Category: Archive

Brazil steps up sugar production to meet growing local demand for ethanol flex cars

admin /11 March, 2006

A key determinant of the quantity of sugar produced in Brazil remained
the influence of world oil prices on Brazil’s sugar cane based ethanol
industry, reported Australian Commodities
(March quarter 2006). The sustained rise in world oil prices since
early 2004 has meant that ethanol is an increasingly competitive
substitute (or extender of traditional oil based fuels).

Ethanol demand rises: Growth in sales of flex-fuel cars, which
are able to run on 100 per cent gasoline, 100 per cent ethanol or a
combination of both, has led to substantially higher demand for ethanol
in Brazil in recent times.

Sugar production loses out: As demand for ethanol has increased
in line with higher world oil prices, a higher proportion of sugar cane
is being diverted toward the production of ethanol and away from sugar
production.

Ethanol price increase: Domestic ethanol prices have increased
to such a degree that in early 2006 the Brazilian Government and
ethanal producers agreed to lower wholesale ethanol prices by around 3
per cent, to reduce inflationary pressures on the economy.

Impact on world sugar market: Over the medium term, the extent
to which Brazilian cars continue to keep pace with growing demand for
ethane is expected to be a motor factor determining movement in the
world sugar price.

30 pc flex by 2011: Sales of flex fuel cars are forecast to
continue growing rapidly in Brazil, with some estimates suggesting that
flex fuel cars could comprise more than 30 per cent of the light
vehicle fleet by 2010-11. As such, demand for ethanol in Brazil is
expected to continue increasing strongly over the medium term.

US$10bn sugar planting investment: In late January 2006 the
Brazilian Government announced that investment of US$10 billion would
be needed over the next five or six years to increase the area planted
to sugar cane and to construct 73 new mills to ensure that increased
domestic and world demand for ethanol (and sugar) is met. Most of the
expansion in area planted is likely to occur in the centre south of the
country, where cone plantings potential to expand to twice their
current area in the future.

4pc increase for 2006-07: Higher sugar prices are forecast to
load to a significant supply response from produces in 2006-07. Sugar
production in Brazil in 2006-07 is forecast to increase by 4 per cent
to around 31 million tonnes. Sugar exports ore forecast to increase by
3 per cent to almost 20 million tonnes. 

Dispute over Iran’s nuclear program could upset oil exports and lead to rising prices

admin /11 March, 2006

The potential for escalation in the current dispute over
Iran recommencing its nuclear program represented an upside risk to the oil,
and hence gold price forecast, reported Australlian Commodities (March
quarte 2006).

Iran ignores IAEA: In early 2006, Iran removed International Atomic
Energy Agency (IAEA) seals from its main uranium enrichment facility, with the
purpose of resuming uranium enrichment research. In early February the IAEA
voted to refer the Iranian nuclear issue to the UN Security Council.

Oil price increase possible: A disruption to Iran’s exports of crude
oil -particularly given Iran is the second largest producer of oil in the
Middle East – could potentially result in an increase in crude oil prices, an
outcome that would be supportive of the gold price.

Consequences for gold market: A number of fundamental factors in the
gold market are also expected to support the gold price in 2006. While mine
production is forecast to increase, official sector sales ore expected to decline
as central banks that are not signatories to the Central Bank Gold Agreement
increase their holdings of gold.

Gold price to increase 26pc: World gold fabrication is expected to
decline as a large increase in rupee denominated gold prices lowers demand for
gold in India. The world gold price in 2006 is forecast to increase by 26 per
cent to on average of US$560 an ounce.

Peak Oil turns 50

admin /10 March, 2006

March 8, 2006 marks the fifty year anniversary of M. King Hubbert’s seminal speech in which he accurately forecasted the 1970 peaking of United States oil production. Few heeded Hubbert’s warning and many, including the director of the United States Geological Survey, actively sought to discredit his work. The lack of preparation for this peak Continue Reading →

Federal and state governments look at greenhouse gas emission benchmarks for farmers

admin /9 March, 2006

The Federal and state governments are considering setting greenhouse
gas emission benchmarks for agriculture, renewing concerns about a
possible future carbon tax on farming systems, reported Farm Weekly (2 March 2006 p12).

Benchmark guidelines for control of agricultural emissions: The
recent meeting of the Council of Australian Governments (COAG) in
Canberra called for the Natural Resource Management Ministerial Council
(NRMMC) to report by the end of the year on the potential for the
development of benchmarks. The report is to include the potential
development of new approaches to reduce emissions from agriculture and
land use, and promote carbon sequestration.

Improved efficiencies sought: It forms part of a COAG drive to
identify more opportunities for energy efficiency in the transport,
agriculture and building industries.

Farmers wary of increased regulation burden: How the benchmarks
would be set and what the implications would be for those producing
above them has raised concerns of further regulation for the farm
sector. National Farmers Federation chief executive officer Ben Fargher
said farmers were already actively involved in reducing carbon
emissions and they did not want to see the sector singled out as a soft
target for more regulation.

Seek to emphasise advantages, incentives: It would be seeking
input into the report to ensure an emphasis on incentives, not
regulation. Mr Fargher said the future development of carbon trading
offered advantages and disadvantages for agriculture. “As an emitter,
it is a negative,” he said. “But agriculture can also act as a sink for
carbon. As a sector, we need a better understanding.”

It’s a global madhouse out there as wheeling and dealing for power runs at frenetic pace

admin /9 March, 2006

Globally, 2005 saw unprecedented merger and acquisition (M&A)
activity in the energy sector, says PricewaterhouseCooper’s latest Power Deals Report.

Records were set for:
– the total number of power deals (527);
– the total value of deals (US$196 billion);
– the biggest single deal (US$28.3 billion); and
– the most mega-deals over US$10 billion (five).

Europe sets the pace: The biggest surge in total deal activity
came in Europe as utility companies move fast to consolidate in the EU
in advance of the anticipated customer choice resulting from
liberalised rules in 2007. There was a trend globally toward domestic
consolidation, with domestic deals accounting for 71 per cent of all
deals in 2005.

More blockbuster deals likely: Derek Kidley, PwC’s Resources
Leader, said: “Globally we are likely to see a new era of blockbuster
deals, with further market consolidation, particularly in Europe. Major
global power players will also look for non-organic growth in a tight
sector facing high fuel prices and security of supply concerns.”

Asia Pacific still active … The value of total deals for Asia
Pacific power assets continued to grow in 2005 following an exceptional
rise in 2004. Total deal value rose to US$17.2 billion in 2005, up from
US$15.1 billion in 2004 and US$6.2 billion in 2003. The value of
domestic electricity assets targeted in the Asia Pacific region rose
nearly three-fold, from US$4.2 billion to US$11.3 billion with deal
numbers nearly double their 2004 level.

… and likely to remain so: Kidley said, “Looking ahead, the
climate for deals in the Asia Pacific region remains positive with a
number of factors maintaining momentum. Power utilities are hungry for
gas to meet their peak energy needs and they are looking beyond
contracts to satisfy these requirements through asset plays. The region
faces a huge investment challenge in both generation and networks to
meet increasing energy demand.”

Renewables also attracting strong interest: The growing
importance of renewable energy in the Asia Pacific region was
demonstrated in a hard fought battle for Pacific Hydro, which was
eventually won by Melbourne-based asset manager, Industry Funds
Management, against Spanish group, Acciona. Meanwhile, Australia’s
Southern Hydro was the most valuable hydro-electric transaction, and
the second most valuable renewable energy deal, ranked at number 30
globally.

Turkey enters Middle East power stakes: five nuclear power plants for domestic use

admin /9 March, 2006

Turkey planned to build up five atomic energy plants, according to The Age (8/3/2006, p.13).

Dependence on natural gas: The first, at Sinop on the Black Sea,
would come on line in 2012 and cease Turkey’s costly dependence on
natural gas, 90 per cent of which comes from Russia and Iran.

One tenth of energy needs: Turkey has a rapidly expanding
economy, a population of 70 million and scarce petroleum deposits.
Energy Minister Hilmi Guler, who made his remarks while visiting a
nuclear plant in the US, said the reactors could provide about a tenth
of Turkey’s expected energy needs over the next two decades.

Equal with Iran in power stakes: Iran and Turkey are almost
identical in population and economy and regard each other roughly as
equals in a combustible region with no dominant power.

But Iran toughens up with nuclear: “Iran with nuclear production
will be the dominant power,” said Ozdem Sanberk, a former ambassador to
Washington who heads a Turkish economic research group. “There will be
an asymmetrical relationship.”

Respect for NPT: He argued recently that Turkey had no choice
but to pursue a nuclear program under the Nuclear Non-Proliferation
Treaty (NPT). US officials are trying to use Turkey’s unease as part of
international efforts to persuade Iran to suspend its nuclear program.