From WA : Nuclear Power and Uranium (1)

As the evidence of the impact to the world from the global warming becomes clear, the world has changed its course to embrace nuclear power as a means to alleviate the greenhouse emission despite concerns on the handling of radioactive wastes and misuse of uranium. As shown in the below table (extracted from World Nuclear Association’s estimates), there are 436 reactors being operable at present with additional 53 reactors being built worldwide (China’s share is 20). From the medium and long term perspective, 142 and 327 reactors are expected to come into operation within 10 and 15 years, respectively, mainly driven by China, India and US.

Country	Reactors				2010 Uranium
	Operable	Built	Planned	Proposed	Requirement (t)
US	104	1	11	19	19,538
France	58	1	1	1	10,153
Japan	54	1	13	1	8,003
Russia	31	9	8	37	4,135
South Korea	20	6	6	0	3,804
China	11	20	37	120	2,875
India	18	5	23	15	908
WORLD	436	53	142	327	68,646

As a result, demand for uranium, a natural element used as a nuclear fuel, will rise significantly. Uranium is supplied from two main sources, primary and secondary source. Primary souce of uranium is coming from mining activity and account for about 62% of the world’s need. While the secondary source is derived from the inventories which are expected to deplete at a faster rate than the past, adding more pressure on the tight uranium market.

At the end of 2009 Kazakhstan, Canada, Australia and Namibia are the world leading uranium producers. While Australia, Kazakhstan, Russia and Canada together holds about two-third of the world uranium resources. It’s no surprised that a lot of uranium exploration acitivities are taking place in Australia, Canada, Africa and Central Asia.

However, despite the perception of high demand in uranium, uranium spot and long term price have been weak. Spot price is hovering around USD40/lbs whereas the long term price is set around USD55-60/lbs. But that does not stop all the uranium mining companies pouring more money into uranium mining development.

Major uranium producing companies are Areva (France), Cameco (Canada), Rio Tinto (Anglo Australia), Kazatomprom (Kazakhstan) and BHP Billiton (Australia). In Australia (as far as I know), Energy Resources of Australia (majority owned by Rio Tinto) and Paladin Energy are the two uranium producing companies listed on ASX.  BHP Billiton is another company listed on ASX which has a uranium mining exposure.

More details on these companies next article though.

From WA : CSG to LNG (2) – The Big Boy Game

In a space of 4 weeks since the beginning of March 2010, there are a few significant developments in the CSG-to-LNG arena. In the beginning of the month, Royal Dutch Shell with its partner, Petrochina, launched an acquisition bid for Arrow Energy in which it already has 30%. This deal, valued at around $3 billion, has cleared some doubts over the feasibility of CSG-to-LNG development.

By mid of the month, BG Group, a leading British natural gas company, through its wholly owned subsidiary, QGC (Queensland Gas Corp), has signed a 20 year 3.6 mtpa purchasing agreement with CNOOC (China National Offshore Oil Corp).  In addition, today it signed Head of Agreement with Tokyo Gas to supply 1.2 mtpa of LNG for 20 years starting from 2015. BG expects to finish its FID by yearend to sanction is QCLNG project (Queensland Curtis LNG).

So far, BG is the leader of the pack for the CSG-to-LNG game, the game exclusively for the Big Boy.

ME : ASX Sharemarket Games (Game 1 2010)

I’ve just registered for the first game of the ASX Sharemarket Games which will run from 18 February to 2 June 2010. The participant will get a hypothetical AUD 50,000 for the trading. The winner for national category will get a cash prize of AUD 5,000 while the winner of each state will receive AUD 1,000.

Well, let’s see what my outcome in the next 3 months will be.

From WA : 20 Largest Listed Companies in ASX 2009

At the turn of the new decade (31 Dec 2009), here are the 20 largest listed companies in Australia Stock Exchange (unit in AUD):

No.	Company	Sector	Mkt Cap
			(billion AUD)
1	BHP Billiton Ltd	Diversified Mining	$114.714
2	Commonwealth Bank of Australia	Banking	$84.153
3	Westpac Banking	Banking	$75.220
4	National Australian Bank	Banking	$58.046
5	ANZ Banking Group	Banking	$57.953
6	Rio Tinto Ltd	Diversified Mining	$45.446
7	Telstra	Telecommunication	$42.680
8	News Corp (b voting)	Media	$42.529
9	Wesfarmers	Conglomerate	$36.171
10	Woodside Petroleum	Oil & Gas	$35.334
11	Woolworths	Retailing	$34.720
12	Westfield Group	Property	$28.939
13	QBE Insurance	Insurance	$26.232
14	CSL	Healthcare	$18.970
15	Newcrest Mining	Gold Mining	$17.090
16	Macquarie Group	Financial	$16.202
17	Origin Energy	Energy	$14.711
18	AMP	Financial	$13.869
19	Fortescue Metal	Iron Ore Mining	$13.744
20	AXA Asia Pacific	Financial	$13.560

From WA : Coal Seam Gas to LNG Development

Last year we saw a huge stampede from foreign major oil & gas companies, including ConocoPhillips, BG Group (British Gas), Royal Dutch Shell and Petronas, into Queensland’s coal seam gas assets with an aim to develop LNG plants using coal seam gas (CSG) as feedstocks. Once considered as a nuisance to coal explorer, coal seam gas, so far, has found its usage in electricity generation in the Eastern States as there is limited conventional natural gas in the East Coast and it is not economical to transport gas from WA which has abundance of gas. As the demand of energy from Asian countries, especially China, is rising, opportunities for converting coal seam gas to LNG arises. Here are four major developments to date.

Origin Energy and ConocoPhillips

In September 2008, ConocoPhillips paid $9.6 billion for 50% stake in Origin’s coal seam gas assets and together form a company called APLNG. It plans to develop four LNG trains producing 14-16 mtpa with an estimated CAPEX of $35 billion. The first train is scheduled to be in operation by 2014 and the remaining trains by 2020.

BG Group

In October 2008, BG acquired Queensland Gas for $5.25 billion and in March 2009 BG bought Pure Energy Resources for $1 billion. It plans to build two LNG trains producing 7.5 mtpa and will seek approval for up to 12 mtpa in the later stage. Its first production is scheduled for late 2013 or early 2014.

Santos and Petronas

Petronas is paying up to $US 2.5 billion for 40% stake of Santos’s coal seam gas assets. Initial plans is to invest $7.7 billion for a 3.5 mtpa LNG plant with an expansion to 10 mtpa in future. First gas shipment is due in 2014.

Arrow Energy and Royal Dutch Shell

Shell paid $644 in June 2008 for 30% of Arrow’s Australian coal seam gas assets. Shell is currently investigating options for multi-train LNG project at Curtis Island. No timeframe is inplaced for its first production.

Book : The Big Fella, The Rise and Rise of BHP Billiton

If you want to know history of the largest miner in the world today, BHP Billiton, this is the book for you. It’s just recently launched in Australia. The authors bring you back to 1883 when BHP was found on the Broken-Backed Hill near the New South Wales and South Australia border. It merged with Billiton, a South African mining company, in 2001 and emerged as BHP Billiton as known today. In fact, the merging creates two companies, BHP Billiton Limited based in Melbourne and BHP Billiton Plc based in London, with identical board and management teams.

Around mid 2008, it commenced a take-over bid for Rio Tinto, also one of the largest miner having several operations in the vicinity of BHP Billiton. If successful, the combined entity would stand shoulder-to-shoulder to big corporates in the world. However, the deal didn’t go through as the commodity price collapsed around the end of 2008.  Yet, in May 2009, BHP Billiton and Rio Tinto started the process to merge its iron ore operation in Pilbara, Western Australia. It’s still too early to predict if the proposal will go through due to objection from China and EU for its monopolistic nature in iron ore trade.

I am interested in BHP Billiton (largest listed company in Australia). It operates in large, long-life and low cost mining and petroleum assets. No doubt, its resources would supply an insatiable demand from rising economy like China. This 518-page book is a good start to getting to know more of the company.

From WA : Australia LNG Play

Australia, sitting on huge gas reserves, is the world sixth largest LNG exporter with current annual shipment of 15.0 Mtpa. Given that it is a politically stable country and located closed to energy hunger nations, Asia, it draws in an influx of foreign investment funds to develop LNG plants from conventional natural gas and unconventional coal-seam gas. If all the developments on the drawing boards come true, Australia will leap frog to the second largest LNG exporter in 2015 with expected annual shipment of 57.5 Mtpa, chasing the No.1 Qatar (expected annual shipment of 78.0 Mtpa in 2015). To date, there are only 2 operating LNG projects in Australia, the North West Shelf project operated by Woodside (owned by a joint venture formed by Woodside, Chevron, BP, Shell, BHP Billition, Mitsubishi/Mitsui and CNOOC) and Darwin LNG project operated by ConocoPhillips.

The international major oil and gas companies such as BG, Chevron, ConocoPhillips, Petronas and Shell are ramping up their stakes in natural gas and coal seam gas assets by partnering up with Australian companies such as Origin Energy and Santos. Table below shows the planned LNG development projects.

Project	Company	Expected Start	Estimated Budget
North West Shelf redevelopment	Woodside, BHP Billiton, BP, Chevron, Shell, Japan Australia LNG	2013	USD 5.1m
Australia Pacific LNG (coal seam gas)	Origin Energy, ConocoPhillips	2014-2015	AUD 35bn
Curtis (coal seam gas)	BG Group	Late 2013	AUD 8bn
Gladstone LNG (coal seam gas)	Santos, Petronas	2014	AUD 7.7bn
Gorgon	Chevron, Shell, ExxonMobil	2014	USD 50bn
Ichthys	Inpex, Total	2015	USD 20bn
PNG LNG	ExxonMobil, Oil Search, Santos, Nippon Oil	2013-2014	USD 12.5bn
Pluto Train 1	Woodside, Tokyo Gas, Kansai Electric	Late 2010	USD 12bn
Shell Australia LNG (coal seam gas)	Shell, Arrow Energy	2014-2015	USD 35bn
Wheatstone	Chevron	2015	USD 30bn

 

LNG developments require enormous CAPEX (in the amount of billions dollars). In order to get a green light to start the development, the project must be able to secure long term buy contract. At present, Japan is the largest LNG importing country accounting for about 40% of the world’s imports. Undoubtedly when economic downturn takes toll and hence, dragging with it, the oil price, it becomes even more difficult to pin down buyers. In addition, as can be seen from the above table, almost all LNG supplies will flood the market in 2016 therefore it is very crucial at this stage to secure a contract at the right price. The most advanced projects are Pluto Train 1 which is due to complete in late 2010 and people start talking about development of Pluto Train 2. Who will come as the winners will be unveiled in the near future.

From WA : OZ Lotto

Tonight the first prize for OZ Lotto (a kind of lottery in  Australia) is a record high of AUD 90 million. In order to win the first prize, your selected 7 numbers must all match the drawn numbers (The odd of winning is one in 45 million). Last week, the first prize was around AUD 50 million and because no one won it, it rolls over to this Thuesday. Many people try their luck today. I am also tempted to fork out AUD 6.50 for 6 sets of 7 numbers. But the queue waiting for purchasing today’s lotto is so long that I don’t want to wait. At the time of writing, I don’t know if anyone win the jackpot. If not, next week jackpot will likely exceed AUD 100 million. Wow!!! And I’ve just discovered it’s tax-free. Perhaps, I ought to try my luck next week :  )