German solar PV subsidies will drop by 1% per month in Q3 2018

The German Federal Network Agency (Bundesnetzagentur or BNetzA) will cut subsidies for solar PV projects commissioned between 1 August 2018 and 31 October 2018 by 1% per month. The BNetzA estimates that the newly solar PV added capacity (2,727 MW) is above the planned capacity expansion path of 2,500 MW. For this purpose, a slight regulation of the subsidies will be implemented and the funding rates will be adjusted to avoid overcapacity.

Germany is shifting from a subsidy-based system to an auction-based one. Since the beginning of 2017, solar and wind power projects over 750 kW have to compete in tenders in order to secure power purchase deals, as feed-in tariff (FiT) contracts are no longer available. However, projects that were approved in 2016 are still eligible.

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Israel passes law to break-up monopoly of state-run power utility IEC

The Israeli cabinet has passed a law approved by the government in June 2018 which opens the domestic power sector to competition for private electricity producers and breaks up the monopoly held by the state-run power utility Israel Electric Corporation (IEC). This is the final chapter of a reform which began in May 2018, when IEC, the government and the main trade union Histadrut agreed to launch the process.

IEC has been managing the domestic power supply chain for decades but has agreed to sell five of its power plants over the next five years and will set up a new subsidiary for the development of two new power stations projects, which are yet to be built. IEC's system management and planning unit will be sold to another government-owned company, but the state power utility will retain its power distribution monopoly. However supply will be gradually opened to competition.

In recent years, the Israeli power generation market has been opened to competition and independent power producers (IPPs), such as Edeltech, IC Power or Dalia Power Energies, operate more than 3 GW, i.e. more than 20% of the total installed capacity.

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Russia's Novatek ships first LNG cargo from Yamal LNG to China

The Russian independent gas producer Novatek has shipped its first liquefied natural gas (LNG) cargo from the Yamal LNG project to China via the Northern Sea Route. This represents a new milestone and the number of such shipments are expected to increase in the future to meet the growing natural gas demands of the Asian-Pacific markets. Novatek already started to ship natural gas via the Northern Sea route in 2010 and currently uses a fleet of 15 Arc7 ice-class LNG carriers with cargo capacity over 170,000 cm.

The Yamal LNG project will consists of three liquefaction trains of 5.5 Mt/year each of LNG and up to 1 Mt/year of gas condensate. The first unit was commissioned in December 2017 while the second and third trains are expected in 2018 and 2019, respectively.

Yamal LNG's main shareholders are Novatek with 50%, Total with 20%, China National Petroleum Corporation (CNPC) with 20%, and the Chinese Silk Road Fund (10%, to be sold shortly by Novatek for the provision of a US$792m, 15-year loan to finance the project). Yamal LNG has already secured contracts for more than 90% of the total capacity with Gas Natural Fenosa (2.5 Mt/year), CNPC (3 Mt/year), Total (4 Mt/year), Novatek Gas & Power (2.9 Mt/year) and Gazprom (3 Mt/year).

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Iraq extends bid deadline for the Diwaniya 70,000 bbl/d refinery project

The Iraqi government has extended the submission bid deadline for the 70,000 bbl/d refinery project in Diwaniya (south of Bagdad, Iraq) from 31 July 2018 to 30 October 2018. The refinery is a key project for the country and its construction fits into the framework of a broader strategy, according to which the government aims at increasing the country's domestic refining capacity to more than 1.4 mb/d.

Diwaniya and other projects will contribute to it, including in particular: Maysan (150,000 bbl/d), Kirkuk (150,000 bbl/d), Karbala (140,000 bbl/d) and Bazian (46,000 bbl/d). In May 2018, the government also signed an agreement with two Chinese companies, PowerChina and Norinco International, for the construction of the 300,000 bbl/d Al Faw (also spelled Fao) refinery at the Faw port in the Basrah region.

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Gazprom gas production up by 8.5% in 1st semester 2018 (Russia)

According to the state-run company Gazprom, exports of Russian gas to non-CIS (Community of Independent States) countries went up by 5.8% between January and June 2018 to reach 108.9 bcm. The largest hikes were reported in Germany (+12.2% or + 3.5 bcm), Austria (+52.3% or + 2.1 bcm), the Netherlands (+61.9% or +1.4 bcm), France (+12.5% or 0.8 bcm), Croatia (+45%, +0.6 bcm) and Poland (+6.7%).

Meanwhile, Gazprom's gas production increased by 8.5% over the time period and averaged 270.1 bcm. Its gas sales on the Russian domestic market also went up by 5.3% (7 bcm) since the beginning of the year. The company's total gas output in 2017 averages 471 bcm, which is 12.4% more than in 2016. For the end of 2018, Gazprom hopes to reach 476 bcm (+1%) but the forecast could still be adjusted and reviewed.

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