• Aug 20 2016

Energy News Monitor | Volume XIII; Issue 9

    India was reported to be actively engaged in renegotiating gas contracts to get the best out of current low prices.

     Climate Change,Coal,Energy,LNG,Oil and Gas,Power,Renewable energy

    Moving from HSD to LNG? 

    India

    India was reported to be actively engaged in renegotiating gas contracts to get the best out of current low prices. GAIL (India) Ltd. was reported to be seeking to defer the 20 year contract to buy LNG from Gazprom until the Shtokman project begins production. GAIL signed a contract in 2012 to buy 2.5 million tonnes (MT) of LNG from Gazprom starting from 2018. Apparently, GAIL is finding it difficult to lure buyers for gas despite the fall in gas prices. If no one wants to buy even cheap gas in India it is not clear what the basis is for all the talk of India being well on its way to becoming a gas based economy? But there was news to support this claim. According to the overseas press, LNG imports to India on short term contracts increased by 43% compared to last year. This was in sharp contrast to Western Europe where demand for gas has fallen. Many analysts expect India’s LNG purchases to increase as price of LNG at the National Balancing Point (NBP) has fallen to about $4.8/mmBtu which is less than the $5/mmBtu India pays to Qatar for LNG. Petronet’s Dahaj LNG terminal is reportedly running at over 100% its capacity. However overall import of gas for FY16 remained at 14.5 MT which was the same as that last year.

    The Natural Gas Vehicles Summit held in Delhi recently concluded that India could potentially use about five MTPA of LNG as substitute for diesel in rail and road transportation. India currently uses 70 MTPA of HSD and a 20% shift to LNG would result in a demand of five MTPA of LNG. LNG is said to have several advantages over CNG, but CNG receives priority allocation from domestic gas which makes it the preferred choice. LNG would cover more distance per refuelling and consequently require less refuelling stops. It is also reportedly safer as it is stored at low pressure (6-8 bar) compared to CNG (> 800 bar). LNG can also be pumped at a high flow rate which would save filling time. India’s biggest commercial vehicle manufacturer, Tata Motors, has made a start by developing India’s first heavy duty LNG fuelled truck, Prima 4032.S.

    Quickfact-1

    One of the positive items reported by the media in July was that a joint expedition by India and the US Geological Survey (USGS) had discovered a major deposit of natural gas in the form of gas hydrates in the Bay of Bengal. No figures were quoted on the extent of reserves of gas hydrates. Whether this qualifies as a new ‘discovery’ through joint exploration between India and USA is debatable as the presence of gas hydrates in the oceans around India was established by ONGC as early as 1984. The key questions that remains unanswered are the extent of the reserves and when and how they could be recovered economically.

    Indian Oil Corporation (IOC) was reported to be in talks to buy the Gujarat State Petroleum Corporation’s (GSPC) stake in the Mundra LNG terminal. Others in the run include ONGC and India Gas Solutions a joint venture between BP and Reliance Industries. Other than the stake sale, there are two issues that should interest readers. One is how GSPC’s debt problems were not converted into a mega scam by the media even though it had the potential to become one ($2 billion from PSU banks having vanished without a trace of gas) and how GSPCs problems are being quietly passed on to profitable PSUs. The other question is on why downstream oil companies are extending their reach into the gas business. Is it because only oil refiners who thrive on margins have the financial resources to bail out bankrupt gas companies?

    Coal bed methane (CBM) was in the news in June. The Centre was reported to have assured the Government of Tamil Nadu that it will not force it to implement a CBM project by Great Eastern Energy Corporation in Cauvery river delta districts of Thanjavur and Tiruvarur. Farmers were reported to be worried over the impact of the project on agriculture. The other news on CBM was that Reliance Industries was close to producing CBM from Sohagpur block in Madhya Pradesh. Initial production is estimated at 1 mmscmd while peak production is expected to touch 3.5 mmscmd.

    Petronet LNG is reportedly planning to invest around $450-600 million in projects outside India in the next five years. It is planning to construct a five MTPA import terminal in Bangladesh and a 1 MTPA terminal in Sri Lanka. GAIL has reportedly issued a tender for six LNG cargoes to take advantage of low prices. While LNG sellers could rejoice over opportunities finally materialising in the Indian market, domestic producers were facing the depressing prospect of a 20% fall in natural gas prices by October. This is the fourth drop in prices in the last 18 months. The gas industry clamoured for a formula linked to international gas prices assuming that it would be a one way bet. They got a formula that they wished for but unfortunately it did not prove to be a one way bet. As they say, ‘be careful what you wish for because you might just get it’!

    Rest of the world

    The expanded Panama Canal was in the news as the first LNG cargo from USA passed through in June. The LNG tanker chartered by Shell carried cargo from Cheniere’s Sabine Pass LNG plant which was the first to export US shale gas to overseas markets. The second LNG tanker to pass through the expanded Panama Canal is expected to be BPs LNG tanker that would carry cargo from Trinidad and Tobago to Mexico. The Panama Canal expansion was the first since it was completed in 2014.  The expansion involved deepening and widening of certain portions of the Canal and the construction of additional larger set of locks. The wider lane will allow four ship transits a day in addition to the 25 daily transits using the old lock system. The old lock system could only accommodate Panamax vessels while the new lock will allow wider Neopanamax vessels. The expanded canal will be able to accommodate about 90% of the world’s current LNG tankers except the Q-Flex and Q-Max tankers used for exports from Qatar.

    The canal reduces distances between export plants in the Gulf of Mexico and Asia to 14,400 km from over 25,000 km and so large LNG tankers that had to sail around South America will be able to reach Asia earlier. The canal is expected to reduce travel time from the US Gulf Coast to Japan to 20 days from 31 days through the Suez Canal and from 34 days around the southern tip of Africa. By 2019 the USA is expected to produce about 60 MT of LNG annually. Many of the 550 LNG tankers that are expected to pass through the Panama Canal annually by 2021 could be carrying US LNG cargoes. According to a new report investment in global Floating LNG facilities is projected to touch $41.6 billion over the 2016-22 period. This is an increase of 264% compared to the investment of $11.4 billion in the 2011-15 period. According to another report, MENA countries are expected to account for 6.5% of global LNG demand this year which is a sharp increase from 1% in 2013. Imports of LNG by MENA countries amounted to 1.5 billion cubic meters (BCM) in 2015 and most of it was from Qatar.

    Moving to the other gas giant Russia, Gazprom and CNPC were reported to have approved roadmaps for implementing an MOU on under-ground gas storage and gas-fired power generation in China. Gazprom was also reported to be on track with the construction of the Power of Siberia gas pipeline that would eventually supply 38 BCM per year of natural gas to China under a 30 year contract.

    There was some movement on the much anticipated delinking of gas prices from oil prices when another gas contract renegotiation surfaced in Europe. The Danish gas marketer Dong has already successfully claimed over $500 million in refunds from one or more of gas suppliers including Gazprom and Hess. With hub trading in Northwest Europe becoming so extensive many analysts think that oil indexed contracts will become a thing of the past. Two Dong contracts for two BCM per year contract were signed with Gazprom when oil indexation was the norm. The expected outcome from the re-negotiation is that the contracts would be re-indexed to hub pricing sooner or later.

    Closer to home, there was news on Bangladesh signing two agreements with US LNG player Excelerate Energy to build the country’s first floating storage and regasification unit (FSRU) at Moheshkali Island. World Bank is reportedly funding the project and it is expected to be operational by 2018.

    Pakistan and Iran were reported to have agreed to amend the sale purchase agreement to extend the timeframe for completion of the Iran-Pakistan (IP) gas pipeline as Pakistan was unable to raise money for the project.  Iran has already built 900 km length of the pipeline on its territory while Pakistan still has to start work on the pipeline. Many optimistic observers are hoping that if India eventually joins the project it may change not just the prospects for gas in the region but also for peace in the region!

    NATIONAL: OIL AND GAS

    Upstream

    ONGC over-reported crude oil production by 12 percent: CAG

    August 8, 2016: Oil and Natural Gas Corp (ONGC) shelled out 18,787 crore in excess subsidy over three years as it ‘over- reported’ crude oil production by 12 percent, which also resulted in extra payment of performance related pay to its executives, the Comptroller and Auditor General (CAG) of India said. ONGC has reported ‘condensate’ production inappropriately as crude oil production, though both products were identified distinct and treated differently by it. Out of 132.17 million tons of crude oil production claimed by ONGC in five years from 2010-11 to 2014-15, as much as 12.1 percent of over 6 million tons was over-reported.

    Source: The Times of India

    ONGC goes for market price for gas from two fields

    August 3, 2016: Making use of an opportunity thrown up by an exemption from the notified gas price, the government-controlled Oil and Natural Gas Corp (ONGC) is tendering out natural gas from its two fields. The price for this gas would be market-linked. The natural gas would go to customers bidding the highest premium over the reserve price. Tender for gas flowing out of ONGC’s Cauvery find has been floated. A separate tender for stranded gas in Assam would be issued soon, ONGC said. The Cauvery block produces about 1.5 million standard cubic metres a day.

    In Assam, the production is much lower at 0.2 million standard cubic metres a day. ONGC managed to get the exemption from the government on grounds of non-materialisation of earlier contracts in the case of the Cauvery block and gas being stranded in the case of Assam. Both these blocks produce gas under the administered price mechanism (APM) regime, which existed prior to the opening up of oil and gas production to the private sector. Under the National Democratic Alliance (NDA) government’s gas pricing guideline, natural gas is priced uniformly at a notified rate derived from six monthly trailing average of a basket of gas benchmarks. The rate for April-September 2016 is $3.06 for very million British thermal unit. In case of discovered producing field from deep water, ultra deep water and high pressure high temperature a premium is allowed but the price is currently capped at $6.61. In the case of Assam, the gas is stranded in the vicinity of field because of lack of proper infrastructure. The government has given the company one year relaxation for sale through the tendering route.

    Source: Business Standard

    Downstream

    Essar Oil to invest ₹16 billion to upgrade refinery, boost GRM

    August 8, 2016: The country’s second largest private sector refiner Essar Oil has chalked out plans to invest 1600 crore to upgrade its Vadinar refinery in Gujarat and boost gross refining margins (GRM) over the next two-three years. The project will be funded through internal accruals only as company generates USD 1 billion EBIDTA and saves good amount of money every year, Essar Oil said. Over the next 2-3 years, Essar Oil will invest 1200 crore to upgrade its naphtha hydro treater, isomerisation unit, continuous catalytic reformer units and also facilities for further recovery of sulphur to improve its margins.

    Source: The New Indian Express

    Transportation and trade

    IGL wins licence to retail CNG in Rewari

    August 9, 2016: Indraprastha Gas Ltd (IGL) said it has won licence to retail CNG in Rewari district of Haryana. IGL said it participated in the bid round held by sector regulator Petroleum and Natural Gas Regulatory Board (PNGRB). The company has received letter of intent dated August 9, 2016 from PNGRB for grant of authorisation to the company for development of city gas distribution (CGD) network in the geographical area of Rewari district, it said. PNGRB asked IGL to submit a performance bank guarantee for 1,052.36 crore within 15 days.

    Source: Business Standard

    Iran set to lose oil market share in India as Rosneft elbows in

    August 9, 2016: Iran’s biggest oil buyer in India is ready to throttle back imports from the Persian Gulf nation once a new supply deal kicks in. Essar Oil Ltd. expects to lower purchases from Iran after shipments from OAO Rosneft begin once the Russian state producer completes a deal to buy a stake in the Indian company, according to Essar Oil. The refiner doesn’t plan to import any crude under the agreement this year and it’s undecided which country or project Rosneft will source the crude from, Essar Oil said. Essar bought more than 148,000 barrels a day from Iran in the first six months of this year, accounting for more than 40 percent of the country’s purchases from the Persian Gulf nation, according to shipping data. The company gets about one-third of the crude it needs for its 20 million-tons-a-year refinery from Iran, Essar Oil said.

    Source: Bloomberg

    SC allows Adani to submit bids for city gas distribution network in Jaipur, Udaipur

    August 9, 2016: The Supreme Court (SC) allowed Adani Gas to submit bids for the development of City Gas Distribution (CGD) network in Jaipur and Udaipur. A bench headed by Justice Madan Lokur allowed submission of bids without prejudice to Adani’s rights and contentions in the appeal pending before it. It also posted the matter for final hearing in September. However, the government counsel said less than 25% pipeline has been laid down by Adani and its deemed authorisation has also been rejected. Adani had appealed against the Rajasthan HC’s April 2015 order that held that the company did not have the authorisation from the Central government to continue work in the two cities. The company had challenged the vires of Regulation 18 of the PNGRB (Authorising Entities to Lay, Build, Operate or Expand City Local Natural Gas Distribution Networks) Regulations, 2008 as being contrary to and violative of the PNGRB Act, 2006. The appeal is pending before the apex court, which had earlier issued notice to the Centre, the Rajasthan government, and others.

    Source: The Financial Express

    Vedanta Resources aims to close merger with Cairn India in early 2017

    August 6, 2016: Mining and energy group Vedanta Resources expects to complete its merger with Cairn India early next year, a move that would boost the firm’s financial strength, Vedanta’s Chief Executive Officer (CEO) Tom Albanese CEO said. Albanese said the rationale for the merger was compelling, which was why Vedanta announced improved terms in July. The deal, which will give Vedanta access to oil and gas explorer Cairn India’s $3.5 billion cash pile, has faced opposition from some big minority shareholders, including British-based Cairn Energy, but Albanese said he did not foresee obstacles.

    Source: Reuters

    India’s top utility said to seek end to imported-gas supply deal

    August 5, 2016: NTPC Ltd, India’s biggest power producer, is seeking to terminate a long-term supply contract for imported natural gas as it says the fuel is too expensive to be used in power generation. The New Delhi-based electricity generator has written to GAIL (India) Ltd, which supplies the fuel sourced overseas by its affiliate Petronet LNG Ltd, saying it’s become impossible to execute the contract as the company is unable to sell the power it generates from the fuel. NTPC signed a 20-year contract with GAIL in 2009 to buy two million metric standard cubic meters a day of gas.

    India’s 16,250 kilometer gas-pipeline network transmitted an average 148.39 million cubic meters of natural gas a day in the year ended March 31, using only about 38 percent of the system’s capacity, according to the oil ministry’s Petroleum Planning & Analysis Cell.

    Source: Bloomberg

    Policy and performance

    India’s oil exploration regime received thumbs up from industry

    August 9, 2016: India’s oil exploration regime has received overwhelming support from the industry, a high profile survey has shown. Over 95% of Indian hydrocarbon industry leaders consider the recent policy changes in the sector to be pro-business and transparent, and over 80% rated the present investment conditions in India’s hydrocarbon market to be quite positive. A survey done by EyeOn consultancy and PetroFed, 214 respondents from public and private sector across the hydrocarbon industry supply value chain, put forward an optimistic view of the future of the Indian hydrocarbon sector, with 93.5% expecting significant to moderate growth over the next five years. The Hydrocarbon Exploration Licensing Policy has been highlighted in the survey, with about 65% respondents welcoming the shift from production/profit-sharing to revenue-sharing contracts and introduction of open acreage policy and more than 64% expecting a successful rounds of bidding for the discovered small fields.

    Source: The Economic Times

    ONGC, OIL clear air over auctions in Assam via ads: Government

    August 8, 2016: Amid protests over the government taking away and auctioning a dozen oil and gas discoveries of Oil and Natural Gas Corp (ONGC) and OIL in Assam to private firms, the two PSUs have sought to clear “misunderstandings” through advertisements, Oil Minister Dharmendra Pradhan said. Strikes and blockages by some students’ unions, among others, that crippled oil and gas output of Oil India Ltd (OIL) and ONGC were organised in Assam after the government put on auction 12 of their discovered fields as part of selling 67 such discovered fields of the two PSUs. Pradhan said the new policy does not debar ONGC and OIL from participating in the bidding process. He sought to justify the auction saying that oil and gas fields are awarded by government through international competitive bidding since 1998-99 under NELP. The 67 oil and gas fields discovered by ONGC/OIL have been clubbed into 46 contract areas and offered in the auction. Bids close on October 31.

    Source: Business Standard

    RBI allows foreign investors to hike stake in HPCL

    August 5, 2016: Reserve Bank of India (RBI) has allowed foreign investors to hike their stake in Hindustan Petroleum Corp Ltd. (HPCL) to up to 40 percent under portfolio investment scheme (PIS). A special resolution was passed by company shareholders to enhance the limit for purchase of equity shares by Foreign Institutional Investors (FIIs), Registered Foreign Portfolios Investors (RFPIs), RBI said. FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through PIS. The RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis and has fixed the cut-off points two percentage points lower than the actual ceiling.

    Source: Business Standard

    Modi govt says households not to get LPG subsidy without Aadhar card

    August 5, 2016: The Centre has asked oil marketing companies (OMCs) not to transfer LPG subsidy to the bank accounts of eligible households unless their accounts are seeded with the unique identification number, Aadhaar. The move, which shows the government’s policy intent to make Aadhaar mandatory for receipt of assorted sops, comes almost a year after the Supreme Court’s interim order, allowing the use of Aadhaar for public distribution system and LPG subsidy deliveries. The petroleum ministry order adds that if the customer submits Aadhaar after July 1 and before September 30, his or her subsidies, if any, will be linked to his bank account and the consumer will start receiving them thereafter. Currently, there are more than 17 crore domestic cooking gas consumers. Of this, 15.8 crore have been added to PAHAL (direct benefit transfer for LPG subsidy) scheme. Nearly, two crore cooking gas consumers have not seeded their Aadhaar number with the bank accounts.

    Source: The Financial Express

    National: Power

    Generation

    NHPC CMD allays safety fears about Lower Subansiri hydro project

    August 8, 2016: National Hydroelectric Power Corp (NHPC) chief K. M. Singh said their apprehensions regarding the safety of the 2000 MW Lower Subansiri project at Gerukamukh in Arunachal Pradesh has been considerably addressed. The NHPC Chairman & Managing Director (CMD) handed over a cheque of five crore Rupees to Chief Minister Sarbananda Sonowal as a contribution to the CM’s relief fund to tackle the flood situation. The construction of Lower Subansiri project has been stalled since December 2011 following stiff opposition from anti-dam activists and groups in Assam, located in the downstream of the dam. The National Green Tribunal is presently hearing a case on the project. The CMD said the tribunal’s next hearing was in September.

    Source: The Times of India

    PM Modi lays foundation for NTPC power plant in Telangana

    August 7, 2016: Prime Minister Narendra Modi inaugurated several development projects in Telangana. He laid the foundation stone for the ₹ 10,598.98 crore National Thermal Power Corp (NTPC)’s 1600 MW Telangana Super Thermal Power Project (Phase I) in Ramagundam city.

    Source: The Times of India

    Renovated BTPS likely to begin operations by August 31

    August 6, 2016: The renovated unit of the Barauni Thermal Power Station (BTPS) is expected to start commercial power generation by month-end. The Bharat Heavy Electricals Ltd (BHEL) carried out the renovation and modernisation (R&M) of two units at Barauni in Begusaria district.

    Source: The Economic Times

    Transmission, distribution and trade

    Surplus power may cause ₹80 billion loss to discoms in FY’17: India Ratings and Research

    August 9, 2016: State power distribution companies (discoms) are staring at a net loss of ₹ 8000 crore in the current fiscal owing to purchase agreements in excess of power demand, according to India Ratings and Research (Ind-Ra). Ind-Ra’s expectation is based on the assumption that discoms will surrender the power purchase agreements (PPAs) with the highest variable cost by paying the fixed costs based on the agreement, it said. The discoms in the western and southern regions are expected to be the worst hit due to PPA tie-ups in excess of the power demand in the region. Ind-Ra estimates losses of around ₹4000 crore by discoms in the western region and ₹2450 crore in the southern region due to the maximum amount of long term PPA with a provision of fixed tariff in the past. The long-term commitments at a fixed cost in PPAs are preventing some discoms from procuring low cost merchant power traded on the power exchanges. The Punjab State Electricity Regulatory Commission has recently revealed that the losses due to the surrendering of excess power for FY2016-17 is expected at ₹2075 crore.

    Source: The Financial Express

    Quick-comment-uglY

    Tamil Nadu CM announces ₹41.2 bn worth schemes in energy sector

    August 9, 2016: Tamil Nadu Chief Minister J. Jayalalithaa announced ₹4126 crore worth schemes in the energy sector, including setting up of a 2×1500 MVA sub-station in Virudhunagar to transmit power generated from a 1600 MW power plant coming up in Ramanathapuram. Jayalalithaa said works at the 2×800 MW thermal power station at Uppur in Ramanathapuram were underway and scheduled to be completed in 2020. Jayalalithaa announced ₹80 crore towards the upgradation and modernisation of the Kodayar Hydel power station, which has been in operation since 1970.

    Source: Business Standard

    New Andhra Pradesh capital of Amravati will not face power shortage: Goyal

    August 8, 2016: The Centre assured that Andhra Pradesh’s greenfield capital city Amaravati would not have any shortage of power transmission capacity. The Andhra Pradesh Power Transmission Corp Ltd has planned a transmission network of 3830 MVA capacity around the capital city to meet the anticipated demand, it said. The state government determines the requirement of power. Once the lines come up, they pick up the cost of transmission infrastructure of the state. So, the plans to set up power transmission corridors are co-terminus with the development of Amaravati, Power and Coal Minister Piyush Goyal said.

    Source: The Times of India

    South Australia keen for nuclear energy business with India

    August 8, 2016: With the civil nuclear agreement between India and Australia coming into force at the end of last year, the state of South Australia is keen to do business with India in the nuclear energy sector, the state’s Minister for Trade and Investment, Defence Services and Veterans’ Affairs Martin Hamilton-Smith said. India and Australia have a great future in the field of nuclear energy, Hamilton-Smith, who is currently leading a 100-member delegation of the South Australia Trade Commission to India, said. Though the India-Australia civil nuclear agreement was ratified by the Union cabinet in December last year, uranium supplies from Australia are yet to start.

    Source: The Economic Times

    Indian Railways to plug into National Power Grid

    August 8, 2016: To get reliable power supply and also cut purchase cost, Indian Railways (IR) is mulling options to buy power directly from the national grid. For this, Railways’ arm Rail Vikas Nigam Ltd (RVNL) will tie up with Power Grid Corporation of India. IR is the biggest consumer of electricity, consuming about 18 billion units per year. Currently, it sources power at an average cost of ₹6-7.5 per unit. Buying power from the grid would help the railways save at least ₹3 per unit. The spot market price has dipped below ₹3 per unit. Government said it would reap dual benefits for the railways — cost and power reliability. Power Grid and IR are looking at options — either to form a joint venture (JV) or appoint Power Grid as a contractor. The JV would be formed between RVNL and Power Grid, wherein the latter would construct the system and RVNL would purchase power.

    Source: Business Standard

    Quick-comment-Good

    Government to setup panel for transmission projects

    August 5, 2016: Government has decided to set up a panel with members from power and railway ministries among others to fast-track railway clearances for construction of electricity transmission projects in the country. The development is significant in view of government’s target of constructing 1,07,440 ckm transmission lines and setting up of 2,82,740 mega volt amp (MVA) transformation capacity during the 12th Plan (by March 2017). As of now, 89,813 ckm of transmission lines and 2,66,033 MVA of transformation capacity have been achieved till June 30. At present, the total transmission capacity of inter-regional links is 59,550 MW (as on June 2016) which is expected to increase to 68,050 MW by March 2017. In order to meeting the government’s target of providing 24×7 power to all, NITI Aayog has also set a target of adding 51,400 circuit km transmission line this fiscal, 82 percent more than what was achieved in 2015-16.

    Source: The Hindu

    Policy and performance

    State’s first smart electric meter installed in Gaya

    August 9, 2016: Bihar’s first smart electric meter was installed on the residential premises of Kumar Kanishk, a resident of street number 5, Shivapuri Colony of Gaya town. The new-generation smart meters are well ahead of the electronic meters. Smart meters, according to India Power’s DGM Rakesh Ranjan, will, besides dispensing with the necessity of manual reading, alert power supply officials to snags with precise location and other details. Smart meter users will no longer be required to register complaints as the meters will send signals to the main server, thereby ensuring prompt fault repair. According to Ranjan, 10,000 smart meters would be installed in the first phase within the next two months. There are about one lakh power consumers in Gaya town, Bodh Gaya and Manpur areas. Smart meters, according to Ranjan, will be beneficial both for the consumer as well as the power company. Whereas the consumer will be getting quality power, the power company will benefit as the system seals the leakages that cause power theft. As of now, power theft continues to be rampant. As per figures supplied by the power company, 62 million units were supplied to the consumers in the month of July, but it got revenue only for 28 million units. The company that got distribution franchise from the South Bihar Power Distribution Company in the year 2014 continues to incur heavy loss and smart meters are likely to convert the loss into profit. Coal and Power Minister Piyush Goyal has directed power companies to ensure 100% smart meter coverage by the year 2020.

    Source: The Times of India

    Second India-Russia n-power plant may get powerful new reactor

    August 8, 2016: As the world’s first Generation 3-plus nuclear power unit was connected to the electricity grid in Russia last week, experts in India said the next nuclear power plant that India and Russia are to jointly set up may get a similar reactor. The Unit 6 of Novovoronezh Nuclear Power Plant in Russia has the most powerful VVER-1200, with 20 percent more capacity than earlier generation VVER-1000 reactors that India has at Kudankulam Nuclear Power Plant. It was connected to the Russian power grid. Eminent nuclear scientist and former Chairman of the Nuclear Power Corporation of India M. R. Srinivasan said that India expects to build similar units at the second site where India and Russia will be setting up a nuclear power plant. He said that the safety features at Kudankulam Nuclear Power Plant, built by India and Russia, were good, but those in the VVER 1200 plants are expected to be better. According to the Strategic Vision for Strengthening Cooperation in Peaceful Uses of Atomic Energy between India and Russia, both sides have plans to build complete construction and commissioning of 12 power units in the next two decades. While Kudankulam is the first plant with six units — two of which are functioning now, the site for the second plant is yet to be finalised.

    Source: Business Standard

    Government considering final recommendation on coal royalty

    August 8, 2016: The final recommendations of study group constituted to consider revision of rate of royalty on coal in under the consideration of government. A study group has been constituted to consider the revision of rate of royalty. Final recommendation of study group is under consideration, Coal and Power Minister Piyush Goyal said. The government has received request from Chhattisgarh to increase the rate of royalty from existing 14 percent to 30 percent, Goyal said.

    Source: The Times of India

    Quick-comment-bAd

    Coal e-auction rose 29 percent in 2015-16: Goyal

    August 8, 2016: Government said that coal allocation via the electronic auction (e-auction) route rose by 29% in 2015-16, fetching 33% more than the notified prices. The increase in booking value through e-auction in 2015-16 was ₹1,121.06 crore, Coal and Power Minister Piyush Goyal said. He said that as on August 3, 2016, the coal stock in the power plants is 30.3 million tonnes, which is sufficient for 22 days of operation of power plants, as against the normative stock of 21 days. At present, there is no power station with critical coal stock, he said.

    Source: Business Standard

    Tamil Nadu launches online service for power consumers

    August 7, 2016: Tamil Nadu government has launched an online service for consumers to apply for low tension service connections. Chief Minister J. Jayalalithaa launched the initiative, the government said. Accordingly, consumers can now apply online to secure a new low tension (LT) service connection, and also upload all necessary documents on the Tamil Nadu Generation and Distribution Corporation website, and also make payment for this purpose. Provisions have been made to check the status and action taken on the application online itself, it said. The Chief Minister also inaugurated 23 power sub-stations constructed across the state at an estimated ₹242.25 crore in districts such as Tirupur and Salem.

    Source: Business Standard

    Government asks firms handling coal in Vasco to check dust pollution

    August 7, 2016: Goa government has warned two companies handling coal at Mormugao Port Trust to either check dust pollution or face a closure. Last December, state Pollution Control Board had already reduced the handling capacity of Adani Murmugao Port Terminal Private Ltd and South West Port Ltd by 25 percent for failing to control the dust pollution.

    Source: The Economic Times

    Delhi HC decision on Jung’s authority unlikely to affect private discoms’ finances, operations

    August 5, 2016: The Delhi High Court decision in favour of Lieutenant Governor Najeeb Jung in a tug of war has definitely come as a blow to Chief Minister Arvind Kejriwal and his Aam Aadmi Party (AAP) government. Among other orders, the Delhi HC has said it is illegal to appoint nominee directors of the Delhi government on boards of Reliance Infra-backed BSES Rajdhani Power Ltd, BSES Yamuna Power Ltd and Tata Power Delhi Distribution Ltd by the Delhi Power Company Ltd. The HC has said the state government’s direction to Delhi Electricity Regulatory Commission to compensate consumers in case of unscheduled power cuts is illegal as such policy directions cannot be issued without communication to the LG.

    Source: The Economic Times

    Government using 80 percent consumer money to show power subsidy: AAP

    August 4, 2016: The Aam Aadmi Party (AAP) tore into the Shiromani Akali Dal (SAD)’s much famed power subsidy to farmers and claims of cheapest electricity in the country, saying Punjab State Power Corporation Limited (PSPCL) was hiding the “electricity duty (ED) and infrastructure development fund (IDF)” on bills to consumers apart from metered charges. Flashing copies of documents procured from the state electricity regulatory commission, the AAP also stated that the government was paying ₹1871 crore as fixed capacity charges to three private power plants — Rajpura, Talwandi Sabo and Goindwal — despite no power being procured from them. The AAP said it would order an inquiry into circumstances under which Punjab power policy was heavily tilted in favour of private developers even “though the example of Gujarat policy was available”. The AAP showed how the state government imported coal from Adani Enterprises worth 6 lakh metric tonne at a cost of ₹500 crore while the state has its own coal mine in Jharkhand.

    Source: The Times of India

    International: Oil and gas

    Upstream

    Statoil to invest $414 million in Norway, UK Utgard field

    August 9, 2016: Statoil ASA submitted a development plan for the Utgard natural-gas and condensate field on the maritime border between Norway and the UK in the North Sea with investments estimated at 3.5 billion kroner ($414 million). Production, which will be processed through the Sleipner platform, is expected to start at the end of 2019, Statoil said as it delivered the plan for development and operation to Norway’s Petroleum and Energy Ministry. Statoil, which operates 70 percent of oil and gas production in Norway, has reduced planned investments in 2016 by 40 percent compared to a peak of $20 billion in 2014. The Utgard field, formerly known as Alfa Sentral, holds about 56.4 million barrels of oil equivalent in recoverable reserves. The field, which will be developed with two wells in a subsea concept, is expected to produce about 44,000 barrels of oil equivalents a day at full output, the ministry said.

    Source: Bloomberg

    Rosneft plans to increase Yugansk oil output to 1.3 million barrels per day

    August 8, 2016. Russia’s Rosneft, the world’s top listed oil company by output, plans to increase production at its key unit, adding to the global glut, it said. Russia, the world’s top oil producer, sees no prerequisites for new talks on freezing oil production yet but is open to negotiations, Energy Minister Alexander Novak said. Russia was pumping at an average of 10.85 million barrels per day (bpd) in July, slightly up from June thanks to increases at some of its biggest producers, including Rosneft. Rosneft, which saw its oil production down one percent last year to 202.8 million tonnes (4.07 million bpd), has recently announced an ambitious drilling programme in a move to turn around the trend. Rosneft sees its oil output flat in 2016. Drilling continues at Yuganskneftegaz, a subsidiary of defunct Yukos and Rosneft’s biggest producing unit. Yuganskneftegaz’s head, Khasan Tatriyev, told reporters that his company is targeting an annual oil production of 68 million tonnes — or 1.4 million bpd by 2020. Last year, oil output at Yugansk was at 62.4 million tonnes. The planned increase to 68 million tonnes (1.37 million barrels per day) would come from a heavier drilling programme and going after hard-to-extract oil, Tatriyev said. Hard-to-extract oil is expected to account for 15 percent of Yugansk’s output by then from around 5 percent last year.

    Source: Reuters

    Indonesia’s Pertamina eyes two Iran oilfields for possible investment

    August 8, 2016. Indonesia’s state-owned Pertamina signed a Memorandum of Understanding (MoU) to conduct preliminary studies on two Iranian oilfields, a step closer to the company’s first investment in the Middle Eastern country’s upstream sector. Under the agreement, Pertamina has six months to look into Iran’s Ab-Teymor and Mansouri oilfields, which are located onshore and contain an estimated total reserves of more than 5 billion barrels. Iran has been able to raise its crude oil output to around 3.6 million barrels per day (bpd) since international sanctions were lifted in January, and the country, the world’s sixth-largest oil producer, may reach its pre-sanctions production levels in coming months. Still, Tehran is looking to boost investment in oil and gas infrastructure and field development that has stagnated over the last few years. Pertamina said it would import its first shipment of liquid petroleum gas (LPG) from Iran in September.

    Source: Reuters

    Sound hits significant gas discovery at Tendrara license, Morocco

    August 8, 2016: Mediterranean focused upstream gas company Sound Energy plc announced that it has made a “significant gas discovery” at the Tendrara license, onshore Morocco. The first Tendrara well, TE-6, which was drilled to a measured vertical depth of 8,743 feet, achieved a stabilised gas flow rate of 17 million cubic feet per day. Sound has a net effective interest of 27.5 percent in the Tendrara license.

    Source: Rigzone

    Oil industry’s ‘hottest zip codes’ see bids soar on SM deal

    August 8, 2016: SM Energy Co.’s $980 million purchase of drilling rights in the biggest US crude field shows producers are willing to pay a premium for access to one of the few spots where oil exploration still turns a profit. SM, which extracts oil and natural gas from the Rocky Mountains to the Gulf Coast, agreed to pay the equivalent of $39,543 an acre for drilling rights across 24,783 acres in the Permian Basin, almost doubling the Denver-based company’s holdings in the region. The Permian’s got “the hottest zip codes in the industry,” Concho Resources Inc CEO Tim Leach told analysts. The Midland, Texas-based company focuses solely on the Permian and announced more drilling plans.

    Source: Bloomberg

    KNOC in talks with Kazakhstan to drop oil field project

    August 5, 2016: Korea National Oil Corp (KNOC) is in talks with the Kazakhstan government to pull out of an oil field project due to disappointing exploration results. KNOC heads a Korean consortium which holds 27 percent of Kazakhstan’s Zhambyl oil block on the coast of the Caspian Sea. The group has invested a total of about $250 million on acquiring the stake and exploration since 2008. KNOC and its Korean consortium owns a 27 percent stake in the Zhambyl block, with the remainder owned by Kazakhstan’s national oil company KazMyunayGas. KNOC holds a 9.45 percent interest in the joint operation for the oil field.

    Source: Reuters

    Premier hits oil in Bagpuss well

    August 5, 2016: Oil and gas exploration and production company Premier Oil has made an oil discovery at the North Sea Bagpuss well, which encountered 41 feet of hydrocarbon-bearing sands within a 68 foot hydrocarbon column. The 13/25-1 well, which was targeting the Bagpuss prospect on the Halibut Horst in the Outer Moray Firth, reached a total depth of 1532 feet. The find was in line with pre-drill estimates. The well is now being plugged and abandoned.

    Source: Rigzone

    PTT Exploration faces class action lawsuit over oil spill

    August 3, 2016: PTT Exploration & Production Pcl, Thailand’s biggest publicly listed oil and natural gas explorer, is facing a more than A$200 million ($152 million) class action lawsuit from 13,000 Indonesian seaweed farmers who claim a 2009 oil spill devastated their livelihoods. The suit is being filed in Federal Court in Sydney against PTT Exploration’s Australian arm.

    Source: Bloomberg

    Downstream

    Indonesia weighs Iran’s proposal for $8.4 billion oil refinery

    August 9, 2016: Indonesia will study a proposal from Iran to build an oil refinery, along with bids from other countries, as it seeks to boost refining capacity to catch up with rising consumption. Iran proposed a plant with processing capacity of more than 100,000 barrels a day and pledged to provide the crude, IGN Wiratmaja Puja, director-general of oil and gas at the Energy and Mineral Resources Ministry, said. The project’s value is estimated at $8.4 billion and would be built over four or five years in Java. Indonesia, already the only OPEC member that’s a net oil buyer, may need to import half of its annual fuel needs even after increasing its refining capacity by 500,000 barrels a day in the next seven years, according to BMI Research. A feasibility study on the refinery’s economic justification is being conducted, Iran’s oil ministry said. The National Iranian Oil Co. has not signed any deals on the project, he said. Indonesia has made no decision on Iran’s proposal because it’s still preliminary, Puja said. Indonesia has also received proposals from China, Kuwait and Russia, Puja said. Indonesia’s refining capacity may grow 2 percent by 2025 while consumption surges 31 percent in the same period, according to BMI.

    Source: Bloomberg

    Indonesia’s Pertamina shuts RFCC unit at Cilacap refinery

    August 4, 2016: Indonesia’s Pertamina has shut its 30,000 barrels per day secondary gasoline refinery unit at Cilacap due to repairs, the company said. The Residual Fluid Catalytic Cracking (RFCC) unit is expected to resume production within 10 days, Rachmad Hardadi, Pertamina’s refinery director said.

    Source: Reuters

    Transportation and trade

    Inter Pipeline makes $1 billion bet on rally in Williams deal

    August 9, 2016: Inter Pipeline Ltd. has agreed to acquire the Canadian assets of Williams Cos. for C$1.35 billion ($1 billion), betting that a rebound in commodity prices will justify the expansion of its natural-gas liquids business. The purchase includes extraction and processing facilities in the oil sands in Alberta, as well as about 260 miles (418 kilometers) of pipelines from Williams and its master-limited partnership unit, Williams Partners LP, the companies said. Williams and Williams Partners said they plan to use the cash proceeds to shrink debt. Inter Pipeline, which also has crude pipelines and bulk liquid storage terminals in Western Canada, is facing slower production growth in the oil sands that has raised concerns from investors about smaller volumes on its systems.

    Source: Bloomberg

    BP seeks buyers for China petrochemicals JV stake in up to $3 billion deal

    August 9, 2016: British oil major BP is seeking buyers for its 50 percent stake in a Chinese petrochemicals joint venture (JV), its single largest investment in China, in a deal that would fetch $2-$3 billion. Situated in Caojing near Shanghai, SECCO is China’s largest petrochemicals refinery and was built at a cost of $2.7 billion. China Petroleum & Chemical Corp (Sinopec) and one of its units hold the other half of SECCO. BP’s stake has been marketed to existing refinery operators in China, including companies from Japan, South Korea, Taiwan and Europe.

    Source: Reuters

    Argentina buys eight LNG cargoes in latest tender-trade sources

    August 8, 2016: Argentina’s Enarsa has purchased liquefied natural gas (LNG) supplies from companies including Trafigura, Royal Dutch Shell, BP, Petrobras and Gas Natural as part of its latest tender, traders said. Eight of the nine cargoes sought in the tender were awarded, covering deliveries for September and October, traders said. Trafigura and Shell will supply two cargoes each, while Brazil’s state-run Petrobras, BP and Spain’s Gas Natural were also among the winners, traders said.

    Source: Reuters

    Oil market on path to rebalancing, OPEC monitoring situation: Qatar

    August 8, 2016: Qatar’s minister of energy and industry, Mohammad bin Saleh al-Sada, said the oil market is on the path to rebalancing despite the recent decline in global oil prices. OPEC was in continuous talks to stabilize the market. An informal meeting of OPEC member countries is scheduled to take place on the sidelines of the International Energy Forum, which groups producers and consumers, in Algeria from September 26-28.

    Source: Reuters

    Iran said in talks to sell crude to Trafigura for China teapots

    August 8, 2016: Iran’s state-run oil company is said to be in talks to sell more crude to oil trader Trafigura Group, including via a potential long-term deal, in a strategy that may help it break into the market to supply China’s independent refiners.

    National Iranian Oil Co. (NIOC) may sell more of its Heavy crude grade to Trafigura. The supplies may then be resold to Chinese independent processors, known as teapots. Trafigura bought about two million barrels of Iranian Heavy crude from NIOC for June loading, with the tanker carrying the supply currently anchored off South Korea. Previously, the shipment floated for three weeks off the Chinese port of Qingdao, which is used by teapots to receive oil supplies. Earlier this year, Iran’s rival producer Saudi Arabia broke from its usual practice of selling via long-term contracts to supply a cargo to a Chinese teapot refiner, in what Citigroup Inc. then said was a “dramatic” shift in the Middle Eastern kingdom’s oil-market strategy.

    Source: Bloomberg

    Venezuela’s crude sales to the US up 25 percent in July

    August 5, 2016: Venezuelan crude sales to the United States (US) increased to 817,806 barrels per day (bpd) in July, the highest level since November, due to larger exports of grades produced in the vast Orinoco Belt, according to trade flows data. The South American nation’s July shipments to the US were 25 percent higher than in June and 12 percent more than in the same month in 2015. Occasional buyers of Venezuelan oil including Lukoil Panamericas and Marathon Petroleum also received shipments in July, according to the data. But shipments to the US — Venezuela’s top oil customer — only declined 6 percent in the first seven months of 2016 versus the same period of 2015, according to data.

    Source: Reuters

    Sinopec to pay $4.5 million in compensation for pipeline blast

    August 5, 2016: A Sinopec Corp subsidiary agreed to pay compensation of 29.8 million yuan ($4.5 million) for damages caused by an explosion last month on a section of the Sichuan-East China natural gas pipeline. The Sinopec Sichuan-East Natural Gas Pipeline Company, affiliated with China’s biggest refiner, said it would complete the payment to the affected township located in central China’s Hubei province. The country’s second-biggest oil and gas company said it would sell a stake of 50 percent in the Sichuan-East China pipeline to raise funds for expansion of the pipeline and the building of gas storage facilities. The Sichuan-East China pipeline project is able to carry about 12 billion cubic metres of natural gas a year, enough for about 6 percent of the country’s total gas consumption.

    Source: Reuters

    FERC alleges National Energy manipulated natural gas market

    August 5, 2016: US federal energy regulatory staff alleged National Energy & Trade LP manipulated the natural gas market in January 2012 and April 2014. Staff at the US Federal Energy Regulatory Commission (FERC) alleged National Energy fraudulently traded physical gas to boost the value of its financial positions. The case is the latest in which federal regulators have focused on so-called “loss leader” or leveraged trading strategies, in which traders lose money in one market to profit from another market. At the time of the alleged manipulation National Energy was a unit of NET Midstream. NET Midstream was purchased by NextEra Energy Partners LP. NextEra said.

    Source: Reuters

    Russia’s Rosneft delivers first gasoline cargo to Asia-Pacific

    August 4, 2016: Energy giant Rosneft said its trading arm had delivered an inaugural gasoline cargo to the Asia-Pacific, marking what could be Russia’s first foray into a region dominated by OPEC producers from the Gulf. The 200,000 barrel cargo, bought by Rosneft from the international market and taken by Indonesian state energy company Pertamina, was delivered on free-on-board (FOB) terms to Malaysia. The cargo was shipped to Pertamina within a term agreement for the delivery of 1.2 million barrels signed between the companies in June, Rosneft said.

    Source: Reuters

    US gas traders unfazed by first summer supply drop in decade

    August 4, 2016: US natural gas supplies fell for the first time in the summer in a decade. Traders aren’t impressed. As the hottest weather in four years spread across the US East Coast, people blasted their air conditioners, driving demand for gas so high that inventories fell 6 billion cubic feet to 3.288 trillion, government data show. Supplies have only declined twice before in the summer, both times in 2006. Futures, however, were little changed as traders focused on the potential for record stockpiles before the winter.

    Source: Bloomberg

    Petrobras could get $768 million with sale of Liquigas

    August 3, 2016: Brazil’s state-run oil company Petroleo Brasileiro SA (Petrobras) could get up to 2.5 billion reais ($768.07 million) from the sale of its liquefied natural gas (LNG) distributor Liquigás Distribuidora SA. In June, the debt-laden Petrobras, as the company is known, kicked off a competitive auction for Liquigás, a subsidiary focused on the distribution and sale of LNG. Liquigás, which has a 23 percent market share in Brazil’s liquefied natural gas market, has 23 plants, 19 warehouses and a network of 4800 resale shops across the country.

    Source: Reuters

    Policy and performance

    For oil companies $110 billion debt wall looms over next five years

    August 9, 2016: The worst may be yet to come for some strained oil services companies as $110 billion in debt, most of it junk rated, creeps closer to maturity. More than $21 billion of debt from oilfield services and drilling companies is estimated to be maturing in 2018, almost three times the total burden in 2017, according to a report from Moody’s Investors Service. Of the 102 defaults this year, 49 have come from the oil and gas sector, Moody’s noted.

    The pressure on oilfield services companies will only increase through 2021, when nearly $29 billion of bonds and loans are expected to come due. Much of the maturing debt was issued between 2011 and 2015, when US drilling was at a record high fueled by strong energy prices and new technologies. Moody’s expects that more than one-third of the analysed companies will be carrying debt loads that are more than 10 times higher than earnings this year.

    Source: Bloomberg

    Venezuela says OPEC, non-OPEC countries may meet in ‘coming weeks’

    August 9, 2016: A meeting between OPEC and non-OPEC countries may take place “in the coming weeks,” Venezuelan Oil Minister Eulogio del Pino said. President Nicolas Maduro said his government was working to convene a meeting between of OPEC and non-OPEC countries to stabilize prices. Russia, the world’s largest oil producer, said it does not see any ground for new talks on freezing oil output but said it was open to negotiations. Since the plunge in oil prices in 2014, Venezuela has repeatedly tried to broker deals to freeze production and reduce a supply glut, with limited success. OPEC members and other producers including Russia did not manage to reach an agreement on freezing supply at a meeting held in Doha in April. OPEC members are scheduled to meet informally in September.

    Source: Reuters

    Russian Energy Minister says first line of TurkStream could be built in 2019

    August 9, 2016: Russian Energy Minister Alexander Novak said that the first line of the TurkStream gas pipeline project could be built in 2019 but that European Union guarantees were needed for a second line.

    Source: Reuters

    Brent oil price held back by crude stored offshore Britain

    August 9, 2016: The volume of crude held in floating storage off Britain’s coast has grown this year due to excess supply, trade sources say, helping to put a cap on some parts of the Brent market which helps set global prices. More than 10 million barrels of crude — over 10 percent of daily world production — was parked in tankers off the British coast for part of July, according to trade sources and shipping data. While some floating storage is not uncommon, traders say the amount has been rising this year. At least three supertankers holding Forties crude remain off the British coast, according to shipping data. The North Sea market helps set global oil prices through the dated Brent benchmark. While arbitraging the crude out of the region can boost the market, the buildup of unsold Forties has weighed on prices.

    Source: Reuters

    Erdogan ready to move forward in Turkish stream deal with Russia

    August 8 2016: Turkey is ready to “immediately take steps” necessary to complete the Turkish Stream gas pipeline project, Turkish President Recep Erdogan said. The pipeline project — frozen during the conflict between the two countries that emerged after the downing of a Russian Su-24 bomber in November last year — is still at an early stage, but can advance quickly if given approval from both sides, Russian Deputy Prime Minister Arkady Dvorkovich said.

    Source: The Moscow Times

    Russia sees no grounds for new talks on oil output freeze yet

    August 8, 2016: Russia, the world’s top oil producer, sees no grounds for new talks on freezing oil production yet but is open to negotiations, Energy Minister Alexander Novak said. Novak said that talks on freezing output could possibly happen if prices fall.

    Source: Reuters

    UK considering directly paying Britons affected by fracking

    August 7, 2016: Britons living close to fracking wells could be paid some of the proceeds under proposals being considered by the UK government. Prime Minister Theresa May has added an option to proposals to be consulted on this week that money from the fund set up to compensate areas hosting shale gas extraction sites be paid directly to residents, the government said. Hydraulic fracturing injects water into rock to aid oil and gas extraction.

    Source: Bloomberg

    Global LNG prices slide as Russian supply, weak demand loosen market

    August 5, 2016: Asian spot liquefied natural gas (LNG) prices fell this week as new supply from Russia’s Sakhalin plant and weakening demand from Egypt helped snap a months-long rally. Prices for September delivery fell sharply to around $5.80 per million British thermal units (mmBtu) from $6.15 per mmBtu also reflecting relatively low crude oil prices compared with recent months.

    Source: Reuters

    Iran adopts oil contract as glut no barrier to boost output

    August 3, 2016: Iran approved a new oil contract model, taking the OPEC nation a step closer to welcoming foreign investment in its energy industry and boosting production even more into an oversupplied market. The contract model was approved at a cabinet meeting, according to the official Islamic Republic News Agency. Priority will be given to boosting output at jointly owned oil and gas fields, the oil ministry said. Iran wants to lure international companies that can make long-term investments worth billions of dollars and bring technology after sanctions were eased in January. Iran has been working on the oil contract model for the past two years. The country hopes companies will invest as much as $50 billion a year. The new contract model was approved in a cabinet session presided by President Hassan Rouhani. The oil ministry will review each contract to be signed by potential new investors, including details on price, duration and other terms of the project.

    Source: Bloomberg

    Husky, CNOOC ink deal to lower gas prices from Liwan gas project off China

    August 3, 2016: Husky Energy reported that its China subsidiary has signed a Heads of Agreement with CNOOC Ltd and relevant companies to lower prices of natural gas piped from the Liwan 3-1 and Liuhua 34-2 fields in the South China Sea to $9.54-11.44 (CAD 12.50-15.00) per thousand cubic feet (mcf) at current exchange rates. Husky owns a 49 percent interest in the Production Sharing Contract (PSC) for the Liwan Gas Project and operates the deepwater infrastructure, while partner CNOOC holds a 51 percent interest in the PSC and operates the shallow water facilities and the onshore gas terminal.

    Source: Rigzone

    International: Power

    Generation

    Turkey’s Aksa to build 120 MW power plant in Madagascar

    August 8, 2016: Turkey’s Aksa Energy announced plans to construct a 120 MW fuel-oil electricity generation plant in Madagascar. To realise the project, Aksa Energy partnered with a local energy firm operating in the country and located in Mauritius to form a new company. The newly-founded Aksaf Power Ltd. will provide electricity for 20 years to the country, according to the announcement made in Turkey’s Public Disclosure Platform. Aksaf Power Ltd is expected to sell around 700 thousand megawatt hours of electricity annually.

    Source: Anadolu Agency

    Transcorp delays $1 bn Nigeria power plan on scarce gas

    August 4, 2016: Transnational Corp of Nigeria Plc suspended plans to build one of the nation’s biggest power plants as a local gas shortage makes it difficult to obtain fuel and a downturn in Africa’s largest economy hinders efforts to raise funds for the project. The company in 2014 said it would raise $1 billion to build a 1,000 MW gas-fired facility. The scarcity of gas has reduced Nigeria’s power generation to less than half of the installed capacity of 6000 MW, the lowest in a decade, even as the country holds the continent’s largest reserves of the fuel. The power shortage has contributed to the contraction of the economy which may shrink 1.8 percent in 2016, according to the International Monetary Fund. The nation, which has about 180 million people, generated an average of 2464 MW of electricity in June, the power ministry said. Comparably, South Africa with a third of the population, has capacity to generate more than 40,000 MW. Nigeria’s power ministry signed agreements with 14 solar-electricity generating companies last month to supply 1125 MW of electricity to the national grid.

    Source: Bloomberg

    Transmission, distribution and trade

    US electricity customers could pay $2.5 bn for nuclear plants that never get built

    August 9, 2016: US electricity consumers could end up paying more than $2.5 billion for nuclear plants that never get built. Utilities including Duke Energy Corp., Dominion Resources Inc. and NextEra Energy Inc are being allowed by regulators to charge $1.7 billion for reactors that exist only on paper, according to company disclosures and regulatory filings. Only two of 18 nuclear projects proposed since 2007 are under construction.

    Source: Bloomberg

    Sterlite, Sharper Shape to monitor power lines via drones

    August 8, 2016: US-based Sharper Shape and power transmission firm Sterlite Power announced a strategic partnership to provide drone inspection services for transmission utilities in India. As part of the cooperation, Sterlite Power will make a minority investment in Sharper Shape to foster Indian market growth and continued technology development, Sterlite Power said. Sharper Shape has already spearheaded the adoption of long-distance commercial drone flights for utilities in Europe. In the US, Sharper Shape is part of the EEI Sharper Utility partnership, an industry collaboration aimed at demonstrating and developing commercial long-distance drone flights for electric companies.

    Source: NDTV

    Eltel to build power transmission line in Norway

    August 4, 2016: Eltel has won a new contract for building of a 420kV transmission line for Statnett in Finnmark in Norway. The transmission line contract comprises works including prefabricated foundations, tower assembly, stringing and material supply for building the 90 kilometres 420 kV transmission line between Reisadalen and Skillemoen. Performing the project involves extensive winter work which makes the project highly suitable for Eltel given Eltel’s vast experience in working under Nordic winter conditions. The contract has a total value of approximately EUR 50 million and it will be executed in the time period 2016-2020. Building of the power line from Reisadalen to Skillemoen is related to the strategic programme for ensuring security of power supply in Finnmark. This line constitutes one section of the new Balsfjord-Skaidi line. The line will further add value to the region and contribute to the development of new renewable energy projects.

    Source: Energy Business Review

    Policy and performance

    Russia to construct eight nuclear power plant in Iran

    August 9, 2016: Iranian Deputy Foreign Minister for Asia and Pacific Affairs Ebrahim Rahimpour has said that Iran’s trade ties with Russia and Azerbaijan witnessed a significant boost immediately after the removal of sanctions followed by the implementation of the joint comprehensive plan of action. He also touched upon an agreement between Iran and Russia for constructing nuclear power plants in the Islamic Republic adding that Russia will build eight power plants in Iran. Russia has constructed Iran’s first nuclear power plant, Bushehr, with 1000 MW capacity and it is preparing for building new plants in Iran. Iran has planned to increase its nuclear power generation capacity to 2000 MW by 2035.

    Source: Trend News Agency

    Indonesia to hold coal output steady despite price rally

    August 8, 2016: Indonesian thermal coal miners will be unable to ramp up output this year due to logistical and debt constraints, despite a strong price rally in recent months, the Indonesian Coal Mining Association said. Global thermal coal prices have risen sharply on an unexpected jump in imports from top consumer China as it curbs local capacity, as well as demand from other emerging Asian markets and even developed economies, particularly South Korea. However, Indonesian coal producers that slashed output in recent years due to slumping prices are not expected to be in a position to quickly boost output, the Association said.

    Source: Reuters

    Turkey imposes import tax on thermal coal for power generation

    August 5, 2016: Turkey imposed a tax on imports of thermal coal from Colombia, Russia and other major exporters, for use in power generation, to support domestic coal production. The Turkish cabinet decided to impose the tax of $15/tonne on imports from the United States, Colombia, Russia and South Africa and announced it in the Official Gazette. The tax hits the biggest exporters of thermal coal but does not apply to imports from the European Union, Israel, Macedonia, Bosnia, Morocco, West Bank, Tunisia, Egypt, Georgia, Albania, Jordan, Chile, Serbia, Kosovo, South Korea, Mauritius and Malaysia, the government said. The levy is equal to around a quarter of the current month’s physical South African coal price of around $63.65 a tonne. Turkey represents around four percent of global seaborne thermal coal demand. Some commentators have suggested that President Tayyip Erdogan believes ramping up coal production will boost tax revenues and help curb Turkey’s budget deficit.

    Source: Reuters

    Japan agrees second reactor life extension since Fukushima

    August 3, 2016: Japan’s nuclear regulator approved an application by Kansai Electric Power Co Inc. to extend the life of an ageing reactor beyond 40 years, the second such approval it has granted under new safety requirements imposed since the Fukushima disaster. The move means Kansai Electric, Japan’s most nuclear-reliant utility before Fukushima led to the almost complete shutdown of Japan’s atomic industry, can keep No. 3 reactor at its Mihama plant operating until it is 60 years old. The regulator granted the first such approval in June to Kansai Electric’s ageing reactors No. 1 and 2 at its Takahama plant.

    Source: Reuters

    Renewable energy and climate change trends

    National

    India to launch extensive research on solar power

    August 9, 2016: India is planning to start extensive research on the use of solar power to bring about a “revolution” in this field, Environment Minister Anil Madhav Dave said. Dave said that during the Paris Climate summit, Prime Minister Narendra Modi had said that there were 122 countries in the world where sunlight was available 10 months of the year. Since India is one of the prominent countries among these 122 nations, it has to take the lead of research on solar power, he said. Dave said if India could get success in the research on solar power, the country can end the burning of wood forever. Under the Paris agreement, the developed countries have committed to mobilise $100 billion per year and agreed to enhance it beyond $100 billion per year post 2020.

    Source: The Times of India

    Solar training centre comes up in Bengal

    August 9, 2016: Solar companies will no longer have to worry about skilled manpower to provide quality servicing to their customers. Thanks to the joint initiative by Switch ON and National Institute of Solar Energy, West Bengal will now host and conduct regular trainings to develop solar technicians in West Bengal, through a  three month long residential Surya Mitra Solar Skill Development programme at Tapovan Training and Innovation Centre in Nadia. This training programme is sponsored by ministry of renewable energy. Each training programme consists of 30 participants and the total duration of the training will be three months.

    Source: The Times of India

    Government mulls study on erosion impact on Odisha shoreline

    August 9, 2016: As climate change and global warming set off an alarming rate of coastal decay, the Odisha Government has proposed an assessment of the erosion prone areas and study its impact on the shoreline of the State. The Odisha Space Application Centre (ORSAC) has mulled a proposal which involves remote sensing, GIS and space technology to understand the scenario in a most comprehensive manner so that remedial measures can be put in place. The project — Assessment of Erosion prone Areas of Odisha State and Study of Micro and Meso Level Effects of Erosion and Coastal Roads and Settlements — is planned over a period of four years beginning the current fiscal. The total outlay estimated for the project stands at ₹9.64 crore.

    Source: The New Indian Express

    Hindustan Zinc to double silver output to catch solar wave

    August 9, 2016: Hindustan Zinc Ltd, a subsidiary of billionaire Anil Agarwal’s mining conglomerate Vedanta Ltd, aims to double silver output in five years due to rising prices and increased demand from solar panel makers. The group plans to produce 500 tonnes of silver this fiscal year and double that to 1000 tonnes by fiscal 2022, Chief Executive Officer (CEO) Sunil Duggal said. Silver has also been boosted by increased demand from solar panel manufacturing and Hindustan Zinc, India’s biggest producer of lead, zinc and silver, has increased its focus on the commodity to cash in on an expected increase in Indian demand, especially for industrial use, Duggal said. Prime Minister Narendra Modi’s government has set a target of producing 100 GW of solar power by 2022 and is incentivising companies to produce solar panels. Analysts say about 40 tonnes of silver is required to produce panels that would generate 1 GW of solar power. Duggal said the company plans to ramp up output from its mines in the western state of Rajasthan and boost silver recoveries from its zinc and lead smelters. The company aims to increase its overall silver recovery from mines and smelters from 60 percent now to 65 percent by March 2017 and 85-90 percent by March 2022.

    Source: Reuters

    India announces repowering policy for wind energy projects

    August 9, 2016: In a bid to infuse a new lease of life in India’s wind energy sector, the Narendra Modi government announced a new policy for repowering of wind power projects. The policy has the potential to turn around a bulk of the 27,000 MW of the existing installed wind generation capacity in the country. The objective of the Repowering policy is to promote optimum utilisation of wind energy resources by creating a facilitative framework, the Ministry of New and Renewable Energy (MNRE) said. India had started harnessing wind power around 1990 and the present installed capacity of over 27,000 MW is fourth largest in the world after China, USA and Germany. As part of the Repowering policy, Indian Renewable Energy Development Agency (IREDA) will provide an additional interest rate rebate of 0.25 percent over and above the interest rate rebates available to the new wind projects being financed by IREDA. Also, all existing fiscal and financial benefits available to the new wind projects will be available to the repowering project as per applicable conditions.

    Source: The Economic Times

    Delhi Metro to install solar plant atop elevated stabling shed

    August 8, 2016: Delhi Metro will install a 3 MWp solar power plant atop an elevated stabling line of Kalindi Kunj depot, the first-ever such shed being built in the DMRC network. Delhi Metro has so far installed solar power facilities at three of its depots — Yamuna Bank, Ajronda and Mukundpur — and work is in progress towards installing more such plants in the other depots. The plant will cater to trains operating on the Janakpuri West-Botanical Garden corridor, construction of which is underway. As per the plan, the plant will be set up on the frames of the stabling lines and will also serve the dual purpose of being the roof of the facility. Presently, the largest solar power plant on an individual roof is the stabling shed of Yamuna Bank Depot with a capacity of 624 KWp, Delhi Metro Rail Corporation (DMRC) said. Delhi Metro has so far commissioned 6.3 MWp of solar power plants across 21 locations in its network. By March next year, it would have commissioned solar power plants with capacity of about 20 MWp and by March 2018, it will generate 31 MWp of solar power, it said. As per its solar policy, DMRC plans to generate 50 MWp of solar power by the year 2021.

    Source: NDTV

    Labour mobility, climate change top agenda at G20: Panagariya

    August 8, 2016: India will take up the issue of international labour mobility, particularly of professional workers, besides raising the topic of climate change at the G20 forum, Niti Aayog Vice Chairman Arvind Panagariya said. He also sought to allay fears on India’s growth front, saying that it is growing at around 7.5 percent as compared to China’s 6 percent. Panagariya, who was chief economist at the Asian Development Bank, noted that Swachh Bharat Abhiyan is the most important scheme launched by Prime Minister Narendra Modi.

    Source: Business Standard

    Tenders for 20 GW solar power projects issued so far: Government

    August 8, 2016: Tenders for solar projects worth 20,766 MW have been issued so far, out of which power purchase agreements have been signed for 8482 MW. New and Renewable Energy Minister Piyush Goyal said that out of the 20,766 MW capacity, letter of intent has been issued for 3392 MW while financial bids have been opened for 1930 MW. Presently, tenders have been floated for 6962 MW for which bids are yet to be opened. Government is hopeful of adding around 10,500 MW solar power generation capacity during the current fiscal. It has an ultimate objective of adding 100 GW of solar power generation capacity by 2022. At present, the country’s solar power generation capacity is over 8000 MW. He also said a total of 315 MW have been installed under the solar roof top scheme and power generated from these projects is being used for both domestic and captive use. He said during 2016-17, a capacity addition target of 4000 MW and 12,000 MW has been proposed for wind and solar respectively.

    Source: Business Standard

    Himachal Pradesh to start battery-operated electric buses

    August 3, 2016: Himachal Pradesh is set to start plying battery-operated electric buses on the Manali-Rohtang route. The state government has urged the Centre to provide subsidy for purchasing 90 buses, Transport minister G. S. Bali said. Bali said the state government is going to be tough with operators plying Volvo buses in Himachal on regular basis and said stringent action, including impounding of the buses, would be taken against those plying illegally in the state.

    Source: NDTV

    Global

    UN chief urges large nations to ratify Paris climate accord

    August 9, 2016: UN Secretary-General Ban Ki-moon urged Argentina and other large nations to ratify the Paris climate accord at a Buenos Aires conference, and Argentina’s Foreign Minister, Susana Malcorra, said she hoped the country would do so by the end of the year. In December 2015, some 195 countries reached an agreement in Paris that obligates states to take concrete measures to curb emissions that contribute to climate change. But the pact will not go into force until it is ratified by 55 countries representing 55 percent of global greenhouse emissions. As of now, only 22 countries have done so, many of them small, vulnerable island nations that account for a negligible percentage of emissions.

    Source: Reuters

    Exxon’s ‘green’ states climate fight heats up in Texas court

    August 9, 2016: Exxon Mobil Corp’s battle with New York and Massachusetts over their probes into the company’s use of climate change data is heating up, and a key element of the national dispute is now in the hands of a Texas judge. The states are investigating whether Exxon for years misled investors about how climate change may affect its business, prompting Massachusetts Attorney General Maura Healey to issue a subpoena in April.

    Source: Bloomberg

    CAB Cakaran biomass power generation project on track

    August 8, 2016: Poultry producer CAB Cakaran Corp Bhd remains on track to start its power generation business in 2018, despite having to go it alone after a plan to partner a Japanese company with the technical know-how fell through. CAB is now in the midst of completing the purchase of land in Gurun, Kedah, and hopes to kick start the application process to the Sustainable Energy Development Authority next year. Of the 100 acres of land that it will obtain, 30 acres has been set aside for the biomass facility and 60 acres for the solar farm while a buffer zone will take up the remaining 10 acres. The solar farm should be up and running by early 2018 while the biomass facility should begin operations in 2018 or 2019.

    Source: The Sun Daily

    Olympic records won’t come easy in Rio because of climate change

    August 8, 2016: Athletes at the Olympic Games may struggle to break world records as they compete with Brazil’s rising temperatures caused by climate change. Marathon runners, swimmers, volleyball players and even soccer referees will succumb to extreme heat and lose concentration during the games, in some cases risking their lives to heatstroke, according to a report released by Observatorio do Clima, a Brazilian civil society group. Brazil heated up faster than the global average, warming 1 degrees Celsius (1.8 degrees Fahrenheit) in the last 54 years, and four cities smashed new heat records in 2015, according to the report. If countries don’t deliver on goals to limit global temperature rises to “well below” 2 degrees Celsius, 12 Brazilian cities may have to limit play in similar games by the end of the decade, it said.

    Source: Bloomberg

    Ukraine eyes solar plant at Chernobyl

    August 7, 2016: The site of the world’s most destructive nuclear meltdown could be resurrected as a power plant — but this time harvesting solar energy. The exclusion zone that surrounds the site of the Chernobyl nuclear power station could be turned into the world’s biggest renewable power plant, according to Ukraine’s government.

    Source: The Economic Times

    Dominion Virginia Power to construct 21 MW DC solar facility at Naval Air Station Oceana

    August 5, 2016: Dominion Virginia Power will build a 21 MW direct current (DC) solar energy facility at Naval Air Station Oceana in Virginia Beach, Virginia. The project partners also include the Department of the Navy and the Commonwealth of Virginia. The solar plant is expected to be completed and operational in 2017. The Navy will provide the 100 acres of the land where 179,000 solar panels will be installed. The Navy will in turn receive an alternative electric feed, which will add to its power independence. The solar facility is expected to produce enough electricity to light up 4400 US households.

    Source: Energy Business Review

    US refining trade group pushes EPA to change biofuels programme

    August 4, 2016: An oil refining group asked the US Environmental Protection Agency (EPA) to change the way it enforces the country’s biofuel mandate, stepping up pressure on the agency to alter the program. The American Fuel and Petrochemical Manufacturers filed a petition urging the EPA to move the responsibility for complying with the Renewable Fuel Standard further downstream in the refining and distribution process.

    Source: Reuters

    Australia’s AGL Energy sets up virtual solar power plant

    August 5, 2016: Australia’s AGL Energy launched what it called the world’s largest “virtual power plant”, a network that will link 1000 households and businesses with rooftop solar and batteries which can be centrally controlled. The A$20 million ($15 million) project in South Australia involves installing solar power storage batteries which have software that allows power flows into the grid to be operated centrally, helping stabilise the grid at times of high demand.

    Source: Reuters

    UK tidal-power developer plans option cheaper than Swansea Bay

    August 4, 2016: Natural Energy Wyre Ltd, a UK-based renewable-energy developer, said it wants to build a 120 MW tidal energy project that could dramatically lower the cost of energy generated by the sea. Installing turbines on the River Wyre in northwest England could harness tidal power flowing into and from the Irish Sea four times a day. The company’s 250 million pound ($329 million) proposed project would capture power from tides that rise 11 meters in the spring and around 10 meters the rest of the year. While UK coastlines have good potential for tidal energy, developers have sought government subsidies to balance against the high costs of early-stage technologies. A planned 320 MW Swansea Bay tidal-lagoon could cost 1.3 billion-pound ($1.7 billion) and need government loan guarantees to be built.

    Source: Bloomberg

    DATA INSIGHTS

    Captive coal blocks scenario in India

    Total number of captive blocks/mines218
    As per the Supreme Court Judgment (dated 29/04/2014) number of blocks de-allocated out of 218 blocks204
    Till June/July 2016-17, under the Coal Mines (Special Provision) Act, 2015, number of blocks allocated to Private and Public Sector out of 204 blocks75

    Distribution of 75 allocated blocks by:

    • End use sector (power and non-power)

    Graph-enm-1

    • Type of mines (schedule II and schedule III)
    Graph-enm-2
    Source: Compiled from various Starred/Unstarred Questions of Lok Sabha

    Fact-FiLe

    Publisher: Baljit Kapoor
    Editorial Advisor: Lydia Powell
    Editor: Akhilesh Sati
    Content Development: Ashish Gupta, Vinod Kumar Tomar and Dinesh Kumar Madhrey

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