InnoveraInnoveraBiomethane from Southern Thailand to Singapore
The Singapore buyerThe value chainThe feedstockCompeting supplyRegulation and borders

The biomethane value chain, and where Salerno stands in it

Two stages of the six are vacant in Southern Thailand, and they are the two worth taking; profit concentrates in the two that are already held.

The biomethane chain, palm mill to Singapore burner tip. 6 stages, from Milling and effluent to Sale to the Singapore user.UPSTREAMDOWNSTREAMMilling andeffluentour suppliers70 Southern Thaimills,independentlyownedAnaerobicdigestionour suppliersThe mills, atabout 60% of themUpgrading tobiomethaneunclaimedAggregation andcompressionunclaimedTransport toSingaporePETRONAS Gas andGas Malaysia bypipe; StraitsBio-LNG andshipowners by seaSale to theSingapore userour customersFour licensed termLNG importers,plussandbox-allocatedgeneratorsBASE CASEUpgrading and aggregation, the two vacant stagesThe two vacant stages are the position worth taking, and they are neighbouring, so the candidate run is upgrading plus aggregation. That is the run this memo recommends.REJECTEDExtending into transport by liquefying and shippingPriced and declined by this analysis: the marine route returns minus 5.2% and needs $25.78/MMBtu against a $20 price, because liquefaction costs about $4.00/MMBtu and the pipeline already exists.ConcentrationFragmented upstream.No mill is largeenough to matteralone, which is asupply risk ratherthan buyer powerHard to sourceAlready built whereit exists. The other40% would needcapital before theycan supply anythingValue captureVacant. This is theposition availableto take, and themost valuablefinding in thissectionHard to sourceInseparable fromupgrading inpractice, so it istreated as vacantwhere upgrading is,which is aninference ratherthan a findingConcentrationConcentrateddownstream, andregulated. Buyerpower sits hereConcentrationHighly concentrateddownstream. Entry isby license or bycontract with alicenseeValue captureProfit concentratesat stage six and atstage five, both ofwhich are held.
▸Who holds each stage, and what characterizes it
Milling and effluent
Who holds it today
70 Southern Thai mills, independently owned
What characterizes it
Fragmented upstream. No mill is large enough to matter alone, which is a supply risk rather than buyer power
Anaerobic digestion
Who holds it today
The mills, at about 60% of them
What characterizes it
Already built where it exists. The other 40% would need capital before they can supply anything
Upgrading to biomethane
Who holds it today
Nobody, in Southern Thailand, on the searches below
What characterizes it
Vacant. This is the position available to take, and the most valuable finding in this section
Aggregation and compression
Who holds it today
Not searched separately
What characterizes it
Inseparable from upgrading in practice, so it is treated as vacant where upgrading is, which is an inference rather than a finding
Transport to Singapore
Who holds it today
PETRONAS Gas and Gas Malaysia by pipe; Straits Bio-LNG and shipowners by sea
What characterizes it
Concentrated downstream, and regulated. Buyer power sits here
Sale to the Singapore user
Who holds it today
Four licensed term LNG importers, plus sandbox-allocated generators
What characterizes it
Highly concentrated downstream. Entry is by license or by contract with a licensee

Six stages carry a molecule from a palm plantation to a Singapore burner tip.

The vacancy at stages three and four is the section's most consequential claim, so here is what was searched for it. Searching for operating biomethane upgrading in Surat Thani, Krabi and Songkhla returns POME biogas plants but no upgrading: Asia Biogas runs Krabi Waste to Energy, Southern Palm operates a covered-lagoon digester in Surat Thani, and three registered projects in the South process about 850,000 tonnes of fresh fruit bunch a year into 4.7 MW of generation. The one Thai plant found that upgrades biogas to biomethane is Asia Biogas's compressed biomethane facility at Rayong, commissioned June 2019, which is not in the South (Asia Biogas). So the South has biogas and generation, and no upgrading. The claim is that the upgrading stage is vacant, not that nothing is happening.

Salerno holds none of these today. It holds relationships with stage one, an engineering capability that can build stages three and four, and a trading platform that could contract stage six.

The two vacant stages are the position worth taking, and they are neighbouring, so the candidate run is upgrading plus aggregation. That is the run this memo recommends. The alternative run, extending downstream through liquefaction and shipping into stage five, is the one the client's own plan prices, and section 13 shows it does not pay.

Selling gas into a pipeline and selling the same gas as bio-LNG to a bunker customer are not the same stage. They are separated by a liquefaction plant, which costs $11.81M at the first-phase scale and $4.00/MMBtu to run. Where Salerno stands is the same in both; what it must build is not, and the difference is the largest single number in this case.

Profit concentrates at stage six and at stage five, both of which are held. That is the structural problem with this business: the stages that are open are the ones where value is thinnest, and the stages where value is thick are licensed, capital-intensive, or both.

Section added · Every later judgment about where to participate is read against it, and a reader assembling it from scattered mentions assembles a different chain each time