Monthly World Energy Market Review

Release Date: August 5, 2016

International Pricing Information US

Current price

M/M (%)

Power (MWh) Avg. price ind users

$65.40

+ 1.90 %

- 1.70 %

PJM region weekday

$34.49

- 22.60 %

- 14.40 %

Palo Verde weekday

$29.00

+ 12.70 %

+ 2.70 %

Natural Gas (Dth) Henry Hub

per Dth. $2.76

- 4.80 %

Europe

Y/Y (%)

- 1.40 %

Rotterdam Coal (US$/t) C: $59.30 M/M: - 2.00 % Y/Y: + 13.10 %

Current price

M/M (%)

Y/Y (%)

Baseload Power (MWh) – Month Ahead Germany

€ 23.50

- 12.80 %

- 30.10 %

France

€ 32.85

+ 7.70 %

- 9.10 %

Spain

€ 42.70

+ 0.40 %

- 22.20 %

Swiss

€ 28.78

+ 4.80 %

- 12.30 %

UK

£ 39.55

+ 5.81 %

- 2.70 %

Italy

€ 41.75

+ 2.50 %

- 18.10 %

Natural Gas (MWh)

Venezuela Oil Basket (US$/bbl) C: $35.00 M/M + 12.40 % Y/Y - 23.70 %

Brazil CEPEA Hydrous Ethanol (US$/l) C: $0.4764 M/M: + 7.80 % Y/Y: + 36.20 %

WTI (US$/bbl) C: $40.94 M/M: - 11.80 % Y/Y: - 8 80 %

NL (TTF)

€ 13.60

- 3.90 %

- 30.30 %

UK (NBP)

£ 12.08

+ 0.20 %

- 13.80 %

Japan LNG (US$/ Dth.) C: $ 7.50 M/M +/- 0.00 % Y/Y: - 11.80 % Singapore Fuel Oil (US$/ Ton) C: $310.20 M/M: + 26.10 % Y/Y + 12.80 %

Australia

Current price

M/M (%)

Y/Y (%)

- 1.30 %

+ 19.00 %

Baseload Power (MWh) Queensland

$63.72

Global Energy Review – International Markets International Energy Markets - Review

• Turkey has introduced a $15/t tax on all imports of coal for power generation, taking the market by complete surprise and adding pressure to already “suffering” coal-fired generators. The tax was intended to “organise foreign trade for the good of the national economy”. But with the tax purely on coal for power generation, it is not yet clear how the government will prevent importers purchasing foreign coal for “cement production”, then instead selling it on to power plants. Turkey imported 13.5m tonnes of all coal types in the first five months of the year, up 2.2% on the year, of which 11.1 tonnes were thermal, according to the latest government data. • Russia’s coal exports in July averaged 447,000t/day, the lowest in four months but still 4.7% higher than the same month last year, government data showed. Although exports fell 3.2% month on month, production rose 1.4% to 98,000t/day, according to the data from the Russian energy ministry. For January-July, Russia’s exports rose 7.4% year on year to 92.8 tonnes and production increased 6.1% to 217m tonnes. Although seaborne prices were low, a weak ruble against the US Dollar, coupled with low oil prices kept Dollar-linked exports lucrative for Russian exporters. • Nearby UK gas prices gained some marginal ground as rising exports to mainland Europe and firming oil prices helped to halt three consecutive sessions of losses. Yet sufficient supply capped gains and put pressure on longer-dated contracts, market participants said. The day-ahead UK NBP contract rose 0.35p to 34.45p/th, while August contract was 0.10p lower at 35.85p/th.

Global Energy Review – US Markets United States Energy Markets - Review •

U.S. WTI crude inventories revealed the first weekly climb in domestic inventories in 10 weeks. The domestic crude supplies rose by 1.7 million barrels for the week ended July 22nd. This was in contrasts to the 2.6 million barrel decline expected by analysts polled. Oil futures fell to their lowest levels in more than three months after the U.S. government data revealed the climb in inventories. U.S. crude prices are trading under $40 a barrel as persistent worries of a glut of crude on the market.

•

In August 2016 natural gas contract expired on July 27, 2016 at $2.672. The most recent EIA storage reported an injection into storage of 17 BCF and inventory levels currently stand at 3.294 TCF. This was below the injection level last year same week of 52 BCF and lower than the five year average injection that was also 52 BCF. After the release of this storage report the new prompt month September 2016 moved up 8% which was the largest move seen since last December. This natural gas rig count fell by 1 to 88. Extreme heat for most of the country has caused the consumption of natural gas to rise by 6.5% in the last week. Natural gas consumed by electric generation increased 9% week over week.

•

The September 2016 contract is now the prompt month for natural gas delivery and traded as high as $2.911 this past week. The 52 week range for natural gas is $1.99 to $3.18. The $3.18 price was one year ago and we are getting close to that range. The expected reported injection for this past week was around 27 BCF and the report fell short of that level. U.S. demand for natural gas has increased due to electric generation increasing. Weather is still remains and the driver as the heat of the summer is upon us.

Global Energy Review – European Markets European Energy Markets - Review

•

Denmark’s Dong Energy reported a more than doubling in year-on-year earnings from its flagship wind power unit to DKK 3.5bn (EUR 471m) in the first half, thanks mainly to one-off gains from the sale of wind farm shares. That partly contributed to a 52% rise in the group’s earnings before interest and taxes (EBIT) to DKK 9.7bn in the first six months of the year, compared with the same period in 2015, Dong said in its interim report, citing the renegotiations of oil-indexed gas purchases contracts as another factor.

•

Germany’s benchmark power contract extended a three-week low on Wednesday, as coal prices continued to ease back from recent highs in line with other weaker fuels. Power for delivery next year last traded at EUR 26.85€/MWh on the EEX exchange, down EUR 0,15 on the day after hitting EUR 26.65/MWh, its lowest since 12 July. In the market for European coal, a price setting German fuel, the front-year contract has fallen below $ 60/t for the first time in a week. The API 2 sank as much as $ 0.75 to $ 59.90/t on London’s Ice exchange, pulling further away from a 17-month high of $62/t hit last week.

•

German power spot prices will fall in the coming weeks, so declining from the six month-highs seen in late July, as electricity consumption declines as the summer holiday season enters full swing and amid higher power plant availability. Spot prices will, however, increase again in the second half of August as people return to work after the holidays.

Global Energy Review – Asia/Pac Markets Asia-Pac Energy Markets - Review • Korea’s power consumption broke through the roof at 80.22 kilowatts. This outstripped another record just two weeks ago of a 78.2 million kilowatts consumption. The ministry of Trade, Industry and Energy assured consumers that there will be no shortages as it has over 10% of reserved power versus demand, thanks to four power plants that have come online. Temperature in Seoul hit 29.2 degrees Celsius with a 73% humidity rate. With this, the ministry predicts that power consumption will further jump to 81.7 million kilowatts as temperature is expected to rise higher in August. • Chinese coal producer Shenhua Group Corp. is seeking a merger with state-owned China General Nuclear Power Corp., a deal that would create a utility giant with about $204 billion of assets. Shenhua group submitted a proposal to government regulators about a possible merger, however, there is no certainty it will result in a tie-up. Any deal would combine China’s largest coal producer with its biggest generator of atomic power, giving Shenhua Group the ability to generate energy from cleaner sources as the nation seeks to reduce its dependency on coal and cut carbon emissions. • Thailand may buy 9,000 megawatts of electricity from Laos this year to ensure sufficient supply to meet rising demand. That is nearly 30% higher that the 7,000 MW that Thailand currently buys from Laos. Most of the electricity would come from hydropower and Thailand is trying to diversify away from gas fired generation. Existing sources of gas are expected to be exhausted within a decade in and Thailand has started to import LNG, but this is at a high cost. Hydropower is a cheaper and cleaner source of energy.

Global Energy Review – LATAM Markets LATAM Energy Markets - Review

• Latin America and the Caribbean could go zero carbon by 2050 with ambitious and targeted policies. That’s according to a report by the United Nations Environment Program – DTU Partnership which stated although those regions account for only 10 % of the world’s greenhouse gas (GHG) emissions, the region is at the forefront of global efforts to tackle climate change. The report estimates that achieving a zero carbon by 2050 would require a complete end to deforestation, a reforestation of 50 million hectares and the restoration of 200 million hectares of degraded land. • Oil and gas leases for nearly 24 million of acres of ocean in the Gulf of Mexico are to be sold in an online auction. The sale will be the first federal offshore oil and gas auction broadcast live on the internet, opening the process up to a much broader global audience. This approach will allow for greater efficiency and transparency, eliminating the need for the public to physically attend the bid reading. The auction will include approximately 4,399 parcels of land, located from the nine to 250 miles offshore, in water depths ranging from 16 feet deep to around 11,000 feet deep. • Argentina is planning to scarp LNG imports by 2021/22. The country’s decision follows its plans to boost domestic gas production by promoting upstream activities in the nation, including shale gas. LNG imports are currently meeting a third of the country’s gas demand but they are also expensive for the country. Argentine President Mauricia Marci believes the process will take five to six years to stop importing gas by tanker. According to Argentine Oil and gas Institute, national output rose 6.6 % to an average of 121.2 million cubic meters per day in the first four months of 2016 from a ten-year low of 113.7 mcm per day in 2014.

Appendix – Commodity Pricing Data Brent Crude - month ahead contract (US$ per barrel)

Foreign Exchange (Euro/USD)

Appendix – Commodity Pricing Data Coal CIF ARA 2017 delivery ($/T)

Natural gas prices, “Calendar year 2017” NBP in £p/therm, TTF & EEX gas in €/MW/h)

Appendix – Commodity Pricing Data European electricity prices for “Calendar Year 2017” (€/MWh)

Appendix – Commodity Pricing Data European day ahead electricity prices (€/MWh)

Glossary Term

Definition

Avg Price Industrial Users

Latest unit cost for electricity consumed by industrial users as reported by the U.S. Energy Information Administration (EIA). The EIA usually publishes the data 4 months after the month of consumption.

Henry Hub Natural Gas

The Henry hub in Erath, Louisiana serves as the pricing point for natural gas futures traded on the New York Mercantile Exchange (NYMEX).

WTI Crude Oil

The reported WTI light crude oil future price is the market determined value of next month’s contract to either buy or sell in multiples of 1,000 barrels West Texas Intermediate or other light sweet crude oil. WTI light crude oil contracts are only executed for physical delivery in relatively few cases but nevertheless they serve as an important pricing mechanism for contracts that are actually executed for physical delivery.

PJM Region Weekday

The Pennsylvania-New Jersey-Maryland (PJM) interconnection functions as a power pool for all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. The PJM power pool is currently the largest competitive wholesale electricity market. The price reported here is the price during weekdays.

Palo Verde Weekday

The Palo Verde switchyard located in Tonopah, Arizona is a key point in the western states power grid and is used as a pricing point for electricity across the southwest United States. The price reported here is the average market price for peak electricity to be consumed on the next day. Peak hours under this contract are from Mon – Sat between 0700 – 2200 hours local time.

Brazilian Ethanol

The market price for a next month delivery of 1liter of ethanol at the mill gate in Sao Palo state as calculated by Cepea.

Rotterdam Coal

The market price for a next month delivery of coal in the Amsterdam – Rotterdam – Antwerp (ARA) port area.

Germany

The market price for one MWh of baseload electricity to be delivered next month as traded on the EPEX Spot Market www.epexspot.com.

France

The market price for one MWh of baseload electricity to be delivered next month as traded on the EPEX Spot Market www.epexspot.com.

Glossary Term

Definition

Spain

The market price for one MWh of baseload electricity to be delivered next month as traded on the trading platform belonging to the Operador do Mercado Iberico de Energia (OMIP).

Swiss

The market price for one MWh of baseload electricity to be delivered next month as traded on the European Energy Exchange (EEX).

UK

The market price for one MWh of baseload electricity to be delivered next EFA month as traded on the Intercontinental Exchange (ICE). EFA month stands for the specific calendar in use under the Electricity Forwards Agreement that breaks up the year in equal blocks of 4 and 5 weeks so as to simplify trading.

TTF

The Title Transfer Facility (TTF) is a virtual hub that serves as a pricing point for natural gas contracts within the Dutch gas network. The actual contracts are traded on the European Energy Derivatives Exchange (ENDEX).

NBP

The National Balancing Point (NBP) is a virtual hub that serves as a pricing point for natural gas contracts within the United Kingdown. The actual contracts are traded on the Intercontinental exchange (ICE).

Singapore Fuel Oil

The market price for Free on Board (FOB) 180 Centistoke (CST) fuel oil in Singapore port to be delivered next month.

Japan LNG

The reported price for LNG in Japan is derived from the price of West Texas Intermediate (WTI) crude oil by means of an index formula and is reported in US Dollar per decatherm.

Queensland Baseload Power

The market price for one MWh of baseload electricity to be delivered next month in Queensland as traded on the Australian Securities Exchange (ASX).

Brent Crude Oil

Brent crude oil is a combination of light crude oil from 15 different oil fields located in the North Sea. Due to the high quality of Brent crude, it is ideal for making gasoline and middle distillates. As such, Brent crude forms the pricing benchmark in Europe and Africa.

Glossary Term

Definition

Foreign Exchange

The blue line in the graph presents the daily exchange rates Euro to USD while the red line represents the moving average over the last 14 trading days.

Coal CIF ARA 20XX Delivery

Coal is an important input fuel for electricity generation. The coal price reported in appendix 3 is inclusive of commodity Cost, Insurance and Freight (CIF) from its origin to the ports of Amsterdam – Rotterdam – Antwerp (ARA) to be delivered next month.

Natural Gas Price for Calendar 20XX

The featured contracts in this graph are for the delivery of natural gas in the UK (NBP), Dutch (TTF) and German (EEX) markets in the next Calendar year. The benefit of the annual contract is that the buyer has an average price throughout the year rather than individual prices for each month that are priced according to market conditions and can show great variances between winter and summer prices. For further information on the specific country contracts, please refer to the glossary for the world report.

European Electricity Prices for Calendar Year 20XX

The featured contracts represent the current market price for one MWh of baseload electricity to be delivered next calendar year (except UK) as traded on each of the respective exchanges mentioned as source. The electricity market in the UK features the season contract as its longest contract. As a result, the reported market price is the average of the nearest summer and winter contracts.

European Day Ahead Electricity Prices

Next to future contracts, each electricity exchange also features a day ahead contract. The day ahead contracts are characterized by greater volatility than the monthly and longer period future contracts as they are more susceptible to actual supply and demand on the day as well as the other factors influencing the longer contract prices.

Confidential This presentation and the information contained herein is confidential and intended for NUS Consulting Group clients. The material contained herein represents the opinion and views of NUS Consulting Group and is provided to discuss general market activity, industry and sector trends, as well as other broad-based economic, market and political conditions. This information should not be construed as research or investment/purchasing advice. Persons responsible for the purchase of energy for an organisation must consider their organisation’s own objectives, risk tolerance and market forecast when undertaking energy purchasing decisions. The circulation or distribution of this presentation or the information contained herein to persons other than the Intended Entity or its employees is strictly prohibited