MonitorsPublished on Mar 23, 2005
Energy News Monitor I Volume I, Issue 40-41
Solar Success in Sagar Island


Status of ethanol blending in India


Bio-fuel to be grown on wasteland



Tata BP Solar to focus on private sector



Tamil Nadu tops in wind energy



Newsletter on renewable energy released



Gujarat Fluorochemicals gets CDM registration



Okhla plant to be used for power supply



Tata Motors, IOC join informally for bio-diesel pilot project






Green energy seen as $100 billion market in decade



Brazil opens first bio-diesel refinery



LIPA installed first fuel cell & solar power system



Wind-power firm gets Spanish bid



AEP, GE sign letter of intent on clean-coal plant



Renewable energy to reduce oil imports in Pakistan



Wind power to boost supplies in Guangdong



GM in fuel cell deal with U.S. Energy Dept



Cost estimate of the gas pipeline

Capital Cost




Compressor / IP station


Construction – pipeline




Design, engg. & super


Owner’s management expenses


Star-up and commissioning


Contingency @ 10%






Yearwise Nuclear Energy Generation in India


Generation (in MU)





















                                          Sources: NPCIL – Annual Report 2003-2004

Solar Success in Sagar Island


Sagar Island is the largest island in the Sundarbans, in the southwestern corner of Gangs Delta, in India. The West Bengal Renewable Energy Development Agency (WBREDA) has been working on Sagar Island since 1996 to address the problem of energy supply. Since then it has the set up of small solar PV Power Plants, on Sagar Island and its neighbour Maushuni Island. WBREDA with the assistance from Ministry of Non-Conventional Energy sources MNES, Govt. of India installed two Power Plants in Sagar island. One with 26 kwp capacity solar power plant was installed in Kamalpur village in Sagar Island in Sunderban. The second 26 kwp solar power plant was installed at Mrityunjaynagar village on Sagar Island. Moushuni, another large island in Sunderban has the country’s largest stand alone type SPV power plant with installed capacity of 55 kwp commissioned in April, 2001. Already about 250 different categories of consumers are being served with this power plant. In the near future this benefit will be extended to another 200 families. This power plant was set up in a record time of 4 months. The Ministry has sanctioned another project for setting up a 100 kwp Power Plant at Baliara village on another part of the same island. With the commissioning of this power plant another 700 families will benefit directly.  The SPV power plants in Sagar Island and Moushuni Island are being run on commercial mode through the local co-operatives formed by the beneficiaries themselves under the aegis of WBREDA, catering to both commercial and domestic needs for 5-6 hours daily in the evening. For obtaining the connection from the power plant, the beneficiary, at present, is required to pay Rs 1000/- connection charge. Further monthly tariffs ranging from Rs 130/- to Rs 1300/- are levied, depending upon the connection loads, which are in the range of 100 to 1000 watts. The distinguishing feature of SPV Power Plant in both these islands is the integration of power and water supply systems in these projects. The power plants have been so designed to drive to low cost conventional water pumps of average 3 HP capacity with an intelligent controller during the day time to provide drinking water without any extra cost, except installation of some additional SPV modules. Around 700 families are getting the twin benefits of such integrated power and water supply at present in the Twin Island of Sagar and Moushini Island. This novel and unique venture has opened up a new way and provides more opportunities for catering to the two basic needs of electricity & water together.  The project is funded by a combination of grants loans & revenues.


Manish Vaid

Research Assistant - ORF

Dollar Devaluation & the World Oil Market

Oil prices have gone up while the value of the dollar has gone down against most currencies in the past one year.  What is surprising is not the direction of these movements[1] but the period over which such movements have been sustained.  

Consequences of the movement of crude price and the value of the dollar in opposite directions are far from straightforward.  Oil producers receive their oil revenues in dollars but they have to use other currencies to pay for goods and services that they import.  Multinational oil companies sell their crude in dollars but they have to use different currencies to operate in different countries.  When the dollar is devalued consumers in countries with appreciating currencies get their oil cheap while consumers in countries with dollar pegged currencies pay more for their oil.  On the other hand, the US, a major producer and consumer of oil is protected from currency risk on crude prices. 

Though the dominance of the dollar started more than 60 years ago, its strength has grown more recently with the economic dominance of the US. Oil importing countries such as India have to sell their goods to earn dollars with which they can buy oil.  If India cannot earn enough dollars it has to borrow dollars from the World Bank or IMF which have to be paid back with interest in dollars.  This creates a great demand for dollars outside the US.  In contrast the US has to only print dollars in exchange for goods it imports.  Even for its own oil imports the US can print dollars (called ‘fiat’ dollars) without exporting goods.  This allows the US to act as the world’s central bank, printing currency acceptable everywhere.  In other words the dollar has become an oil-backed as opposed to gold-backed currency.  This is partly the reason why the current account deficit (value of goods and services imported from other countries above what it exports to these countries) of the US has increased to $ 500 billion in 2004.  Oil importing developing countries invest in their hard earned dollars in US Banks or US Treasury bonds.  Today foreigners hold 48 per cent of the US Treasury bond market and own 28 per cent of the US corporate bond market and 20 per cent of all US corporations.  In total foreigners hold $ 8 trillion of US assets.  The foreign deposited dollars strengthen the dollar sustaining its dominance. More than 80 per cent of all foreign exchange transactions and 50 per cent of world exports are denominated in dollars.  More than 65 per cent of all official exchange reserves are in dollars.  Dominance of the dollar in world trade ensures that most reserves are in dollars even though the share of US output is much lower. 

Impact on supply of oil 

A weak dollar decreases the purchasing power of oil exporting countries vis-à-vis other countries.  For example a weak dollar relative to the Indian Rupee makes the terms of trade worse for those oil exporting countries which are trading partners of India.  Countries that import more from the US lose less than countries that import most goods from Europe and Japan.  Oil exporting countries such as Venezuela that are geographically closer to the US and therefore trade more with the US lose less than countries like Indonesia which are far away from the US. OPEC producers generally look for a stable store of value for their oil revenues but this issue is more complex than it appears. The impact of dollar devaluation on OPEC countries is not uniform as each of the OPEC member countries has different trading partners. OPEC countries that trade mainly with Asia or North America are more immune to these movements than are OPEC countries that trade mostly with Europe.  While OPEC countries that have no dollar assets are interested in a move away from the dollar, countries with large assets in dollars have little interest in changing the current system.

Dollar devaluation also increases inflation in oil producing countries.  Studies have shown that out of 18 oil producing countries, 14 were subject to inflation on account of dollar depreciation. The countries that did not show dollar depreciation related inflation had diversified economies and had not pegged their currencies to the dollar. Increase in inflation and decrease in purchasing power reduce real income for the producing country and in turn reduce the amount of funds available for investing in increasing oil production.  A substantial hike in oil prices however could lead to increased oil production despite dollar devaluation. As for oil producing companies it has been established that drilling activity of companies is highly correlated with oil prices.  Generally as oil price increases rig count increases but there are significant regional differences owing to exchange rates, political and economic factors.  Oil price in US dollars is positively correlated with rig count in North America, Latin America and the Middle East (where most currencies are pegged to the dollar).  Rig count in Europe is negatively correlated with oil price denominated in US dollars and positively correlated with oil price denominated in euros.  Generally dollar depreciation reduces activities in upstream through different channels including increased cost, higher inflation rates, lower purchasing power and lower return on investment.  Dollar depreciation reduces the supply of oil and increases the demand for oil.  Therefore oil prices stay higher for a longer period than expected. 

The devaluation of the dollar has been contemplated upon by oil producing countries and companies.  Since the early 1970s they have colluded to manage the risk in dollar dominated oil market.  In the early 70s when the dollar was weak against major currencies multinational companies agreed to adjust the price of oil to counter the weakness of the dollar against a basket of currencies.  The first currency basket agreed upon was the Geneva I Basket which consisted of nine currencies.  In 1973 OPEC negotiated with the oil companies to amend the Geneva I agreement in a manner to offset the US dollar depreciation.  They agreed to use the arithmetical average of currencies of 11 countries against the exchange of the dollar for oil price adjustment.  This was called the Geneva II accord.  A shift away from the dollar has also been discussed by OPEC but that is not a decision that OPEC countries can take unilaterally.  Oil price is calculated on the basis of formulae derived from marker crudes like Brent, WTI or Dubai, all of which are denominated in dollars in international oil markets.  All trade and hedging in the oil market is carried out in dollars.  OPEC has no control over the price of these marker crudes. 

Impact on oil demand

The dollar’s depreciation against the euro insulates Europe from rising international oil prices preventing a significant increase of inflation.  As a result economic growth in the EU may accelerate allowing economic growth in the US and EU regions to converge for the first time in many years. Dollar devaluation makes oil relatively cheap in countries with non-dollar appreciating currencies such as the euro and yen.  Heavy taxation of petroleum products in Europe insulates consumers from the effect of crude oil price fluctuations and price increases.  On the other hand, oil importing developing countries such as India are vulnerable to high oil prices as their currencies are either pegged to the US dollar or their exchange rates ‘managed’ to prevent appreciation of their currencies against the dollar. The impact of high dollar prices for oil on developing countries is generally more severe than for OECD countries as their economies are more energy intensive in addition to being inefficient in energy use.  According to the IEA, on average oil-importing developing countries use more than twice as much oil to produce a unit of economic output as do OECD countries.  India for example used more than two and a half times as much oil as developed countries per unit of GDP. Developing countries are also less able to manage high import costs of oil.  For example, India spent $ 15 billion equivalent to 3 per cent of its GDP on oil imports in 2003 which was 16 per cent higher than that in 2001.  Developing countries whose economies are highly dependent on oil also suffer loss of GDP following sustained increase of oil prices.  It is estimated that the loss of GDP averages 0.8 per cent in Asia following a sustained $ 10 oil price increase.  India would lose 1 per cent of its GDP following a sustained increase in oil price. Oil importing developing countries would also see deterioration in their aggregate current account balance and also experience large increases in inflation.  Though India subsidises energy prices which contains inflation to some extent at least in the short term but the impact is passed on re-appearing as fiscal deficit in the national budget or as huge losses in oil company balance sheets both of which have serious long term economic consequences.  

While producers and consumers may differ on the right price for oil, both would definitely be in agreement on the question of minimizing price and currency volatility.   Consuming countries may prefer to pay in their own currencies in which case currency risk may be shared between both parties through currency clauses in sales contracts.  Hedging tools may also be used the cost of which is shared by the buyer and the seller.  As for OPEC, the choice of currency used for pricing oil largely depends on the nature of imports of OPEC members.  Venezuela has a major share of its imports from the United Sates at an average of 42.3 per cent (1981-2002) while all the other OPEC members import a major share of goods and services from the European Union.  For OPEC as a whole 37 per cent of the imports originate from the EU and only about 14 per cent from the US.  This mismatch in trade directions exposes OPEC to currency risk, which leads to wealth disruptions by way of currency exposure.  Studies show that OPEC losses due to  currency exposure can be minimised by pricing in euro because oil exports to the EU is 1.8 per cent in excess of exports to the US and goods imported from the EU is 23.6 per cent in excess of imports originating from the US.  Studies also show that other things held constant, the average currency exposure could have been reduced by 17.7 percent if oil were priced in euros between 1986 and 2002.  While a sudden shift away from dollar pricing of crude oil is extremely unlikely, a gradual move away from the dollar cannot be ruled out in the long term. Until very recently inadequate liquidity limited choice of available currencies for pricing of oil.  The emergence of the euro has changed that and if oil could be sold in other currencies such as the euro the dominance of the dollar will be challenged.  More oil importing countries would acquire the euro as their reserve and its value would increase and more trade would be transacted in euros.  If that happens estimates say that the value of the dollar would fall by 20-40 per cent. 

Team Energy ORF [email protected]

Some light at the end of the tunnel:

Ingredients of Power Sector Reforms in India – VI


(Continue from Issue no. 39)

N K Singh & Jessica S Wallack

7. Conclusions: Light at the End of the Tunnel

Electricity sector reforms in India are an ongoing process. The state-level reforms catalyzed by the financial incentives provided by the APDRP and the commitments set out in the state-central government Memorandum of Agreements are yet to be completed. Restructuring of SEBs is underway across the country, and most states have constituted independent regulatory commissions, but these are recent innovations and are still evolving. EA 2003 sets out a long-term path for creating a competitive market structure, most aspects of which are still evolving.

Tariff guidelines, competitive bidding rules, and other crucial aspects of the institutional and legal infrastructure for competitive power markets are subject to debates between the central and state governments as well as central and state regulators. Discussions of phasing out surcharges are generally contentious, on technical and political grounds. The process of formulating the National Electricity Policy and other rules has been inclusive for the most part: commissions, task forces, regulators, and other have provided ample opportunities for stakeholders to comment. Such a consensus-based process takes time. Technical aspects of implementing EA 2003 also take time.

The act mandates universal metering, but actually installing and maintaining the hardware will be a long process, as will implementation of energy audits and other mechanisms for managing power distribution. The government of the electricity sector, in particular, is evolving. The Central Electricity Regulatory Commission (CERC) and the central government, especially the Ministry of Power and the CEA, have yet to fine-tune their jurisdictions. Some state governments are still forming State Electricity Regulatory Commissions, while others have formalized SERCs but have little experience in the role of independent regulator. This paper emphasizes few of the many unsettled questions regarding the trajectory of reforms in the energy sector: How can India ensure adequate finances for very large investment in generation, transmission and distribution to improve growing power shortages? Also how can it make sure the terms of such finances would make power available at reasonable costs? The TF report suggests several fiscal and financial incentives, but these are still up for debate and new options are still welcome. What are the best tariff regulations for the transition toward competitive markets? India has moved from single-part to two-part to Availability Based Tariffs over the past decade and a half. Competitive bidding will ideally be the next step, but any steps that can be taken to ensure this outcome would be helpful.

What is the best way of accelerate open access, one of the keys to competition as well as to harnessing the generating capacity of captive power? Balancing and settlement mechanisms, coordination of system operation, and other matters are yet to be worked out. Accelerating the completion of National Power Grid System and creating conditions for private investment in transmission and multiple load dispatch centers is a clear first priority, but the next steps of market design are less obvious. There are numerous other open questions that were beyond the scope of this paper, but nevertheless, should be considered in some way.

For example, what can India do to balance environmental soundness with the need to keep costs down in the short term?[2] This is no small economic issue in the long term, given the inevitability of rising oil costs as well as the costs of environmental damage due to coal use. Second, what can the country do to reduce full costs? Coal sector reform is an obvious answer, since coal supplies roughly 35% of the country’s total primary energy needs and is artificially expensive due to import duties and inefficient coal mining and transport within India. What else can the country do to encourage an optimal mix of fuels?

Third, how should reforms is sequenced to take advantage of complementarities? India must take care at this point to ensure that reforms continue to move forward as these and other questions are explored. Steps should be taken to prevent sudden policy reversals by state governments, particularly in politically sensitive areas such as application of user charges and arrangements for subsidies. Last but not the least, political and institutional mechanisms for sustaining political consensus must be considered. Forming a Standing Committee of Chief Ministers, or perhaps a Cabinet Committee under the Prime Minister to ensure progress in these critical areas, are a few options.


1.     Dubash, Navroz, and Sudhir Rajan (2001). “Power Politics: The Process of Power Sector Reform in India,” Economic and Political Weekly September 1, 2001.

2.     Godbole, Madhav (2003). “Electricity Act 2003: Questionable Wisdom,” Economic and Political Weekly September 27, 2003.

3.     Haldea, Gajendra (2004). “Introducing Competition in Generation of Electricity,” presentation to CERC, May 7, 2004.

4.     Hunt, Sally (2003). “Competitive Power Markets? A Viewpoint on the Practical Way Forward for Emerging and Transitional Economies,” World Bank Energy Lecture Series, January, 2003.

5.     Koop, Jennifer (2003). “India Trip Paper: Overview of the Indian Power Sector,” MIT-Sloan School.

6.     Ministry of Energy, Government of India (1990). “Report of the Committee on Fixation of Tariffs for Central Sector Power Stations,” New Delhi, June 1990.

7.     Ministry of Power, Government of India (2002a). Report of the Committee on Financing of Power Sector during X & XII Plan (chaired by Dr. Udesh Kohli).

8.     Ministry of Power, Government of India (2003). Annual Report 2002-2003. New Delhi, India, February 2003.

9.     Planning Commission, Government of India (2000). Annual Report on the Working of State Electricity Boards and Electricity Departments. New Delhi: April 2000.

10.   Tongia, Rahul (2003). “The Political Economy of Indian Power Sector Reforms” Program on Energy and Sustainable Development Working Paper 4, December 2003.


Task Force on Power Sector Investments and Reforms

Terms of Reference

·          To analyze the existing investment climate in the power sector and suggest measures for promoting and facilitating private investments, both domestic and foreign, in all segments of the power industry;

·          To suggest an enabling fiscal regime for securing some investments;

·          To consider ways for augmenting resources for meeting the investment needs of the sector with the objective of providing “Power for all by 2012”;

·          To suggest measures for the speedy implementation of Accelerated Power Development and Reforms Programme (APDRP), Pradhan Mantri Gramodaya Yojana (PMGY), Minimum Needs Programme (MNP), Accelerated Rural Electrification Programme (AREP), and the Accelerated Generation & Supply Programme (AG&SP). To suggest roadmap for effective functioning of State Electricity Utilities, including reduction in the cost of delivered power, in the context of Electricity Act, 2003;

·          To recommend Electricity Tariff Policy;

·          To evolve and recommend National Electricity Policy.

The report was written by a select group of experts, after hearing arguments of stakeholders such as banks, financial institutions, regional and state electricity providers and regulators, and consumer organizations. The Task Force deliberated on these presentations as well as the written statements given by federal, regional, and state policymakers. The Task Force also took the findings and recommendations of previous commissions into account.


Market Design: Summary



Mostly public, private participation encouraged since 1991 and participation increasing. No current restrictions on concentration of private ownership. The private sector only accounts for about 10% of the total capacity of 107,000 MW as of 2002-3.

Conditions of supply & pricing:

Current: Rate of return regulation, two-part tariff for fixed and variable costs, based on interest allowance, O&M (subject to operating norms), depreciation, taxation, interest on working capital. Rate of return no longer guaranteed (Fewer pass throughs, normative levels instead of actual used for pricing). Power purchased via Purchase Power Agreements. Also Availability Based Tariff (ABT) in market for balancing services in inter-state transmissions.

Future: Reduction of lengths of PPA, blocks of power sold in power market. Encouragement of power trading, development of competitive market for trading. Tariffs based on transparent bidding according to central government guidelines TBD. Separate ABT pricing for balancing services for all transmissions. Power also to be bought from “captive generators” under contracts for blocks of power.

Conditions for hedging TBD

Capacity expansion:

Shared responsibility of central and state government to plan, private sector bids on & builds project.







Nearly all public. Private participation in maintenance since 1998, private ownership allowed in EA 2003. The Central government-owned Power Grid Corporation of India Limited (PGCIL) provides the bulk of inter-regional connectivity, with state transmission utilities providing much of the rest of the infrastructure. Private participation is beginning, however: the Central Electricity regulatory Commission (CERC) issued a transmission license to Tala Delhi Transmission Commission Ltd., a JV Company between POWERGRID (49%) and Tata Power (51%) in October 2003.


Open access (EA 2003); also allowable to build parallel/alternate transmission networks if costs of existing facilities objectionable. EA 2003 stipulates 5 year transition, transition TBD.

System Operation:

Regional Load Dispatch Centers under review.

Pricing of services:

MYT tariff for long-term contracts, access prices based on competitive bidding for short-term contracts, with floor at previous year’s average cost per unit per day. Zonal stamp proposed for inter-state transmission. (Previously separate charges for state, inter-state, inter-region, leading to pancaking) Charges for transmission loss based on average losses in national transmission system. Transmission networks likely to remain heavily subsidized until distribution sector surcharges are rationalized.

Process for capacity expansion:

Central government prepares reference document for private and public sector investment.


Distribution and retail currently bundled together. Distributor responsible for metering, biling, enforcement, as well as building network access structures.

Ownership & Control:

Public, most generation by State Electricity Boards. A few areas such as Delhi and Bombay are private. Private participation encouraged by EA 2003. Spillover from captive power to designate areas becoming more common. Interest in privatization rising since EA 2003. Terms of privatization include schedules for reducing distribution losses in time-bound programme.


State Electricity Regulatory Commissions 9SERCs) following broad guidelines issued by Central ERC.


Currently rate of return, with variation across state in accounting norms, little metering in agriculture, nearly 100% metering other consumers (though theft/losses led to understand actual consumption), and heavy cross-subsidization from industrial to agricultural users. Move toward MYT, operating performance parameters TBD. “Uncontrollable” costs – fuel price, change in unit price of power, inflation can be passed through, “controllable” costs such as employee costs, repair & maintenance, cannot be passed through to consumers. As in generation, based on normative parameters rather than actual. Subsidies to be based on cost-of-service. Universal metering a goal.  



Crude Facts

  • India is the fourth biggest petroleum consuming country in Asia.
  • China is the second largest oil consumer in the world.
  • Norway is the world’s third largest oil exporter after Saudi Arabia and Russia.
  • Venezuela is the world’s fifth largest oil exporter.


Caspian Basin & Central Asia - Outlook for Russia


Igor Tomberg, Ph.D. (Econ)

Research Associate,

Centre for Foreign Economic Studies, Institute of International Economic and Political Studies, Russian Academy of Sciences, for RIA Novosti


The Caspian region today is a zone of the interests of various countries - the U.S., Russia, China, Japan and India, for it is a promising oil and gas province with resources exceeding those of the North Sea. Under the bottom of the Caspian Sea, which is the largest lake in the world, there is 4 per cent of the world gas and oil reserves. U.S. experts estimate the recoverable oil resources there at 2.4-4.6 billion tons.  


Most of the major oil companies, Chevron Texaco, ExxonMobil, British Petroleum and Halliburton among them, have invested impressive sums in that region. Over the past five years the U.S. investments in Central Asia and the Caspian region have increased from "insignificant sums" to $30 billion.   The reverse side of such investment is counteraction to laying a pipeline from Kazakhstan to China. There are fears in Washington that a considerable part of Caspian oil will run along Asian routes to China and India, which are greatly increasing the consumption of energy resources, becoming U.S. rivals (at least in oil consumption).


In Kazakhstan it is believed that the talks on building an oil pipeline to China are dragged out because of the opposition by the U.S., which does not want an alternative to the Baku-Ceyhan route.   The EU policy in regard to that region was shaped also under the influence of the new geopolitical situation after the break-up of the USSR.   Europe's real interest, not politically motivated (like in the U.S.), in the energy resources of Central Asia and the Caspian Basin complicates the shaping of a clear-cut European policy in that area. Most likely Europe will focus on solving geopolitical problems by economic methods. Probably Europeans will be revising their policy in regard to Russia, making it tougher in the context of their own interests in Central Asia and the Caucasus.  


At the same time, increased state regulation in the Russian fuel and energy sector, for all its minuses, will have a positive effect for strengthening Russia's energy positions abroad. And then Europe will have to adapt itself to Russia's interests and plans (which, however, are yet to be finally formulated).   China's interests in the Caspian region are quite understandable and predictable. The main threat to the country's remarkable development rate is the shortage of raw materials, primarily energy bearing resources, a problem that was spotlighted at the latest congress of the Communist Party of China. According to forecasts made by leading world experts, by 2010 China will import up to 120 mln tons of oil annually - twice as much as in 2002. By that time the Central Asian countries plan to increase oil production in the Caspian region. Meanwhile, the Persian Gulf zone, whence China imports most of its oil, is becoming increasingly unstable.   Nowadays China has been strengthening its positions in the region.


The economic successes it has achieved over the past years allow it to back up its political interests by convincing economic and financial arguments. In this situation Russia's position appears to be somewhat ambiguous. On the one hand, Beijing is a Moscow's strategic partner, and on the other, it is a successful rival in the zone of its direct geopolitical and economic interests.   For the time being, maximum of what is possible is LUKoil's presence in Azerbaijan, Kazakhstan and Uzbekistan.


LUKoil controls such big amounts of geological assets in the Caspian Sea that it has formed a kind of a "corporate shelf" extending to the water zones of a few countries. In fact, a sixth player has emerged among the five Caspian states, and its recoverable resources of hydrocarbons exceed, for instance, the Caspian resources of Iran. The company has estimated that the total amount of its recoverable resources in the Russian sector of the Caspian is 4.5 billion tons in oil equivalent (32.9 bln barrels).


To compare: the present amount of LUKoil's resources, as of April this year, was 2.75 billion tons in oil equivalent (20.1 bln barrels).   A significant part of the USSR's oil and gas legacy - the network of main gas pipelines - has been preserved. The bulk of hydrocarbon raw materials from the region reach the foreign market through Russian pipelines, though there have appeared a number of new oil and gas transportation projects, which are in varying degrees of preparedness.   After several months of cooperation with the new antiterrorist alliance in Central Asia, President of Russia Vladimir Putin announced a reappraisal of the U.S. large-scale military presence at the southwestern borders of his country.


Russia, he said, needs its own Central Asian alliance. The Russian president had in mind not military cooperation but cooperation in the sphere of energy - the vast resources of natural gas in that part of the world. He called on Kazakhstan, Uzbekistan and Turkmenistan that are rich in energy resources to agree to Russia's control over "the amount and direction of gas export from Central Asia" and made it quite clear that from now on the gas issue is a priority at the highest state level.   As oil prices have been rising at a record-high pace of late, energy security has become a key issue of all significant international meetings and contacts. For instance, gas consumption in the U.S., according to the Department of Energy, will grow by 40 per cent by 2025. So, U.S. dependence on this kind of fuel is growing. These circumstances may change the general tone of the U.S. political dialogue with Russia, which boasts the world's largest gas resources.  


For the time being the Gas Exporting Countries Forum (GECF) does not correspond much to the OPEC configuration. Some experts believe, however, that precisely Russia will determine gas prices on a future integrated market.  Combining the efforts of Russia, Kazakhstan, Turkmenistan and Uzbekistan, which own immense gas resources, is an objective condition for creating a large regional gas alliance. Available sales markets, like India, Pakistan, China and some other countries, make this idea even more attractive. 


Moreover, it has been forecasted that gas will account for up to 70 per cent among the sources of generating electricity. The only problem is that the demand for gas, and the very emergence of the gas market, depends on an increase in the share of liquefied natural gas supplies. Though gas processing is expensive today, the future belongs to LNG. Having paid the price now (by launching a large-scale construction of gas processing plants), the Russian energy companies will be able to dictate the prices on the world market.  


Though Russia has become notably more active in the Central Asian and Caspian region, the present efforts are clearly not enough to counterbalance the increase of U.S. influence there. The problem is that the leaders of the countries in the region do not go beyond the limits of the problems imposed on them by the Americans - development of democracy and human rights protection in the independent countries of Central Asia, combating terrorism, and so on - the problems traditionally used by Washington as an instrument of pursuing U.S. interests.  


The situation could be changed by going over to solving the really important problem of the raising living standard, which is far more vital in Central Asia than democracy and human rights. The living standards in the region could be raised though effecting large-scale economic projects by major corporations, above all in the sphere of oil and gas production and transportation.


(Courtesy RIA Novosti)


Gazprom - Rosneft Merger Will Not Stifle Competition in Russia


Jana YUROVA (RIA Novosti political commentator)


Gazprom and Rosneft will have merged into one single whole by early summer. This deal is supervised by Russia's Economic Development and Trade Ministry, Industry and Energy Ministry and the Russian property-management agency. These three departments have, at long last, come to terms on this issue, hammering out asset-consolidation plans with senior corporate managers. Specific details are not disclosed. Nonetheless, off-the-record reports have it that the concerned parties prefer the initial merger concept that was suggested last fall by Gazprom chief executive officer Alexei Miller.   Many Russian experts are inclined to think that this heralds the incipient liberalization of the Gazprom stock market, as well as a gas-sector reform. However, Russian authorities do not perceive this as their main task.   It is an open secret that the state now owns 38.37 percent of Gazprom shares. In the long run, the corporate merger will provide the state with controlling interest, i.e. a 50-percent stake (plus one share). With this in mind, 100 percent of the Rosneft state-run company's shares (minus Yuganskneftegaz) will become part and parcel of the Rosneftegaz state-run enterprise's authorized capital. Rosneftegaz which has been established especially for this merger will exchange them for 10.7 percent of Gazprom shares being controlled by its subsidiaries. In other words, the Rosneft company's gas-production assets will merge with similar regional Gazprom assets. Meanwhile Gazprom's oil-production units will merge with those of Rosneft.   The former main Yukos production unit (namely, Yuganskneftegaz) was surrounded by bureaucratic intrigue for quite a while. According to Alexei Miller, this enterprise will not be included in the merger, becoming an independent state-run entity instead. There are plans to establish a vertically-integrated oil company on the basis of Yuganskneftegaz. However, this seems to be a long-term prospect.   The evaluation of Gazprom and Rosneft is the most topical issue at this stage. As is known, the Rosneft public company owes about $20 billion. This sum total includes a $9.3-billion loan that was used to purchase Yuganskneftegaz.   This tremendous debt should be reduced, no matter what, because even a 100-percent Rosneft stake would otherwise cost less than 10.7 percent of Gazprom shares. Consequently, officials started discussing the need for debt-restructuring plans. At first, it was suggested that Yuganskneftegaz assume responsibility for Rosneft debts. In other words, the "troublemaker" itself was supposed to solve this problem. Well, this is hardly surprising. Rosneft faces $5 billion in federal tax claims (as regards Yuganskneftegaz), as well as lawsuits by a Western-bank consortium. That consortium demands that Rosneft pay back a $540-million loan that was received by YUKOS, with Yuganskneftegaz acting as security.   Rosneft will also have to repay yet another $900 million (that were received by Yukos from MENATEP shareholders), using Yuganskneftegaz as security.   However, it seems that the former Yukos subsidiary has some powerful defenders. This company will no longer have to repay these debts. They are now looking for a "culprit" that will foot the bill. It seems that Yukos and MENATEP (that owns its shares) will have to do this, all the more so as Russian, Israeli and Spanish courts are voicing tax charges and other substantial claims to their senior managers.   Yuganskneftegaz has reportedly filed a lawsuit with Moscow's court of arbitration, requesting that Yukos managers pay $11.1 billion. This sum total includes Yuganskneftegaz's federal-budget debts, as well as damages for the use of transfer-price concepts by former corporate owners. Moreover, Yuganskneftegaz would open a bankruptcy case against its former mother company, if it wins this lawsuit, deputy Yukos board chairman Alexander Temerko noted. Yuganskneftegaz would become the main Yukos creditor, eventually claiming the right to acquire its assets, if the latter goes broke.   The Gazprom - Rosneft merger now highlights yet another tiresome intrigue. Why are they doing all this? This move should liberalize the Gazprom stock market, Deputy Economic Development and Trade Minister Andrei Sharonov noted. This is highly important for the company's value, for improving Gazprom-management quality and for profiting the entire Russian stock market.   Many experts believed this theory. Indeed, the state must acquire controlling Gazprom interest for the sake of liberalization. This is only a mandatory pre-condition. Meanwhile subsequent federal steps are the most important aspect.   The thing is that liberalization calls for abolishing the 20-percent stock-ownership quota as regards foreigners. Not a single official has so far said anything about specific deadlines. Speaking of an all-out sectoral reform, it would be only too logical for Gazprom to provide independent producers with non-discriminatory access to the gas-transport infrastructure, i.e. pipelines. But Russian authorities are in no mood to implement such revolutionary plans. Moreover, presidential aide Igor Shuvalov said unequivocally the other day that any all-out Gazprom reform would not take place.   In short, the projected merger does not have economic implications alone. Looks like, the creation of a major oil-and-gas concern is politically motivated. Russia continues to liberalize domestic markets at a breath-taking pace on the eve of its admission into the World Trade Organization (WTO). This is fraught with initial price hikes and other problems, too.

(Courtesy RIA Novosti)





ONGC consortium sings agreement with Sudan

March 29, 2005. Sudan has signed a $400 million deal to develop its southern Thar Jath oil fields to an initial capacity of 80,000 b/d by the end of March 2006. The deal was signed with the Sudanese White Nile Petroleum company — a consortium of Malaysian state oil firm Petronas, which owns 68 per cent, ONGC, which has a 24 per cent stake and Sudan’s state oil company Sudapet with 7 per cent. The remaining 1 per cent is divided between the three companies. The reserves of the Thar Jath oil fields, in Block 5A in the southern Unity state, were estimated at a minimum of 250 million barrels.

Reliance to buy Hardy Oil's stakes in 8 blocks

March 27, 2005. Reliance will take over 10 per cent stake of Hardy Exploration and Production (India) Inc (HEPI) in the eight oil and gas exploration blocks the two firms had won together two years ago. The takeover by Reliance would allow HEPI to exit from the eight blocks that were awarded under the third round of the new exploration licensing policy (NELP). Reliance currently holds 90 per cent stake in them.

ExxonMobil keen on stake in KG basin

March 25, 2005. Exxon Mobil Corp, the world's largest publicly traded oil company, is keen on acquiring a stake in Reliance Industries' D6 Block in Krishna Godavari basin in Bay of Bengal where 14 trillion cubic feet of gas reserves have been discovered till date. ExxonMobil, the world's largest and most profitable private producer of oil and gas with operations spanning 40 countries, has held preliminary talks with senior Reliance officials on taking 50 per cent stake and operatorship of KG-DWN-98/3 (KG-D6) block. RIL is also on the lookout for deepsea gas exploitation technology and considering bringing in an experienced global upstream major for the purpose. Reliance is racing against time to begin natural gas production from the field by 2007-08 fiscal, the time it has given for beginning supplies to its first and most important customer National Thermal Power Corp.

OIL acquires field in Libya

March 23, 2005. Oil India Limited has acquired its first overseas oil field in Libya outbidding global giants like Occidental, CNPC and Petrocanda among others. The oil major is all set to explore in Libya and an MoU to this effect was signed in Tripoli.

Cairn increases Rajasthan’s reserve estimates

March 24, 2005. Cairn Energy of the U.K. increased its estimates of oil at a new field in Rajasthan. Oil was found at two new appraisal wells at the N-V field leading to upgradation of reserves to 250 to 350 million barrels, up from earlier estimates of 80 to 220 million barrels.

OVL to invest up to Rs 3 billion abroad

March 24, 2005. The Government has allowed ONGC Videsh Ltd (OVL), to make investments of up to Rs 300 crore (Rs 3 billion) in oil and gas properties abroad without approaching the Union Cabinet for approval. Prior to this, the OVL board was empowered to take investment decisions of up to Rs 200 crore (Rs 2 billion). The enhancement of OVL's powers shall enable the board to take fast decisions to acquire medium-sized projects and ventures to increase oil and gas production from overseas participation to augment the energy security of the country. OVL has stakes in oil and gas properties in Vietnam, Sudan, Russia, Myanmar, Libya, Iran, Iraq, Syria, Australia, Egypt, Qatar and Ivory Coast and is pursuing opportunities in Angola and Ecuador among other countries.

ONGC, Leyland arm sings deal for LNG project

April 01, 2005. ONGC has roped in the Hinduja group for implementing the Rs 25,000 crore (Rs 250 billion) mega project involving an LNG terminal, power plant and petrochemical complex. Ashok Leyland Project Services (ALPS), an associate company of Ashok Leyland, has been mandated for sourcing LNG for the proposed plant in south India, most likely at Mangalore in Karnataka. ONGC and ALPS will form one or more special purpose vehicles (SPVs) for implementing the project. ALPS will have the lead responsibility to source 5 million tonne of LNG per annum initially, and scale it up to 10 million tonne per annum at a later date. ONGC is believed to have tapped the Hindujas for the considerable clout they enjoy in gas-rich Iran. India has already inked a deal with Iran to import 7.5 million tonne per annum of LNG from 2009-10. IOC, too, has signed a pact for import of 9 million tonne of LNG per annum.

OIL seeks partners for Assam exploration

April 01, 2005. Oil India plans to join hands with a foreign exploration company to explore for oil and gas in the thrust belt in Assam and Arunachal Pradesh. The company already holds the licence for parts of the Schuppen belt in Assam. The tie-up could extend to bidding for one of the three blocks in Assam which are under offer in the fifth round of the New Exploration Licensing Policy (NELP). The block falls in the Naga Schuppen belt while the other two blocks are in the shelf part of the Assam-Arakan basin. It would be looking for a company with niche experience of exploration in the thrust belt. The tie-up would be for domestic blocks. OIL had earlier this year signed a MoU with IOC for jointly undertaking upstream projects, but this tie-up was mainly for overseas projects. The thrust belt falls in Assam and Andhra Pradesh up to the Nagaland border and is believed to have a high oil potential. OIL is targeting 1-1.5 million tonne oil production from the area in the three years. Besides the thrust belt, the company plans to focus in the riverside areas of Arunachal Pradesh and the Brahmaputra river belt. This is part of its strategy to double its oil production to 7 million tonne in three years. 

ONGC begins drilling work at Bengal rig

March 31, 2005. State-owned Oil and Natural Gas Corp has begun a Rs 400-crore (Rs 4 billion) drilling campaign in Bengal offshore after a gap of around 15 years. Falling in exploration block WB-OSN-2000/1, awarded to ONGC under second round of New Exploration Licensing Policy, this is the first among four wells to be drilled in this block. The last exploratory drilling was taken up in the Bay of Bengal in late eighties without any encouraging results. The recent gas finds in adjoining basins like Mahanadi and Krishna Godavari offshore have enhanced the prospects of West Bengal offshore.


Bharat Petroleum deal put on hold 

March 29, 2005. Sri Lanka put off indefinitely a decision to sell off part of the state-run oil company to Bharat Petroleum as trade unions threatened to stop work, triggering panic buying at petrol stations across the country. The government, which sold a third of the Ceylon Petroleum Corporation to Indian Oil Company in 2003 is to sell another one third to Bharat Petroleum.

HPCL eyes refinery in Saudi Arabia

March 29, 2005. Petroleum Minister Mani Shankar Aiyar said Hindustan Petroleum Corporation Ltd (HPCL) was interested in setting up a refinery in Saudi Arabia. India was also looking for long-term crude contracts with the West Asian nation, he added. Besides the hydrocarbon sector, Aiyar also intends to discuss setting up commercial oil storage facilities in India with the help of Saudi Arabia. India plans to build oil reserves of five million tonnes by 2008 to cover 15 days’ domestic demand for oil products. Indian Oil Corporation is working out the details of the project, while the funds are to made available by the government. A proposal to levy a cess for the reserves was earlier under examination.  India currently imports 24 million tonnes crude oil from Saudi Arabia, constituting nearly 26 per cent of its overall imports. India is also inviting Saudi investment in oil refining and fuel retailing and exploring opportunities to invest in developing gas fields in the oil-rich nation. India’s crude oil imports from Saudi Arabia have risen four folds, from 6 million tonnes in 1999-2000 to nearly 24 million tonnes in 2003-04.

IOC auto LPG dispensing station in Kerala

March 27, 2005. Indian Oil Corporation Ltd has announced the opening of its first automobile LPG dispensing station in Kerala and the simultaneous launch of ‘Autogas', the company's brand of LPG for automobiles. The new facility will be inaugurated at Pallichal in Thiruvananthapuram district.

BPCL retail outlet with visual identity

March 27, 2005. Bharat Petroleum Corporation Ltd (BPCL) has announced the launch of its first new `retail visual identity' in Kerala in Thiruvananthapuram. By the end of April this year, the company plans to introduce the new visual identity in 50 outlets in the Southern region alone. Nationally, it expects to have 150 new-look outlets in place by the end of April. By the end of the next financial year, the company plans to have between 600 and 700 retail outlets sporting the new visual identity. As part of its marketing efforts, the company recently set up its first ‘vehicle care centre’ at a retail outlet in New Delhi. During the course of the next financial year, the company plans to establish 30 such `vehicle care centres' across South India. 

Gulf oil firms considers units in India

March 23, 2005. Kuwait Petroleum Corporation (KPC), Saudi Aramco and National Iranian Oil Company (NIOC) have started talking to several Indian oil companies, including Hindustan Petroleum Corporation Ltd (HPCL) and Essar Oil, to set up joint-venture grassroots refineries in the country. All three oil giants are seeking to sign partnership deals quickly with any refinery here to enter into a binding contract for their feedstock (crude oil). With crude oil prices scaling new highs, the three members of the Oil Producing and Exporting Countries (OPEC) want to rapidly raise their production quotas. Any raising of their production quotas will have major implications for international oil prices. Saudi Aramco, KPC and NIOC have begun talks with HPCL for picking up equity in the state-owned company's 9-million tonne Guru Gobind Singh Refinery at Bhatinda in Punjab. They are also talking to Essar Oil, the private company that is setting up a 10.5 million tonne refinery at Vadinar in Jamnagar, Gujarat. While India imports over 70 per cent of its crude oil requirement, India's refining capacity is higher than its consumption of petroleum products. India has about 125.97 million tonnes of refining capacity but consumes only about 110 million tonnes of petroleum products. The surplus is exported.

Numaligarh Refineries may ship high-speed diesel

March 24, 2005. Numaligarh Refineries Ltd (NRL) in Assam will send by barges its first consignment of high-speed diesel in the middle of next month for discharge at Budge Budge in West Bengal. It is estimated that the round trip will take 35 days. The first trial shipment of NRL products by barges was undertaken by the Central Inland Water Transport Corporation (CIWTC), the public sector barge company, in 1996; it took several months to complete the journey by the river route which passes through Bangladesh. Vivada Inland Waterways Ltd, a Kolkata-based private barge company that has secured the contract for undertaking the forthcoming shipment, will place two barges, ‘Naharkatiya’ (capacity 1,800-dwt vessel) and ‘Barauni’ (1,200-dwt vessel), at Silghat - a place on the banks of the Brahmaputra river and about 100 km from the Numaligarh refinery - for loading the high-speed diesel.

Saudi Aramco, IOC plan crude storage venture

April 02, 2005. India may now play host to commercial storage of Saudi crude. State-owned companies Saudi Aramco and Indian Oil Corporation (IOC) have begun discussions on setting up of the storage facility in India. The commercial storage facility would be owned by Saudi Aramco and IOC jointly while the crude would be owned by the Saudi company. Aramco has such storage facilities in Rotterdam, South Korea and the Caribbean. 

HPCL, Saudi Aramco join hands  

March 31, 2005. Hindustan Petroleum Corporation will partner Saudi Aramco in executing the 20 million tonne per annum (mtpa) export-oriented Yambu refinery project in Saudi Arabia. In return, Saudi Aramco will partner HPCL in expanding the capacity of its 7.5 mtpa refinery in Vizag. Both the refineries will focus mainly on exports of petroleum products to various countries.  Saudi Aramco’s participation in the 12 mtpa Paradip refinery project of Indian Oil Corporation (IOC) in Orissa is also being pursued. 

Adanis to set up CNG dispensers at BPCL outlets

March 31, 2005. The Bharat Petroleum Corporation Ltd has decided to enter into a deal with the Gujarat Adani Energy Ltd for retail sales of compressed natural gas (CNG) in the Ahmedabad. BPCL and GAEL, the wholly-owned subsidiary of the Adani Group, is expected to sign a memorandum of understanding (MoU) soon. GAEL will be allowed to function from four outlets run by BPCL in Ahmedabad.  At present, GAEL is operating three CNG outlets in the city, located at Naroda, Jamalpur and Maninagar areas. The new arrangement with BPCL will help GAEL sell CNG from Kankaria, Drive-In, Viratnagar and Vasna areas in the city. 

BPCL plans foray into Singapore

March 31, 2005. Bharat Petroleum Corporation Ltd is planning to expand its retail business to South Asian countries starting with petroleum retailing Singapore. Its first overseas foray — into Sri Lanka — is caught in a trade union issue. BPCL is targeting the Singapore market through acquisitions. The move comes even as the Singapore Petroleum Company recently took over petroleum retail outlets being earlier run by British Petroleum.

In the domestic market in last two financial years, BPCL has added 1,800 retail outlets. The corporation expects to sell around 2.5 million tonne of petrol through its domestic retail outlets during the current year and 9 million tonne of diesel. It has also received a licence for selling compressed natural gas (CNG) in three districts of Gujarat — Gandhinagar, Mehsana and Banaskantha. It also plans to introduce CNG in at least two new markets beyond Gujarat. Besides compressed natural gas, the corporation intends to focus on marketing its liquefied petroleum gas in both the domestic and commercial segments. 

ONGC's Tatipaka refinery on target

March 30, 2005. OIL and Natural Gas Corporation's Tatipaka mini-refinery at Rajahmundry achieved the MoU target of 80,000 tonnes in respect of value-added products (VAP) for 2004-05 on February 9 and achieved the performance target of 90,000 tonnes of VAP products for 2004-05 on March 24. The mini refinery is credited with heralding the downstream saga of ONGC and it has achieved all its targets since its commissioning three years ago. The unit fulfils the entire HSD (high sulphur diesel) requirements of both Rajahmundry and Karaikal assets. Tatipaka refinery produces HSD of Euro-III standards. The first turnaround of the refinery was completed successfully in February 2004 with in-house expertise.

MRPL ties up with Ashok Leyland for retail outlets

March 30, 2005. ONGC'S subsidiary Mangalore Refineries & Petrochemicals Ltd (MRPL) has joined hands with Ashok Leyland to form a joint venture company for setting up retail outlets for petroleum products. MRPL and Ashok Leyland Project Services would have equal equity contribution of 26 per cent each in the proposed venture. The balance 48 per cent equity will be offered to financial institutions and other strategic investors. MRPL has been authorised by the Ministry of Petroleum & Natural Gas to set up 500 retail outlets in the country. These outlets will be set up at locations along various National and State highways.

Transportation / Trade

BPCL's gas supply project by April

March 22, 2005. Bharat Petroleum Corporation Ltd (BPCL) is all set to enter the gas distribution market on its own. The Rs 18-crore (Rs 180 million) pilot project of the oil company for supply of natural gas to industrial and other consumers in Gujarat will go on stream next month. Depending on the success of this project, the oil company will invest about Rs 350 crore (Rs 3.5 billion) to cement its moorings in this market in Gujarat in the next few years. Apart from this, BPCL will be expanding its share in the gas distribution market by entering other States through joint ventures with Gail India Ltd. BPCL already has a stake in Indraprastha Gas Ltd (IGL), which distributes compressed natural gas (CNG) to vehicles and piped natural gas to households in Delhi. BPCL's pilot project in Gujarat envisages buying of natural gas from Gujarat State Petronet Ltd and distributing it through pipelines to various consumers. In the first phase of the project, BPCL is laying a network of pipeline in Gandhinagar to cater to industrial consumers in and around the State capital. The second phase, where the company will set up CNG stations to cater to vehicles and other consumers, will be ready by June or July this year.

BGL takes up auto LPG distribution in Andhra

March 25, 2005. Bhagyanagar Gas Ltd (BGL), a joint venture between the GAIL India and Hindustan Petroleum Corporation Ltd (HPCL) has decided to take up distribution of auto LPG and CNG by setting up outlets across Andhra Pradesh. GAIL has floated BGL in 2003 with HPCL for providing eco-friendly fuels for automobiles, domestic and commercial users in AP as well as to capitalise on the future demand for gas from consumer, commercial and industrial sectors. As part of GAIL’s nationwide initiative and to exploit the gas major’s presence in the state, BGL has chalked out plans where in the company will focus on expanding its presence across the state with an estimated investment of Rs 260 crore (Rs 2.6 billion).

GAIL ties up with BPCL to supply CNG

March 24, 2005. GAIL (India) Ltd has formed a joint venture company with Bharat Petroleum Corp Ltd (BPCL) for launching compressed natural gas (CNG) in Kanpur. Central UP Gas Ltd, the joint venture company, would distribute CNG for automobiles and piped natural gas for household use in Kanpur. The Petroleum Ministry has allocated 100,000 standard cubic meter per day of natural gas for Kanpur city gas. According to an estimate, the demand for CNG and PNG is going to increase from 28,000 standard cubic metre per day at present to 200,000 standard cubic metre per day in 2007.  The company will set up one Mother, one Online and one Daughter Booster station in Kanpur in 2005. These will go up to two each of Mother and Online stations and four Daughter Booster stations by 2007. GAIL has laid a pipeline from Sachendi to supply natural gas to Kanpur. The laying of pipeline is complete and is to be commissioned soon. Starting with the first CNG station at Kanpur by August 2005, the company plans to expand CNG facilities in a phased manner.

BG-ONGC-RIL to sell Panna-Mukta gas directly

March 31, 2005. The UK-based BG Group, Oil and Natural Gas Corporation and Reliance Industries will begin marketing of natural gas produced from the Panna/Mukta and Tapti fields in the Mumbai offshore. Gail (India), which was marketing the entire 10.8 metric million standard cubic meter per day (MMSCMD) gas produced from the fields, will now get only 6 MMSCMD for sale to power and fertiliser units on the Hazira-Bijaipur-Jagdishpur (HBJ) pipeline. GAIL currently pays a capped price of $3.11 dollars per MBTU. The combine will sell 4.8 MMSCMD of gas mostly to their affiliate companies at a price of $4.08 dollars per MBTU. Gujarat State Petroleum Corporation will buy 1 MMSCMD from the joint operators. Gujarat Gas, a BG affiliate firm, will take 0.7 MMSCMD. The remaining 2 MMSCMD would be consumed by Reliance and its affiliate IPCL.

Policy / Performance

Data on petro-product consumption understated  

March 29, 2005.  During 2003-04, around 101 million tonne of petro-products (including crude oil) were imported. This is 2.6 million tonne more than the 98.4 million tonne disclosed by oil companies to the government. In case of LPG, oil companies showed imports of 1.7 million tonne during the year, up 0.4 million tonne over the Directorate General of Foreign Trade’s (DGFT) recorded data. A similar trend was observed in the previous year too. Interestingly, naphtha imports, according to oil companies, were twice that recorded by DGFT. What does this mean?

While LPG and crude oil can be imported only by industry players who are mandated to report their imports to the government, it is not so in the case of naphtha which can be used to adulterate petrol. If that were so, has the case for adulteration of petrol, which accounts for around 10 per cent of petro-products sold in the country, been overstated for 2002-03? Or, is it a ‘lapse’ on the part of DGFT, which perhaps has not recorded the entire import of naphtha into the country.

More crude import deals with Saudi Arabia soon: Aiyar

March 28, 2005. India hopes to explore the possibilities of bilateral investments in hydrocarbon sector and long-term crude import deals with Saudi Arabia, the Petroleum and Natural Gas Minister, Mr Mani Shankar Aiyar, said. He said India's crude imports from Saudi Arabia were through annual term contracts. In the current fiscal ending March 31, the country's crude imports from Saudi Arabia are expected to be about 26 per cent of the overall oil imports. He said we would consider various prospects for investing in Saudi Arabia's oil refining and natural gas exploration sectors. The Minister also stated that he would take further a Saudi Aramco proposal to Indian Oil Corporation to build commercial crude oil storage facilities in India. India will resume talks with Pakistan on building a natural gas pipeline from Iran and other issues of bilateral cooperation in the hydrocarbon sector, the Minister indicated.

Besides meeting Mr Aziz, the Petroleum Minister would also meet his Pakistani counterpart to discuss the Iran-India pipeline, and diesel and petrochemical exports from India. Mr Aiyar has scheduled his visit to Pakistan just before his June visit to Tehran to seal a deal for import of natural gas from Iran, which would pass through Pakistan.  India had previously stated it would deal only with Iran on the pipeline and it would be Tehran's job to get the Pakistani transit and guarantee gas delivery at Indian borders. The Minister would discuss issues such as route of the pipeline and transit fee with Pakistan, which would have an important bearing on the cost of the gas. India and Iran are currently engaged in detailing techno-commercial issues such as gas volumes, route and pricing and the Petroleum Minister's visit to Tehran would be for signing a firm pact.

Indo-Romanian talks on oil & gas

March 28, 2005. India and Romania will be holding talks for co-operation in the oil and gas sector next week. The delegation from Romania, which includes representatives of the Romanian oil & gas companies, will have meetings with senior officials in the ministry of petroleum and natural gas. They will also have meetings with officials from ONGC, IOC, GAIL, and EIL.

The business delegation is on a mission to India to understand and explore business opportunities in the oil & gas sector between the two countries. Currently, both the countries are negotiating a memorandum of understanding (MoU) in the field of oil and gas. Under the proposed MoU, the parties intend to co-operate in research and development, oil and environmental issues, including energy policy such as oil energy efficiency, environmental protection and joint projects.

India seeks long-term ties with Myanmar

March 25, 2005. Describing Myanmar as a valuable neighbour and strategic partner, external affairs minister K Natwar Singh said India sought a “long-term partnership” with it for bilateral and regional development, progress and stability. Mr Singh held wide-ranging discussions with his counterpart U Nyan Win covering cross border infrastructure development projects and energy cooperation. He also raised the question of interests of Indian companies in both onshore and offshore blocks. While Indian companies are already engaged in offshore activities following invitation from Myanmar, there has been “some hitch” of such participation in onshore blocks.

India’s West Asian crude dependence continues

March 26, 2005. The total oil imports from West Asia stood at 61.5 million tonnes during 2003-04. India’s dependence on West Asia for crude oil is expected to continue for some time even though it seeks to widen its portfolio of crude oil suppliers. More than 68 per cent of oil imports during the nine-month period ending December 2004 were from the region. The country bought about 48.9 million tonnes from nine countries in the region, out of a total oil imports of 71.7 million tonnes, valued at Rs 85,541 crore (Rs 855.41 billion). The total oil imports from West Asia stood at 61.5 million tonnes during 2003-04, while countries outside the region supplied about 29 million tonnes. Saudi Arabia continues to be the biggest exporter with 17.14 million tonnes of its crude oil finding its way to Indian refineries. There is big gap between the first and the second biggest importer of crude oil to India. Saudi Arabia is followed by Nigeria, a non-West Asian country, but one of the few sources of sweet crude needed by Indian refineries. India had imported 10.72 million tonnes from Nigeria till December. Most of the Nigerian crude oil is imported through monthly and term tenders. With India making fresh attempts to get business in Nigeria, imports from that country are likely to increase. Besides Nigeria, there is no other significant oil source for India outside the West Asian region. There are two reasons for the dependence on West Asia. The overall crude oil consumption has increased, though domestic production as a percentage of consumption has declined to 30 per cent, from 45 per cent in 1994-95. This means increased imports from the region. Another reason cited by the official is that India was late when the race for oil and gas from other sources than West Asia began.

Cabinet defers Bharat II diesel norms

March 24, 2005. The Union Cabinet deferred implementing Bharat Stage II diesel fuel norm across seven States by six months. This means Uttar Pradesh, Rajasthan, Uttaranchal, Madhya Pradesh, Punjab, Himachal Pradesh and Jammu & Kashmir will continue to sell Bharat Stage I grade diesel up to October 1 against the earlier deadline of April 1. Indian Oil Corporation Ltd is upgrading its Panipat and Mathura refineries to meet the new norms but this will take another 2-3 months. Also, Reliance Petroleum has not committed supplies of adequate diesel quantity needed for the domestic market. However, automobile makers across the board are ready with Bharat Stage III compliant variants, which carry a higher price tag than existing models. The Cabinet approved introduction of BS II grade diesel by April 1 in all States except the seven. Also, petrol and diesel of BS III equivalent grade would be made available in all the 11 major cities and petrol of BS II grade would be made available throughout the country from April 1. The 11 cities where BS III norms will be introduced from April 1 include the National Capital Region, Chennai, Mumbai, Kolkata, Ahmedabad, Bangalore, Hyderabad and Secunderabad, Kanpur, Pune, Agra and Surat.

Price of petrol & diesel to be increased

March 23, 2005. Consumer prices of petrol and diesel are set to be increased by Rs 2.50 a litre and Rs 1.30 a litre, respectively from April 1. In a revised Cabinet note, the petroleum ministry has also pitched for limited freedom to oil marketing companies to change prices within an approved band from May 1 besides shifting the price revision mechanism from the present fortnightly to a monthly or quarterly basis. The combined impact of soaring global crude oil prices, duty changes in the budget and higher fuel specification works out to Rs 4.24 a litre for petrol and Rs 3.83 a litre for diesel. It has, however, not factored in the impact of higher global oil prices while proposing the price hikes. Pending increase in petrol and diesel prices, under-recoveries of oil marketing companies, Indian Oil (IOC), Bharat Petroleum (BPCL), Hindustan Petroleum (HPCL) and IBP are expected to touch Rs 950 crore (Rs 9.5 billion) for March 2005 alone. As oil PSUs are also holding back the prices of LPG and kerosene, their under-recoveries on these two subsidised fuels, post adjusting the nil customs and excise duties, are expected to be Rs 14,000 crore (Rs 140 billion) for the current fiscal. The impact of duty changes in budget calls for a Rs 2.20 a litre increase in petrol and Rs 1.06 a litre in diesel. The impact of the auto fuel policy has been calculated at 30 paise a litre for petrol and 24 paise a litre for diesel.

India to invest $25 b in oil fields abroad

March 22, 2005. The Petroleum Minister, Mr Mani Shankar Aiyar, said that India could invest up to $25 billion in acquisition of overseas oil and gas fields. The Minister also hinted at the possibility of India soon receiving a foreign direct investment of over $8 billion in the energy sector. India's total annual FDI inflow currently stands at around the level that China received during 1983 to 1991 — $4-5 billion. However, China's FDI inflow today stands at about $50 billion annually. India and China need to collaborate in the energy sector instead of competing with each other, he said. While India and China would continue to be dictated by market forces and could compete in some areas, there were possibilities of working together, the Minister said.

Displacing conventional fuels reduces energy/GDP ratio

March 23, 2005. The kitchen fuel used by more than half of all Indian households is still firewood. Another 20 per cent use either crop residues or dung cake. This is one reason why the energy/GDP ratio has not been falling as fast as it could have. The displacement of conventional energy sources (in theory largely renewable) by fuels such as coal, LPG, electricity and natural gas has been the primary source of the fall in the energy intensity of the economy over the past five decades. The Department of Economic Affairs' (DEA) paper on Central Government Subsidies opposed a drop in kerosene subsidy on the grounds that, though used mostly by the urban ‘rich', a hike in prices would also hurt the rural poor for whom kerosene is the ‘main source of energy for lighting'. According to the 2001 Census, 77 million rural households (ie 56 per cent) used kerosene to light up their homes. For LPG, the DEA suggested removal or at least reduction of subsidy in a phased manner. Actually, as many as 7.8 million rural households used LPG in 2001, in part because kerosene is not easily available in villages. Rural households thus accounted for a large chunk of the 33.6 million LPG-using households nationwide. The DEA paper stated that clean fuels are ‘environment friendly', and on this count went so far as to contemplate the provision of cash transfers to the poor to compensate for the reduction or elimination of subsidy on these fuels. This policy option, however, was immediately dismissed because cash transfers were likely to be diverted to other uses, and might actually increase the consumption of firewood. The fact is that  ‘clean' fuels apart, a shift away from non-commercial to commercial energy sources needs to be encouraged because it reduces the energy intensity of the economy: clean fuels are also more efficient in the extraction of energy. A goal which is important enough to think of subsidising by cash transfers, is important enough to think of subsidising through commodity-specific subsidies, which do not involve as great a risk of diversion of the subsidy to other uses.  Such a decision is also politically convenient is another matter.

Crude imports fall

March 24, 2005. India's crude oil imports declined by 1.9 per cent to 6.94 million tonnes in February 2005 even as the domestic oil product consumption rose marginally by 1.1 per cent to 9.17 mt with a fall in diesel demand. The country imported 6.94 mt of crude against 7.08 mt in February 2004. Further, the petroleum product demand, at 9.18 mt, in February 2005 was only 1.1 per cent higher than the 9.08 mt consumed a year ago. The imports of petroleum products nearly doubled to 1.21 million tonnes, from 625,100 tonnes last year, on the back of increased LPG imports. Petroleum product exports rose 30.5 per cent to 1.66 mt in February 2005 compared with 1.27 mt previously. During April-February 2004-05, crude oil imports increased by 6.6 per cent to 87.37 mt (81.96 mt). The domestic consumption during the period increased 3.8 per cent to 101.53 mt (97.84 mt). The petroleum product imports went up by 5.5 per cent to 7.01 mt, while exports jumped 24.8 per cent to 16.14 mt.

Vizag, Paradip refinery capacity to be increased 

April 01, 2005. The Petroleum Minister, Mr Mani Shankar Aiyar, has said that the Government would examine the prospects of expanding the capacity of HPCL's Visakhapatnam refinery and the proposed IOC refinery at Paradip for bringing in Saudi Aramco as equity partner. He said that HPCL's 7.5-million-tonne Visakhapatnam refinery might be upgraded to make it an export-oriented refinery.

Revamped plan for PDS kerosene

March 31, 2005. Using his dual portfolio of the Ministry of Petroleum and Natural Gas and that of Panchayati Raj, Mr Mani Shankar Aiyar has worked out a revamped scheme to strengthen the distribution and marketing of kerosene under the public distribution system (PDS). Since the actual supply of kerosene to the consumers takes place through a network of approximately 500,000 retail points, the implementation of the scheme would require a close involvement of State governments, district administrations, Panchayati Raj institutions, voluntary organisations and consumer bodies. The draft policy guidelines circulated by the Petroleum Ministry suggest that all these organisations and institutions should be involved in propagating and monitoring the scheme. The Panchayati Raj Ministry has given its views on how it could help in monitoring PDS so that the entitled consumer receives the product. It has been found that nearly half the blocks in the country do not have wholesale dealerships of kerosene and many do not have any domestic LPG agency.

High oil prices will hit growth: FM

March 30, 2005. Finance minister Palaniappan Chidambaram said energy-hungry India could cope with oil prices near record highs, but warned they could shave 0.5 percentage point off growth in Asia’s fourth-largest economy. Gross domestic product grew 8.5 per cent in 2003-04, as robust farm output fuelled the fastest expansion in nearly 15 years, but the government has forecast growth will slow to 6.9 per cent this fiscal year. Mr Chidambaram said a rise in world oil prices was “completely unjustified” and would hurt trade in India.

Private oil firms eye tie-ups with Taiwan 

March 31, 2005.  A delegation of private sector oil and fertiliser companies has returned from Taiwan after exploring the possibility of cooperation in the petroleum industry.  The visit came at a time when India and China, the world’s two largest oil consumers, have been looking at cooperation in the energy sector to avoid competition in bidding for oil blocks in third countries as they search for energy security. The delegation held talks with six major Taiwanese oil companies - China Petroleum Corporation, Dairen Corporation, USI Corporation, International Petrochemicals Group, Formosa Petrochemicals Corporation and Morning Star Group. The six Taiwanese companies have a total market capitalisation of $ 29 billion. The talks centered on forging an alliance among the private sector oil companies to pool in their strengths for mutual benefit. Apart from the distribution of petroleum products in India, the two sides also discussed setting up of downstream petroleum chemical complexes to take advantage of the Indian and international markets.

Oil companies not to roll back price hike in AP

 April 05, 2005. Oil companies in the state have refused to roll back the hike in prices of petroleum and diesel to pre-April 1 level as demanded by the Andhra Pradesh government. Reaffirming their position on the decision to increase the prices, the representatives of oil companies told the government that they have effected the price hike as the 2 per cent turnover tax (TOT), hitherto non-transferable, has now become recoverable with the abolition of the old Act. “We are following the policies and guidelines of the Union petroleum ministry.



NTPC to sign gas deal with Reliance

March 28, 2005. State-run National Thermal Power Corporation (NTPC) said that it would sign gas sale and purchase agreement with Reliance Industries Ltd by the next week for supply of gas (13 million standard cubic metre gas per day) to its Kawas and Gandhar power plants in Gujarat. The Kawas and Gandhar expansion projects are of 1,300 MW capacity each and are expected to be commissioned by 2007-end. Reliance had quoted a price of $2.97 per MMBTU for supply of LNG/gas bettering offers from Shell, Yemen LNG and Petronas for LNG. RIL would supply natural gas from the Krishna-Godavari offshore basin in Andhra Pradesh up to boundaries of projects in Gujarat at a distance of 1,400 km through pipeline. The Kakinada-Ahmedabad pipeline has also pushed the production deadline to March 2008 from 2006-07 planned earlier. NTPC and Reliance had not yet been able to sign the agreement due to confusion over who would lay the 1,400 km pipeline from Kakinada to Ahmedabad. While Reliance wanted to lay the pipeline on its own, state-run gas transporter GAIL India Ltd had staked a claim to lay the line.

ONGC to hike capacity of Tripura plant

March 25, 2005.  ONGC is considering stepping up the capacity of the proposed power plant at Palatana to 1,500 MW. The company had previously proposed setting up a 750-MW (3x250 MW) gas-based power generation unit in Tripura. The company was considering setting up the power plant in two phases of 750 MW each. ONGC has formed a special purpose vehicle with Infrastructure Leasing and Financial Services and the Tripura State Power Development Corporation to set up the power project. ONGC has announced a Rs 400-crore (Rs 4 billion) investment plan for stepping up natural gas production capacity in Tripura from 1.7 million standard cubic metres per day (mmscmd) to 4.5 mmscmd by 2007. Apart from drilling four new wells, the investment plan also includes setting up three gas storage stations, revamping existing storage facilities and laying a pipeline connecting the production wells to the power plant.

Ajanta group to foray into power generation

March 24, 2005. The Morbi-based Ajanta group has decided to foray into power generation. The group has plans to set up a power plant with an investment of Rs 500 crore (Rs 5 billion) at Samakhiali in Kutch district. The lignite-based power plant project will become operational in next two years. The whole project is still in the conceptualisation stage.

Environment body asks Reliance Energy to pay Rs 3 billion

March 23, 2005. Reliance Energy Ltd has been asked to furnish a bank guarantee of Rs 300 crore (Rs 3 billion) to prove that the company is serious about setting up a flu gas desulphurisation (FGD) unit, essential for controlling pollution, at its 500 MW coal-based power generation plant in Dahanu (DTPS). The Dahanu Taluka Environment Protection Authority (Dahanu Authority), which passed the order, may also consider ordering a shut down of the power plant at it next meeting scheduled on April 26. The company has been accused of delaying the setting up this unit by environment groups and citizens in Dahanu, which is on the outskirts of Mumbai. The area is considered an ecologically fragile zone and environment groups have been arguing since 1994 that emissions from the plant affect its agriculture and horticulture. Reliance Energy Ltd has said that the emissions from its Dahanu Thermal Power Station (DTPS) are lower than the ambient air quality standards and that the plant is operating well within the norms specified by the regulatory authorities such as National Ambient Air Quality Standards (NAAQS) in India. The company has further said that the rapid environment impact assessment study of the DTPS recommended by the Central Pollution Control Board (CPCB) led to the conclusion that the disadvantages of the installation of Flu Gas Desulphurisation (FGD) plant outweigh the advantages that it offers. 

NTPC plans to generate 164 b units in 2005-06

March 31, 2005. The National Thermal Power Corporation said it plans to generate 164 billion units of electricity during 2005-06. An MoU to this effect was signed by the NTPC with the Power Ministry. The MoU also includes targets of important milestones relating to various projects including 1,300 MW each Kawas and Gandhar, 800 MW Koldam hydro power, 1000 MW each Rihand, Vindhyachal, Sipat-II and 1980 MW each Sipat-I and Barh projects.

TPC may lose to rival in bid for Sri Lanka plant 

March 31, 2005. Tata Power Ltd, India’s third-biggest generator by market value, may lose out to the country’s largest state-owned utility, National Thermal Power Corp, in a bid to invest in a $400 million power plant in Sri Lanka.  Sri Lanka wants NTPC, which produces a fifth of India’s electricity, to build the coal-fired plant because the project is backed by the governments of the two countries. Electricity demand in Sri Lanka, a country of 20 million people, is expanding 8 per cent a year. NTPC’s plant will initially generate 300 megawatts and reach full capacity of 900 megawatts as demand grows. The plant will be located north of the capital, Colombo.

Hindalco’s captive plant 

March 31, 2005. Hindalco Industries Ltd, the flagship company of the Aditya Birla Group, signed a memorandum of understanding with the Jharkhand government for setting up an alminium smelter project of capacity of 3,25,000 tonne per year with a 600 MW captive thermal power plant at Tumbagarha in Latehar district of Jharkhand. The total investment in the project would be about Rs 7,800 crore (Rs 78 billion). The project would be completed in 30 months. The unit would consume 5.6 million tonnes of coal annually.

Tata Power to partner DVC in Maithon project

March 30, 2005. Tata Power Company Ltd signed an agreement to partner the Government-owned Damodar Valley Corporation (DVC) for setting up the 1,000-MW Maithon Left Bank Thermal Power Station in Jharkhand. Tata Power will hold 74 per cent stake in the venture. The Rs 3,120-crore (Rs 31.20 billion) DVC will hold 26 per cent stake. As per the agreement, DVC will have the option to either sign a power purchase agreement with the joint venture or purchase a pre-decided quantum of power from the project. The project will target power generation cost of around Rs 2 a unit. Surplus power, after meeting the requirements of DVC, will be supplied to the power deficit western and northern States. The project is the first public-private generation joint venture after the Electricity Act 2003 came into force.

Maharashtra signs power deals

April 4, 2005. Maharashtra on Monday signed agreements with eight private companies to set up plants to generate a total of 12,500 megawatts (MW) of power, the state government said in a statement. The companies included Reliance Energy Ltd, which had signed up to build a 4,000 MW plant, and Tata Power Company Ltd. and Essar group to set up units of 1,500 MW each.

NHPC to generate 13 b units

April 5, 2005. National Hydroelectric Power Corporation (NHPC) plans to generate 12.96 billion units of power during 2005-06, as against the 11.2 billion units generated in 2004-05. A MoU to this effect was signed by the NHPC with the Ministry of Power, a company release said. The target of capacity index has been raised to 96.2 per cent, it said, adding other parameters that have been included in the MoU are recovery of dues, research and development activities, consultancy, and quality certification.

Transmission/ Distribution / Trade

Power Grid set to lose transmission monopoly

March 22, 2005. Power Grid Corporation of India (PGCIL) will soon lose its monopoly in the power transmission sector with the government directing NTPC to diversify into transmission. The government has asked generation giant NTPC to invest in the transmission sector to add on transmission capacity for the national grid. Till now, PGCIL was the lead player in the transmission segment, controlling 20 per cent of the 280,000 circuit kilometres of transmission lines in the country. This will kick off competition in the power transmission sector, which till now has been dominated by state-run companies. Consumers can now look forward to more competitive tariff regimes with more players in the market. Reliance, the private sector power company, has also put in an application to take up transmission projects. The government has directed NTPC to get into transmission given the financial constraints faced by the PGCIL. NTPC has been asked to identify transmission projects worth Rs 2,000-3,000 crore (Rs 20-30 billion). These would be dedicated transmission systems for NTPC projects. In other words, the NTPC would be setting up transmission lines from its projects to PGCIL’s lines. The investment will translate into 50 circuit kilometres of transmission lines. The Central Electricity Regulatory Commission looks upon this measure as a small step towards the setting up of a national grid. Interestingly, though the ministry of power had issued guidelines to facilitate private investment in the transmission sector as early as January ’00, there haven’t been too many takers. The only private venture to be given a license has been M/s Powerlinks, a joint venture between Tata Power (51 per cent) and Power Grid (49 per cent). Reliance Energy has applied for a license for the entire western region (21 lines and 12 substations), but this is under consideration. However, NTPC will have to set up a separate unit for its transmission business, as the Electricity Act clearly states that the “Central Transmission Utility shall not engage in the business of generation of electricity or trading in electricity.”

APERC reduces industrial tariff

March 22, 2005. The Andhra Pradesh Electricity Regulatory Commission has reduced the energy charges for industrial units in its tariff order for 2005-06. There is no change in tariffs for domestic, cottage industries, local bodies, general purpose and railway traction. As per the tariff order issued, the energy charges for industrial consumers using 132 KV and above will be Rs 3.25 per unit as against the existing Rs 3.50. Similarly, the tariff rates of 33 KV industries will be Rs 3.35 per unit (existing Rs 3.50) and 11 KV industries will be Rs 3.40 per unit (Rs 3.50). There is also a reduction in the wheeling charges of distribution companies by one to two paise per kWh. The commission also changed the incentive structure, the discount applicable on the energy rates, for industrial consumers. Incentives will be now based on load factor only.

Accordingly, a 5 per cent discount is applicable on the energy rates if the load factor is 30 per cent to 50 per cent, 10 per cent incentive if the load factor is 50 per cent to 60 per cent, 15 per cent if the load factor is 60 per cent to 70 per cent and 20 per cent incentive is applicable if the load factor is above 70 per cent. The tariffs for Government lift irrigation schemes have also been reduced from Rs 2.41 to Rs 2.36 per unit to keep in line with the concept of cost-to-serve. The commission had limited the transmission losses to 5 per cent next fiscal as against 6.25 per cent in the current year. The distribution losses had also been limited to 17.24 per cent as against 18.52 per cent in 2004-05. Hence, the overall systems losses were expected to decline from the current 23.61 per cent to 21.38 per cent next year.

OERC cancels AES Corp's power distribution licence

April 03, 2005. The Orissa Electricity Regulatory Commission (OERC) formally revoked the licence of AES Corporation for power distribution in the State. The OERC order came on a petition from Gridco, the bulk-power supplier to Cesco. Gridco had sought the revocation of the distribution licence of AES for its failure to pay current dues in full and meet the conditions imposed by the regulator. Gridco had approached OERC seeking cancellation of the licence of AES stating that it did not honour the shareholding agreement.  AES held 51 per cent share in Cesco, while the remaining 49 per cent was held by the State through Gridco. Cesco supplied power to Khurda, Puri, Nayagarh, Cuttack, Jajpur, Jagatsinghpur, Kendrapara, Dhenkanal and Angul districts.

Powergrid signs MoU with ministry

April 01, 2005. Powergrid has signed the yearly Memorandum of Understanding (MoU) with the Ministry of Power detailing the targets to be achieved by Powergrid during FY 2005-06. Powergrid has been consistently rated in the highest bracket based on its actual performance vis-à-vis the targets in MoU signed with Ministry of Power since signing of its first MoU in 1993-94. The physical, financial and operational targets set forth for Powergrid for the year 2005-06 shall facilitate strengthening of National Power Grid in a time bound manner. Addition of 3800 Circuit Kms of Extra High Voltage transmission lines & 4885 MVA of transformation capacity have been targeted for the FY 2005-06.

Captive power starts flowing into grid 

March 31, 2005. Surplus power from India Inc's captive units is beginning to flow into the grid. PTC India Ltd (PTC) has made a start with the evacuation of surplus electricity from Jindal Steel & Power Ltd's 205 MW captive unit in Chhattisgarh. With the captive units in the country accounting for a cumulative power generation capacity of about 20,000 MW, or close to NTPC's total installed capacity, players such as PTC are aggressively trying to tap surplus power available with such players so that it can be supplied to distribution utilities requiring power.  With the Electricity Act 2003 easing the governing sale of power from captive sets to the grid, many more players are expected to sell surplus power to traders such as PTC and other intermediaries, who can then supply the power to distribution utilities. PTC plans to enter into a memorandum of understanding (MoU) with the prospective customers for a period of around three years or more for trading of surplus power. While the Government is increasing incentives to tap captive power as a means of tiding over power demand in the short-to-medium term, the Central Electricity Authority has drafted a comprehensive policy for purchase of power and wheeling of surplus power from captive sets.

MSEB out-sources distribution and billing

March 30, 2005. In a far reaching move, state power utility MSEB has chalked out plans to outsource energy distribution and bill recovery. The Board has begun a process to appoint distribution franchisees (DF). The areas of business include collection of bills as well. The move comes a few months ahead of MSEB's proposed trifurcation. The Board will cease to exist in its current form from June 10 this year.  Efforts are on to improve its financial health before this, especially at a time when it's facing a shortfall of over 2500 MW. Due to this, the entire state, barring Mumbai, has been forced to live life without power for at least for three hours a day in mid-summer. The state government is implementing six-hour load-shedding in rural areas and three hours in urban areas on a rotation basis.

Policy / Performance

Nuclear power cheaper in the long run

March 29, 2005. Come July, India’s largest 540-MW nuclear power plant (Tarapore Atomic Power Project-4 — TAPP-4) will start commercial production by delivering electricity to the western grid even as Maharashtra is reeling under a 2,500 MW power shortage. The cost per unit of power produced by TAPP-4 is likely to be around Rs 2.65. Maharashtra has been purchasing power from Power Trading Corporation and other private sector players at over Rs 3 per unit. The capital cost of a nuclear power plant is higher but the variable cost is much lower. So, as time passes, the per unit power cost comes down as the fuel cost is stable and capital cost depreciates. For instance, Tarapore I and II today produce power at less than Re 1 per unit. While the fuel cost in a thermal power plant accounts for 70 per cent of the total running cost of the plant, in the case of a nuclear power, it is only 10-15 per cent. The impact is felt once a nuclear plant crosses 10 years. Technically, a nuclear plant can live 50-60 years. The average cost of nuclear power, produced by 14 reactors, is Rs 2.50-3 per unit, comparable with thermal power but as the reactors age goes up, the cost of nuclear power comes down.

Huge disparity in GMDC lignite prices

March 29, 2005. The pricing policy of the Gujarat Mineral Development Corporation Ltd (GMDC), a state government undertaking and a prominent producer of lignite in the state, has baffled the industry as a whole. GMDC is involved in mining of lignite in Panandhro in Kutch and Rajpardi in Bharuch district. The lignite is mined and distributed by GMDC, but there is a big difference in the prices of lignite. The lignite mined at Panandhro is priced at around Rs 690 per metric tonne, including the royalty and the sales tax. The price of lignite mined at Rajpardi comes at around Rs 1,140 per metric tonne, i.e. a difference of more than 60 per cent. The quality of lignite produced at both the places is the same. The calorific value is the same. The mining and supply at both the places is under the control of GMDC. So this huge disparity in the prices does not make any sense.  The GMDC officials reason that the price of the former is lower by almost Rs 600 per metric tonne compared with the price of the latter, if one takes into consideration the freight charges. While the freight charges for bringing lignite from Panandhro to Surat is around Rs 1,450 per metric tonne, it is around Rs 400 for bringing lignite from Rajpardi.

Gujarat NRE Coke plans third unit in Karnataka

March 29, 2005. The Kolkata based Gujarat NRE Coke (GNCL), one of the largest coke manufacturer in the country, has firmed up plans of is setting up its third plant at Dharwar in Karnataka to manufacture 400,000 tonnes of coke a year. The project would hike GNCL’s total capacity to a little over a million. With sky rocketing prices and uncertain availability of high quality coking coal, the company has decided to go for ‘stamp charging facility’ which would be imported from China. This will help the company reap the benefit of using low cost coking coal without compromising on the quality. Once the stamp charging facility with technology for heat recovery oven is implemented, coke oven plants set up with heat recovery technology would be capable of producing power at nominal cost, which may be taken up as forward integration project at a later date once full reform in power sector is in place.

Ministry pushes power schemes

March 26, 2005. After a cut in allocations for the Accelerated Power Development and Reform Programme (APDRP) for the next financial year due to under-utilisation, the power ministry has recommended 85 schemes worth Rs 1,500 crore (Rs 15 billion) for financing in the current fiscal. The steering committee of the ministry has suggested the clearing of 85 schemes, from 14 states, for funding under the programme. The recommendation will be forwarded to the finance ministry, which is in charge of disbursing funds to the states for the programme. The allocation for the APDRP has been cut from Rs 3,500 crore (Rs 35 billion) in the current fiscal to Rs 2,100 crore (Rs 21 billion) in 2005-06. The APDRP was introduced in 2003 with the aim of accelerating distribution sector reforms. It aims to reduce AT&C losses to 15 per cent, bring commercial viability in the power sector, reduce interruptions, and increase consumer satisfaction. The scheme has two components, the investment component and the incentive component. Under the former, additional central assistance of 50 per cent of project cost is provided for strengthening sub-transmission and distribution network. The balance has to be provided by SEBs and utilities from Power Finance Corporaiton, Rural Electrification Corporation, other financial institutions, or from their own resources as counter-part funds. Under the incentive component, an incentive equivalent to 50 per cent of the actual cash loss reduction by SEBs/Utilities is provided as grant. 2000-01 is the base year for calculation of loss reduction in subsequent years.

MNCs may build N-power plants

March 26, 2005. As part of a major thrust to enhance nuclear power generation, the government is exploring the option of allowing foreign companies to set up nuclear power plants in India. The alternative is to import uranium, the fuel required. A road map was being drawn up, which envisaged the addition of an additional 20,000 MW by 2012. The policy is expected to be announced by the middle of next month. The only hurdle would be that India was not a signatory to the Nuclear Non-Proliferation Treaty (NPT). The way out being suggested is that the country signs the NPT for the purpose of hiking power capacity, while leaving the existing indigenous capacity untouched. Allowing the private sector or other countries to set up plants in India will require amendments to the law. 

Better utilisation of coal urged

March 28, 2005. With imported coal expected to be available to power plants from next fiscal, the power ministry is moving into top gear to ensure that the fuel use is rationalised. Potential savings could be to the tune of Rs 1,000 crore (Rs 10 billion) a year. The ministry is going to chalk out a plan on coal management, focussing on the fact that remote and inland plants should ideally get coal from domestic sources while imported coal should be available to coastal and pit head plants. The government has estimated that coal shortfall will be around 10 million tonnes a year over the next two years and the power ministry has asked state electricity boards (SEBs) and National Thermal Power Corporation (NTPC) to expedite coal imports to keep their plants running. The aim of the exercise is to minimise the movement of coal in order to keep transportation costs to a minimum. Currently, the Railways is overcharging significantly for transporting coal.

India to achieve 6900 MW N-power generation

March 25, 2005. State-run Nuclear Power Corporation of India Limited (NPCIL) is aiming to raise power generation from its units to 7000 MW by 2008. To achieve the targeted power production eight reactors would have to be added to the existing 14 nuclear power reactors. The eight reactors include two each in Tarapur with 1,080 MW units, two 220 MW reactors at Kaiga near Karwar, two 220 MW units in Rajasthan and two 220 MW units at Kudamkulam near Kanyakumari. 14 reactors were producing 2950 MW and that the additional units would generate 3,960 MW in the coming years

NPCIL seeks to diversify into hydropower

March 26, 2005. Nuclear Power Corporation of India Ltd (NPCIL) wants to diversify into hydropower generation. The company sees this as preparation for availability-based tariff (ABT) regime, which is currently not applicable to it. According to the January 2000 ABT order for power generation stations owned by the Union Government, electricity tariff consists of fixed and variable costs. State electricity boards give priority to cheaper sources of power, when buying electricity — this is known as the merit order dispatch. Power bought from NPCIL is currently an exception to this order. As most of the company's power plants have high fixed costs, it has begun internal discussions on adding hydropower to its portfolio. The company hopes to supply peak power through hydro generation, which is much cheaper than nuclear power. Nuclear Power Corporation has also studied the option of entering coal-fired generation but decided against it considering the coal procurement problems. Analysts believe the company may have no other choice but to diversify into cheaper sources of power generation if ABT order is applied to nuclear power. The company will benefit if it can enter into a joint venture with National Hydroelectric Power Corporation to produce hydropower. Although nuclear power has been considered an expensive option, the average capacity of the plants operated by Nuclear Power Corporation has steadily risen from 60 per cent in 1995-96 to 85 per cent in 2001-02. The company is currently working on eight projects at four sites and will generate close to 7,000 MW by 2007-08 — more than double its current capacity.

IEA advises energy efficiency

March 23, 2005. International Energy Agency (IEA) will advise industrialised nations on energy policy and encourage consuming nations to do more to contain growth in energy demand. Rapid consumption growth in the United States, China and India has helped drive oil prices up, IEA said in a recent release. Users were still ignoring market signals, IEA indicated. Consumers should become more energy-efficient, and respond to higher prices by lowering consumption, IEA feels. Energy efficiency measures can be easily adopted worldwide, especially in transportation sector, and more so in industrialised nations. However, there was scope for improvement in developing nations as well. High oil prices are damaging economic growth and top producers should avoid saying that prices will stay at current levels, according to IEA.

Capital's power woes may end

March 23, 2005. The Delhi budget gives three cheers to the privatisation of power distribution, assures citizens of meeting demand for ensuing summer and promises to increase power generation without adding to pollution. In an effort to reduce dependence on the Northern Grid, plans are afoot to add generation capacity by setting up a 330MW gas based power plant, Pragati-Phase II and a 1000 MW gas turbine combined cycle power project. The budget has a word of comfort for Delhi residents and industries. Power requirement for this summer is pegged at 3600 MW, and Delhi Transco is making the necessary arrangement to ensure this level of power supply. Transco did manage to meet its peak demand requirement of 3490 MW in 2004. The government also plans to convert the IP power station from a thermal base to a gas based plant. This change will be done in a phased manner—replacing one unit each year so as to maintain current generation levels. It is also considering setting up a 330MW gas based power plant, Pragati Phase II. Government plans to set up a 1000 MW gas turbine combined cycle power project at Bawana. The Delhi government has decided to develop this project through private participation.

OERC move to make power tariff industry-friendly

March 23, 2005. The power tariff for the 2005-06 in Orissa appears to be industry-friendly. The Orissa Electricity Regulatory Commission (OERC) has made an attempt to give incentives to promotion of industry in the state in its retail supply tariff order for 2005-06. The tariff order, with a view to encouraging the establishment of new industries, has offered a discount at the rate of 25 per cent for contract demand of 5 MVA and above in the first slab from April 1, this year. This discount, however, is subject to the condition that they operate at a guaranteed load factor (LF) of 80 per cent. Fabrication units, agro industries, cold storage and IT industries will be covered under the industrial category while hotel units and BSNL will be able to avail the facility of off-peak tariff. As an incentive to curb pilferage of power, voluntary declaration of unauthorised use will lead to immediate regularisation as consumers without penalty. Under the new tariff regime, the extra high tension (EHT) and high tension (HT) consumers, covered under Special Agreement will now get a discount of 25 per cent on the energy charges in the first slab of existing tariff provided they fulfil the various conditions with an overall charge not exceeding 230 paise per unit. Incentive tariff for HT and EHT will continue as before for consumers with a higher level of consumption.

Plan panel calls for linking central aid to paring losses in power sector

March 23, 2005. Average retail tariffs in India are one of the highest in the world at 30.8 cent/kwh as against China at 20.6 cent/kwh, Brazil at 27.6 cent/kwh, Japan at 15.3 cent/kwh and Germany and the United States at 9.5 cent/kwh and 7.7 cent/kwh respectively. This makes the Indian power sector internationally un-competitive and the ‘paying consumer’ is burdened with one of the highest tariffs in the world for similar consumption levels. The paying consumer here is the industrial segment cross-subsidising the domestic and agricultural consumers. Stating this in its mid-term appraisal report of the power sector for the 10th Plan, the Planning Commission suggests that this imbalance can be corrected only by encouraging competition in the entire electricity value chain. Such an enabling environment would create conditions that will allow the private sector, central PSUs and state sector utilities to compete on the basis of tariff rather than just looking at guaranteed returns. The Plan document has also put in place a roadmap entailing various policy measures and strategies aimed at inducing competition in the sector. It has recommended that all central assistance to state governments for the sector must be linked exclusively to loss reduction and improved viability.

Kerala Govt to seek pvt partnerships for non-conventional power

March 22, 2005. The State Government will invite private entrepreneurs to set up stations for generating power from non-conventional energy sources. The Government would allocate land for the purpose for 20 years on lease basis. It will also provide all possible assistance for getting the statutory clearances for setting up the power plants. Besides, the Government will take care of aspects like construction of sub-stations and distribution network. And if needed, the existing sub-stations will be upgraded for facilitating power supply from the non-conventional energy sources and the Agency for Non-conventional Energy and Rural Technology will make the initial investments. A study had identified 16 places in the State that are suitable for generating power from wind. It has also been estimated that power to the tune of 605 MW can be generated from them. The wind plant at Ramakkalmedu in Idukki district would be commissioned soon. 

Pvt power producers to add 3,000 MW in Maharashtra

March 23, 2005. Private sector power companies would be adding fresh capacity to the tune of 3,000 MW in Maharashtra over the next couple of years. The demand for energy has been on the rise in the State with no commensurate increase in power generation capacity. The State has also not invested in high-tension lines and substations. According to estimates, a whopping Rs 56,000 crore (Rs 560 billion) would be needed to overhaul the power generation, transmission and distribution system in the State. Meanwhile, the State Government will discontinue the system of load shedding during evening all over Maharashtra in the next one year. The Government is implementing a project to convert all three-phase lines to a single phase one. The investment that is going into this project is about Rs 500 crore (Rs 5 billion). Currently, there is load shedding to the tune of 3,000 MW in the State that is likely to shoot up to 3,800 MW during the summer months.

Integrated energy policy soon

April 4, 2005. The power ministry has proposed sweeping changes in the regulatory mechanism of the energy sector. This is needed to bring all the sectors in sync with the integrated energy policy. As of now, each of the linked energy sector is working on its own. Certain elements like stable pricing regime for fuels being used in power generation, focus on nuclear and non-conventional generation will also have to be synergised to bring them as part of the integrated energy policy. The power ministry has also highlighted the declining growth of hydro generation over the years. Further the technological breakthrough in the nuclear generation is expected to play a large role in diversifying the fuel mic for power plants. Also, the option of liquid fuel is now being increasingly dumped as an option for power plants. As against the liquid fuel option the power ministry is turning around to the fact that gas would be the sustainable fuel for conventional power generation in the coming years. 

PM to launch rural electrification scheme

April 02, 2005. The Prime Minister, Manmohan Singh, will launch here ‘Rajiv Gandhi Grameen Vidyutikaran Yojana' (RGGVY), a new rural electrification scheme, aimed at providing electricity to all households in villages. Under the scheme, a rural electricity distribution backbone with at least one 33/11 KV or 66/11 KV sub-station is to be created in each block to build infrastructure by installing at least one distribution transformer in each village or habitation. Decentralised distribution generation is to be undertaken where grid supply is neither feasible nor cost-effective. The ultimate aim is to bridge the urban-rural divide and accelerate rural development by generating employment and eliminating poverty. In its National Common Minimum Programme (NCMP), the United Progressive Alliance has promised rural household electrification in the next five years. Under the new programme, 90 per cent of the capital cost is to be extended as grant by the Centre in keeping with the NCMP goals, one of them being free electricity connection to all rural household living below the poverty line.

Power policy skirts tariffs

April 04, 2005. The draft tariff policy prepared by the power ministry avoids any confrontation with the Central Electricity Regulatory Commission’s (CERC) guidelines and does not specify any norms for setting tariffs. “The norms are to be determined by the CERC. The policy is in line with the National Common Minimum Programme, which says the regulatory structure will be strengthened, and does not interfere with the regulator’s domain,” said AK Basu, chairman, CERC. The tariff order for 2004-09, which has already been issued, was by and large in line with the policy. The document, which has been circulated for comments to various states, also calls for a review of the duties on electricity in order to bring them to a reasonable level. The draft policy is, however, in favour of time-bound recovery of uncontrollable costs, such as fuel, power purchase and taxes, through tariff hikes.  On tariffs, the draft policy is in favour of quick recovery of uncontrolled costs. It says the focus should be on the regulation of output, and not input, costs. State electricity regulatory commission (SERCs) will have to notify roadmaps (by September 2005) to bring tariffs within a 20 per cent range of the average cost of supply by 2010-11. The draft policy says tariffs for agricultural use will have to factor in the use of ground-water resources in a sustainable manner, in addition to the average cost of supply.  So, there may be different set of tariffs for different parts of a state depending on the water table level. The draft policy adds that subsidised power rates should be permitted only up to a pre-identified level of consumption, beyond which tariffs reflecting efficient cost of service should be charged from consumers. If the state government wants to reimburse even part of the cost of electricity to poor consumers, the amount can be paid in cash or any other suitable way, it says, adding that the use of prepaid meters can also facilitate the transfer of subsidy to such consumers. 

PFC loan for Nagarjuna's Udupi thermal project

April 01, 2005. The public sector Power Finance Corporation (PFC) has agreed to provide a term loan of Rs. 750 crores (Rs 7.50 billion) to Nagarjuna Power Corporation for setting up a 1,015 MW mega thermal power plant in Udupi district, Karnataka. PFC's funding will have tenure of 12 years and carry an interest rate of 7.25 per cent. The project funding of Rs. 750 crores (Rs 7.50 billion) was cleared by the PFC board after the promoters re-worked the power purchase agreement (PPA) with the State Government-owned Karnataka Power Transmission Corporation in January wherein the rate of return had been fixed at 14 per cent on the basis of a plant load factor of 80 per cent. The power tariff during the first year of operations is estimated at Rs. 2 per unit. The first phase of the project with a capacity of 507.5 MW is expected to be commissioned within 38 months of financial closure and the second phase after 42 months. Once the project is fully commissioned by end-2007, it is expected to add about 7,600 million units to the State grid.

Power, cement sectors to get 87 mt coal

April 01, 2005. Power and cement sectors including captive power plants have been allocated 87 million tonne (mt) of coal for the first quarter of 2005-06. The minister of state for coal and mines, Dasari Narayana Rao approved the recommendations of the Standing Linkage Committee, an inter-ministerial body in the department of coal which considers coal demand from various sectors.  Power sector has been given a linkage of 75.15 mt, while the cement sector 4 mt in the first quarter of the next fiscal. The Standing Linkage Committee reviewed coal supply to both the sectors for 2004-05. Despatch of coal to power sector during 2004-05 is estimated at 274 mt exceeding the Annual Action Plan target by 8 mt. This is an increase of 14 mt over last year. For 2003-04 and 2004-05, coal despatches to power sector mark an increase of 27 mt over the target. In view of the prevailing coal shortage, the Standing Linkage Committee has recommended that power houses should import 10-12 mt coal in 2005-06.  The committee has applied new coal consumption norms to 88 captive power plants (CPPs) resulting in coal saving of about 800,000 tonne for the quarter.

Old power plants to be made energy efficient

March 30, 2005. Faced with coal shortages and the rising prices of diesel and naptha, the power ministry has decided to focus on improving the performance of old and badly maintained plants in order to make up for the shortfall in power requirements. An ambitious plan drawn up by the ministry aims to improve performance of 26 power plants with a plant load factor (PLF) of less than 60 per cent. The average PLF the ratio of the actual power generation to the installed capacity of a plant in India is 73.9 per cent.  A team of officials from Central Electricity Authority and National Thermal Power Corporation (NTPC) are to visit these plants and draw up a roadmap to increase the PLF to 50 per cent in six months, 60 per cent in one year and 75 per cent in three years time. The move is expected to result in an additional generation of 5000 MW of power each year. 

SBI Caps recommends sale of FIs’ equity in Spectrum Power 

March 31, 2005. SBI Caps, which was roped in by the Industrial Development Bank of India Ltd (IDBI)-led lenders, has strongly called for the sale of equity of financial institutions (FIs) in the 208 mw Spectrum project and not the sale of assets.  FIs hold 32 per cent stake, equivalent to Rs 54.67 crore (Rs 546.7 million), while the other equity holders are Rolls Royce (32 per cent), Spectrum Technologies USA (STUSA) (17 per cent) and Bambino Group & Associates (19 per cent). Since September 2003, the IDBI-led lenders have gained the management control of the Spectrum Power Generation Ltd (SPGL). In its report submitted to the IDBI Ltd, SBI Caps has called for the sale of equity through a transparent bidding process.

New power firms to start functioning

March 31, 2005. The seven new companies formed out of the restructured Gujarat Electricity Board (GEB) will take up the mantle of power generation and transmission in the state from April 1. The new power bodies were formed after the Central and state governments signed a MoU to reform the power sector in January, 2001. The four-year restructuring of GEB was marked by long battles with employee unions and tedious procedures of dividing assets and debts between the companies.  In the new avatar of the board, the current chairperson of GEB, V L Joshi will head Gujarat Urja Vikas Nigam Ltd, Gujarat State Electricity Corporation Ltd and Gujarat Energy Transmission Corporation Ltd.  The other four distribution companies will be managed by other IAS officers including P K Taneja and L Chuaungo, who are already the managing director of Gujarat Alkalies and Chemicals Ltd and Gujarat Industrial Power Company Ltd, respectively. 

Coal India-NLC combine plans large thermal power projects

March 30, 2005. Coal India Ltd (CIL) has decided to enter into the power generation business jointly with Neyveli Lignite Corporation (NLC). To begin with, a 2,000-MW capacity thermal power plant is to be set up at the pithead of one of the mines located in the command area of Mahanadi Coalfields Ltd in Orissa. Once the project is completed, the CIL-NLC combine might set up large thermal power projects in other States also. All its seven production subsidiaries would give priority to produce more of washed and proper sized coal, which would facilitate them to get better sales returns. This apart, Coal India is planning to enter coal gasification and coal-bed methane projects jointly with ONGC. A memorandum of understanding would shortly be signed with ONGC for setting up a joint venture company for setting up a coal gasification project.

US offer may help India to renew talks with other nuclear powers

March 30, 2005. India may finally cease to be an untouchable as a nuclear power if the US' offer to supply the country nuclear energy technology, takes off. It may in fact help India renew talks for acquiring technology from other nuclear powers such as Russia and France. The US offer will, however, not have any bearing on India's planned nuclear energy projects' schedule, said Mr S.K. Jain, Chairman and Managing Director, Nuclear Power Corporation of India Ltd. "India has devised its own nuclear power technology. And we have in-place a nuclear power generation schedule for the next 30-odd years. We welcome technological and financial support from the US. And from any country, which respects our nuclear position," said Mr Jain. According to Mr S.A. Bohra, NPCIL's Director (Technical), US technology will be most welcome for setting up new projects. Although India is setting up 1,000 MW light water reactors at Kudankulam with aid from Russia, but that was before the latter signed the NPT.

Revisit power subsidies: PM

April 05, 2005. Prime Minister Manmohan Singh today called for a political consensus on rational user charges for electricity and implied that the issue of subsidy for power needed to be revisited.  With this, he seemed to have hit a raw nerve not just within the United Progressive Alliance but also within his own party.  “Electricity is today a basic necessity. However, it is necessary that users remember it as an economic asset and hence, has to be valued and used judiciously. Every user of energy must be made aware of its economic and environmental cost,” he said. “Even when governments offer subsidies to certain categories of users and there is scope for that, they must understand the relevance of this subsidy and have respect for the asset being provided to them. I, therefore, urge our political leadership to take a more long-term and rational perspective in pursuing our energy policy,” he said.   He also said the challenge of economic generation, distribution and pricing of electricity had to be addressed in a non-partisan manner in order to ensure the rapid spread of electrification across the country and attract investments to the sector. The scheme, aimed at providing electricity in all the remaining 74,000 villages by 2009, was launched in the presence of National Advisory Council Chairperson Sonia Gandhi. 

AP to seek Rs 20 billion from Centre for electrification

April 05, 2005. Chief Minister Y S Rajasekhara Reddy, who participated in the nationwide launch of Rajiv Gandhi Grameen Vidyutikaran Yojana said that his government would request the Union government to provide Rs 2,000 crore (Rs 20 billion) for electrifying the remaining households in the state. Though Andhra Pradesh achieved 100 per cent electrification of all the 26,565 villages, more than 40 per cent of the rural households are yet to be electrified. Under the new scheme, the Centre will provide 90 per cent of the cost of electrification which includes augmentation of electricity distribution network to the states. 

Karnataka seeks Rs 7 billion for rural electrification

April 05, 2005. The state government has sought central assistance of Rs 700 crore (Rs 7 billion) under the Rajeev Gandhi Grameen Vidyuktikaran Yojana for taking electricity to villages. The money is to be spent over five years to give electricity to some 16,000 hamlets in the state, chief minister Dharam Singh said. This takes the Congress - Left coalition at the centre a step closer to delivering on its National Common Minimum Programme promise of providing electricity to some 78 million villages in the country that don’t have it at all.  The new scheme will benefit some 550,000 below the poverty line households, he said, in the remote and hilly areas. 

Central approval for rural electrification project

April 4, 2005. The Union Government has approved in principle the Rs 337-crore (Rs 3.37 billion) rural electrification project of the Kerala Government. The project, under the Rajiv Gandhi Rural Electrification Programme, envisages supply of power to 879 villages in the State, the Chief Minister, Mr Oommen Chandy, said. Mr Chandy said the State Government had also submitted to the Centre a project for constructing 15 sub-stations in seven districts. He expected the Centre's approval for the project. He said that more than 100,000 households coming below the poverty line had been given free power connection in 2004-05 under the Accelerated Rural Electrification Programme.




Unocal starts production from Moulavi in Bangladesh

March 22, 2005. Unocal Corporation said that two of its subsidiaries have started production from the Moulavi Bazar gas field in Bangladesh. The Moulavi Bazar field is currently producing more than 70 million cubic feet of gas per day (mmcfd), from two well completions.

 The company plans to complete two more wells by May 2005, which is expected to increase the field's production capacity to 150 mmcfd. The Moulavi Bazar field is located in block 14 in the northeast district of Sylhet. Unocal Bangladesh Blocks 13 and 14, Ltd., is operator and, together with Unocal Bangladesh, Ltd., has a 100-percent working interest in the production sharing contract (PSC) covering the field. Natural gas production from the Moulavi Bazar field is delivered into the existing Bangladesh national gas network. Under the natural gas purchase and sales agreement (GPSA) signed with Petrobangla in October 2003, Unocal built the gas processing plant with a capacity of 150 mmcfd and a 24-kilometer pipeline to connect the field with the national grid. Total development cost of the project, including development wells, has been estimated at US$42 million. The company estimates the Moulavi Bazar field has a gross resource potential of more than 440 billion cubic feet of gas.

Russia's Tatneft to explore for oil in Syria

March 22, 2005. Russian oil firm Tatneft has signed an agreement to explore for oil in Syria and produce it under a production sharing agreement, the firm said. It said it was the first big production sharing agreement signed by a Russian company in the Middle Eastern state. "The contract provides for seven years of exploration. The period of development and production of oil, with consequent sharing of production, will comprise 25 years," Tatneft said. Tatneft took part in tenders for 16 blocks and was awarded block 27, comprising two areas in Syria's southeastern Al Bu Kamal region, near the pipeline from Iraq to Syria.

Unocal finds more oil at Gulf of Mexico field

March 22, 2005. Unocal Corp. said an appraisal well drilled at a Gulf of Mexico deepwater field found significant amounts of oil. Testing in the waters off the southwest flank of the Mad Dog deepwater field, Unocal said it found about 300 feet of net oil pay in one section. It also discovered hydrocarbons some 700 feet deeper on the west flank of the structure than previously encountered.

CNOOC offers oil and gas blocks 

March 24, 2005. The China National Offshore Oil Corp. (CNOOC) is offering 10 offshore oil and gas blocks to foreign companies for exploration and development this year, the company has announced. The blocks cover a total area of nearly 67,000 square kilometers in Bohai Bay, the Yellow Sea, East China Sea and South China Sea, with water depths ranging from 10 to 200 meters. China is stepping up efforts to tap its offshore oil and gas resources to feed the roaring economy and supplement waning onshore reserves. CNOOC is the largest offshore oil producer in China. It enjoys exclusive rights to explore for, produce and market China's offshore oil in cooperation with foreign companies. At the beginning of each year, CNOOC routinely opens up selected blocks to foreign bidders. Big-name partners include Royal Dutch/Shell, Kerr-McGee and ConocoPhillips.

Rally Energy discovers gas in DG Khan

March 24. 2005. Rally Energy Pakistan Limited, operator of Safed Koh exploration licence along with its joint venture, made a gas discovery at Dewan-1 exploratory well in Dera Ghazi Khan district of Punjab. The discovery well on one-inch choke flowed 5.0 mmcfd of gas with a condense yield of 22 b/d from the Cretaceous Lower Goru reservoir sand interval of 2521m to 2635m. The gas has a calorific value of 1027 BTU/SCF and the gas bearing structure tested through Dewan-1 has a most likely estimated closed area of 14 sq km with a maximum vertical closure of over 450 metres. The DST and the log evaluation has indicated a gas column of 170 metres and Rally’s management believes that this is a significant natural gas discovery and when fully developed it will not only add to the country’s gas reserves but also produce substantial volumes of gas.

Venezuela increases proven oil reserves

March 28, 2005. Venezuela's state-run oil company increased its proven oil reserves by 192 million barrels after drilling at two fields in eastern Venezuela, the company said. Petroleos de Venezuela S.A., or PDVSA found 132 million barrels of crude after drilling two new wells at the Tacata field in Anzoategui state and discovered another 60 million barrels of oil reserves at the Chaguaramal field in Monagas state after drilling an exploration well. PDVSA has said it will invest $5 billion this year in exploration and production. The company claims it is pumping more than 3 million b/d of oil, but industry estimates put the figure closer to 2.6 million b/d. Venezuela, the world's fifth largest oil exporter, has approximately 78 billion barrels in proven oil reserves - the largest in the Western Hemisphere.

Russia offshore fields' output will rise by 2020

March 29, 2005. From 2005 to 2020 oil output from offshore fields can reach 600-700 million metric tons, while gas output - up to 1.6 trillion cubic meters. “Geologic exploration that allows to accumulate 10-13 billion tons of extractable commercial oil reserves, including 1.3-1.5 billion tons of cost-effective reserves, and 10-18 trillion cubic meters of gas has to be intensified,” said an official.

Preparing deposits for auctions will cost 33.2 billion rubles ($1 equals 27.81 rubles) overall. Currency receipts from oil output before 2020 will reach $98-$128 billion, while gas output receipts will be $107 billion, said Kaminsky.  The budget's one-time expected receipts from delegating the right to use subsurface mineral resources have been estimated at $1.8 to $4.9 billion. The figure was calculated on the basis of data on auctions for mainland and offshore fields in Russia and abroad, according to Kaminsky.

Unocal discovery in northwest territories, Canada

March 30, 2005. Unocal Corporation said its Canadian subsidiary, Northrock Resources Ltd., has made a hydrocarbon discovery on the Summit Creek prospect in the Central Mackenzie Valley area of the Northwest Territories in Canada.

INPEX earmarks $1 bln to boost 05/06 oil, gas output

March 30, 2005. Japanese upstream company INPEX Corp. will spend more than $1 billion next year to raise oil and gas output, and may review the benchmark oil price it uses to make investment decisions. INPEX is also targeting exploration opportunities in Africa, especially Libya, which will hold a second post-sanction licensing round in May. Inpex, plans to invest 135 billion yen in development, more than 90 percent of total capital expenditure next year.

Sinopec discovers large gas field in Sichuan 

March 30, 2005. The China Petroleum and Chemical Corp. the country's second largest oil and Gas Company, announced it has discovered a large gas field in the northeastern part of Sichuan Province with verified reserves topping 114.4 billion cubic meters. The Puguang Gas Field is the largest gas field ever discovered in the Sichuan Basin, and one of the largest in the country. The Ministry of Land and Resources has confirmed that the field has 87.8 billion cubic meters of extractable reserves. Sinopec is accelerating efforts to develop the field to meet the country's voracious demand for fuel.

ChevronTexaco plans heavy crude project

March 31, 2005. ChevronTexaco Corp. is planning a new project with Spain's Repsol YPF to pump heavy crude in Venezuela's Orinoco tar belt, marking the latest interest by major oil firms in Venezuela's vast reserves.The multi-billion-dollar project will refine the extra heavy Orinoco oil into synthetic crude and transport it through a new regional pipeline, according to a letter of intent the two oil firms signed with Venezuela. Major oil firms are lining up to develop Venezuela's Orinoco area. Norway's Statoil and France's Total plan to launch a second upgrading project in the area this year. Joint investment of $5 billion to $6 billion is planned in the project. The four heavy crude projects in the Orinoco area Petrozuata, Sincor, Hamaca and Cerro Negro produce a heavy tar oil that is refined into around 500,000 b/d of synthetic oil.The new project will be Repsol's first heavy oil venture in Venezuela.

Shell had reserves of 11.9 Billion barrels end of 2004

March 31, 2005. The Royal Dutch/Shell Group of Cos. still recovering from a scandal that forced it to drastically reduce the level of its proven reserves, revealed that its oil and gas reserves fell by a further billion barrels last year. The oil company said that after replacing only 19 percent of the oil that was pumped out of the ground in 2004, its recoverable reserves stood at 11.9 billion barrels at the end of the year, down from a restated figure of 12.95 billion barrels in 2003.

Eni says Kazakh KMG to join Kashagan project

March 31, 2005. Kazakh state oil and gas firm KazMunaiGaz (KMG) will acquire half of UK gas and oil firm BG Group's stake in the Kashagan oilfield. BG said it would raise some $1.8 billion from the long-awaited sale to the project partners, led by Eni, of a 16.67 percent stake in the Kashagan field, which is located in the Caspian Sea offshore Kazakhstan. Kashagan, covered by a 40-year production sharing agreement, is due to start pumping oil in 2008 and is at the heart of Kazakhstan's plans to become a major oil producer in the next decade.

Marathon’s discovery in Angola

March 31, 2005. Marathon Oil Corporation through its wholly owned subsidiary, Marathon International Petroleum Angola Block 31 Limited, announced the Ceres-1 deepwater discovery in Angola. The Ceres-1 discovery well is located approximately 170 kilometers (105 miles) off the Angolan coast in 1,633 meters (5,358 feet) of water. The well was drilled to a total depth of 4,334 meters (14,220 feet) and tested at a maximum rate of 5,644 barrels of oil per day through a 44/64 inch choke. Ceres is located approximately 32 kilometers (20 miles) southeast of the planned Northeast Development Area where four previous discoveries were made, and is about 31 kilometers (19 miles) northwest of the recently announced Palas discovery.

Libya seeks OPEC approval to raise production 

April 4, 2005. Libyan Prime Minister Shukri Ghanem said that his country was trying to win the approval of OPEC to raise its production quota within the cartel. Libya "is trying to convince OPEC to revise its production quota," Ghanem said, adding however that Tripoli would respect the oil organisation's decisions. Libya wants "to increase its oil production capacity and this is precisely why it granted exploration rights to foreign firms," Ghanem said. Earlier this year Libya granted 15 exploration licences to oil firms, with US companies getting the lion's share, for the first time in 40 years. Libya wants to increase its production but it also wants to maintain stability on the markets.  Libya produces 1.4 million b/d but hopes to increase it to 3m b/d by 2010. The North African country has proven reserves of 36 billion barrels which could reach 100bn barrels and must invest $30bn over 10 years to raise its production.

Technip win $500 mln Brazilian contract

March 24, 2005. French oil services firm Technip said it won, with Subsea 7, a unit of Siem Offshore, a contract worth around $500 million for the deepwater Roncador field development in Brazil. Technip's share of the engineering, procurement, installation and construction contract is around $350 million.

OPEC ready to boost output

April 4, 2005. OPEC is ready to boost oil production by another 500,000 b/d or more if oil prices remain near record highs, the group's acting Secretary-General Adnan Shihab-Eldin said. He said ministers would intensify consultations "over the next days and weeks" about a second production rise in as many months as U.S. oil prices head toward $58 a barrel. "OPEC stands ready to implement its decision to add another 500,000 should this become necessary over the next few days or next few weeks, and beyond that, we also stand ready to consider additional increases in production to ensure that supply continues to be ahead of demand," Shihab-Eldin said.

The Organization of the Petroleum Exporting Countries raised output by 500,000 bpd in mid-March to dampen oil's 30 percent rally so far this year, but left room for another increase of the same volume if prices failed to fall below $55. Shihab-Eldin said OPEC's 10 members bound by quotas had already lifted production by an estimated 300,000-500,000 b/d in March over February. OPEC estimated that production by the 10 members came to about 27.7 million bpd in February.  He forecast demand for OPEC's crude to be 28.5 million bpd in the third quarter, rising to 30.3 million b/d in the last three months of 2005.

ChevronTexaco buying Unocal for $16.4 b

April 4, 2005. ChevronTexaco Corp., the second biggest U.S. oil concern, is buying rival Unocal Corp., the ninth biggest U.S. oil and gas exploration and production company, for about $16.4 billion in cash and stock. Under the deal announced, ChevronTexaco would also assume $1.6 billion of debt.

Gas find offshore Venezuela

April 4, 2005. U.S. oil major ChevronTexaco has made a commercial natural gas discovery in Venezuela's offshore Deltana region, the company's regional president said. The international oil major made the discovery in Deltana's Block 3 on the maritime border with Trinidad and Tobago.  ChevronTexaco is exploring Block 3 as well as Deltana's Block 2 as part of the OPEC nation's efforts to increase natural gas output for domestic use and export.


Kuwait oil project to cost over $8.5bn

March 28, 2005. Kuwaiti Energy Minister Ahmad Fahd Al-Sabah said the cost of major plans to develop four oil fields with the assistance of foreign oil majors will be over $8.5 billion. Ahmad, who last month submitted new draft legislation to regulate the Kuwait Project to the emirate’s parliament that the cost was raised from an early estimate of $7 billion. The returns of foreign companies during the 20-year investment will be around $3.2 billion, he said.

Petrobras plans $1 bln Brazil refinery project

March 28, 2005. Brazil's state-run energy company Petrobras plans to invest $1 billion to expand a refinery in Minas Gerais and build a petrochemical factory to make acrylic acid, the company said. The project will be financed by the Minas Gerais State Development Bank, which expects the expansion and factory to be completed by 2010. Petrobras, $650 million will be used to modernize and expand the Gabriel Passos Refinery in the city of Betim. The rest will be used to build the petrochemical complex.

China to boost refining capacity to handle energy demand

March 29, 2005. China, whose booming economy is expected to see record demand for oil this year, plans to expand its refining capacity by more than a third within the next five years. By 2010, the country aims to add 100 million tonnes to its refining capacity, on top of its current nearly 300 million tones. China processed a record 273 million tonnes of crude oil last year, up 13.7 percent from the year before, marking the fastest growth rate in three decades. Boosting domestic refining capacity is a key element in China's plans for coping with its enormous appetite for energy and fits into a larger strategy to rely more on the country's own resources to the greatest possible extent. Consumption of crude oil in China, already the second-largest user after the United States, will jump to 320 million tonnes this year, an 11 percent rise over the 288 million tonnes used last year, according to earlier predictions.

Milestone for gas-to-liquids fuel plant

March 30, 2005. Syntroleum Corporation commemorated the successful production of more than 140,000 gallons of ultra-clean fuels at its gas-to-liquid (GTL) fuels plant at Port of Catoosa, Oklahoma. The plant also manufactured 60,000 gallons of additional products, such as syncrude. Gathered to mark the occasion were representatives from Syntroleum, the U.S. Department of Energy (DOE), Marathon Oil Company and Integrated Concepts and Research Corporation (ICRC).

Technip to build refinery unit in Virgin Islands

March 31, 2005. French oil services firm Technip said it had won a contract to build a hydro treating unit at one of the world's largest refineries, the St. Croix refinery in the U.S. Virgin Islands. Technip said the 50,000 barrel-per-stream-day unit will produce low-sulphur gasoline, in compliance with new U.S. regulations. The contract was awarded by Hovensa, a joint venture of Venezuelan state oil company PDVSA and Amerada Hess and the project is expected to be finished in November 2006.

Transportation / Trade

Caltex in marketing contract with NOCK

March 25, 2005. Oil marketer Caltex Oil entered into a three-year product marketing partnership with the National Oil Corporation of Kenya (NOCK). The agreement gives NOCK the responsibility of distributing Caltex products in Kenya’s commercial, industrial and retail sectors. NOCK operates six fully-fledged, company owned and dealer operated petrol stations in Kenya. Nock also operates a 1.4 million litres per day modern bulk loading facility in Nairobi.

Yemen to export surplus gas to Pak

March 26, 2005. Ambassador of Republic of Yemen Abduleah M Hajar has said that his country is working on a plan to export surplus gas to Pakistan. He said it was not feasible to supply this gas through pipeline and therefore it would be converted into LNG for shipment through tankers. Yemen was also exploring possibilities for initiating other investment projects under joint ventures including gas field project. Pakistan exports textiles, medical equipment, pharmaceutical, rice, sugar and leather garments to Yemen while it imports petroleum products.

Qatar to spend $15 bln on LNG ships

March 29, 2005. Gas giant Qatar will spend $15 billion in the next five years to add 70 vessels to its fleet of tankers to export liquefied natural gas (LNG), Oil Minister Abdullah al-Attiyah said. The Gulf state, which is home to the world's third-largest gas reserves after Russia and Iran, aims to export 77 million tonnes of super-cooled and compressed gas by 2012. "Qatar is well committed and overbooked by 2012 in terms of LNG contracts," Attiyah said. "We will build more new LNG ships, about 70, between now and 2010 and the cost will be about $15 billion."

Oman signs $688m deal for LNG train

March 31, 2005.Qalhat LNG, in which the Omani government has 55.84 percent stake, signed a loan agreement worth $688 million rials with 13 international banks to launch the third LNG train early next year.

3-B Malampaya-Brunei gas pipeline mulled

April 1, 2005. The Philippines is eyeing the establishment of a gas pipeline from Malampaya in Palawan to Brunei Darussalam as part of the Trans-Asean Gas Pipeline (TAGP) project. The proposed Palawan to Brunei pipeline would cover about 1,000 kilometers. The Malampaya gas pipeline from Palawan to Batangas stretches about 500 kilometers. The proposed pipeline could cost at least $3 billion since the Malampaya pipeline project alone costs about $1.5 billion.

Oil producer Oman forays into trading 

March 22, 2005. Oman will take its first step into oil trading this summer with the help of a leading private firm, becoming the most aggressive Middle East producer to venture into speculative trade. The likely winner of a tender to set up a semi-state joint-venture to trade oil will be Dutch trader Vitol, one of the biggest private energy trading houses in the world. The joint-venture will be independent from Oman's Ministry Oil and Gas (MOG) and will not be given exclusive rights to market Omani crude or oil product output, as is the case with most state trading firms in the region. State-owned Oman Oil Company, set up in 1992 with interest in exploration, production and downstream operations, is expected to be the majority shareholder. The new firm, based first in Muscat with a view to opening an outlet in Singapore, will buy Oman crude from the MOG and resell it on the spot market, as other lifters regularly do. CPC Blend crude oil export volumes are expected to rise nearly 200,000 b/d to total 650,000 b/d this year. The new trading venture is expected to take on riskier speculative positions in the oil market, a rare move among oil producers who typically take a more conservative stance.

ChevronTexaco sells fuels marketing business in Peru

April 1, 2005. ChevronTexaco Corp. said it is selling its fuels marketing business in Peru, including Texaco service stations, to Peruana de Combustibles S.A. The deal is part of ChevronTexaco's broader strategy to get out of the marketing business in some countries and focus on higher-return areas where its brands already have an established presence.

Russian plan for east Siberia rail link 

April 05, 2005. OAO Russian Railways, the country’s rail monopoly, plans to invest up to 30 billion rouble ($1.1 bn) on railways in east Siberia to help increase the amount of oil shipments from the region to Asian countries. Russian Rail by 2008 plans to ship as much as 30 million tonne a year (600,000 b/d) of oil from Skovorodino near the Chinese border to Perevoznaya, Russia, on the Pacific coast, the Moscow-based company said. The fuel could then be put on tankers destined for Asian countries such as China or Japan.  Russian oil companies are increasing shipments by rail because the nation’s pipeline capacity hasn’t kept up with crude production that’s increased 50 per cent since 1999. Buyers of oil in Asia want access to more Russian crude to reduce their dependence on the Middle East for supplies. Chinese oil companies have signed contracts guaranteeing that they will increase rail deliveries of Russian oil from last year by half to as much as 15 million tonne a year, the company statement said. OAO Transneft, Russia’s pipeline monopoly, plans to build the first stretch of its eastern pipe from the Irkutsk region to Skovorodino, about 60 km from the Chinese border. The pipeline will initially ship 600,000 barrels a day. Russian Railways’s construction plan will allow as much as 36 mt a year of oil to be shipped from western Siberia, Russia’s main oil producing region.   

Petronas begins gas supply

April 4, 2005. Petronas Carigali (Pakistan), a subsidiary of Malaysia's national oil and gas corporation Petronas, announced that it had commenced gas production from the Rehmat field in Block 2769-4 (Mubarak), Sindh. The processed gas is being supplied to Sui Northern Gas Pipeline Limited's Sawan Qadirpur trunk line starting from March 28 through a 35-km pipeline from Rehmat Gas Plant in Ghotki, near Sukkur. The initial production rate of the plant is 15 million standard cubic feet per day (mmscfd) and it is expected to increase 60 mmscfd in the next two months, says a press release.

CB&I wins contract for British LNG terminal expansion

March 31, 2005. Chicago Bridge & Iron Co. NV said it was awarded a $470 million to $500 million contract for the expansion of a LNG import terminal at a facility outside of London. The contract for an import terminal at a facility in Kent, England, is scheduled to be completed in mid-2008. It was a portion of CB&I's first-quarter new business taken previously mentioned, the Texas-based engineering, procurement and construction company said.

Policy / Performance

Shell, Kuwait sign pact to seek China, India deals

March 22, 2005. Royal Dutch/Shell Group and state-owned Kuwait Petroleum International (KPI) have signed a deal to jointly develop downstream investments in China and India, the firms said. KPI said it hoped the deal could pave the way for new refineries to handle heavy Kuwaiti crude, something which would ease a key bottleneck in the global oil market. The agreement follows a deal last week between KPI, the overseas arm of Kuwait Petroleum Corp., and BP seek joint investment opportunities in China. Shell and KPI will explore opportunities across the downstream chain, from supply and refining to distribution and marketing of petroleum products, Shell said. "This strategic partnership will seek opportunities around the world for leveraging Shell's global downstream experience with Kuwait's hydrocarbon resources and growing downstream investments," Shell said. The deal could help Kuwait find a home for the significant increase in output it plans in coming years, using Shell's contacts and technology to build its share in the Asian market.

Yemen turns to gas resources to replace oil

March 28, 2005. Yemen, one of the world’s poorest countries in a constant search for alternative resources to its dwindling oil reserves, is hoping for a brighter future with a $2.5-billion gas project. The dire situation even prompted President Ali Abdallah Saleh himself to admit recently that “our oil reserves are in danger of running out by 2012 and the government should look for alternative resources to oil”. Yemen is seeking to exploit and market its gas reserves, currently estimated at about 10.2 trillion cubic feet which along with the country’s oil fields are located in the region of Marib, east of Sanaa. But Yemen’s total gas reserves remain minute when compared to Gulf neighbor Qatar which has 900 trillion cubic feet.

Nippon Oil hikes price of gas

March 30, 2005. Nippon Oil Corp. announced its largest wholesale price increase in 14 years for gasoline and other petroleum products for April. The nation's biggest oil refiner said it would raise the wholesale price for April by 5.1 yen per liter from the current month, the largest increase since an 8 yen increase in October 1990 during the Persian Gulf crisis. The latest increase, due to a sharp rise in crude oil prices, follows a 3.3 yen increase for March. Other Japanese oil refiners are expected to follow suit and lift their respective wholesale prices by around 5 yen per liter. Cosmo Oil Co., Japan Energy Corp. and Idemitsu Kosan Co. separately announced later the same day that they would increase wholesale prices by margins ranging between 4.8 yen and 4.9 yen per liter. The Oil Information Center said Japan's average retail price for regular gasoline in March rose 1 yen per liter from the previous month to 117 yen, the first rise in four months.

Gazprom, Lukoil strike 10-year contract

March 29, 2005. Russia's top two energy companies, the Gazprom natural gas company and the country's No. 1 oil company Lukoil, signed an agreement for a strategic partnership over the next decade. Gazprom chairman Alexei Miller and Lukoil president Vagit Alekperov agreed that the two companies will implement oil and gas exploration and development projects in Russia's main gas production region, Yamalo-Nenets in Western Siberia, the Russian sector of the oil-rich Caspian Sea, Uzbekistan and other regions. Miller said the 2005-2014 agreement is "a striking example of a long-term mutually beneficial interaction between Gazprom and independent gas producers."

Kuwait earns $28bn from oil

April 2, 2005. Preliminary figures show that Kuwait earned $30 billion, mainly from oil, during its 2004-05 fiscal year. Based on Ministry of Finance projections released in February, Al- Shall Economic Consultants calculated that Kuwait earned between 8 billion and 8.25 billion dinars ($27.3 billion and $28.2 billion) in crude oil sales for the year. Non-oil income was figured at 627 million dinars ($2.14 billion).With total revenues estimated at between 8.75 billion and 9 billion dinars ($29.9 billion and $30.8 billion), and actual spending totaling 6.25 billion dinars ($21.4 billion), Kuwait will wind up with a (gross) surplus of between 2.5 billion and 2.75 billion dinars ($8.56 billion and $9.41 billion), the country’s sixth straight surplus, the consultants said. Kuwait pumped an average of 2.34 million barrels per day during the year. The year’s oil earnings could also be adjusted upward since they were calculated on crude earnings, and not refined product sales, which bring in more. Kuwait’s Cabinet in December 2004 approved a 6.95 billion-dinar ($23.8 billion) budget for fiscal year 2005-06, that began, with total projected earnings of 4.6 billion dinars ($15.75 billion).

Brazil & Uruguay sign energy MOUs

April 1, 2005. The presidents of Brazil and Uruguay signed several memorandums of understanding (MOU) for joint operation or cooperation in the power, oil and gas exploration, mining, telecommunications and education sectors. The two countries will create a bilateral commission to undertake geological and mining studies, and Brazil's federal energy company Petrobras and Uruguayan state oil company Ancap signed an MOU to study joint oil and gas exploration. The two leaders also signed an MOU to build a 500MW transmission line to increase power exchange between the two countries. The line will complement an existing 230kV line that links the Brazilian town of Livramento to Rivera in Uruguay. A possible Petrobras-Ancap agreement will aim to look for oil or gas in the Pelotas basin that stretches from southern Brazil to northern Uruguay, Brazil's mines and energy minister Dilma Rousseff said.

China to expand energy production for GDP growth

March 1, 2005. China will continue to expand its energy production capacity, with the aim of using one percentage point in energy production growth to support two percentage points in GDP growth by the year 2020, said energy director Xu Dingming. China plans to newly build a production capacity of 1.1 billion tons of coal and 150 million kw hydraulic power generation by 2020, equivalent to the construction of a Three Gorges Project every two years and at the same time, oil production will be turned internationally. On top of expanding production of coal, hydropower and oil, China will speed up development of nuclear power and new energies. Two rounds of biddings have been conducted for wind power construction, and a third one is expected in April. Four sites have been chosen nationwide for bio-power tests. Exploration of natural gas and pipeline construction will be accelerated. A trial station receiving LNG has started work in Guangdong, and more trial stations will be set up in Fujian, Zhejiang, Shanghai, Jiangsu, Shandong, Liaoning and Guangxi.

India plans oil venture with Saudis new feature

April 4, 2005. Saudi Arabia, the largest OPEC oil producer, and India are jointly planning to export fuels to the rest of Asia, Oil Minister Mani Shankar Aiyar of India has said. The fuels will be produced at two refineries, Hindustan Petroleum's Visakhapatnam refinery and Indian Oil's proposed Paradip refinery, both near ports on the east coast of India that are nearest to Singapore and other Asian markets. Consumption of fuels in Asia is growing, led by China, the world's second-largest consumer of oil. China's economy expanded 9.5 percent in 2004, increasing energy consumption in the world's fastest-growing major economy. Saudi Arabia's "energy market is shifting to Asia," Aiyar said that Middle East nation's ambassador to India, Saleh Mohd Al-Ghamdi. "Saudi Arabia wants to increase export of fuels and invest in refineries." India offered stakes in the Visakhapatnam and Paradip refineries to Saudi Aramco, the world's biggest oil company by production, Aiyar said. India may expand capacity of these refineries, he said, without giving further details. The Visakhapatnam refinery can process 7.5 million metric tons a year of crude oil, while Indian Oil plans to build a 9 million ton-a-year refinery in Paradip. "We are looking at making both these refineries export-oriented, so that we can lower our net outgo of foreign exchange by exporting fuels," Aiyar said. India is signing deals with countries including Saudi Arabia, Sudan and Venezuela to secure supplies of crude oil. Demand for fuel in India is growing as cheaper loans and falling interest rates are encouraging people to buy more cars and motorcycles.

China, India to co-operate for energy needs

April 3, 2005.  Chinese Premier Wen Jiabao visits India this week with the race between the world's two most populous nations to secure the energy they need to fuel their growing economies likely to be on the agenda. With rapidly growing oil demand, and increasing dependence on imports - last year over 40 percent of China's crude and some 70 percent of India's came from abroad - the two countries have more than just their rivalry in common. India's ONGC, which has stakes in oil and gas projects in countries including Russia, Libya and Australia, plans to spend $2 billion this year on overseas acquisitions. Chinese state oil giant CNPC, parent of New York- and Hong Kong-listed PetroChina, has invested billions of dollars in projects around the world, including Indonesia, Azerbaijan, Syria, Algeria, Ecuador, Peru, Chad and Kazakhstan. If China and India can't cooperate over oil and gas deposits there may still be a future for lower-level cooperation. "Both countries have large populations without access to modern forms of energy and we need to work together developing technologies appropriate for rural areas," said R. K. Pachauri, director general of the Energy and Resources Institute. Cleaner coal-burning techniques offers another opportunity for cooperation, but neither side has rushed to promote this kind of deal amid the jostling about overseas oil resources, he said.

Pakistan studying four options to acquire natural gas

April 3, 2005. The Pakistan Prime Minister, Shaukat Aziz, has said his country was studying four options to acquire natural gas and would make a final decision keeping in view the `economic feasibility and the national interests'. Mr. Aziz said Pakistan was examining options to acquire Liquefied Natural Gas (LNG) from Qatar and from Iran or Turkmenistan. Mr. Aziz's latest observations are significant in the context of the opposition voiced by the United States to both India and Pakistan to the proposed Iran-Pakistan-India gas pipeline.

Oil, gas platforms eyed for fish farms

April 4, 2005. Thousands of oil and natural gas platforms in the Gulf of Mexico could be converted into deep-sea fish farms raising red snapper, mahi mahi, yellow fin tuna, and flounder, under a plan backed by the Bush administration. For years, marine biologists and oil companies have experimented using the giant platforms as bases for mariculture, but commercial use of the platforms as fish farms never got off the ground because of the federal government's reluctance to open up the oceans to farming.  Yet in December, President Bush proposed making it easier to launch fish farms off the nation's coasts. That could be done by resolving a ''confounding array of regulatory and legal obstacles," the White House said. Fish farming in the rough-and-tumble ocean, done by enclosing thousands of fish in submerged pens serviced by scuba divers, is limited commercially to waters within state jurisdiction, where permits have tended to be easier to get. Moi is grown in Hawaii, and cobia is farmed near Puerto Rico.

Kuwait seeks to strengthen oil ties with China

April 4, 2005. Kuwait hopes the next few months will see a strengthening of its partnership with China's oil industry.  "We are talking with every one of China's big oil companies, including Sinopec, PetroChina and CNOOC (China National Offshore Oil Corp), on further co-operation, and this coming together is only a matter of months," added Al-Nouri, managing director of KPC's international marketing department. The Middle East Corporation also hopes to participate in the long-term development of China's oil industry by establishing refining, petrochemical and infrastructure joint ventures. Al-Nouri said he hoped the firm's permanent presence in the Chinese capital will help it strike "long-term oil supply contracts with China and establish joint ventures." 

Pakistan sees energy shortage by 2010

April 4, 2005. Pakistan will face a major shortage of oil and gas, source of 80 per cent of its energy needs, by 2010 unless it steps up exploration activity, a senior government official said. At a projected annual economic growth of seven per cent, Pakistan would face a shortage of about 20 million tons of oil equivalent in five years time, jumping to 100 million tons by 2025, said Ahmed Waqar, Secretary to the Ministry of Petroleum and Natural Resources.  Pakistan produces 3.5 billion cubic feet of natural gas per day, which meets 50 per cent of the country's total energy needs. Officials say it has four options - gas pipelines from Qatar, Turkmenistan, or Iran, or the import of liquefied natural gas from Qatar - to meet growing demand as well as a speeding up of domestic exploration.  They say Pakistan is trying to promote the use of cheaper natural gas and coal in the local industry to cut its oil import bill, which is expected to rise above $4.8 billion in the 2004/05 fiscal year to June 30. Waqar said the government had set a target of drilling 100 exploratory wells this year from an average of 55 to 60 each year previously and planned a major road-show in London on April 26-27 to attract investment in this effort. Pakistan's proven oil reserves stand at 800 million barrels and scientifically estimated potential reserves of 27 billion barrels, the director general of the Hydrocarbon Development Institute of Pakistan said. He said proven gas reserves stood at 45 trillion cubic feet and scientifically estimated reserves at 450 trillion cubic feet. Waqar said the country would host a meeting of officials from Afghanistan and Turkmenistan on April 12-13 to discuss the technical feasibility of a proposed $3.3 billion gas pipeline.

Africa FG, Chevron agree on new $5bn gas project

April 4, 2005. The Federal Government and US oil major ChevronTexaco, have agreed to execute a $5 billion (N665 billion) Gas-to-Liquids (GTL) project that will be sited in Escravos, in the heartland of Delta State. President Olusegun Obasanjo also issued a stern warning to oil producing companies in the country that henceforth, he would not give approval to projects presented by any company that does not show concrete efforts to build an Independent Power Plant (IPP). The GTL project initiated in 2001 by the NNPC/Chevron Joint Venture, was initially to cost some $1.7 billion.

However, checks reveal that following the approval of Obasanjo for the expansion of the project that included a comprehensive gas gathering project and the construction of floating mega stations for the Niger Delta area, the cost now rose to $5 billion. Obasanjo said that in line with the governmentís economic blue-print, it aimed to generate 10,000 mega watts of electricity by 2007, adding that mush of this output is expected from the private sector.

Norway and UK sign treaty to develop cross-border oil fields

April 4, 2005. Norway and Britain signed a treaty in Oslo to develop oil fields that straddle their North Sea boundary in hopes of eventually boosting supplies to help meet world thirst for oil. Demand has pushed oil prices to record levels, prompting Norwegian oil minister Thorhild Widvey to say she now worries that the cost could be harmful to the world economy.  The new treaty, which was settled in February, was signed by Widvey and British energy minister Mike O'Brien in hopes of producing more oil, especially from smaller fields in the border zone.  Neither Norway nor Britain is a member of the Organization of Petroleum Exporting Countries, but O'Brien said he and others were talking with the cartel about what to do about oil prices.



Kepco Cebu to build P15-B power plant

March 28, 2005. KEPCO Cebu Corp. a joint venture of KEPCO Philippines Corp. and Salcon Power Corp. is investing P15 billion to construct a 200-MW coal-fired base load power plant in Naga, Cebu. The first 100-MW generator will start operations in December 2008, while the second 100 MW generator will be operational in March 2009. A total annual power production of about 1,185,053 MWH will be generated at P3.920 KWH to be sold directly to the Visayas Electric Cooperative and other nearby local electric cooperatives.

The power plant will use Semirara and local Cebu coal. And only if necessary, it will also use imported Indonesian coal. The project will utilize the circulating fluidized bed combustion (CFBC) technology that complies with world-class environmental standards.

Mini power plants in Bangladesh

March 26, 2005. The Bangladesh government has initiated a move to put in place a number of power plants in the country’s remote areas which are not covered by electricity supply network. A total of six mini power plants would be installed at six remote Upazilas under a project called Remote Area Power Supply System (RAPSS). The areas are Kutubdia, Sandwip, Hatibandha, Patgram, Ashasuni and Debhata. Of these, the first two are remote islands located in Chittagong region and treated as "off-grid" and have no electricity infrastructure.  The other four Upazilas are technically termed as "on-grid" located in the northern "Monga ridden" Rangpur region. Such "on-grid" areas have some infrastructures like transmission lines, but no distribution system.

Africa releases N25bn for new power plants

March 24, 2005. The Federal Government has released N24.8 billion towards the construction of four new power stations that will generate additional 1,230 mega watts of electricity. The amount represents about 45 percent of the N55.66 billion total cost of the four gas-fired power plants now under construction in Papalanto, Ogun State, Omotosho in Ondo State, Geregu in Kogi State and Ughelli, Delta State. A breakdown of the release, showed that the government made available to the National Electric Power Authority (NEPA), the sum of N11.6 billion for the Papalanto and Omotosho power projects. Nigeria is expected to provide 35 percent equity financing for the construction of the two plants, totaling N15.97 billion.

20 nuclear power plants to be built in Iran

March 28, 2005. The Iranian Parliament ratified a bill concerning the construction of new nuclear power plants in Iran with total output of 20,000 megawatts. "Iranian Majlis has ratified the proposal of the parliamentary energy commission on the construction of 20 new nuclear power plants with the total output of 20,000 megawatts, the head of the Majlis energy commission said. The MP didn't specify the location of the new construction sites. Currently Russian specialists complete the construction of the first unit of the nuclear power plant in Bushehr - the northern part of the Iranian shore on the Persian Gulf. The launch of the unit is scheduled for late 2005 with the commissioning in 2006.

Ontario, Quebec, propose east coast hydro project

March 30, 2005. Ontario and Quebec have submitted a joint proposal for the development a massive hydroelectric generating project in the east coast Canadian province of Newfoundland and Labrador. The project would consist of two generating stations on the Lower Churchill River, which would eventually provide enough power for nearly 2 million homes. Under the Lower Churchill plan, a 2,000 megawatt facility would be developed on Gull Island, and a second, smaller 824-megawatt station at Muskrat Falls, about 60 kilometres (37 miles) downstream. One-third of the total energy output of the project would be sent to Ontario via a 1,250 megawatt link through Quebec, which would be completed by 2009 as part of the agreement.

Transmission / Distribution / Trade

ENDESA to sell electricity to the Italian market

March 23, 2005. ENDESA and Merloni Progetto Energia (MpE) have signed a joint venture agreement to sell electricity to end customers in the retail market. The power sold to the Italian small and medium sized customer segment, the size of which is 84 TWh with approximately 5 million potential customers, will be supplied by Endesa Italia, which has installed capacity of 6,360 MW and 2004 sales of 26.2 TWh (of which 45 per cent was sold on the deregulated market). Merloni is expected to generate sales of over Euro 200 million in 2005, with a portfolio of over 2,000 customers and a sales volume of more than 2 TWh. ENDESA already sells electricity to industrial clients in Italia via Ergon Energia, a 50-50 joint venture with ASM Brescia, with a 2005 sales target of 6 TWh.

Wapda to sell power to Afghanistan

March 26, 2005. Pakistan will export electric power to Afghanistan and for this purpose a grid station would be set up in Khost city. An official team comprising senior engineers of Water and Power Development Authority (Wapda) recently visited Khost city to conduct a preliminary survey for construction of a 132-kv grid station and developing an internal power distribution network in Khost city. The Khost grid would be linked through a 100-kilometre transmission line with a 220-kv grid in Domail, district Bannu of NWFP. Cost of the project, which involves establishment of 132-kv grid station, laying of 100-km transmission line and putting in place an internal electricity distribution network in Khost, has been estimated at Rs822.55 million and it would be completed in two years.

Rural power company supplies national grid in Bangladesh

March 29, 2005. Rural Power Company Ltd (RPCL) is set to supply 70 MW additional electricity to the national grid from the current fiscal. RPC, the first local IPP, will produce the electricity through implementing the third phase of the Mymensingh power plant combined cycle project. RPCL's spokesman said that it would not require any extra fuel to run the third phase of the plant. Aiming to increase the capacity and convert the Mymensingh 140 MW power plant into a combined cycle power plant, RPC initiated its work in 2001. However, KFW showed its interest to provide Euro 20 million in this project and signed an agreement in July 11, 2002 in this regard. As per the directives of the KFW, RPCL was signed an agreement with Siemens to install the plant in September12, 2002.

Pakistan to buy electricity from Tajikistan

April 1, 2005. Pakistan and Tajikistan have signed a Memorandum of Understanding for sale of electricity to Pakistan and mutual co-operation in the field of hydro power development, particularly high voltage transmission lines. During the meetings that Pakistan wanted to purchase 1,000 megawatt of electric power and was interested in opening air and land routes between the two countries as desired by the President Pervez Musharraf and Prime Minister Shaukat Aziz. The Tajik President agreed with the proposals made by Pak.

Policy / Performance

Pakistan’s 25-year energy plan approved

March 22, 2005. Pakistan plans to increase its power generation capacity by 143,000-mw in the next 25 years to 162,590-mw from the current 19,540-mw to sustain higher GDP growth rate at 7-8 per cent. The 25-year Energy Security Plan (ESP 2005-2030) approved recently by President Gen Pervez Musharraf and Prime Minister Shaukat Aziz envisaged increase in nuclear power generation by 8,400-mw to 8,800-mw by the year 2030 from current nuclear power of 400-mw. The planning commission had told the president that unless power production capacity was increased by 143,000-mw in a phased manner over the next 25 years, it would not be possible for the country to sustain higher growth rates in the long run.  In overall terms, the government plans to add a total of 143,053-mw electric power by 2030, thus, the total generation capacity would reach 162,590-mw.

Philippine approves wind power project

April 4, 2005. The Board of Investments (BOI) of Philippines has approved the P687.5-million additional investment of Northwind Power Development Corp to add five units of wind turbine to its present project and increase its capacity from 25 megawatts (MW) to 33 MW. The project originally involved the installation of 15 units of wind turbine at 1.65 MW each for a total of 25 MW capacity.

West seeks to avert power crunch

April 4, 2005. In an effort to avert another regional power shortage, the governors of four western states threw their support behind plans to build new power lines over the next five years to supply low cost electricity to fast-growing Southwest cities. California Gov. Arnold Schwarzenegger, Nevada Gov. Kenny Guinn, Utah Gov. Jon Huntsman Jr. and Wyoming Gov. Dave Freudenthal said they have signed an agreement to speed development and funding of the lines and have already begun studying possible routes. Dubbed the Frontier Line, the high-voltage transmission project could cost up to $5 billion, according to state. The state officials are looking to coal and renewable fuels to supply the additional power. Power plants in near the coal fields of Wyoming, which supplies roughly 35 per cent of the nation's coal, are seen as the natural starting point for the lines.

Agreement signed to develop ‘energy city’ in Qatar

April 5, 2005. The Qatar-based Al-Addiyar Real Estate Investment Company signed an agreement with Gulf Energy to develop an “Energy City” in Qatar that will raise the global stakes of Middle East’s energy sector, reshape the dynamics of its oil and gas business and expand its role in the management of resources. The MoU, the construction of the project will begin in the third quarter of this year. The project is a pioneering initiative that will take the Middle East much beyond its role of just controlling over half of the world’s oil and gas reserves. Energy City will place Qatar on the world energy map, joining the league of other key energy centers like Calgary, Singapore, Houston, Stavangar and Aberdeen.

Renewable Energy Trends


Status of ethanol blending in India

March 28, 2005. The revival of India’s ethanol blending programme, on the back-burner since its launch in several states in 2003, reflects the growing realisation of the urgent need to accelerate the use of bio-fuel. Brazil and the US have been successfully using both, ethanol-blended petrol and bio-diesel, for transportation. According to the IEA, in the absence of strong policies, the worldwide use of oil in transport would nearly double from 2000 to 2030. Bio-fuels and other fuels derived from biomass could help change this picture. Doping of ethanol with petrol supplies extra oxygen for complete combustion and reduces carbon monoxide levels in auto emissions. The other positive is a higher octane level in ethanol-blended petrol. With methyl-tertiary-butyl-ether (MTBE) being discouraged or banned across countries, demand for ethanol is rising. India had launched its ethanol-blending programme in 2003, with the purpose of helping the sugar sector use surplus molasses for production of ethanol and to reduce the import of crude proportionate with the amount of ethanol used. However, as a Parliament panel recently commented, faulty planning and lack of seriousness from the government have hindered implementation. While there were stated fears at one point of shortage of feedstock in time for meeting 5 per cent blending demand, ethanol capacity is presently sufficient. But crop productivity, and use of alternate substrates need to be considered seriously, if we are to plan for the future. India has huge ethanol potential, based on existing capability to increase productivity of sugarcane and other crops like sweet sorghum, damaged grain and cassava, etc. In the longer term, it is expected that fuel ethanol will also be produced in sizable quantities from materials such as wood, high-cellulose crops and waste. In India, as in Brazil, production costs of ethanol are relatively lower. But sugarcane prices need to be decontrolled to improve viability. As demand grows, in India too, market forces will work to create additional capacity and find substrates most appropriate. Looking ahead, an IEA study estimates that by 2020, enough low-cost cane-derived ethanol could be produced to displace about 10 per cent of gasoline worldwide.

Bio-fuel to be grown on wasteland

March 26, 2005. The Hyderabad-based International Crops Research Institute for Semi-Arid Tropics (ICRISAT) will collaborate with Nandan Biomatrix Ltd to grow bio-fuel and medicinal plants on wasteland. The memorandum of understanding to this effect, signed by the two organisations, envisages collaborative research for evolving superior varieties of bio-fuel plantations and medicinal plants and working out improved agronomic practices for their good growth. The project will help in the production of nutraceuticals.

Tata BP Solar to focus on private sector

March 28, 2005. Solar power company Tata BP Solar, a joint venture between Tata Power and BP Solar, is shifting its business focus in the domestic sector from government projects to the private sector, including individuals, corporations and banks. Till now, in the domestic market the government projects accounted for about 70 per cent of the company’s total revenues. The market for solar energy is growing exponentially. The government policies, though inconsistent, are encouraging. Consumers get subsidies and soft loans and there is income-tax benefit for using solar equipment. The government is making it compulsory for new buildings to have solar water heaters. Other factors that will drive the growth are the scarcity and rising rates of grid electricity. Companies getting more environment conscious and insisting on a green image is fuelling the inclination towards solar energy. Tata BP Solar expects to grow by 30 per cent in 2005-2006 and has targeted revenues of Rs 500 crore (Rs 5 billion). The company is also planning to expand its 40 MW solar cell manufacturing plant in Bangalore to a 100 MW plant over the next few years. The expansion of the plant would be undertaken in two stages. Tata BP Solar plans to invest Rs 75 crore (Rs 750 million) and envisages a revenue growth to Rs 1,500 crore (Rs 15 billion) by 2009. The expansion will be financed through internal accruals, the company sources said.

Tamil Nadu tops in wind energy

March 25, 2005. The key findings of the Confederation of Indian Industry (CII) report ‘Success in Harnessing Wind Energy – Tamil Nadu’ said that Tamil Nadu has emerged as a role model state and a leader in wind energy generation in the country with an installed capacity of 1,664 MW, which is 53 per cent of the total installed capacity in the country. Of the 3,050 MW estimated potential, the state has successfully captured 55 per cent and poised for a capacity addition of 500 MW during the current year. According to the CII report, the success of Tamil Nadu in harnessing wind energy is mainly due to the positive perception created by the state among investors in setting up wind farms. The initiatives include maintaining a consistent wind energy policy, lower wheeling and banking charges at 5 per cent. The other factors will be making captive use economical, inherent geographical advantage such as good wind regime due to major mountain pass, multiple use of wind farm area for cultivating cash crops, high concentration of captive consumers in the state, robust grid infrastructure and the reasonable power purchase price by Tamil Nadu Electricity Board (TNEB) at Rs.2.70 per unit. Tamil Nadu has been able to attract and retain the private sector investments in wind energy due to its consistent and transparent wind power policy.

Newsletter on renewable energy released

March 22, 2005. IN a major step towards promoting the use of renewable sources of energy, the Ministry of Non-Conventional Energy Sources has come out with the first issue of a countrywide newsletter, which will enclose reports on national and international developments in the field of non-conventional energy, along with technical reviews and success stories to raise general awareness among people about the sector. The newsletter, titled ‘AKSHAY URJA'.

Gujarat Fluorochemicals gets CDM registration

March 23, 2005. Gujarat Fluorochemicals Ltd (GFL), a refrigerant gas manufacturing company, has received the country's first project registration from the Executive Board of Clean Development Mechanism (CDM), established under the Kyoto Protocol. GFL's project has received this registration for Greenhouse Gas Emission Reduction by Thermal Oxidation of HFC 23, at Gujarat. HFC 23 is a greenhouse gas with global warming potential equivalent to 11,700 tonnes of carbon dioxide. As per the Kyoto Protocol, GFL will now be able to trade the carbon credit that will accrue to it as a result of this CDM project implementation, in international markets, to corporate entities of developed economies. This is India's first and the world's third project to be registered as a CDM by the board.

Okhla plant to be used for power supply

The Delhi Jal Board is thinking in terms of power production from the biogas produced in its Okhla plant, to meet the electricity requirement in its various plants. For residents in some parts of south Delhi, this means that the days of unlimited domestic fuel supply for a paltry Rs 115 per month, may soon be over. The Okhla sewage treatment plant of Delhi Jal Board, source of the biogas supplied to these houses, has a monthly running cost of about Rs 4-4.5 milion. The money recovered from both domestic fuel supply to consumers and sludge manure supply to farmers does not cover the costs. In fact the only profitable exercise carried by the plant is the supply of farming water (about 140 million gallon at Rs 1.25 per kilolitre) to farmers in Delhi and the neighbouring states of Haryana and Uttar Pradesh.  With its present sewage supply, DJB is capable of generating 2,000 kilowatt power at a cost of just Rs 5.50 per unit. At present, about 3,000 residents receive biogas supply from the Okhla Plant. The sewage treated to produce this gas, is received from Timarpur, Kashmere Gate, Lajpat Nagar, Vinay Nagar, Chanakyapuri and several other areas.

Tata Motors, IOC join informally for bio-diesel pilot project

March 30, 2005. Tata Motors has announced a pilot programme for the use of bio-diesel in its vehicles. At the flag-off ceremony of the bus fleet at its plant at Pimpri in Pune, Dr V. Sumantran, Executive Director PCBU and ERC Tata Motors Ltd, said this is a joint project undertaken with Indian Oil Corporation. He, however, noted that there was no written agreement between the companies. This is a project undertaken to understand the feasibility of such an exercise. Dr Sumantran said the data would be obtained from the 43 buses plying in and out of the company premises, travelling about 160 km a day, in varying traffic conditions and weather. He said that depending on the data, the programme would be rolled out to include the remaining buses of its fleet.  Dr Sumantran said that Tata Motors in the recent past undertook several research and development projects towards adoption of environment-friendly technology. Mr B.M. Bansal, Director, R&D, Indian Oil Corporation, said IOC has developed a process that would convert vegetable oil into bio-diesel while giving out by-products such as glycerine (which can be used by pharma companies) and oil cake, which is a good fertiliser. He said about 10 per cent of bio-diesel was being blended for the pilot programme. Mr Bansal said that IOC has filed a patent for the process. He said jatropha was the only plant that was being used for the manufacture of bio-diesel although another option, karanjia, was there.


Green energy seen as $100 billion market in decade

March 22, 2005. Renewable energy like wind and solar power and hydrogen fuel cells could blossom into a $100 billion a year global market in less than a decade as technology costs fall, according to a study. The combined market for "green" sources of energy has already grown 68 percent since 2002 to more than $16 billion last year, according to Clean Edge, a research and publishing firm based in California. The market could grow to a $102.4 billion annually by 2014, according to Clean Edge, whose forecasts on renewable energy have been exceeded by the market for the past three years. Even if the renewable market grew to that size, it would be tiny compared to conventional energy. The oil market alone is several trillion dollars per day.

Brazil opens first bio-diesel refinery

March 24, 2005. Brazilian President inaugurated the country's first refinery for biodiesel fuel, which keeps the country's status as one of the world's leaders in renewable fuels made from farm products. He said that we are showing the world that it is possible to create a fuel from renewable resources. The Soymina plant will produce up to 12 million liters (3.2 million gallons) per year of biodiesel fuel from oleaginous seeds like sunflower, soybean, and castor bean. The biodiesel will be blended at a 2 per cent ratio with gas oil, permitting its use in diesel vehicles without modification. Brazil is one of the world's most advanced producers of alternative fuels made from farm crops. Gasoline sold around the country includes a 22 per cent blend of ethanol.

LIPA installed first fuel cell & solar power system

March 29, 2005. The Long Island Power Authority (LIPA) dedicated the first combined use of solar power and fuel cell systems on Long Island. The unique combination of alternative energy technology systems are located at the Local 25 International Brotherhood of Electrical Workers (IBEW) headquarters in Hauppauge. The 15 kilowatt (kW) solar power system and 5 k fuel cell unit will provide electric power and domestic hot water to the facility. The 5k fuel cell system is part of LIPA's on-going Clean Energy Initiative (CEI) research and development program and will operate as part of LIPA's electric grid. The fuel cell, manufactured by Plug Power of Latham, NY, converts the energy of natural gas and an oxidant (air or oxygen) into useable electricity. Fuel cells generate electricity through an electrochemical process rather than combustion. No particulate matter, nitrogen or sulfur oxides (NOx or SOx) are produced. The fuel cell will generate electricity while also providing supplemental domestic hot water to the IBEW facility. In the event of an electrical outage, the fuel cell is capable of operating independent of the electric grid delivering 110 volts at 50amps, to supply electricity to critical loads and emergency lighting throughout the facility.

Wind-power firm gets Spanish bid

March 30, 2005. Acciona, Spain's fourth-largest construction company, offered to buy Australia's Pacific Hydro for 709 million Australian dollars to expand in wind power, a business growing faster than its building operations.  Acciona offered 4.50 dollars, or $3.50, a share in cash, 2.3 percent more than Pacific Hydro's previous closing price. Pacific Hydro's biggest shareholder, Industry Funds Management (Nominees), does not want to sell its 32 percent stake and is said to be in talks with Acciona about joint ownership.  The Spanish company last month said it planned to spend as much as €2 billion, or $2.6 billion, to triple its wind power business, adding to plants in Spain, Germany, France, the United States and Canada. Wind-energy capacity in Australia almost doubled in 2004, driven by regulations promoting it.

AEP, GE sign letter of intent on clean-coal plant

March 31, 2005. Ohio-based American Electric Power Co Inc. signed a letter of intent with General Electric Co. and Bechtel Power Corp. to perform a study for a clean coal power plant of up to 1,200 megawatts. GE's GE Energy subsidiary said the study will determine the cost estimates for the project and will lead to the engineering design phase for a clean coal or integrated gasification combined-cycle (IGCC) plant. Among the potential sites under consideration by AEP for the plant are Mason County in West Virginia, Meigs County in Ohio, and Lewis County in Kentucky. AEP expects the engineering phase to last through 2006, the construction phase to start in 2007 and commercial operation by 2010.

Renewable energy to reduce oil imports in Pakistan

April 2, 2005. Utilisation of renewable energy technologies can help reduce dependency on foreign oil imports and strengthen national economy. This utilisation will save us from many environmental problems, especially the green house effect and global warming. Gillani said "Currently, we rely heavily on fossil fuels for our energy needs, but these resources are limited and environmentally too damaging as compared to renewable energy sources which will never run out. The renewable energy technologies can help improve quality of our environment." He said that according to the International Energy Agency, supplies of fossil fuels would start running out from year 2020 and to meet the electricity needs at that time renewable energy would be the best answer. "Our actions to use renewable energy technologies may not benefit us now, but will benefit many generations to come," the parliamentary secretary said. Senior scientist of the Pakistan Council of Renewable Energy Technologies, Majeedul Hassan and technical advisor Alternate Energy Development Board S. M. Bhutta said that an effort to establish renewable energy and sustainable energy initiatives as a viable alternative within Pakistan’s utility sector, research is being conducted to support adoption of current renewable energy driven trends.

Wind power to boost supplies in Guangdong

April 5, 2005. China's largest wind power plant is to open in Jieyang City as Guangdong plans to greatly enhance wind power generation. With nearly 200 wind-driven generators and a total capacity of 100,000 kilowatts, the power plant in Huilai County is expected to begin generating electricity in September. It will initially provide more than 20,000 kilowatts for Guangdong. One generator at the power plant can supply 600 kilowatts of power, enough for more than 100 households consuming 5,000 watts each. In full swing, the power plant can meet the demand for 20,000 households. There are two other large wind power plants in Guangdong. One in Shantou’s Nan’ao County is the second largest in China with a capacity of 54,330 kilowatts. Another in Shanwei City has a capacity of 16,500 kilowatts.

GM in fuel cell deal with U.S. Energy Dept

March 30, 2005. General Motors Corp. said it signed an $88 million deal with the U.S. Department of Energy to build a fleet of 40 hydrogen fuel cell vehicles and further develop the technology. Under the five-year program, the world's largest automaker will spend $44 million to deploy fuel cell demonstration vehicles in Washington D.C., New York, California and Michigan. The Department of Energy will contribute the other half of the investment in the program, under an agreement that expires in September 2009.

Registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485


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[1] A negative correlation between oil price and the dollar value is well established by studies. The correlation coefficient of between oil price and the dollar is found to be -0.7. Correlation coefficient measures the relationship between two variables. If it takes the value ‘0’ there is no relationship, if it takes the value ‘+1’ there is a perfect positive relationship (when one goes up the other does too) and if it takes the value ‘-1’  there is a perfect negative relationship (when one goes up the other goes down)

[2] Steps have been taken: EA 2003 specified that SERCs should set a certain requirement for distribution companies to purchase a certain amount of power from renewable sources, while the National Electricity Policy says that this percentage should be made available from April 1, 2005. The government has also allocated Rs. 200 million in its 2003-4 budget to the Council for Scientific and Industrial Research for research in solar energy, wind turbines, and hydrogen fuels. What else should be done?

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