Feasibility isn’t only about physics and engineering. It’s also about cost.
Published:
January 17, 2013 at 2:07am
Somebody has pointed out in a comment that the issue is not whether it is possible to build those vast gas tanks on the reclaimed land but what it would cost.
Today’s technology makes anything possible. And not just today’s: man walked on the moon in the late 1960s.
Take the famous Burj Al Arab hotel built on the shifting sands on the coast of Dubai. It was possible. Of course it was. It’s standing.
But it was built in a country where money is – or rather, was at the time – no object.
32 Comments Comment
Leave a Comment
Well, most of those who have “switched” or are voting for the Labour Party think that once Joseph is in power, money will again become unlimited.
What’s worrying is Konrad Mizzi’s statment they they will go for the cheapest offer and will ‘push bidders to offer the cheapest prices’.
The cheapest is not always the best and when one considers that it is a power station that we’re talking about, we have reason to worry.
This is not a decision that can be reversed easily.
The cheapest bidder will be the one who skimps on safety.
I don’t believe all that Konrad Mizzi is saying. He is paying with words, and that is his strategy to come out of corners.
The deal that has already been struck with one supplier, and it already carries a gift of Euro 30M to be paid by March 2014 in order that Joesph Muscat can honour his promise.
We have heard so much about it that it is impossible that this condition has yet to be included in statement of interest.
My question at this point in time is that should the two-year schedule go overboard, will the selected supplier be prepared to fork out anthor Eur30M, without earning anything in the meantime, to cover the reduction for 2015?
The bill for the reduction will be even higher then, as the reductions to businesses will also commence.
Don’t forget that the Eur 30M is over and above the Eur 25M already in place to subsidize the purchase of the fuel.
All this hassle and empty talk is for a saving of Eur100 per family per year. Are the Maltese ready to prostitute themselves for Eur100 per year?
In answer to your last question, yes. And that is most unfortunate because those to whom Eur100 / year makes a significant difference are the ones who will suffer most.
There is also the fact that Konrad Mizzi is no accountant.
He may very well be conversant with energy technologies, but he has absolutely no idea about hedging agreements and the like.
Regarding costs and financing, Tonio Fenech, as a qualified experienced accountant is much more an authority than Konrad Mizzi.
Konrad Mizzi is not conversant with energy technologies. His connection to the energy industry is as a business management consultant, not an energy industry consultant.
He is NOT conversant with energy technologies, for heaven’s sake.
Add ‘time frame’ to the equation. A project may be feasible in terms of technology and also cost, but what about time frames?
This is coming from an IT project manager working abroad on large projects who is a decade younger than Dr.Konrad Mizzi.
FACT: Natural gas by Sicily-Malta pipeline is cheaper than LNG shipping, storage, and regasification [DNV Kema].
FACT: A private company will construct an LNG terminal (€142M), and a new gas-fired turbine (€166M) [PL’s Energy Vision presentation].
FACT: The company will be contracted to supply electricity to Enemalta at a fixed price for 25 years, with interim reviews after 10, 6, and 3 years [PL’s Energy Vision presentation].
FACT: The cost of the capital investment will be recouped by the private company over the 25 year lifetime of the plant by including that cost in the energy unit price charged to Enemalta.
FACT: Because gas by pipeline is cheaper than LNG shipping, storage, and regasification, LP wants to develop the gas pipeline project in parallel with the proposed new LNG terminal and gas-fired turbine.
FACT: LP says that when the gas pipeline comes online, we’ll switch over from using the LNG terminal to the gas pipeline, bringing energy prices down further.
FACT: LP says that the Siciliy-Malta gas pipeline will take 6-10 years to come online.
FACT: The cheaper pipeline gas cannot be used by the private company during the initial period 10 years even if it comes online earlier, because Enemalta will be bound to buy electricity from the private company at the initial contracted fixed price.
FACT: With the gas pipeline on the horizon, the private company will want to recoup the LNG terminal cost (€142M) over the initial contracted period of 10 years, not 25, because it will be forced to bring the terminal offline and switch over to the gas pipeline after the initial 10 years.
FACT: This will bring the electricity unit cost for Enemalta higher than LP’s estimate of €0.096 FROM DAY 1.
In short, the LP’s Energy Vision for cheap electricity is nothing but a dream. New questions about the plan arise by the day, questions that the LP obviously had not factored in in their original estimates but promptly brush off with a grin and a “Oh, we had[‘nt] thought of that …”.
A case in point is Muscat’s response to the question of the Sicily-Malta gas pipeline, “Mela le. M’għandniex problema bil-pipeline. Nagħmluh. Meta jiġi, naqilbu fuqu.”
I wouldn’t worry about the Sicily-Malta pipeline, which will never happen under a Labour government.
It would throw a wrench into Mizzi’s calculations, as you have pointed out.
It would also trigger job losses at the LNG-fueled power plant, and if the Dockyard story is anything to go by, the LP would rather cripple the economy than make any kind of difficult, rational decision.
More importantly, the Sicily-Malta pipeline is premised on the productive, cooperative relationship that exists today between Malta and the EU. This just might not survive the change in government.
During the 80s the Labour government was regressive when it changed the Marsa Power Station to coal and in such a densely populated area.
The new Nationalist government had no choice but to make alternative arrangements and build another power station, closing down Marsa. The economy started to grow and to keep the momentum more power had to be generated.
The time has come again to increase the energy generation so a new power station had to be built.
The choice was between gas and oil, no coal again.
We couldn’t have a gas-fired power station because Malta did not and still does not have the delivery (building of gas tankers/ships) and storage options (vast gas tanks) because hugely expensive and the process takes years (the problem the Labour Party faces now).
So the obvious choice was heavy fuel oil while the process of sorting out EU funding for a gas pipeline from Sicily went through, followed by more years for laying it down and building the infrastructure. The estimated time for the gas pipeline project is five years.
At the same time, the Nationalist goverment managed to obtain funds for the interconnector to produce cheaper and cleaner energy. The interconnector will come on stream next year. The Labour Party has ignored this. Quite clearly, somebody has sold it a power station and somebody else is taking a cut, and several people are personally invested in making sure it goes through.
All this means that, without Labour’s plans, our energy supply will see a marked and steady improvement, and that it will be the best option environmentally, financially, and also – we cannot ignore this – politically. By politically, I do not mean partisan party politics, but international/domestic politics. It is wiser to be totally dependent on a pipeline from the EU (Sicily) for our gas supply, than totally dependent on sea shipments from a non-EU state.
Compre this to the Labour Party plan, which is based not on solid, long-term projections in the best interests of the country and its people, but on the need of some people to take a cut from the sale of a power station and all the attendant infrastructure, in a plan shrouded in secrecy.
Those Maltese brokers (perhaps there are Labour politicians among them) who take their cut will take the money and see no further than that, while the country suffers 25 years of uncertainty, challenging timeframes, huge hedging risks, and large capital employment.
The economy, and the people, will pay the very heavy price purely so that somebody, or some people – and this is becoming increasingly obvious given the secrecy round the project and its details – can make a financial killing.
Whoever is in power should take the sensible step and stay with the energy plan that we have in place already. But that is not going to happen because somebody is pushing for the purchase of that power station project, and a ‘gentlemen’s agreement’ seems to have been reached already on a deal that and people who are anything but.
Konrad Mizzi says that, under Joseph Muscat’s government, Algeria could be involved in bringing gas supplies to Malta.
Maybe Konrad Mizzi can explain how that will work?
Alex Sceberras Trigona might be able to answer that.
Did he say that? Link. Give me a link! I need to vaporise this crazy scheme. Is anyone following the news these days? I mean international news, not ‘local’. Take my word for it that the price of gas from Algeria will skyrocket, just like oil from Iraq did.
Why do I bother? MLP will still win.
This is like the gun debate in the US. A tidal wave of ignorance submerging every sensible argument. And the politicians riding on the tidal wave.
Konrad Mizzi said it on Bondi+. It was lost in a deluge of stuttering and argument. Lou pounced on the comment and said something “Hawnhekk hareg newspoint, mela” or something of the sort.
It was at the point in the discussion (ahem) when they were talking about ships that can transport gas.
Once the idea of chartering ships was torpedoed ably by Anne Fenech (“avukata taht it-tinda”, skond Mizzi) in a recorded interview clip, (she said that ships of the right size exist but are unavailable for charter), and part delivery by larger ships is unlikely, Mizzi came back with something along the lines of “vapur li sejjer l-Algerija…”. Algeria sells, not buys, gas.
When I have the time, I’ll try to find the exact point in the programme and will post the link here. Meanwhile, look up last Tuesday’s edition of Bondi+. Be patient. Watching it was a most frustrating experience.
Ok. Found it. http://www.tvm.com.mt/live: click on the link for Tuesday this week and scroll to around 16:10 and watch from there. Konrad says that big ships can discharge part of their load here “u jkomplu sejrin l-Egittu, l-Algerija..”
From the CIA world fact book, Algeria entry:
Natural gas – production:
84.61 billion cu m (2010 est.)
country comparison to the world: 11
Natural gas – consumption:
28.82 billion cu m (2010 est.)
country comparison to the world: 30
Natural gas – exports:
55.79 billion cu m (2010 est.)
country comparison to the world: 7
Natural gas – imports:
0 cu m (2010 est.)
country comparison to the world: 151
Natural gas – proved reserves:
4.502 trillion cu m (1 January 2012 est.)
country comparison to the world: 11
And for the sake of the non-Baxxters:
http://www.upstreamonline.com/live/article1314226.ece
Algeria crisis pushes up oil price – more than 10% of Algeria’s gas production locked in
because:
http://www.aljazeera.com/news/africa/2013/01/2013116154848726750.html
Hostages seized after deadly Algeria attack – two dead, dozens abducted
http://edition.cnn.com/video/?hpt=hp_t1#/video/business/2013/01/16/qmb-elbagir-algeria-gas-field-attack-and-hostages.cnn
Hostages taken in gas field attack
The current hostage crisis in Algeria has already pushed world oil and gas prices up TODAY.
Well, I was tweeting all this to my buddy Harry this morning while having my nails done [Is this right? Ed.] I knew all this and I’m only a jackshit zaghzugh with a laptop. Surely Joseph Muscat, with his cohorts of konsulenti and esperti, would know it too?
So which is it? Is he lying scum or just very, very thick, and I mean never-watched-CNN-thick?
Why worry? We’ve been saying that Labour will set us back 30 years and, at that time, we got used to electricity for a day and blackouts for two.
A bit of nostalgia won’t hurt, will it?
A. Attard, I’m sure with Vanessa Frazier heading the Ministry of Foreign Affairs, we will do just fine. She has just replaced John Paul Grech. Of such career moves is Malta made.
And Joseph Muscat should explain what involving Algeria means for Malta’s foreign policy, indeed, what his foreign policy is all about.
He will give us all the details ‘f’hin opportun”.
Every country has to go through a period where the people learn from the mistakes of the past.
It seems that Malta still needs to learn.
The size brings about advantages and also disadvantages. Now Malta is facing an election scenario, which sadly some american advised a party to hit at the people with money in their pockets.
This should never be the point of reference of an election campaign.
Merkel was never elected to give us a reduction in energy. No Way.
Energy costs as much as it should cost. No one complains at the price of gold when it goes up and when it goes down.
What should be the pinnacle of the election argument is JOBS, work, progress, making the country as attractive as can be for investments and the future.
What if Malta had to face the situation of Greece? Would anyone believe that the leader of the opposition would still keep his word and keep prices low?
The answer is very big NO.
http://www.youtube.com/watch?v=29Af54GV258&NR=1
Note the dense setting of piles to ensure stability, which, in this type of tank, is mandatory.
Note also the type of construction, either a double walled steel/concrete tank, which is the safer option, when space constraints are a determining factor.
Konrad ignores the learning curve required.
What grade of concrete is required in this case?
I’m no expert, but I do know that certain grades haven’t yet been achieved in Malta.
Who’s setting the terms of reference for the expression of interest?
According to some ‘experts’ they will put the piles 140ft. down in rubble.
Have I missed something? If the PL intends to give the contract on a DBO (design, build and operate) to their preferred partner, then the cost of the land which the plant will occupy should be factored in.
I have not seen any evidence to prove this – and it must be worth quite a few millions. Half-baked proposals are bound to prove unsustainable.
[Daphne – They say they are going to give them public land. But that qualifies as state aid.]
Oh, but the land will be gifted to the contractor, following a vox pop.
Design, build, operate – yes. The big question is, financed by whom?
This is bordering on corruption. Giving our land (Malta taghna ukoll, don’t forget) for free to some speculator is highly irregular.
The PL’s statement that their chosen partner will give Eur 30M is what in a Middle Eastern contract is hidden as royalties.
When I saw that building I thought Joseph came up with the idea of artificial islands “ghas-settur privat”.
What happened to the LIVING WAGE?