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Rulings in Renewable-Energy Battle in Spain to Test Arbitration Power
The clouds may finally be lifting over a series of multiyear legal battles involving soured investments in Spain’s renewable-energy market. In the past 18 months, international arbitrators ordered Spain to pay compensation to several investors for losses incurred after the Spanish government revoked incentives designed to attract capital to the nation’s renewable-energy market. As Spain seeks to annul the rulings, the dispute is testing the strength of international arbitration to enforce certain investor rights. “It’s the very legitimacy of international arbitration that’s been challenged,” said Fernando Mantilla-Serrano, a partner and global co-chair of the international arbitration practice at law firm Latham & Watkins LLP. Mr. Mantilla-Serrano represented some investors in their claims against Spain. Dozens of renewable-energy investors claimed a total of at least €7.86 billion ($8.96 billion) in more than 35 arbitration cases filed against Spain since 2011, according to a document the Spanish government issued late last year. The document appears to be the only public tally of the claims. These investors—which include private-equity firms, asset managers and global power companies—were attracted to Spain by a package of incentives the Spanish government introduced in 2007 to encourage electricity generation from renewable sources. However, electricity consumption in the country declined in the wake of the 2008 financial crisis, making the subsidies more costly for local electricity companies. Concerned about increasing deficits, the Spanish government in 2009 began a rollback of the incentives that culminated in 2013 and that drastically reduced the revenue of renewable-energy plants, private-equity executives said. Investors that had poured capital into renewable-energy projects during the late 2000s and early 2010s saw their returns deteriorate without the incentives. Many now seek compensation for the losses they suffered. “That’s a huge number of cases arising out of basically one policy decision,” said Joseph Profaizer, a partner and global head the of international arbitration practice at law firm Paul Hastings LLP. Spain has prevailed in two of the six cases international arbitrators have ruled on so far. But a series of four consecutive decisions in favour of investors tipped the scale against the Spanish government.   Spain should pay  In the latest decision, the Washington, D.C.-based International Centre for Settlement of Investment Disputes, which is part of the World Bank Group, ruled in June that Spain should pay €112 million, net of interest, in damage compensation to Antin Infrastructure Partners, less than the at least €148 million the European private-equity firm claimed, according to case documents. Antin in 2011 invested alongside asset manager DWS Group in two concentrated-solar-power plants located in the Spanish province of Granada, the documents showed. DWS is seeking compensation from Spain through a separate arbitration case it filed with ICSID. Spain has requested an annulment of Antin’s award. The request is pending. Antin declined to comment for this article, while the Spanish government didn’t reply to requests seeking comment.  One investor still waiting for an arbitration decision is Foresight Group. The London firm in 2008 launched a retail fund dedicated to investment in solar projects, raising €35 million for Foresight European Solar Fund, said Federico Giannandrea, a partner at Foresight who leads the firm’s infrastructure investments in continental Europe. The firm made two investments in Spain from that fund, he said. In 2009, it acquired a nine-megawatt photovoltaic plant in the Castilla-La Mancha region. A year later, Foresight formed a joint venture with a Spanish company, which today is part of renewable-energy operator Athena Investments, to buy another photovoltaic plant in Cordoba. “The tariffs were very attractive,” Mr. Giannandrea said. “We spotted the opportunity of a market that was nascent at the time, which was the solar market.” Foresight has sold its stake in the two plants, but kept the rights to the legal claims as it still wishes to return more capital to investors, he added. Several other investors are in the same situation, according to people familiar with the matter.   Charter violation  In the four cases decided in favour of investors so far, ICSID and the Arbitration Institute of the Stockholm Chamber of Commerce ruled that the changes Spain made to its renewable-energy incentives violated the Energy Charter Treaty, an international agreement aimed at fostering cross-border investments in the energy industry. Spain is one of the 53 current members of the treaty. Spain is fighting the claims and the awards by bringing the European Union into the picture. The Spanish government has argued that the EU law takes precedence over the Energy Charter Treaty to resolve disputes between EU-based investors and EU states. Another Spain argument is that paying awards to investors would amount to state aid, which only the EU could approve. The main question, international arbitration experts said, is how far the Spanish government is willing to go to avoid paying the awards. Adding to the pressure on Spain, Antin and the other three investors that won their cases requested the U.S. courts enforce the awards granted to them. The arbitration institutions are expected to rule on more cases in the coming months, and they likely will award more compensation to investors, the experts said. “There’s a tendency to try to follow what has been decided in previous cases,” said Carmen Otero García-Castrillón, a professor of private international law at Complutense University of Madrid. “When the facts are much alike, it would be shocking if the cases were decided in a different way.” It is much less clear, however, if investors will ever get paid. “I really hope so,” Mr. Giannandrea said. “We don’t think it would be fair if states were allowed to breach promises without consequences.”   Source: Private Equity News https://www.penews.com/articles/rulings-in-renewable-energy-battle-in-spain-to-test-arbitration-power-20181105  
Energy
Thailand PTT Public Co., Ltd. signs LNG contract with Tri-Gen
PTT Plc, the national oil and gas conglomerate, has signed a contract with Thai gas trader Tri-Gen Solution Co to distribute liquefied natural gas (LNG) for use in industrial factories. With the 10-year purchase contact, Tri-Gen aims to expand the LNG market in Thailand to encourage the use of clean and environmentally friendly energy. Wuttikorn Stithit, executive vice-president of PTT for natural gas supply and trading, said the agreement has been effective since Nov 9. "This sales purchase contract for LNG promotes use of the fuel and should help expand the market," he said. "LNG has to be shipped by vehicle, so it is convenient to transport from PTT's inventory at Map Ta Phut in Rayong to customers in industrial factories, some of which are not along with natural gas pipeline. This method can respond to rising LNG demand from the industrial sector." Sommot Sarakoses, Tri-Gen's managing director, said the company is confident it can supply LNG to industrial factories efficiently because of a collaboration with Exion (Thailand) Co, which has a long history of LNG sales in Thailand. Moreover, Tri-Gen is partnering with SSB Cryogenic Co, a Singaporean company, to provide related equipment, technology and conditioning of vessels to transport the LNG, providing international safety standards. Mr Sommot said LNG is a potent alternative energy that offers a high heat rate. The gas has no smell or colour, and is non-toxic, so it does not corrode properties and buildings, he said.   Source: Bangkok Post https://www.bangkokpost.com/business/news/1582974/ptt-signs-lng-contract-with-tri-gen  
Energy
PH eyes bigger share from oil exploration
All oil that may be discovered during the country’s planned joint exploration with China in the West Philippine Sea, President Rodrigo Duterte promised that he will insist that the Philippines should get a larger share. In a press conference in Puerto Princesa City, the President, citing Palawan’s brownouts, stressed that the country needed the oil more to light up areas without electricity. “I told China, ‘If there’s oil and you will drill oil there, I will have to insist that we get a bigger share. That’s ours,’” he notes. He added: “They said, ‘That’s also ours.’ Yes, but that’s ours. So we must get a bigger share. What face will I show in Palawan?” The President said he needed it to light up parts of the country that were without electricity, as justification for the Philippines’ bigger share should there be oil discovered. Earlier, Malacañang mentioned the joint oil exploration with China may be undertaken in Service Contract (SC) No. 57 and SC 72. In the case of SC 57, which is under the Philippines’ exclusive zone, China must comply with Philippine laws. SC 57 covers 7,120 square kilometers offshore of northwest Palawan. It was awarded to the Philippine National Oil Company Exploration Corp. Reportedly, state-owned China National Offshore Oil Corp. has shown interest in being a partner in the joint exploration for SC 57. Later this month, Chinese President Xi Jinping is expected to visit the Philippines. The joint oil exploration in the disputed sea is likely to be discussed.   Source:https://globalnation.inquirer.net/170959/ph-eyes-bigger-share-from-oil-exploration
Energy
Petron prepares for expansion of Bataan refinery
Petron Corp. is in talks with contractors for its planned refinery expansion and petrochemical plant project in Bataan. Currently, its existing refinery is operating at near full capacity. Petron general manager Lubin B. Nepumoceno announced in a briefing, “We are talking to service providers for our CCRU (continuous catalytic reforming unit) project.” Nepumoceno added that, along with additional refining capacity, the project would allow the oil giant to produce fuel combinations. Mostly petrochemicals such as mixed xylene, toluene and benzene. “No firm number yet until approved by (Petron’s) top management”, said a company official when asked how much the new equipment would be rated in terms of producing petrochemicals. “We still need to work out the production capacity, we are going through basic engineering design,” he added. In its public financial report released last week, Petron reported a record quarterly consolidated net income of P5.8 billion for the first quarter, up by 4 percent year-on-year thanks to “stable and improved operating efficiencies at its refinery in Bataan.” Petron explained, the Bataan facility was operating at record 99 percent of its refining capacity of 180,000 barrels daily, during that quarter. In September 2017, Petron president Ramon S. Ang said the company prefers an expansion of its refinery complex in Bataan since it would be quicker to implement and would be less costly than building a new one outside of Luzon. He said the additional capacity could be as much as 120,000 barrels per day totaling the production capacity to 300,000 barrels daily.   Source:https://business.inquirer.net/250893/petron-prepares-expansion-bataan-refinery
Energy
Meralco rate up 11.35¢/kwh
Residential customers of Manila Electric Co. will pay more in their November bill. Due to higher power prices at the spot market, Meralco will enforce an increase of 11.35 centavos in its rate per kilowatt-hour. In an issued statement, Meralco explained that this month’s adjustment would mean that a typical residential customer who consumed 200 kwh a month would see an additional P23 in his bill. The company said that, aside from higher charges brought about by higher demand, at the Wholesale Electricity Spot Market. The increase was also due to a rise in the price of fuel from Malampaya, which affected the gas-fired power plants in Batangas. Power plants running on Malampaya gas such as the First Gas-Sta. Rita, First Gas-San Lorenzo, First NatGas-San Gabriel and South Premiere-Ilijan, provided 61 percent of Meralco’s supply needs. In November,Meralco’s overall charge will increase to P10.09 per kwh from the P9.976 per kwh in October. The generation charge alone rose by 8.17 centavos per kwh based from the current price of P5.275 per kwh from P5.1908 per kwh previously. This was mainly due to a P1.3545 per kwh increase in Meralco purchases from the WESM, from which the company sourced 17 percent of its supply for the month. The price of power obtained from independent power producers (IPPs) and through power supply agreements (PSAs) went down by 14.5 centavos and 56.11 centavos per kwh, respectively. Meralco sources 43 percent of its supply from IPPs and 41 percent from PSAs.   Source:https://business.inquirer.net/260161/meralco-rate-up-11-35%C2%A2-kwh