on the unattractive level of its tariff for wind. In the meantime, the Philippines have built 427MW and Thailand 1,018MW.

When Vietnam Prime Minister Mr. Nguyễn Xuân Phúc increased the wind power FiT in 2018 to US$8.5c./kWh, the expectations for a rapid expansion of wind power deployment in Vietnam were running high, given its 3,260 kilometers of coastline and the best wind resources of continental Southeast Asia. 

The country - especially its busy South - is hungry for power. Vietnam’s Ministry of Industry and Trade (MoIT) forecasted in July 2019 that electricity demand will exceed its supply by 6.6 billion kilowatt hours (kWh) annually in 2021 - increasing to 15 billion kWh annually by 2023. The country will need an average investment of US$6.7 billion a year to expand its power generation capacity by 10% every year between 2016 and 2030 according to the Ministry.

Given the urgency to avoid severe power shortage, Vietnam’s national utility, Electricite du Vietnam (EVN), became the leading buyer of solar energy in the ASEAN region in the last two years. By setting a FiT high enough to attract local and international investments, Vietnam has triggered a rush to build 4,460MW of solar projects in record time, representing now 44 per cent of Southeast Asia’s total solar installed capacity. This could have been followed by wind power in order to boost renewable and clean energy production in the South. However, the unfortunate turn of events around the new Planning Law implementation might lead to a missed opportunity for Vietnam to harness wind energy - a good, reliable and cheap source of local renewable energy. 

Whereas the world is turning to renewables as the primary source of electricity, Vietnam seems stuck with imported fossil fuels from the past, such as coal and gas, to power its growth.  

About The Blue Circle

Founded in 2013, The Blue Circle identifies, develops, finances, owns and operates renewable energy projects in complex and challenging geographies in the Asia-Pacific region. The Blue Circle uses the most advanced technology to build responsible and sustainable projects. With offices in Singapore, Ho Chi Minh City, Bangkok and Phnom Penh, The Blue Circle is the leading renewable energy company of Southeast Asia. Its team is committed to changing the world one green electron at a time. www.thebluecircle.sg

For further information, please contact:

Ain Aziz
Communications Manager
ain.aziz@thebluecircle.sg     
Tel: +65 6358 3414

Arrival of Vestas V150-4.2MW Wind Turbines in Cam Ranh

Arrival of Vestas V150-4.2MW Wind Turbines in Cam Ranh

The Dai Phong wind project (40MW) saw a major development in November 2019 with the arrival of the Vestas V150-4.2MW wind turbines at Cam Ranh port. This marks the presence and usage of wind turbines with the largest rotor diameter in Southeast Asia, using 73.7 meter long blades. The project will consist of 10 wind turbine generators (WTGs) and is the first phase of the larger Mui Ne project which could eventually grow up to 200+ MW.

"Dai Phong will be equipped with the latest wind turbine technology and the longest blades installed, exhibiting Vietnam's leadership in the wind energy market within the region. In its operational stage, the Dai Phong wind farm will displace around 57,000 tons of CO2 per year to power 90,000 Vietnamese households,” explains Irving Paul Girsang, Senior Wind Engineer of The Blue Circle.

The Blue Circle currently has the largest coverage of ASEAN countries of any Independent Power Producer (IPP) or renewable energy (RE) project developers, with projects in eight countries out of ten within the region.

About The Blue Circle 

The Blue Circle is a developer of renewable energy projects in Southeast Asia with offices in Ho Chi Minh City, Bangkok and Phnom Penh. The Singapore-based company looks to bridge the gap in project development in the region by bringing international project development experience, financial expertise and capabilities together with local market understanding. 

About AC Energy 

AC Energy is the energy platform of Ayala, one of the largest business groups in the Philippines. AC Energy is one of the fastest growing energy companies with over $1 billion of invested and committed equity in renewable and thermal energy in the Philippines and around the region. The company aspires to develop 5 GW of attributable capacity and generate at least fifty percent of its energy from renewables by 2025.
www.acenergy.com.ph 

For more information, please contact:

Ain Aziz
Communications Manager
Email: ain.aziz@thebluecircle.sg