Energy News Monitor I Volume I, Issue 31

Energy Injustice in India: Hiding Behind Poor

Continued from Volume VI, Issue No. 30…

A thorough analysis of the power sector in the country provides different reasons for this gross neglect of rural areas. Huge inefficiencies prevailing in generation, transmission, distribution and utilization of electricity are at the root of the large problem. These inefficiencies alone, which are typical characteristics of a badly managed grid based centralized electricity generation system, amount to a total loss of 25-40% of the installed capacity. Few effective measures such as improving the generating plant performance, OR reducing the T&D losses; OR minimizing the wastage in usage, OR demand side management (DSM); OR energy conservation have tremendous potential to overcome the deficits. The gross inefficiency as witnessed in Indian power sector is largely avoidable, as demonstrated in developed economies, by much smaller investment than that needed for new capacity addition. Although this has been clearly pointed out by experts for a number of decades, what has been lacking is the political will to do so. Each component of overall inefficiency, if taken to international best practice, is able to provide adequate electricity to thousands of villages.

Table 8: Power Sector Efficiency in India

Power Sector Area	Prevailing level of efficiency / loss in India	International best practice
Generating capacity utilisation	50 - 60%	More than 85%
Aggregate Technical & Commercial losses (AT&C)	35 – 40 %	Less than 10%
End use efficiency in agriculture	45 – 50 %	More than 80%
End use efficiency in industries and commerce	50 – 60 %	More than 80%
End use efficiency in other areas (domestic, street lights and others)	20 – 30 %	More than 80%
Demand Side Management	Potential to reduce the effective demand by more than 20%

Source: Integrated Energy Policy, Planning Commission and other sources

None of the 15 villages covered in the survey have 100% electrification. Even in those villages, where the official records indicate more than 50% electrification of households, the supply is so bad that the per capita electricity consumption is abysmally low. Most of the villages covered in the survey have per capita electricity consumption less than 100, which almost negates the very purpose of electrification. Most states consider one unit a day as the lifeline energy requirement for a family. Unless the per capita electricity consumption in rural India reaches at the least the present national average of about 650 kWH (during 2008-09), we cannot say that the electrification of country’s households is satisfactory.

The worst part of such a poor supply to the villages is that there is neither a regularity nor it is provided when the people need it most. Generally the power supply is provided in the afternoon hours and late night hours, when it is not of much use for the villagers. Additionally, the low voltage conditions and frequent interruptions make the electrification a cruel joke on the villagers.

The author, who lives in a village of about 200 houses in Karnataka, experiences this every day. This village is scheduled to get power supply for 12 hours a day for domestic purpose, but the unscheduled power cuts and other interruptions for maintenance purposes bring this duration down to less than 10 hours a day on an average. On many days the supply situation becomes so bad that even the UPS (Un-interrupted Power Supply) system cannot get sufficiently charged to provide the necessary back up supply for lighting system. The rural feeder at 11,000 Volts which brings supply to my village, like most rural feeders in Karnataka and probably everywhere in the country, is so much neglected that simple devices like lightening arresters are not installed to protect them from lightening surges. The consequence of this neglect is that the sub-station which controls this feeder at Thirthahally town switches it off manually whenever there is an indication of lightening. Being a part of Western Ghats, which receives heavy rainfall during monsoon season, the author’s village is subjected to many such interruptions in a single day. In addition to this there are other types of interruptions which make the electricity supply really a cruel joke. Though this village is only 4.5 kM from the Taluk Head Quarters (Thirthahally) it gets much less number of power supply than the Taluk Head Quarters itself. This situation in Karnataka, where the state capital gets the best quality of supply, and the power quality gets deteriorated as we go down in the hierarchy of importance in habitats, seems to be the same all over the country.

Another aspect of such electricity Injustice is the financial implications to the rural consumers. In Orissa the tariff is same throughout the state, putting the rural population at additional disadvantage of paying the same price for a lower quality of supply as compared to the state capital and other cities. In Maharastra too the tier B location and rural areas have similar tariffs for domestic use despite the fact that the rural areas get much less number of hours of supply as compared to tier A and tier B locations. This exemplifies the electricity injustice. Only the city of Mumbai has different tariff basically because it is served by private companies. Even that part of Mumbai, which is served by the company also serving other parts of Maharastra (MSEDCL), has the same tariff as that of villages.

In Karnataka this injustice is compensated to some extent by prescribing a slightly lower tariff for domestic uses in rural areas as compared to Bangalore. The domestic tariff for towns and cities other than Bangalore is higher than that of villages but lower than that of Bangalore. However, such a small compensation for poorer supply has come only after a stiff opposition by public on the injustice. People are continuing to object seriously for poor quality of supply in rural areas during successive tariff revisions.

In Uttar Pradesh and Bihar also the tariff order prescribes a slightly lower tariff for domestic uses in rural areas as compared to urban areas. The state of Bihar, after the bifurcation of Jharkhand as a separate state, has even lower supply on an average. With an average of about 7 hours supply in a day the status of the villages is pretty bad as compared to other states.

What becomes evidently clear is that it is the rural population that suffers the most from this inequity. An observation on relative welfare of the villages also provided similar indication. As compared to the capital city and the tier B location in each of these states, the relative welfare of communities in villages was much less. Even amongst 15 villages in different states the relative welfare of communities was better where the percentage of electrification was higher and where the per capita consumption figure was better. Some villages were noticed to have been doing better than other because of better electricity supply.

This objective survey of the villages has revealed that with 100% house hold electrification and 24 hours of supply each of these villages will reach a much better quality of life style, drastically reducing the need for urban migration and slums. The Electricity Injustice for the rural population of the country can be exemplified by the facts in the box below.

In Karnataka between 1999 and 2009 the available power capacity has gone up by 70%; energy consumption has gone up by 95%; per capita consumption has gone up by 76%. But 356 villages remained unelectrified.

In Maharastra between 1999 and 2009 the available power capacity has gone up by 54%; energy consumption has gone up by 54%; per capita consumption has gone up by 32%. But 5,018 villages remained unelectrified.

In Uttar Pradesh between 1997and 2009 the available power capacity has gone up by 58%; energy consumption has gone up by 53%; per capita consumption has gone up by 6%. But 12,298 villages remained unelectrified.

to be continued…

Views are those of the author

Author can be contacted at [email protected]

Energy in India’s Future: Insights (part –XVI)

Jacques Lesourne and William C. Ramsay*

Continued from Volume VI, Issue No. 30…

Role of the international community

n order to tackle the challenge of climate change, developed countries not only need to curb their own emissions but also persuade the developing countries to change their mode of production without prejudice to their growth. The international community has to persuade India to follow policies that promote equal distribution of income so that the GDP growth will have progressive affect on the reduction of poverty. Bringing about any change in the modes of production and distribution of wealth is going to face massive opposition because of existing lobbies and interest groups in the country. The usual diplomacy of suasion or top-down diplomacy is less likely to work.

This may be controversial, but we believe that India needs to be persuaded to promote those policies that directly affect the HDI score of the country, i.e., by increasing access to modern energy services, particularly in rural areas and bringing about energy efficient technological changes in the industrial sector to reduce energy use and emissions. There will be an immense opposition to such a change from groups whose economic interest is tied to the old mode of production. The international community has to understand the strength of the interest groups/lobbies that support and oppose such changes. Unruh (2000) beautifully elaborates that the relative strength of interest groups that support change must be higher than that of the group that opposes the change. Therefore, strategy should focus on creating/promoting the interest groups that will support the change and discourage the groups that oppose the change, instead of direct implementation of the policy. This can be done by working with domestic academic groups, civil society organizations and the business community. Academic institutions in India play an important role in policy making. Civil society organizations like the Center for Science and Environment in Delhi can have a significant impact on public opinion, which translates into voting pattern of the people, and thence into the government policy.¹⁹ Business communities can be motivated by the new economic opportunities. They may consider entering into these ventures of technological change as first movers’ advantage. This will induce them to lobby for fiscal/financial concessions for initiating such projects. This can be successfully achieved by working closely with some industry associations, including the Confederation of Indian Industry (CII).²⁰ Channels to work for change already exist but activities in these channels need massive scaling up by the international community, e.g., Australian clean technology firms are already gearing up to invest in India.²¹

If India is successful in bringing about this change it will contribute to saving its large vulnerable population from being victims of natural disasters and will gain lots of valuable credits of future emission reduction targets under the Kyoto Protocol.

Conclusion

The national and global macro scene of India’s energy scenario is intimately connected to micro-equilibriums, local social and economical balances. This suggests the potential for half-influencing, half-collaborative civil society and diplomatic moves that, we believe, go in a more subtle way than usual recommendations.²² This suggests enough the complexity (in the Edgar Morin meaning of the term), and even the societal dimension of the issue of energy in India.

This implies a learning process as the consensus for an inclusive approach is not yet reached.

With this as a subtext, we can separately explore the answers and processes in which the energy sector and its various subsectors are engaged. In the second part, we start from the “sectoral” and industrial approaches, then examine international and diplomatic issues of energy security and finally, in the third part, present some corporate measures we believe could have structural potential.

Sectoral and international issues

Under the shadow of China? Indian international energy projection

Energy is par excellence a geostrategic subject. It is so not only for the concerned country’s security and external economic implications, but it has also become so in a context of international negotiations and debates on issues of the global commons such as greenhouse gas emissions. The first series of concerns is enough to fill books for any country; while the second for a country like India is even more overwhelming. So the balance between the urgency of the two issues should be reflected in the strength of the powers and tools that can be deployed.

Contrary to the wisdom of the day, we argue here that India is not such an urgent case. It is not a lost cause, as first part has demonstrated that balanced and inclusive policies offer a way out of current concerns. Nor is it a quantitative immediate threat, especially when compared to Chinese greenhouse gas emissions.

In this context the geostrategical implications of Indian energy are twofold. India is not just a classical case of sourcing and securing energy. To this must be added the ways and means of integrating the Indian energy scenario into a global debate on the common issue of global environmental sustainability. It becomes more an opportunity for both technical and soft diplomacy than the usual coercive diplomacy. India’s security issues of today raise many overarching diplomatic issues in the extended region.

Preamble: Myth and realities of India’s growth and environmental issues viz. China

Scholars and the media routinely use the phrase “and India” when dealing with China on energy prices, emissions and growth. We want to clarify here that though they might be comparable in terms of population these countries are far apart in terms of their level of economic activities, energy uses, poverty burden and emissions. China’s per-capita GDP is more than double India’s. The Indian share in the total primary energy consumption of the world is just 3.9% while China’s share is 15%. They do not occupy at all the same position nor mode of insertion in the world economy and world system of production. China has an export-based economy. More than 40% of Chinese manufactured imports and 56% of its manufactured exports are based on assembling or semi-processing goods. This is highly labor and energy-intensive, usually for middle and lower value-added goods that comprise nearly 90% of the Chinese manufactured exports. The energy intensity of Chinese export activity is quite high, and though it represents a demand on the global production system—as it is ultimately aimed at exports—it is located in China. One could compare this to the “water exports equivalent” that agribusiness countries start accounting in their food exports. This “energy contents in exports” explains an important part of the high primary energy demand. The fact that the Chinese government trades this off with unemployment but is aware of the side effects or the fact that the demographic curve will allow it all the while resenting the strategy and curtailing its energy intensity leads to a clear conclusion: the Indian economy is quite different.

Further, India houses close to 33.12% of the total world’s poor, while China houses to 13.17%. China’s cumulative emissions, since 1900 to 2002 are four times higher than India’s. For a more detailed comparison of India and China, one may refer to chart book prepared by Deutsche Bank Research (2005). Therefore, one must be cautious in putting these two countries into the same shoes, extending to India the issues of the Chinese case, usually better known to the general public and “general energy experts” who look at macro figures. We have amply discussed the specificity of Indian domestic issues. This specificity, we argue, should also be factored in the analysis of India’s international energy scene. India’s presence in global energy markets is mainly for its oil and gas requirements, as it imports nearly 75% of its total requirement.

Energy security: Equity oil, pipelines and nuclear deal

Currently India is trying to diversify its supply sources for oil and gas from the Gulf region²³ to minimize its vulnerability to supply disruptions due to political instability in the Middle East. It has been trying to build relationships all around the world (see Box 1). India is using almost all the tools available to secure oil and gas supplies for its future needs. This can either be achieved by long-term contacts with energy exporting countries, or by directly investing in exploration and production of oil and gas in resource rich countries.

Equity oil

Oil and Natural Gas Corporation’s (ONGC), a national exploration and production company, overseas subsidiary ONGC Videsh Ltd (OVL) is the main organization active in Africa and South America. India has long term contacts on supply of oil with Iran and Qatar, as well as long standing Gas projects. India’s pursuit of oil and gas faces stiff competition from China. China has been able to strike deals with more success in comparison to India. Over time, however, India and China have learned to cooperate with each other and have even started bidding for blocks jointly (Vardarajan 2006a, see Box 1).

OVL, in meeting India’s future energy needs, does not compromise on economic prudence of projects to pursue other objectives, putting India into diplomatically difficult situations. For example, India refrained from providing vocal support to the pro-democratic forces during the Myanmar crisis of September 2007 due to its energy interests. This seriously hurts India’s long-standing image as an uncompromising nation for human and democratic rights in the world—achieved during the nonalignment movement—and leads to serious national debates on the issue. India is also criticized for its participation in the Sudanese project which provides support to the Khartoum regime.

Box 1

Brief Profile of ONGC Videsh

As of January 2007, ONGC Videsh holds interests in 25 oil and natural gas projects in 15 countries, spanning Africa (Sudan, Libya and Egypt), Asia (Russia - Sakhalin), Kazakhstan, Vietnam, Myanmar), Latin America (Brazil, Colombia, Venezuela and Cuba), and the Middle East(Syria, Qatar, Iran and Iraq). One of ONGC Videsh’s most high-profile investments is its share in the Greater Nile Petroleum Operating Company (GNPOC), which has engaged in E&P work in Sudan since 1997. ONGC Videsh acquired a 25% equity stake in the company in 2003, with the balance held by the China National Petroleum Company (CNPC, 40%), Petronas (30%), and the Sudan National Oil Company (Sudapet, 5%). The GNPOC acreage in Sudan holds proved crude oil reserves of more than one billion barrels, and current production levels from the eight main GNPOC fields exceeds 300,000 barrels of oil per day. In addition to the upstream activities, the GNPOC companies operate a 935-mile crude oil pipeline that pumps oil to Port Sudan for export.

ONGC Videsh also holds a 20% stake in the ExxonMobil-led consortium that operates the Sakhalin-I project in Russia. According to company estimates, the oil fields associated with Sakhalin-I hold recoverable crude oil reserves of 2.3 billion barrels. Production at Sakhalin-I started in October 2005, and is expected to reach 250,000 barrels/day in early 2007. Oil from the Sakhalin-I project will be piped westward to the DeKastri terminal on the Russian mainland for export, while some crude oil will also be pumped into Russia’s domestic pipeline system for local consumption.

Recently, OVL has taken over the British energy company, Imperial Energy, for US$ 2.6 billion. Imperial, which has oil assets in Siberia and north Kazakhsthan, currently produces around 10,000 barrels/day. It hopes to increase the production to 35,000 barrels/day by the end of 2009 and 80,000 barrels/day by 2011.

Source: http://www.eia.doe.gov/emeu/cabs/India/Oil.html

Pipelines

Pipelines offer a sustainable, least-cost option for procurement of oil and gas under many circumstances. Mani Aiyer Shankar in his time as minister of petroleum and natural gas became obsessed with ideas for pipelines. Plans to build the pipeline from Iran through Pakistan to India (IPI) were almost suspended because of U.S. pressure but appear to have gained at least rhetorical momentum recently. The pressure during 2006 was so high that he had to be removed from the ministry (Vardarajan 2006b) because India had to chose between a dubious pipeline and a secured, global, commercially and strategically far-reaching nuclear deal with the United States. In addition to this, India went to the extent of voting for sanctions against Iran, its historical ally, for uranium enrichment program in International Atomic Energy Agency (IAEA) board meeting. Although India of course does not want a military nuclear Iran, New Delhi circles fully understand the claims for energy security developed by their regional neighbor.

Another pipeline possibility for India, a 1,680 km pipeline costing around US$ 3.3 billion to secure gas supplies from Turkmenistan to India via Afghanistan and Pakistan, is also hanging and equally improbable. The Taliban’s influence in the border areas of Afghanistan and Pakistan poses risks for such an investment. In addition to this, India’s relation with Pakistan also makes the negotiation costly and difficult (Verma 2007).

Myanmar is yet another source of gas for India, and it fits well with India’s “look east” policy. Alternative routes for laying down the pipeline are either through Bangladesh or India’s northeastern states. It may look costly to deal with Bangladesh and could well yield greater benefits in the future, because it is believed that Bangladesh has large untapped sources of gas. But Bangladesh is politically unwilling to contemplate a pipeline that could be seen as exploiting Bangladeshi gas for India in the absence of a global economic deal between the two countries. On the other hand, routing a pipeline through the northeastern states of India is highly risky because of the low-intensity but recurring insurgent problem in these areas of the country.

Among all these possibilities, the IPI pipeline seems the most interesting for India. This pipeline was in a dormant stage till recently. With a person like Hamid Ansari, former Indian ambassador to Iran, as the vice president of India, interest in this pipeline could be reactivated. At this writing we have already seen some strong possibilities for this pipeline. The minister of oil and natural gas, M. Deora, visited Pakistan in 2008 to finalize the modalities just before Iranian President M. Ahmadinejad’s visit to India specifically to discuss this pipeline. The test of all of this political by-play will be whether anyone seriously offers gas (which is not currently available) at a price and a date for delivery.

Separately, the United States has agreed with India on a deal in civil nuclear energy, that has been ratified by all relevant national and international authorities. This has been a major accomplishment for Prime Minister Manmohan Singh.

Nuclear deals

The Indo-U.S. nuclear deal has been in the world’s head lines for months if not years. The news is that the United States is cooperating with a country which has not yet signed the Nuclear Non-Proliferation Treaty (NPT), at variance with current U.S. law. This means that the U.S. law regarding nonproliferation will have to create an exception for this deal. This might give legitimate reasons for other countries of Nuclear Suppliers Group (NSG) to cooperate with other non-NPT signatories on nuclear issues, like China to Pakistan, Russia to Iran and etc (Einhorn 2005). According to the Pellaud Committee (Vardarajan 2006c), India is one of those developing countries that have achieved complete mastery over the front and back ends of the nuclear fuel cycle. We are less convinced by their mastery of the back end of the fuel cycle as no one has satisfactorily demonstrated that to the satisfaction of their citizens. In addition to this, the IAEA has appreciated India’s safety performance in handling nuclear material and achieving a very low probability of accidents²⁴. India is seeking the necessary technology and fuel supplies to add substantial capacity for power generation. This could significantly reduce the future global demand for gas and future emission of CO₂as nuclear displaces coal. The world at large seems to be gaining out of this deal in terms of fossil fuel markets and CO₂. But its implication for proliferation may be negative rather than positive, as opposed to what is usually claimed by India and the United States. India has always remained firm on its unwillingness to sign the NPT and has excluded many facilities from IAEA inspection. The question is to what extent will these exceptions undercut the integrity of the NPT and induce other non signatories to seek similar treatment?

India has already struck a multibillion-dollar deal with Russia in February 2008 to build four more reactors in the South. This deal will take off once the NSG lifts its embargo of nuclear trade with India, also necessary for activation of Indo-U.S. nuclear deal. The maximum contribution that is expected from nuclear in installed capacity for electricity production is just 10%. Therefore the reduction in emissions is fairly modest.

Finally the Indo-U.S. nuclear agreement is in place, since India’s communist parties, which left the coalition in the last term of the government to protest the deal, do not play any role in forming the current progressive alliance. The main party of the coalition that has ruled India since 2004, the Congress-I, for quite some time did not want to go ahead with the deal in Parliament because of the risk of losing this ally and of facing a dissolution of the Parliament. The Congress-I finally went ahead at the early autumn 2008, having secured a tiny majority with new allies. Interestingly, the opposition parties may have been opposed on the nuclear matter, but it was little secret that they ultimately favor a strategy of getting “closer to the U.S.” There is definitely a majority in the country in favor of the deal, even though this majority doesn’t correspond to any of the possible ruling coalitions. As many issues that “cut across” the Indian political exchequer, despite being voted with difficulty, it should be implemented smoothly.

Sectors and margins of industrial reorganization

India’s commercial and formal energy sector is beginning to evolve as a competitive structure, from a situation of state-owned administrative departments. India’s energy sector has become one of the cornerstones of the India’s economic reforms since the 1990s. Though state ownership is still dominant, different agencies in the value chain have been gradually reshaping themselves as competitive corporate entities. Though slowly, these state owned enterprises are increasingly adapting to operate under a market oriented framework compared to the administrative style functioning before the 1990s (Ruet 2005). Market development and alternative economic reform policies have changed the set of incentives for government owned enterprises which now act more like independent strategic firms and less like government departments.

After the liberalization of the 1990s, private ownership also began to emerge in the fuel supply chain, albeit unevenly:

· The rise of large private actors is definitely more pronounced in oil than electricity or coal. Within the overall energy sector, electricity has seen the largest change.

· Within states, the poorest states with the lowest institutional capacities and private players have experienced the fewest changes (one notable exception is the very poor state of Orissa, which privatized its electricity distribution in 1999, resulting in a managerial and regulatory failure (Siddiqui 2007).

Recapping the sectors: The electricity sector has experienced the most intensive reforms. This led to increasing private ownership particularly in generation (nearly 24% of the total installed capacity25). In addition to this two states, Orissa and Delhi, have privatized their distribution system with only 49% of the asset value remaining with the respective state governments (respectively in 1999 and 2002).

The oil and gas sector has also been significantly liberalized to augment domestic production. Most of the distribution (retail sector) is still operating under government control though there is a presence of private distributors owned by Reliance Energy group in few states. In exploration and production (E&P) activities the state remains the dominant player but recently private players have been successful in winning bids for E&P (notably Reliance in the Bay of Bengal). Indian Oil and ONGC, which are state companies, are also very active in developing international partnerships in resource rich regions around the world.

The refinery sector has also been liberalized and there are two major private players with a significant share of the total refinery capacity.

The coal sector has seen by far the least changes in terms of market oriented reforms and remains embroiled in local politics.

Coal sector

It is the most important component of India’s energy requirements. The Fuel Policy Committee (1970), led by the famous Indian economist Shukhamoy Chakraborty,²⁶ emphatically argued that coal should be the main source of India’s energy needs as it is the most reliable and cheapest fuel. The coal sector²⁷ was nationalized through various legal measures during the first half of the 1970s (Ministry of Coal - MoC²⁸ 2005 p.9). This nationalization was justified on the grounds of inadequate investment, unscientific mining practices and poor working conditions for labor. This nationalization took place in a broader wave of nationalization in many sectors during the rule of Prime Minister Indira Gandhi.²⁹ Following Nationalization, the coal industry was reorganized into major public sector companies, namely Coal India Limited (CIL) which owns and manages all the old government-owned mines of National Coal Development Corporation (NCDC) and the nationalized private mines, and Singreni Colliery Company Limited (SCCL) which was in existence under the ownership and management of the Andhra Pradesh State Government at the time of the nationalization.

Table 24. Production of coal (million tons)

* NCDC and SCCL only. Source: MoC (2005).

Since then this sector has remained dominated by government owned organizations (Table 24). Legal provisions were created in 1976 and subsequently in 1993 to allow coal mining for captive end-use in steel, power, cement production, and to permit the exploitation of isolated small patches by agencies approved by their respective State Governments. Growth in captive mining is restricted because of various administrative hurdles regarding land acquisition and environmental clearances. In addition to this, captive miners are not eligible to sell their over production in the open market.

Figure 15. Net imports of coal

Source: Ministry of Statistics and Program Implementation (MOSPI), http://mospi.nic.in/

Growth in coal demand has outstripped the growth in supply. The coal sector of India remained largely untouched by reforms, and is subject to significant competition from foreign suppliers, particularly from Australia. The major users of coal, i.e., the electricity generation industry and the steel industry,³⁰ have been complaining about the lack of competitive supply from domestic providers both in terms of quantity and quality. As a result of this, domestic users of coal have shifted to Australian suppliers. This surge in imports (Figure 15), even though there are sufficient reserves at home to meet demand, has put the government under tremendous pressure to introduce changes in the coal sector. As yet, little has been done.

Oil and gas sector

According to Oil & Gas Journal (OGJ), India had 5.6 billion barrels of oil and 38 trillion cubic feet (Tcf) of gas in proven reserves as of January 2007, the second-largest amount in the Asia-Pacific region, behind China. The combination of rising oil consumption and fairly stable production levels (30–34 million metric tons (mmt)) leaves India increasingly dependent on imports (70% of total requirement) to meet its consumption needs.

Regulatory trajectory

A first phase can be described³¹ over 1971–1991. A shift occurred during 1970s from the principle of import parity in pricing for the oil industry, to an administered pricing mechanism (APM) with command-and-control instruments used to control the prices of the crude as well as the finished petroleum products. Consequently, policies were introduced to attract private investment and technologies in the exploration and production (E&P) activities so as to supplement the efforts of the national oil companies (NOCs) even though there continued to be a preferential treatment for NOCs. Foreign oil companies such as Burmah Shell, ESSO, Caltex and Indo Burmah Petroleum, which virtually controlled the Indian oil industry, especially downstream, were nationalized by the government.

Since 1991, the government has embarked on a series of policy reforms designed to deregulate the sector and promote private participation. More than the rise of demand, the stagnation of production has been worrying. The main reason for a slow-down in supply is the decline in existing oil and gas fields. India produces approximately 820,000 barrels of oil per day (b/d), of which about 55% comes from the giant field of Mumbai High and its satellite fields; 18% from onshore fields in Gujarat; and 14% from the northeastern states of Assam and Nagaland. The production of the Mumbai offshore is declining since the field has been in production for nearly 30 years (efforts are on for enhanced recovery). As a result of the shortage in supply, there has been a rise in imports, which currently account for nearly 70% of overall consumption and are expected to grow in the future (see Figure 16 and Figure 17).

Figure 16. Demand-supply gap: Crude oil

Source: Hydrocarbon Vision 2025, Government of India.

Figure 17. Demand-supply gap: Natural gas

Source: Hydrocarbon Vision 2025, Government of India.

A policy document, the Hydrocarbon Vision 2025, was formulated by the Government of India to lay down the guiding policies for the hydrocarbons sector for the next 25 years. According to this document, the objective of the policies in the oil and gas sector would be to achieve “energy security, stability and sustainability.” Some of the significant guidelines in the document include the following:

· Exploration and production segment: Complete appraisal of sedimentary basins, absorbing/updating technologies, zero environmental impact.

· Refining and marketing segment: development of a globally competitive industry, creation of a free market and healthy competition, setting up of a common regulatory mechanism for downstream and natural gas.

· Natural gas: to become the preferred fuel for the future, bridge demand-supply gap through imports of piped and liquefied natural gas.

Thus, the demand-supply gap has to be addressed through large investments, both of capital and technology, so as to boost production levels and meet growing demand. That leaves a large scope open for private sector participation. But we can consider that, as of now, this sector is still highly regulated even after its (moderate) efforts to liberalization during the early 1990s.

The sector today can indeed be divided into three vertical stages: exploration and production, refinery, and retail marketing.

Notes:

19. The Center for Science and Environment has been very effective in forming public opinion in recent times on environmental issues.

20. This organization, along with UNIDO, has already largely engaged into programs to support energy efficiency in Small Scale Enterprises.

21. Clean Tech Forum of Australia is very actively pursuing the India market, http://www. cleantechforum.com

22. In France, for instance, compare with the “Vedrine report,” released in September 2007, that mostly attempts to build an overall “power relation” with emerging countries.

23. Gulf region accounts for 65% of India’s current import of crude.

24. http://www.thehindu.com/2008/05/01/stories/2008050158150100.htm

25. Includes the captive capacity added by industries primarily for their own use.

26. He was one of the architects of Indian planning immediately after India’s Independence.

27. Coal resources are of two distinctly different categories, coking and noncoking (also referred to as thermal/steam coal). Our resources of coking coal used in steel and other metallurgical industries are meager and of relatively poor quality. In comparison, high ash, low sulphur and low calorific value noncoking coal resources, which are best suited for thermal power generation, exist in fairly abundant quantities.

28. The Ministry of Coal has published a Report of The Expert Committee on Coal Sector Reforms, headed by T.L Shakar, in two parts http://coal.nic.in/welcome.html

29. This wave of nationalization in various sectors of the economy was motivated by a famous study by R.K. Hazari. He found that the growth of the economy was not being distributed evenly. Even though his proposal to solve this problem was quite different from nationalization and industrial licensing, the political establishment took his study as a pretext to start licensing and nationalization of industries. This period also experienced a bulk of affirmative actions as a part of the famous program initiated by Indira Gandhi famously coined “Garibi Hatao Andolan” (remove poverty movement). This was a major departure from the Nehruvian framework. Nehru’s vision of strong state sector with due respect to fundamental rules of market forces was reduced to a strong state sector without any respect to market forces.

30. The highest claimant of coal is the electricity sector (73%), followed by steel (9%).

31. This section draws from Menon-Choudhary and Shukla (2006), in Ruet and Huchet (2006).

* Editors

to be continued…

Courtesy: ENERGY IN INDIA’S FUTURE: INSIGHTS, GOUVERNANCE EUROPÉENNE ET GÉOPOLITIQUE DE L’ÉN

Note: Part V of the article on Oil & Gas Discovery & Production in India: Historical Milestones, part XIII of the article on Gas in India – Issues, Opportunities and Challenges will be published in Volume VI, Issue 32

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Upstream

DGH rapped for missing KG files

January 13, 2010. India’s supreme auditor has issued an ultimatum to Directorate General of Hydrocarbon (DGH), the custodian of country’s oil & gas assets, to produce full records of Reliance Industries (RIL)-operated KG-D 6 block and Panna-Mukta-Tapti (PMT) fields. If documents are not produced, it will be presumed that these records are not maintained. PMT fields are jointly operated by a consortium of ONGC, British Gas (BG) and RIL. In October 2009, the government had asked the CAG office to audit capital expenditure (capex) proposed by oil & gas producers after authenticity of RIL’s $8.84 billion capex plan to produce 80 million standard cubic meters per day (MMSCMD) of gas from its Krishna-Godavari basin block (KG-D 6) was questioned.

Downstream

HPCL plans Rs 200 bn refinery

January 18, 2010. To refine 9-15 million tonnes of crude oil every year, the state-run Hindustan Petroleum Corporation (HPCL) plans to set up a plant in the Konkan region. It is looking to invest over Rs 200 bn for a greenfield project in Raigad or Ratnagiri districts of Maharashtra.

The Konkan region outweighed Gujarat and Andhra Pradesh as it was seen as a natural expansion of the refinery in Mumbai, which has the capacity to refine 6.5 million tonnes per annum (MMTPA). The proposed refinery will be developed on a debt-equity ratio of 1:2 or 1:2.5. HPCL plans to develop commercial complexes around the refinery in the Chembur-Mahul region, a part of Mumbai’s central suburb.

IOC’s first overseas bond issue a hit

January 17, 2010. In what is perhaps the most successful dollar-denominated bond issue by any Asian company in recent times, India’s largest public sector refiner, Indian Oil Corporation (IOC), has raised $500 million from the international market to meet capital expenditures of its ongoing projects. IOC’s maiden five-year corporate bond issue was oversubscribed 13 times, with an order book of $6.5 billion, the company said in a statement.

Transportation / Trade

Gail to buy 4 pc in Myanmar-China project

January 19, 2010. State-run gas transportation company Gail India will pick up a 4% stake in the $2-billion Myanmar-China gas pipeline project. OVL, the overseas arm of oil and gas major ONGC, will pick up another 8-8.5% stake in the pipeline project that will link two gas producing blocks A1 and A3 in Myanmar with consuming centres in the mainland China. OVL, along with Gail, already has a 30% interest in two gas producing blocks in Myanmar. The companies, however, could not secure gas from the project as the neighbour preferred China over India for gas sales from A1 and A3 blocks. In 2004, Myanmar had committed that Gail would be the preferential buyer of the gas but opted for China later due to political considerations.

Jet fuel to be kept out of GST net

January 18, 2010. Aviation turbine fuel (ATF) will be kept out of the Goods and Services Tax (GST) net even as the domestic airline industry is keen on its inclusion in the new tax system.

The Government is looking to introduce a dual GST system, which will be a milestone for the indirect tax reforms. The Centre has now agreed with the States' proposal that ATF, crude, motor spirit and high speed diesel (HSD) be excluded from the proposed GST regime.

This means that ATF will continue to be subjected to sales tax ranging from 4 to 30 percent even after the GST system is introduced. Mitigation of cascading effect of taxation is one of the perceived benefits of GST to trade. However, with ATF's exclusion from GST, the cascading effect is unlikely to be mitigated.

Dutch co buys Caltex Gas for nearly Rs 5 bn

January 13, 2010. Dutch group SHV said that it has acquired Chennai-based Caltex Gas India, a wholly-owned subsidiary of US-based Chevron. The deal is touted to be the largest in the Indian LPG segment and SHV had spent below Rs 5 bn on this all-cash deal.

Caltex, which has a turnover of around Rs 3.5 bn, imports, stores, bottles and markets LPG in South India. The around e11-billion SHV has an Indian subsidiary based in Hyderabad, which is into LPG distribution mainly in the industrial, commercial and auto LPG segments. It is known by its brand Super Gas.

Policy / Performance

ONGC-Hinduja pact stays, no JV

January 19, 2010. The government has asked ONGC to adopt a consortium approach instead of a joint venture with the Hindujas to pick up a participating interest in the $12.5-billion South Pars-12 gas project in Iran that would ensure long-term supply of 6-million-tonne liquefied natural gas (LNG) to India, a government official said. OVL may pick up 20% or more in the South Pars-12 field development project and 10% or more in the LNG terminal depending on its negotiations with Hindujas. In 2006, ONGC had entered into a pact with Hinduja group company Ashok Leyland Project Services (ALPS) to form JVs for investing in global oil and gas assets as well as LNG projects. The proposed JV had envisaged leveraging exploration & production (E&P) expertise of ONGC and the business-goodwill of the Hindujas in hydrocarbon-rich Middle East.

OilMin receives Rs 120 bn cash subsidy

January 19, 2010. India's finance ministry has given Rs 120 billion ($2.63 billion) as cash subsidy to state-run oil firms to compensate them for selling fuel below market price.

Mangalore: Foundation laid for third phase of MRPL

January 19, 2010. Union Minister of State for Petroleum and Natural Gas Jitin Prasada said that his Ministry was considering supply of gas as fuel for refineries to bring down their cost of processing crude oil. He suggested that oil companies could transport their products through pipelines instead of tankers, which were damaging the road. It was safer and more environment-friendly, he said.

HPCL introduces green fuel Euro-IV to India

January 18, 2010. Minister of State for Environment and Forests Jairam Ramesh commissioned HPCL's Euro-IV compliant oil refinery in Mumbai. The Minister further said that Comprehensive Environmental Assessment was carried out in the country. India has a target to implement Euro IV-compliant fuel in 13 major cities from April and upgrade the rest of the country's fuel standards to Euro-III from Euro-II specifications. State-run Hindustan Petroleum Corporation Limited (HPCL) has spent Rupees 400 billion on the refinery's upgrade. By bringing in tighter fuel criteria to improve air quality, India is set to leapfrog Asian rival China, which started using a Euro III-like norm for petrol from January 1, with a Euro III diesel equivalent set to become a national mandate from June 2011.

Finmin offers to pay one third of oilcos' demand

January 15, 2010. The finance ministry is unwilling to pay the entire Rs 317 bn demanded as compensation by the petroleum ministry on behalf of the state-owned oil companies — IOC, BPCL and HPCL — for selling cooking gas and kerosene below cost in the current financial year. Finance ministry wants to pay only one third of the revenue losses of the three oil companies on the sale of the two cooking fuel as per a subsidy-sharing formula that worked till 2007-08. The oil companies are expected to lose about Rs 450 bn in 2009-10 for selling petrol, diesel, kerosene and diesel below market rates. Oil ministry is demanding a 100% compensation for under-pricing cooking gas and kerosene from the finance ministry as per a cabinet decision taken in July 2009.

Cabinet sanctions OVL's investment in 2 Nigerian blocks

January 14, 2010. India has sanctioned funding of $359 million to ONGC Videsh Ltd, overseas arm of ONGC Ltd, for the execution of the first exploration phase in two Nigerian deepwater blocks. The two blocks, OPL 279 and OPL 285, are being jointly explored by a joint venture company of ONGC Videsh and Lakshmi Mittal's Mittal Investments Sarl (MIS), known as ONGC Mittal Energy Ltd, incorporated in Cyprus. The decision comes ahead of Indian Petroleum Minister Murli Deora's visit to Nigeria later this month. For the first exploration phase of five years from 2007 to 2012, the expenditure for OPL 279 and OPL 285, located in Nigeria's Gulf of Guinea, is estimated to be $389 million and $399 million, respectively.

POWER

Generation

L&T lines up Rs 250 bn for power venture

January 19, 2010. Larsen & Toubro (L&T), the country’s largest engineering company, will invest around Rs 250 bn to build its thermal power business in the next five years, a senior executive said. L&T Power, the wholly-owned subsidiary of L&T, will have a generation capacity of 5,500 MW, including hydro power, by 2015. L&T Power is yet to bag any hydro project but it is bidding for projects in Himachal Pradesh, Uttaranchal and Jammu & Kashmir. L&T Power has received orders worth Rs 160 bn since it was formed in January last year. The company is scouting for more projects and will also bid for the ultra mega power projects (UMPPs) that have minimum capacity of 4,000 MW each and are typically based on super-critical technology.

GAIL keen to join NTPC in 2 GW facility near Dabhol plant

January 18, 2010. State-run gas utility GAIL India is keen to join NTPC in a new 2,000 MW power plant planned adjacent to the beleaguered Dabhol plant in Maharashtra. NTPC is planning additional capacity of at least 2,000 MW at the site adjacent to the Dabhol power plant at an estimated cost of about Rs 80 bn.

Dabhol power plant, built by US energy major Enron Corp, originally was planned with a generation capacity of 2,150 MW but was later scaled down because of problems with equipment. The plant is currently generating around 950 MW and Ratnagiri Gas and Power Pvt Ltd - the new owner of the Dabhol power plant and the adjacent LNG receipt facility - hopeful of reaching full capacity generation of 1,950 MW by March.

JP Power to raise Rs 15 bn

January 14, 2010. Jaiprakash Power Venture (JPVL), that houses the power generation business of diversified $7-billion Jaiprakash Associates, is raising Rs 15 bn through a qualified institutional placement (QIP). The company is likely to dilute around 10% stake by the end of this fiscal to raise the fund, said two officials involved in the process on conditions of anonymity.

GMR to begin work on Chhattisgarh power project by March

January 13, 2010. GMR Energy Ltd, a unit of GMR Infrastructure, will begin construction work on its 1,200 MW thermal power project in Chhattisgarh by March. GMR Energy signed the deal for the 1,200 MW project with two units of 600 MW each in June 2007 with the state government. It will come up in Raikheda area of Raipur district, about 35 km from state capital Raipur. The power plant will get water from Mahanadi river, some 40 km from the proposed plant site.

Transmission / Distribution / Trade

Meet to review coal supply to power plants

January 16, 2010. Shipping secretary K Mohandas is to meet power producers and cargo movers on to facilitate timely delivery of coal to power plants. The move is also aimed at increasing cargo movement through inland waterways. Total cargo movement through inland waterways stood at 3.38 billion tonne km at the end of 2007-08, accounting for only 0.34% of total inland cargo transfer. The government aims to increase it to 20 billion tonne km by 2025.

BHEL bags Rs 2 bn order from PowerGrid

January 14, 2010. State-run BHEL said it has bagged a Rs 2 bn order from PowerGrid for supplying insulators for setting up transmission lines. These insulators would be used in the first-ever + 800 kV transmission lines of PowerGrid from Biswanath Chariyali in the North East to Agra in Uttar Pradesh, it said. The HVDC transmission line would be a major step ahead in implementing a bulk power transmission system in the country. This interconnection is envisaged to bring surplus, low-cost power from the northeastern region to the power deficit states in the northern region. BHEL has successfully designed, developed and tested these insulators at STRI, Ludvika, Sweden, the only internationally accredited laboratory equipped for testing of such insulators in the world.

Policy / Performance

State working on plan to minimise effect of power regulation

January 19, 2010. Faced with acute shortage of power, the Orissa government has decided to go for load shedding in the state with a humane face. The sympathetic approach of the government to the issue will be demonstrated through minimizing the duration of load shedding in peak time and resorting to longer power cuts in the off-peak period. For this purpose, the Orissa government has asked the State Load Despatch Centre (SLDC) to augment hydro power generation during the peak demand period and reduce generation during the off-peak time. Similarly, it has asked the power distribution companies to take into consideration the examination time of the students while resorting to power regulation. The orders of the Orissa Electricity Regulatory Commission (OERC) pertaining to power cut in the state will come into effect after the power distribution companies and the State Lead Despatch Centre (SLDC) agree to these suggestions.

Coal India to seek board nod for international deals

January 18, 2010. Coal India Ltd plans to go to its board this month with specific “strategic partnership” proposals underlining overseas coal-offtake agreements and equity joint ventures with international majors. Following the board approval, it will appoint merchant banker to conduct the due diligence. However, following the due diligence, CIL will have to come back to the board again with specific proposals so as to seek the approval of the Empowered Committee of Secretaries to firm up the deals. While the details of the proposals to be placed before the board are not known a total of eight international companies with assets in the US, South Africa, Australia and Indonesia turned up with business proposals during a meeting in Kolkata in mid-December. The companies are: Peabody, Massey Energy, Murray Energy, Foresight, Coal and Oil- Kideco, Nobel, Harvest Indo and Trishakti. Interestingly, despite seeking more time to come up with proposals, two of the world's largest mining and mineral majors Rio Tinto and Xstrata have finally preferred to opt out of the race to be a strategic partner of CIL. Both the companies felt that they had nothing to offer in line with CIL's expectations.

India to have 6 GW solar power by 2017: Ramesh

January 18, 2010. Promising action that will help curb India's dependence on coal, Environment and Forests Minister Jairam Ramesh, said India will have at least 6,000 MW of installed solar power capacity by 2017, bulk of which will be put up by the private sector. Ramesh said the Jawarharlal Nehru National Solar Mission, launched in the national capital last week, has planned 20,000 MW of solar energy by 2022 and intends to drive down costs through a rapid scale-up of capacity. This is higher than the target of 4,000 MW of solar power by 2017 envisaged in the solar mission document. The government will create the necessary environment to attract project developers to invest in research and domestic manufacturing of solar power equipment.

Regulator fines TNEB official for not complying with open access norms

January 18, 2010. The Tamil Nadu Electricity Regulatory Commission (TNERC) has penalised officials of the Tamil Nadu Electricity Board for contravening the provisions of the Intra State Open Access Regulation 2005. Through an order on January 6, following suo motu proceedings, the commission has held that the decision of the TNEB Member (Generation) to lower the minimum limit of intra state open access to 0.5 MW from the prescribed 1 MW was ‘illegal.' The TNERC strongly criticised the action and fined the official Rs 20,000. The Member (Generation) has the option to appeal before the Appellate Authority for Electricity. The TNERC has said that “instead of filing a petition before the State Commission for lowering the limit below 1 MW, the Member (Generation) decided to usurp the power of the State Commission conferred by Section 42(2) of the Electricity Act, 2003 and illegally lowered the limit.

Delhi govt may grow biofuel crops on forest land

January 18, 2010. Citing the limited availability of fossil fuels, the Delhi government said it might look into using its forest land for growing biofuel crops, seen as a source of clean energy. Forest land in the state could be used for plantation of biofuel crops like Jatropha, chief minister Sheila Dikshit said. She, however, cautioned against large-scale use of agricultural land for planting biofuel crops and asked for a balance. Citing adverse effects of climate change and limited availability of fossil fuel, she recommended more and more use of solar energy and biofuels.

MoU signed for generating solar energy

January 18, 2010. The Rajasthan government signed a Memorandum of Understanding (MoU) with Bill Clinton foundation for generation of solar energy in the state. The MoU was signed between State Energy secretary Naresh Pal Gangwal and chairman of Clinton Foundation Erasi Meganizer in the presence of Chief Minister Ashok Gehlot. Under the agreement, the Clinton foundation would provide technical know how for developing solar parks at different places in the state to generate solar energy. Lauding the agreement as historic, Chief Minister Ashok Gehlot said it would meet the requirement of the energy of the state in the coming days.

Dadri land acquisition: No immediate relief for Reliance Power

January 18, 2010. The Supreme Court did not pass any order on a petition filed by the Anil Dhirubhai Ambani Group (ADAG) challenging the Allahabad High Court verdict quashing Uttar Pradesh Government's notification to acquire land for the company's 8,000 MW Dadri power project. A bench headed by Chief Justice K G Balakrishnan posted the matter for hearing on January 29 as some of the farmers had filed a caveat and were given the opportunity to contest the appeal filed by Reliance Power Ltd. No sooner senior advocate Mukul Rohatgi started making submissions on behalf of Reliance Power Ltd, advocate M L Sharma said he was appearing for some of the farmers who have filed the caveat and opposed the hearing for granting stay against the High Court verdict.

Companies cannot sell power outside, says U'khand govt

January 16, 2010. With Uttarakhand facing severe power crunch, the state government has disallowed small hydropower projects (SHPs) to sell power outside the hill state. The move follows pleas by several SHPs, mostly by private developers to sell power outside the state.

The Uttarakhand Electricity Regulatory Commission (UERC) had sought guidelines from the government on an application by Vanala hydel project (15 Mw), which is situated in Chamoli district of the state. The Him Urja Pvt Ltd, which is developing the Vanala project wanted to sell power to the Power Trading Corporation (PTC). Similarly, other companies like Swasti Power Engineering Ltd and Polyplex Corporation Ltd had also sought permission for the sale of power outside the state from their hydel projects.

India, Iceland mull mutual support on geothermal energy

January 15, 2010. The Minister for New and Renewable Energy, Dr Farooq Abdullah, has said bilateral co-operation with Iceland is essential to make progress in the area of geothermal energy development.

Addressing the India-Iceland workshop on Renewable Energy, he listed out likely areas for cooperation between the two countries including technology transfer in deep drilling, reservoir assessment and setting up of geothermal demonstration power plants.

The workshop discussed issues relating to cooperation between India and Iceland for development of the geothermal sector in India by assessing the geothermal resources and its utilisation for power generation and thermal applications.

UMPPs to single co capped at 3

January 16, 2010. The government has decided that one company can only implement up to three ultra mega power projects or UMPPs at any point in time in an attempt to ensure that these large projects, typically around 4000 MW, achieve financial closure and start generating electricity at the earliest. The move is likely to impact Reliance Power that has already bagged three out of four UMPPS bid out so far.

Reliance-Anil Dhirubhai Ambani group company Reliance Power has been awarded three of the four UMPPs bid out by the government so far. Reliance Power has the mandate to implement ultra mega power projects in Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand). The fourth, at Mundra in Gujarat, has been awarded to Tata Power.

RBI caps the amount banks can lend to a particular company or to one sector. The government has planned a total of nine UMPPs, with four projects close to coal mines, and five in coastal locations. While four contracts have been awarded, the next batch of UMPPs may come up at Cheyyur (Tamil Nadu), Bedabahal (Orissa) and Akaltara (Chhattisgarh).

Orissa not to renew MoU of non-serious power companies

January 13, 2010. Orissa government is finally acting tough on the companies who have signed MoU but gone slow or not fulfilled the terms and conditions. In a move that promises to accelerate the work of the projects of serious players, the state government has decided not to renew the MoU singed by Nababharat Power, Essar Power and Mahanadi Abani Power Ltd. These companies had signed MoU way back in 2006 but not yet taken up the initial work as yet violating the terms and conditions mentioned in the MoU. The state government has signed 15 MoUs in two phases in 2006 and 2008 respectively with 15 power companies with a condition to start production by 2013. The state accordingly allotted land, water and coal to these companies. Review done by high level officials revealed that 12 companies have taken up work seriously.

INTERNATIONAL

OIL & GAS

Upstream

OPEC unlikely to raise output this year, Qatar says

January 18, 2010. The Organization of Petroleum Exporting Countries is unlikely to increase production this year because the market is sufficiently supplied, Qatar’s Energy Minister said. OPEC, responsible for about 40 percent of global crude supply, started a record production cut early last year in response to the sharpest demand drop since the 1980s. The group’s adherence to output targets has since waned as consumption revives and prices gain, with crude futures trading near $80 a barrel. OPEC meets next in March.

Vast boasts 2.7 bn barrels in place at Qara Dagh Block in Iraq

January 18, 2010. AJM Petroleum Consultants ("AJM") has completed an independent, initial resource assessment of Vast Explorations's Qara Dagh Block, in the Kurdistan Region of Iraq. AJM has estimated an unrisked "Best Estimate" of 2.7 billion barrels of Petroleum Initially in Place. Vast Exploration has a 37% interest in the Qara Dagh Block.

Iraq signs Majnoon oilfield agreement with Shell, Petronas

January 17, 2010. Iraq, holder of the world’s third- largest oil reserves, signed a 20-year service contract with Royal Dutch Shell Plc and Petroliam Nasional Bhd to develop the Majnoon oilfield, one of the largest in the world. Iraq’s South Oil Co. and Missan Oil Co. are also part of the group that plans to boost production to 1.8 million barrels a day from 45,000 barrels a day now, Shell said.

Kashagan group should cut costs by $3 bn – KazMunaiGas

January 15, 2010. Kazakh state oil and gas company KazMunaiGas said it has proposed that the consortium developing Kazakhstan's largest oil field Kashagan, in which it is involved, cuts costs by about $3 billion in 2010.

The company's press service said the North Caspian Operating Co., which develops the giant Kashagan field in the Kazakh part of the Caspian Sea, had originally planned to spend about $10.4 billion this year.

The consortium, which comprises France's Total SA, U.S.-based ExxonMobil, ConocoPhillips, Royal Dutch Shell PLC, KazMunaiGas, Italy's Eni SpA, and Japan's Inpex, has spent $28 billion between 1997 and 2009, including $6.2 billion that was spent last year, KazMunaiGas said.

Po Valley to lift gas production in Italy

January 13, 2010. Australian company Po Valley Energy Ltd has produced one million cubic meters of gas in Italy to date and says it will expand output this year. Gas volumes at Po Valley's 100 percent owned Castello gas plant east of Milan will be incrementally increased to about 70,000 cubic meters per day over the next two months, up from 50,000 cubic meters of gas per day currently.

Maersk, Shell make N.Sea gas and condensate find

January 13, 2010. Denmark's A.P. Moller-Maersk and Anglo-Dutch Shell have made a gas and condensate discovery in the Danish sector of the North Sea. The discovery was made in exploration well Luke-1X east of the Elly gas and condensate field, the Danish Energy Agency said in a statement.

Downstream

Petrobras to change scope of Comperj project

January 13, 2010. Brazilian state-run energy giant Petroleo Brasileiro SA, known as Petrobras, is considering a change in its Comperj refinery project to focus on heavy oil processing rather than petrochemicals. Comperj would be constructed as a so-called "premium" fuels refinery that would process 300,000 barrels of oil daily, the newspaper said. The primary raw material would be heavy oil from the prolific Marlim field.

Transportation / Trade

Praxair reaches supply deal with Valero for Memphis refinery

January 18, 2010. Praxair, Inc. has finalized an agreement with Valero Refining Company to supply oxygen and nitrogen to Valero's Memphis, Tenn., refinery connected to Praxair's pipeline system. As part of the agreement, Praxair will build a new air separation plant with a capacity of 450 tons per day. In addition, Praxair will build two new six-mile pipelines for the supply of oxygen and nitrogen to Valero's Memphis refinery.

EU-Iraq partnership is 'first step' toward Southern Corridor pipeline

January 18, 2010. The European Union has signed a strategic energy partnership with Iraq, in a move that could contribute to the EU's energy diversification plans, the European Commission announced. Iraq has the world's third largest proven oil reserves and could become a gas supplier for the Nabucco pipeline, the EU's flagship project for the development of the so-called Southern Corridor energy supply route aimed at reducing dependence on Russia. The agreement foresees strengthened EU-Iraqi cooperation, to be detailed in an "Energy action programme" for 2010-2015, covering energy efficiency, energy demand management and renewables, according to the EU. The EU said it is also ready to help Iraq draw up a new national gas development plan, develop its electricity grid, improve the safety and the reliability of its oil pipelines and "identify sources and supply routes for gas from Iraq to the European Union.

Policy / Performance

Oil shortages to reappear in 2011, Goldman Sachs says

January 18, 2010. Goldman Sachs Group Inc. said that shortages will reappear in the crude oil market as supply fails to keep pace with a recovery in demand. Global oil consumption will return to levels seen before the financial crisis by the third quarter of this year. At the same time, projects to bring new oil to consumers are still lagging as a result of the credit crunch.

Petrobras obtains permits for $20 bn refinery project

January 18, 2010. Brazil's state-run oil company, Petrobras, that it has obtained environmental permits and completed the required paperwork to begin constructing what will be the nation's largest oil refinery. Located in the northeastern state of Maranhao, the refinery will be capable of processing 300,000 barrels of oil a day when it starts operating in 2013. By 2015, its capacity will be expanded to 600,000 barrels a day. Construction of the refinery will cost an estimated US$20 billion. Petrobras has reached a broad agreement with Japanese trading firm Marubeni Corp. to help finance the project. Marubeni's stake will be ironed out later, but Petrobras reportedly hopes it will make an investment of around 20 percent. The state-run oil company will also seek funding from the Japanese government. Brazil has been working to become self-sufficient in terms of oil. Now that the nation is ready to begin tapping deep-ocean oil reserves, attention has shifted to an expansion of exports as well.

Japan eyes automatic tax cut when gas price tops threshold

January 18, 2010. The Japanese government Tax Commission fleshed out a plan in which the gasoline tax will be automatically reduced by 25 yen if the price at the pump stays above 160 yen (US$1.76) a liter for three to four consecutive months. The proposal is included in the panel's fiscal 2010 tax reform proposals, which would maintain the gasoline tax at the current 53.8 yen per liter, but would lower it by 25 yen, which is equivalent to the gasoline surcharge portion, when prices surge. The lower tax rate would be in place until the retail price crawls below 130 yen for three to four months running.

Tullow tells heritage oil it will pre-empt Ugandan sale

January 18, 2010. Tullow Oil Plc, the U.K. explorer with the most licenses in Africa, told Heritage Oil Plc it will exercise pre-emptive rights to buy Ugandan assets jointly owned by the two companies. Tullow will match a $1.5 billion-dollar bid from Eni SpA to buy Heritage’s share of Blocks 1 and 3A in Uganda’s Lake Albert. Tullow plans to sell a stake in the blocks to another oil company.

Exxon Valdez pollution lingers in Alaskan beach sand

January 17, 2010. Oil spilled from the Exxon Valdez tanker more than 20 years ago is trapped between layers of sand on the Alaskan shoreline, putting local species at risk, according to a study published in Nature Geoscience. The Exxon Valdez tanker crashed into ice in 1989, dumping 11 million gallons of oil into Prince William Sound. Exxon Mobil Corp. last year agreed to pay $470 million in interest on the $507.5 million judgment won by local victims of the spill, including fishermen and small businesses.

Alberta eyes moderating oil sands growth

January 15, 2010. Canada's oil-rich province of Alberta needs to look at ways of moderating the pace of oil sands developments, the province's new minister of energy Ron Liepert said. Liepert said he wants to ensure that future oil sands development does not overstretch Alberta's infrastructure capacity.

Sudan, China hold refinery expansion talks

January 14, 2010. Sudan's oil minister Al-Zubair Ahmed Al-Hassan was in China for talks on Khartoum refinery expansion. The minister of energy and mining, Al-Zubair, discussed during a regular meeting of Khartoum Refinery Board the performance of the refinery during the past year and plans for the new year. The minister, who chaired the meeting, also tackled with Chinese officials an agreement to increase its production to 200,000 barrels per day instead of its current capacity of 100,000 bpd to meet the growing need of oil derivatives. Sudan and the state firm China National Petroleum Corp (CNPC) signed on November 17, 2009, an agreement on the second phase of the expansion of the refinery.

China starts using Natural Gas from Central Asia

January 13, 2010. Natural gas delivered from Turkmenistan to China through the gas pipeline China - Central Asia started to arrive in the northern part of Sintszjan-Uigur Independent Area, thus, Urumchi became the first city in the country that started to use natural gas from Central Asia. Further annual deliveries of natural gas from Central Asia to the cities of the northern part of Sintszjan-Uigur independent area will reach 3 billion cubic meters. The gas pipeline China - Central Asia of 1833 kilometers in the west begins at the border of Turkmenistan and Uzbekistan, passes through the central part of Uzbekistan and the southern part of Kazakhstan, and crosses the Chinese-Kazakhstan border at the check point Horgos. Total extent of this transboundary energy corridor, first in the country, intended for import of foreign natural gas, will be 8653 kilometers.

Brazil Sugarcane Industry: Ethanol blend reduction 'makes sense'

January 13, 2010. According to the Brazilian Sugarcane Industry Association (UNICA), the federal government's decision to reduce the anhydrous ethanol content of gasoline from 25% to 20% must be limited to the established 90-day period. Hydrous ethanol is pure ethanol (E100) used in flex-fuel vehicles, which run on any mix of ethanol and gasoline. The blend reduction involves anhydrous ethanol, which is the type of ethanol that is mixed with gasoline.

Jordanian panel wants expert to oversee refinery expansion bid

January 13, 2010. The ministerial committee tasked with reviewing the Jordan Petroleum Refinery Company (JPRC) expansion project recommended the appointment of a technical, legal and financial expert to oversee the tendering process. The committee, headed by Minister of Energy and Mineral Resources Khalid Irani, said in its report to the government that the selected expert should work under the direct supervision of the ministries of finance and energy and mineral resources, and be tasked with revisiting and formulating the terms of the expansion agreement as well as negotiating on behalf of the government with potential bidders for the tender, a government official said after the Cabinet meeting yesterday.

Woodside puts finishing touches on Sunrise LNG plan

January 13, 2010. Australia's Woodside Petroleum Ltd. said it's finalizing a development plan for the Sunrise liquefied natural gas field that will deliver "significant" benefits to the fledgling nation of East Timor. But hopes of a quick approval for the project receded when East Timor said it will block proposals by the Woodside-led consortium to develop billions of dollars in disputed oil and gas. The apparent hard line by East Timor, which wants an LNG plant built on its coastline, as opposed to Woodside's preference to pipe the gas to Darwin or use a floating LNG plant, raises the prospects of further delays. Containing more than 5 trillion cubic feet of gas and associated condensate, Sunrise was discovered more than three decades ago. But its location in the Australia and Timor-Leste joint petroleum development area has frustrated several previous development attempts.

Feds plan to track refinery outages

January 13, 2010. The Energy Information Administration said it plans to begin tracking planned and unplanned outages at U.S. refineries in 2011 and their potential impact on the oil market. Under the Energy Independence and Security Act of 2007, the EIA was required to assess the impact of planned outages using commercially available data, after unusually high incidences of refinery outages that year. EIA said that while commercial data is useful in many areas, it often is incomplete and falls short in addressing specific unit outages and production impacts.

PTTEP to collect stakes in 3 permits offshore Australia

January 13, 2010. PTTEP Australasia (Ashmore Cartier) PTY LTD (a subsidiary of PTTEP) has entered into the farm-in agreement with Woodside Energy Limited and the joint venture partners under which PTTEP will acquire a 20% participation interest in Petroleum Exploration Permits WA-378-P, WA-396-P and WA-397-P, located offshore Northwestern Australia.

POWER

Generation

Turkey demands to shutdown Metsamor nuclear power plant

January 18, 2010. Turkey is seriously concerned with the functioning of the Metsamor nuclear power plant in Armenia. Residents of the country’s eastern and south-eastern regions have repeatedly appealed to the high instances on this issue. The concern is caused by fears of the spread of radiation in a greater part of Turkey in case of a failure at the nuclear power plant. Armenia must close the power plant and find alternative sources.

Micronesia takes on giant Czech power plant

January 18, 2010. The Federated States of Micronesia — a chain of more than 600 islands dotting the west Pacific — is objecting to plans to renovate a lignite-fired power station in Prunerov in the Czech Republic, saying the plant’s carbon emissions are a direct threat to the nation’s future. Lignite is brown coal, the most polluting and least efficient type, and Micronesia says the Prunerov plant is one of the world’s biggest single industrial sources of planet-warming carbon dioxide, the main greenhouse gas. The issue could become a test case for other small island states across the globe that say they are similarly threatened by CO₂ emissions from big polluting nations and industries. The Prunerov project emitted 40 times more CO₂ annually than the whole of Micronesia and the government believed the planned refitting would not use the best available technology, he said, echoing concerns expressed by Greenpeace and environmental lawyers involved in the case.

Brazil's Petrobras to open first ethanol power plant unit

January 18, 2010. Brazil's state-run oil company Petroleo Brasileiro S/A (PBR, PETR4.BR), or Petrobras, will officially open the country's first ethanol-fueled power-generating unit Tuesday, the company said in a statement. The company has adapted one 45-megawatt turbine at its Juiz de Fora power plant to be used with ethanol or gas. Brazil is the world's largest ethanol producer, which it derives from sugarcane.

Korea on course to build nuclear power plant in Turkey

January 18, 2010. It is reported that Turkey will most likely put a Russian firm in charge of building one plant in Akkuyu and give a second plant at Sinop to a Korean builder. Korea looks the likely winner with a consortium composed of Korea's KEPCO and U.S. firms GE and Westinghouse. The reason Turkey favored the Korean-U.S. consortium is that the country wants to reduce its energy dependence on Russia, the paper said.

Japan utilities Dec coal consumption falls y/y

January 14, 2010. Japan's 10 utilities consumed less thermal coal to generate electricity in December than a year earlier, industry data showed. The utilities also burned 0.34 million kilolitres of fuel oil last month compared with 0.75 million kl a year earlier, data from the Federation of Electric Power Companies of Japan showed.

Transmission / Distribution / Trade

Company plans to build regional transmission system

January 19, 2010. Irving Oil Ltd.'s parent company, Fort Reliance Ltd., has created a company aimed at building a regional electricity transmission system. The firm wants to improve the points where power lines meet between New Brunswick and Quebec, Nova Scotia and Prince Edward Island, reducing bottlenecks to bring more power online. A regional transmission system would increase the free flow of lower-cost and greener energy across provincial borders. The regional transmission system would lower consumers' costs, improve emission performance, lay the foundation for a smart grid and facilitate future economic development.

Policy / Performance

Work on 132 MW combined cycle power plant to commence in Ghana

January 19, 2010. Vice President John Dramani Mahama cut the sod for commencement of work on additional 132 megawatts combined cycle power plant, at the Thermal Power Station at Aboadze near Takoradi. The Takoradi Thermal Power Project, undertaken by the VRA, to supplement hydro sources of generation at Akosombo and Kpong, has contributed to achieving its corporate goal of ensuring efficient and reliable power supply. Ghana was the first country in the sub-region to benefit from his country's economic assistance.

Japan to fund Asahan III Power Plant

January 19, 2010. Jakarta: State-owned electricity company PT PLN will construct Asahan III Power Plant following its approval in a previous meeting. The funding will rely on a soft loan from the Japan Bank for International Cooperation (JBIC). The Asahan III Power Plant is targeted to produce 2 x 87 megawatt of electricity.

Private Dewa power plant delayed

January 18, 2010. The Dubai Electricity and Water Authority (Dewa) plans to commission the first private sector power plant, delayed for over a year, in the third quarter of 2014. Dewa is looking to hire a consultant for the privatisation of 1,500 megawatts of the Hassyan power plant. Although it has received a couple of offers for the project, the offers were "too expensive". Dewa plans to have an advisory consultant over the next 15 to 18 months. Dewa expects its cap-acity to rise from 7,000 megawatts last year to 10,000 megawatts this year, Al Tayer said. Only 1,500 megawatts will be studied for privatisation.

Chu says nuclear plant loan guarantees will be issued ‘soon’

January 15, 2010. Energy Secretary Steven Chu said loan guarantees in the U.S. had sought to start approving in December for developers of four new nuclear power plants should be done soon. The Energy Department, empowered to dole out $18.5 billion in guarantees, has put Southern Co., Constellation Energy Group Inc., NRG Energy Inc. and Scana Corp. on a short list for approval. The U.S. is trying to boost the nuclear power industry after decades of stagnation. No new plants have been licensed in the U.S. since the 1979 accident at Three Mile Island in Pennsylvania. Southern, the biggest U.S. power producer, is positioned to win preliminary approval for a loan guarantee to build a nuclear plant, two people familiar with the process said last month.

Renewable Energy / Climate Change Trends

National

Leitner Shriram bags orders to supply 45 MW wind turbines

January 18, 2010. Leitner Shriram Manufacturing Ltd has received orders for installing 45 MW of wind turbines in Maharashtra and Tamil Nadu. Leitner Shriram is a joint venture between Shriram EPC Ltd, which holds 49 per cent, and Leitner Technologies of Europe (51 per cent), to manufacture wind turbines of 250 kW and 1.5 MW. The 1.5-MW turbines are gearless and run on Leitner's permanent magnet technology. The company will supply and commission 10 1.5-MW wind turbines for PPS Enviro Power in Tamil Nadu by mid-May. PPS Enviro is a Hyderabad-based company, which manufactures solar panels and sets up solar farms.

India being vindicated in Himalayan glacier issue

January 18, 2010. As the controversy over retreating Himalayan glaciers took a new turn, Environment Minister Jairam Ramesh said India stood vindicated with a UN body moving to retract its own "alarmist" warning that the glaciers would melt by 2035 due to climate change.

Ramesh slammed as 'alarmist' the warning by Rajendra Pachauri's Nobel-prize winning Inter-government Panel on Climate Change (IPCC) that the glaciers would vanish and said it was without any scientific basis. Pachauri, who is the IPCC Chairman, washed his hands of the controversy saying he has "absolutely no responsibility"

Pachauri too doubts if glaciers would vanish by 2035

January 18, 2010. Noted environment scientist R.K. Pachauri, who heads the United Nation panel for assessment of climate change said that Himalayan glaciers are indeed melting faster but whether these snow rivers would vanish by the year 2035 is questionable.

Penalty for non-compliance with renewables purchase obligation

January 18, 2010. Failure to comply with renewable purchase obligations (RPO) will attract ‘regulatory charges' (penalty) for entities in the renewable energy business. The nature of these charges will be laid down by the respective State Electricity Regulatory Commissions (SERC), according to Central Electricity Regulatory Commission (CERC) sources. CERC on notified regulation on Renewable Energy Certificate (REC) in fulfilment of its mandate to promote renewable sources of energy.

The framework of REC is expected to give a push to renewable energy capacity additions in the country. Elaborating on the ‘regulatory charges' concept, sources said, The regulatory charges will be levied based on the differential between the RPOs prescribed by the SERCs and the commitments met by the entity.

Union Budget 2010 should focus on environment: CII

January 18, 2010. Amid the global focus on climate change and initiatives required to save the world from the environment crisis, the Confederation of Indian Industry (CII) submitted specific recommendations for the Union Budget 2010 aimed at the very same issue. Considering the fact that installation of energy efficient technologies often involves signification costs along with the accelerated depreciation, which is provided currently, a tax credit should be provided equal to 150pc of expenditure incurred on cost and installation of energy saving technologies, CII said in its suggestion. For promoting installation of energy conservation or improvement technologies in the real estate sector, CII recommended a tax deduction to individuals for undertaking such investment in the house or property they are living in and also to builders who invest in these technologies while constructing green buildings.

Railways eyes more use for alternative energy

January 18, 2010. The Railway Ministry has asked its officials to consider the potential of accessing subsidy schemes and fiscal incentives offered under the wind power programme as well as the National Solar Mission for use of renewable energy in the sector. The Railways commissioned windmills at Kasturirangapuram and Urumangalam village, Tirunelveli, Tamil Nadu to generate 10.5 MW. The windmill farm was set up at a cost of Rs 660.5 mn. By drawing 16.3 million unit of energy over a seven-month period from the windmills commissioned in Tirunelveli for the Integral Coach Factory (ICF) at Perambur, Chennai, the Railways says it saved Rs 50 mn. The Railways has provided solar-based water heating systems of different capacities for some training institutes, running rooms and rest houses. It has completed electrification of more than 1,200 manned level crossings with solar-based lighting system.

Suzlon wins wind turbine order from Swedish firm

January 16, 2010. Wind turbine maker Suzlon Energy said its oversease arm won an order from Swedish wind power developer and consultant Triventus AB. The order consists of engineering, procurement and construction work for two 2.1 MW wind turbines, Suzlon said in a statement.

Municipal Corporation plans to sell bio gas

January 13, 2010. With the bio-methanisation plant in the city failing to generate power from the gas produced by using municipal solid waste, the Vijayawada Municipal Corporation (VMC) is exploring various other possibilities to put the plant into use. One of the ideas the Corporation is seriously pursuing is to sell the gas produced at the plant for cooking purposes as bio-gas. It has called for tenders from the firms that are into this particular business. The firm that bags the contract will have to store the gas in huge containers and sell it to corporate educational institutions that have hostels with a large number of students as well hospitals.

Global

Tasmania gets off lightly from climate change

January 19, 2010. The CSIRO says Tasmania's water resources won't be badly affected by climate change. The findings are part of a report looking at the availability of water for irrigated agriculture in Tasmania. It found most of the new irrigation schemes planned for the state would deliver a secure supply of water even under the worst predicted climate changes.

Climate change stance behind poll slide – Australian PM

January 19, 2010. Prime Minister Kevin Rudd says his climate change policy could be to blame for the hit he's taken in the polls. The first Newspoll of the new year shows Labor's primary vote support - at 40 per cent - has slumped to its lowest level since the 2007 election. Mr Rudd's approval rating also took a tumble, dropping six points to 52 per cent. Mr Rudd highlighted the Government's climate change policy when asked about the poor result. Labor's plans on climate change are in doubt after the Senate twice threw out the proposed emissions trading scheme, and the Copenhagen climate conference bombed.

Ocean energy could reach up to 200 GW

January 19, 2010. The world’s oceans represent a vast untapped resource for renewable energy generation, and a host of technology companies are emerging to pursue the great frontier of hydrokinetic power. According to a recent report from Pike Research, if ocean energy trial projects are successful in the next few years, this new industry could represent a significant new source of electricity, reaching up to 200 gigawatts (GW) of installed generation capacity by 2025. According to Pike Research’s scenario-based forecasting model for the ocean energy industry, technological success and the right regulatory environment could yield global power generation capacity of up to 200 GW by 2025. On the other hand, if early projects have limited success, are too costly, or do not enjoy a favorable public policy regime, the marine renewable sector could be relegated to niche status, reaching no more than 25 GW in global capacity by 2025.

UAE's hydrogen power, CCS project ready in 2014

Jan 18, 2010. A joint venture hydrogen power plant and a linked carbon capture and storage (CCS) project in the UAE should be completed in 2014 even though terms have yet to be agreed. The $2.2 billion Hydrogen Power project could be the world's first large-scale CCS project, in a race with a clutch of projects around the world. It is a joint venture between the United Arab Emirate's renewable energy initiative Masdar and oil major BP. The plant would split natural gas into hydrogen and the greenhouse gas carbon dioxide (CO2). The hydrogen would fire a 500 megawatt power plant, while the CO2 would be injected into oilfields. The plant itself would consume around 100 MW, leaving 400 MW to be sold into the UAE's power grid.

Biofuel crops, solar panels to cover 11 pc of Germany by 2020

January 18, 2010. Efforts to boost production of renewable energy in Germany means the amount of land used to generate power and heat from corn, solar panels and wind turbines will more than double by 2020. Almost 4 million hectares will be needed for growing biofuel crops and operating windmills and solar parks within 10 years, according to data provided by Germany’s renewable energy agency. That compares with 1.77 million hectares used for renewable energy now in a country of 35.7 million hectares. Germany may be able to generate about half of its electricity using renewable sources at the end of the decade, the industry estimates.

Iran plans new renewable energy plants: Minister

January 17, 2010. OPEC member Iran plans to develop new renewable energy power plants over the next five years with capacity totaling 2,000 megawatts (MW) to meet energy demand, its deputy minister for electricity said. Abbas Aliabadi said Iran already has 8500 MW hydro power plants in operation and has installed 130 MW of wind turbines. The private sector has already signed contracts to install wind turbines as well as biomass systems with capacity of 600 MW and the ministry of energy is implementing 500 MW wind converters in the country, he said without naming any company.

EU nations spar over climate policy after UN summit deadlock

January 17, 2010. European nations are struggling to hold a common line on climate policy after last month’s failed United Nations summit in Copenhagen, with the U.K., Germany and France defending deeper emission cuts in the face of Italian and Polish resistance. Differences between the European Union countries are emerging after the UN failed to set binding worldwide targets to curb the air pollution blamed for climate change.

Soros says U.S. needs carbon cap to unlock clean-energy finance

January 15, 2010. A U.S. law to curb carbon emissions would spur billions of dollars of spending on green-energy projects in developing countries, billionaire George Soros said. Without a cap on carbon dioxide emissions that puts a penalty on pollution, low-carbon investments won’t be profitable, Soros, founder of $25 billion hedge-fund firm Soros Fund Management LLC, said.

Texas wind plans advance despite Pickens retreat

January 15, 2010. A move by billionaire oil tycoon T. Boone Pickens to cut his order for wind turbines and to postpone construction of a huge wind farm in Texas isn't a sign that the appetite for wind electricity in the state has diminished, a wind advocate said. Wind accounted for 6 percent of the electricity produced last year, according to the Electric Reliability Council of Texas (ERCOT), up from 4.6 percent in 2008 and well above an estimated 2 percent nationwide.

Antarctic wind farm reduces bases' reliance on diesel

January 15, 2010. The world's southernmost wind farm has been opened in Antarctica, the first in what could be a number of renewable energy projects aimed to lower the frozen continent's reliance on diesel for power.

The construction of the three-turbine Ross Island wind farm was a huge challenge in an environment where the temperature can fall as low as -57 degrees Celsius. The wind farm will supply about 11 percent of the power to New Zealand's Scott Base and the American McMurdo Station, and will cut diesel consumption by about 463,000 liters per year.

German tariff cuts to spark solar sector bloodbath

January 15, 2010. A potential deep cut in feed-in tariffs in Germany will hit solar companies around the world and increases pressure on large players to reduce exposure to the world's largest photovoltaic market. Analysts say that lower prices could result in a shakeout in the industry that drives higher cost players out of business and dissuades new entrants. German government plans to chop feed-in tariffs -- prices utilities pay generators of renewable energy -- as early as April, much more deeply and sooner than the market expected.

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