India and Africa Energy Trade and Development Sector: Major Challenges and Prospects

 

 

 

 

Iron and steel

Primary and Semi-finished iron and steel is another target of India.

Yarn and fabrics

Man made yarn and fabrics keeping India cotton agriculture growth in mind is another target of India.

Plastic and linoleum products

This sector is having a tough competition with China and East Asian countries, which persuade India to target Africa in domestic and industrial scale.

Rubber manufactured products

The products like bathroom footwear, shoes, gloves, buckets, domestic items, industrial belts and sockets, army purposes, etc are important place in India target.

Nigeria is an important market for India’s exports of drugs and pharmaceuticals, machinery and instruments, and manufactures of metals, and figures among the top 10 global markets for these commodities. Further, Tunisia ranks among the top 10 global markets for India’s exports of transport equipments during 2003-04.”7

Mutual benefits for India and African countries

Exim India extends Lines of Credit (LOCs) to Governments, parastatal organizations, commercial banks, financial institutions and to regional development banks to support export of eligible goods on deferred payment terms. In total, the Bank has 16 operative LOCs covering 32 countries amounting to US $ 238 million in the Africa region, including those, extended with the support of Indian government. The operative LOCs as on February 2005, extended to the African region includes:

‘Rs. 200 mn (US$4.54 mn) to Offshore Development Company Ltd, Namibia.

Two lines of US$ 10 million each to PTA nk covering 16 countries in the eastern and southern African region.

US $ 5 mn to Seychelles Marketing Board, Seychelles

US$ 10 mn to ABSA bank, South Africa.

US$ 10 mn to Central bank of Djibouti

US$ 15 mn to Govt. of Ghana

US$ 10 mn to West African Development Bank (BOAD) covering 8 countries in the West African Region

US$ 10 mn to Govt. of Sudan

US$ 5 mn and US$ 40 mn to Govt. of Angola

US$ 20 mn to Govt. of Mozambique

US$ 5 mn to Govt. of Lesotho

US$ 15 mn and US$ 18 mn to Govt. of Senegal’8

The African region is an important source for India’s imports of several items.

A)            ‘Gold dominates India’s imports from Africa with a significant share of 48% during 2003-04. South Africa is the second largest source, after Switzerland, for India’s gold imports accounting for 23.3% (US$1.5 bn) of India’s total gold imports (US$6.5 bn) during 2003-04.  The major items of imports are:

1.             Inorganic chemicals                            17.4%

2.             Cashew nuts                                           8.1%

3.             Raw Cotton                                            4.8%

4.             Wood and wood products                     3.5%

5.             Metal ferrous ores and metal scrap      3.2%

B)            Morocco (18.7%), Senegal (9.9%) and South Africa (8.9%) are the largest source of India’s global imports of inorganic chemicals respectively, of India’s total imports of organic chemicals (US$1.3 bn) during 2003-04.

C)            Tanzania (18.9%), Guinea-Bissau (17.5%) and Cote d’Ivoire (16.1%) are the three largest sources for India’s global imports in cashew nuts respectively, of India’s total cashew nuts imports (US$299 mn).

D)            In raw cotton, Egypt, Mali, Sudan, Benin, Tanzania, Cameroon and Burkina Faso ranked among top ten sources for India’s global imports of raw cotton during 2003-04.

E)            Cote d’Ivoire, Nigeria, Gabon, and Benin are among the top ten largest sources for India’s imports in wood and wood products in 2003-04’9.

India and Africa Emerging Scenarios

With a view to significantly enhance India’s trade with Africa, the Govt. of India launched an integrated programme  “Focus Africa” from the year 2002-03. The main objective of the programme is to increase interactions between the two regions by identifying the areas of bilateral trade and investment. India under ‘Focus Africa’ programme has been designed with the objective of enabling India to emerge as a key partner in Africa’s developmental processes by providing competitive and appropriate technologies, products and services.

The Confederation of Indian Industry (CII) Africa Committee has the mandate to further business co-operation that helps establish a symbiotic relationship between India and emerging African economies. CII has Institutional Agreements with 32 counterpart organizations in 18 African countries with the objective of facilitating exchange of information and promoting business interests of Indian and African Industry10.

Export-Import Bank of India (EXIM India) operates a number of financing and support programmes to facilitate and promote India’s trade and Investment in the African region. The EXIM Bank operates a programme to support overseas investment by Indian promoter through joint ventures/ wholly owned subsidies. Such support includes finance and in select cases, directs participation in equity along with Indian promoter, to set up such ventures overseas. This has assumed significant relevance lately in the content of Africa’s Look East Policy.

A.            India’s Efforts (TEAM-9) in Africa

India today pledged $500 million in the form of concessional credit facilities to eight West African countries (Burkina Faso, Chad, Cote d'Ivoire, Equatorial Guinea, Ghana, Guinea Bissau, Mali and Senegal) who, together with India, form TEAM-9 or Techno-Economic Approach for Africa-India Movement. TEAM-9 Ministers, who signed a memorandum of understanding (MoU), agreed that a Heads of State/Government meeting would be held regularly.

B.            Two Conclaves on India-Africa Partnership 2005

The first India–Africa Project Partnership Conclave, March 4-7, 2005 was indeed a pan-African glimpse on the emerging opportunities in the African continent. The conclave was represented at the ministerial level by most of the African countries. Besides the ministers, the respective national chambers of commerce, financial institutions and top businessmen were also part of the event. The leaders from African countries saw India strongly focusing on joint venture projects with them, which would facilitate Africa’s ability to access the 500 million US dollar line of credit under TEAM 9 and the 200 million US dollar line of credit under NEPAD.

The African countries look at India as a source for technology, expertise and manpower training. There is a great deal of convergence of interests. The organizers said, “The primary objective of the event was to enable Indian technical consultants, industry and project exporters to participate in a wide range of developmental activities and projects, which are in the offing in several African countries, and which are also recipients of significant funding from multilateral or regional agencies and India”11. India’s efforts to aid and support Africa in its development and in the establishment of its industries, received a major boost through the three-day India-Africa Project Partnership.

It is felt that there is also a need to facilitate the sharing of technologies available with Indian Small & Medium Enterprises (SME), for partnering projects in the private sector in Africa. The target areas for Indian companies are infrastructure, especially power and energy, transport, telecom, irrigation, water supply, sanitation and housing. Other sectors would include agriculture, agro-food processing, healthcare and pharmaceuticals, turnkey projects and engineering consultancy. Power and energy sector is crucial to the development of African economies. Leading companies of India like Tata, Kirloskar Brothers Ltd, Angelique International, Mohan Energy, International Tractors, Sterlite, Kalpataru, Jaguar Overseas, SSP Ltd, Praj Consultants, who have made a mark in the African continent, need to focus Africa through region wise.

India has been geared towards strengthening of horizontal South—South linkages, and towards promoting self-reliance through transfer of technologies, appropriate to the needs of her partners. India sees South—South Cooperation as the embodiment of a new spirit, of an alternative, cooperative approach to the challenges of economic development. Minister of State for Commerce and Industry Mr E.V.K.S. Elangovan spoke about India’s burgeoning trade ties with Africa and the need for more people-to-people contacts12.

Second Conclave

The Second Africa and India Project Partnership Conclave from 6-8 November 2005, focused on the TEAM-9 efforts and its activities in the West Africa. This conclave emphasized on the New Partnership for Africa Development and TEAM-9 projects valued at $ 360 million has been approved and letters of credits opened. India focused on the Energy sector, Small and Medium Scale Enterprise (SMEs) under TEAM-9 programme. The e-commerce, e-medicine, telecommunication and IT sector were discussed and number of countries presented their projects. The programme of Focus Africa, line of Credit to SME & other sector is announced that valued $360 million. Along with it, e-education, tourism and hotel industry, housing construction projects are also targeted.  MEA shared favorable opinion on the Space Technology and India’s experience regarding it. The need of Africa in this area is appreciated and MEA promised to work on this issue with them.

This conclave came forward with the motto that continues to be at the forefront and has been addressed that involve the need for raising the trade and investment levels as well as avenues of technology transfer and the need to address education and training requirements in Africa. The key sectors covered in power and energy, transport and other infrastructure projects, Agriculture, food processing and water management. One of the highlights has been a special session devoted to deliberations on financing partnerships. SMEs sectors discussed how to overcome them to become effective participants in the globalized regime.

Suggestion and Conclusion

Africa as a whole, for Indian business, is still a largely uncharted territory. The existing level of business ties between India and Africa does not reflect the full potential. The consolidation of Indo-Africa economic co-operation, bilateral or multilateral, can usher in a new era of South-south co-operation. Regional economic cooperation is considered to be an answer to Africa’s developmental needs. Various steps were taken for integrating regional economies are creating opportunities for projects in all sectors including agriculture, manufacturing and services. Indian government introduced many initiatives for partnerships and mutual benefits, between India and the African countries. Institutional capacity building is crucial for development. A trained and educated workforce has given India a considerable edge over the rest of the developing world. India can help African countries in developing their infra-structural systems. President Dr. Abdul Kalam announced the willingness of Government of India to provide seamless and integrated satellite, fiber optics and wireless network connecting 53 African countries including Francophone during the Pan African Parliament, Johannesburg, on 16 Sept 2004. This will provide three Connectivities: (i) Heads of the State Network for e-governance (ii) Tele-education network for higher education, skill enhancement and capacity building and (iii) Tele-medicine for providing health care and super specialty medi-care. This programme will be funded by India. This network will be in position by early 2007.

To sum up, there is a possibility of PTA and then move to FTA keeping the beneficial measures in mind. The need to avoid the Double Taxation Avoidance is felt and there is possibility to remove this barrier. FTA between Indo-Africa will enhance the level of bilateral trade. Thus it was agreed to adopt a longer-term approach to the idea of an FTA and recommend implementation of measures to expand Indian trade in Africa on a priority basis. The emphasis should be on trade creation and minimizing trade diversion to maximize welfare.  Exim Bank agreed to help Africa region during the Conclave on India-Africa Project Partnership to strengthen the trade on the preferential line of credit.

Suggestions

1.        India has geographic advantages in linking the African and Asian continents. There is a need to develop trade between Indian Ocean and Atlantic Ocean route in building Indo-Africa trade and economic relations in a comprehensive way.

2.        To start with, India needs to build bilateral relations with Francophone countries particularly Benin, Cameroon, Congo, Dem. Rep. of Congo, Djibouti, Guinea, Gabon, Mauritania, Niger and Rwanda. The rest of Francophone countries are already covered under the scheme of India and TEAM-9. 

3.        Once the bilateral relations will develop between Indo-East African countries, the efforts for multilateral relations should be persuaded. It will lead to develop a common market between Indo-Eastern African countries.

4.        India should carry forward this idea of common market in SADC region by involving NEPAD, EBID- the Bank for Investment and Development of ECOWAS, ECOWAS Regional Development Fund (ERDF) and ECOWAS Regional Investment Bank (ERIB).

5.        Along with it, there is a need to build people to people contact programme in understanding each other culture, language, traditions and ethics. It will demystify the existing doubts and impact established by French and British colonialism about each other on the one hand and will provide a way to move forward in understanding common issues of development.

6.        The secular traditions of India and its worldwide image to keep Hindus, Muslim and other communities together are intact and are known worldwide. Further, that out of 1.3 billion Muslims, 900 millions lived in Africa and the Indian continent. This is the beginning and inspiration for African countries and India to move forward in the changing international relations and develop their markets accordingly.

Reference

1.        Oil and Gas, IBEF, (CII), 2005, p.3.

2.        mohan, Breaking Boundaries. . . Joining Hands, MEIPL, 2005, p.4.

3.        Power, IBEF, (CII), 2005, p.27.

4.        For More, http://www.eia.doe.gov/emeu/international/reserves.html,

Energy Information Administration, US Government, January 18, 2006.

5.             The Hindu, October 15, 2005.

6.             India-Africa project Partnership March 2005, ADB, Exim India, Ministry of Commerce and Industry, MEA, India.

7.             CII India-Africa Project Partnership 2005, Background paper, Delhi.

8.             Ibid.

9.             Ibid.

10.           Ibid.

11.            Delegate, India–Africa Project Partnership Conclave, March 4-7, 2005.

12.           Ibid.

(Views are personal)

 

Dr. Suresh Kumar* Expert in Political Economy and Federal Politics, University of Delhi

 

Towards Energy Cooperation in South Asia

Dr. Samir Ranjan Pradhan§

t is often argued that there is lack of trade compatibilities among the countries of South Asia, which hinder the process of regional economic integration. However, one sector that has the potential to augment greater integration is the region’s energy sector. It can be argued that regional energy cooperation in South Asia may yield benefits for member countries rivaling those may stem from other aspects of cooperation such as trade, joint ventures and cooperation in science and technology.

Growth induced structural changes have resulted in soaring consumption of all forms of energy in general and oil and gas in particular in the region. The soaring consumption accompanied by domestic as well as regional reserve and production deficit has resulted in voluminous imports of energy from other regions, and hence propped up the concerns about energy security. Therefore, in my view, negotiating the imminent and pertinent energy challenges of the region may have considerable impact on the sustenance of the new Asian Dynamism.

Even though, South Asia has the lowest per capita consumption of energy in the world (0.45 toe), it is going to have the highest rate of energy consumption growth by 2010 and beyond. While 60 percent (775.3 million) of its population remains without access to lifeline energy sources such as electricity and are dependent on biomass, the energy intensity of the region is very high at 0.65 toe in comparison to the world average of 0.29 toe.

Let’s us look at the region’s energy sector fundamentals. The South Asian region comprises of countries with high energy production potential and fast growing energy demand, which in turn opens up avenues for cooperation. The countries of South Asia have outstanding potentials of energy development and have complementary endowments on a contiguous landmass, which is a prerequisite for the development of an integrated energy infrastructure. Moreover, the region is also endowed with the requisite technical capabilities and skill needed in the field of energy production and distribution. Thus the prime movers for energy cooperation in South Asia stem from the lopsided and hence complementarities pointing to the existence of sectoral competitive advantages among the members. Therefore the thrust should be given to harness the competitive advantages for the common benefit of all through regional cooperation.

A glance at the energy sub sectors of the member countries points to the existence of sectoral competitive advantages:

India

·          Refining, retail trading, Petro product market (handling imports for land locked countries like Nepal, Bhutan, exporting to Sri Lanka)

·          Expanding domestic E & P industry

·          Major companies operating overseas like OVL, IOC, etc in acquiring assets, technology, etc

·          One of the prominent player in CNG based public transport system

·          Coal based power generation, etc

Pakistan & Bangladesh

·          Gas based power generation

·          Gas Reserves

Nepal & Bhutan

·          Hydro based power generation

Sri Lanka

·          Oil based power generation

Although India is much ahead in the energy sector in comparison to other members, it will still be depending heavily on external energy sources, especially from and through its smaller neighbours, Nepal, Bangladesh and geo-strategically located Pakistan.

In such a backdrop, we need to

·          Emphasize the important role of energy cooperation in facilitating economic development and industrialization in the region;

·          Realize the pernicious effects of escalating oil prices on the member economies;

·          Recognize the complementarities of SAARC countries as well as the differences in economic development, natural resource endowments, and specific geographical conditions.

For this, the following initiatives are to be prioritized, in the spirit of voluntary cooperation, mutual respect, and shared benefit:

1.                    To make efforts to ensure a sustainable supply of energy, inter alia, increasing energy exploration, facilitating energy-related innovations, and developing energy-efficient technologies;

2.                    To advance the sustainable development of energy resources and technologies including geothermal, bio-fuel, solar, hydro-power, wind, etc.

3.                    To conduct joint research and studies in developing renewable energy resources as well as energy and market efficiency in order to address the increasing energy demand, shortage of energy supply, and to mitigate the negative environmental impacts of energy use;

4.                    To enhance the knowledge on energy through sharing of information, best practices, and experience in energy exploration, development, and conservation on fossil energy and renewable energy;

5.                    To encourage capacity building programs in the energy sector including training and scholarship programs;

6.                    To establish linkages with existing energy cooperation network of regional groupings such as ASEAN, ASEAN+3, APEC, EU, and also with major producing and exporting regions such as, Gulf Cooperation Council (GCC), Russia, Central Asia and other regional groupings;

7.                    To explore the possibility of setting up a consultative mechanism between oil producing and consuming countries to identify ways and means to help mitigate the adverse effects of oil price fluctuations, including examining the possibility of re-investing profits gained from the recent surge in oil prices to ensure the sustainable economic growth, development, and welfare of the members;

8.                   To explore the possibility of building strategic oil storage system to mitigate shortfall in oil supplies as well as to maintain a prudent level of energy supply for the region;

9.                    To study the possibility of formulating contingency plans relevant to each member country’s needs as well as the needs of the region, in the event of an energy supply crisis or disruption due to natural disasters, terrorist attacks, and war;

10.                 To encourage a government-private partnership as well as increase participation of related enterprises, institutions, agencies, and sub-regional arrangements in providing their support for the enhancement of energy cooperation in the region;

11.                  To encourage closer cooperation and networking among the private sectors of member countries, particularly energy companies, in addressing energy needs and efficiency as well as sharing of information and best practices;

12.                 To encourage closer economic ties among member countries by promoting foreign direct investment and project financing in the energy sector as well as improvement of investment climate;

13.                 To enhance networking among member countries’ energy institutions, energy experts, technology universities, and centers of excellence in exploring possible ways to develop economical and feasible alternative energy resources, specific to each respective member country;

To conclude, it can be stressed that energy cooperation in South Asia presents tremendous potential for the region as a whole by synergizing sectoral complementarities and harnessing competitive advantages of members in an integrated manner. The time has come to focus on out-of-box pragmatic thinking based on realistic commercial fundamentals rather than clinging to age old political misconceptions.

 

Note on the issues for attention in the coming Energy Security Seminar on 14-15 February 2006.

 

Part – II

3) Role of Governments, Companies and markets in supply security

a.        What is the price that crude might reach in the next 25 years? Is there a maximum, which is determined by substitute fuels coming in to replace oil at a specific price?

b.        In the first oil crisis of the seventies it was indicated by all futurists that beyond 20$ in 1973 prices oil shale, in Canada and coal oil conversion would be coming into the market. Even now Sasol in South Africa would be in a position to convert most of the coal available in the market to oil at prices around US dollars 40/Barell. What will be the price of oil produced from coal or gas in the twenties of the current century?

c.        If oil price of crude and products is determined by adopting import parity price is there any role left for the government in price fixation? Will there be any room for competition in the oil market in an IPP regime? Will the adoption of IPP principles lead to a violation of competition law in force in many countries? (In South Africa and UK this question has come up)

d.       What is the justification for refineries getting higher GRM (Gross Refinery Margin) whenever the oil price increases?

e.        In respect of coal is there adequate coal in India to meet the growing requirements mostly from coal? What could be the fall back strategy if coal supplies do not meet the requirements?

f.         What is the relative level of carbon generation on a total and per capita basis in China, US and India on account of power generation with coal in 2005 and likely in 2030?

4) Increasing variety, balance and diversity in the energy mix

I.      India is planning for biomass supply through non-edible oil seeds and specific cultivation of energy crops like jatropa. What are the physical limits to the availability of this even in the distant future due to constraints of land and demand from other needs?

II.      There is a view that biomass production and use should be encouraged on a highly decentralized basis so that it can be produced in small quantities in villages and used with very little purification in rural irrigation pumps and tractors. Is it a feasible proposition? What should be the changes in our policy and programs on biofuels to make it a pro-poor program?

III.      The growth of nuclear energy program in India is constrained by the limited availability of Uranium. It is however hoped that fast breeder reactor could help us to overcome this constraint. Are there any experience or study, which provides data of the likely commercial viability of fast breeder reactors?

IV.      Is there international acceptance of the Thorium based nuclear power generation? What is the worldview on this possibility?

5) Moving towards a low carbon economy.

I.      What are the likely costs of clean coal technologies? Is carbon sequestration well established technically and commercially?

II.      What are the plans to make the cost of power generation low in India? Will not the use of gas or nuclear technology to produce power reverse the trend of lowering power generating cost observed in the last two years?

III.      The use of renewable energy technologies including wind and solar would reduce the level of carbon emission. Should they not get much higher priority?

IV.      What are the current estimates of capital and operating costs of GTL and coal to oil projects?

6) Improving access to energy: Structural reforms & regulation

I.      In India, where most of the energy users are poor, the need for subsidized supply to the economically weaker sections is well recognized. But, the delivery systems designed to give subsidized energy supply has lead to most of the evils of the energy sector. Could it be replaced by a regulatory system, which provides for a uniform price for all sections and subsidization through energy coupons? What has been the experience of such systems else where in the world?

II.      Power sector is not able to attract private investment. What are the specific measures, which the government should introduce to mobilize private investment?

III.      India is a very large country with very large quantities of energy in different forms being used. Is it feasible and desirable to have a single regulator for the whole energy sector or different regulators for different fuels? What can we learn from international experience?

-Concluded-

India’s Energy Security: Major Challenges

Part - I

Edited transcript of brainstorming session held on 25 January 2006 at the Observer Research Foundation to identify key issues for the National Conclave on ‘India’s Energy Security: Major Challenges’

Chair: Mr D V Kapur

Objectives:

Discuss issues to be highlighted in various sessions in the light of the fact that the concept of energy security must go beyond the petroleum sector.

Draft, in very concrete and brief language, recommendations for the consideration of the government to be submitted after the conclave taking into consideration the draft report on ‘Integrated Energy Policy’ by the expert committee of the planning commission led by Dr Kirit Parikh.

The Power Sector

The sector is certainly extremely important but it can belittle the importance of having security of other forms of energy and mostly the power which is pulling down India’s economic growth rate. The shortage of investment in power sector is in fact interconnected with petroleum sector.  There is no survey of the number of diesel sets being run by small & medium industries, particularly the export oriented industries, but the number is definitely large running into several lakhs. 

These industries lack technical capabilities to maintain these sets at optimum efficiency levels.  Inefficient use and maintenance result in loss as the cost of power from these sets can be close to Rs 13/unit. In addition there are close to 50,000 portable generation sets being used in households apart from a large number using Kerosene and LPG for lighting purposes.  This results in unnecessary consumption of petroleum products. 

The level of gas prices (LNG or piped) is already high and is expected to increase further.  In the absence coal which now said to be not extractable at economic prices all over the country what are the options for us?

If nuclear power is the option then how is it going to be done? During the next couple of decades something like 30-40,000 MW of nuclear power is to be added in this country.

NEWS BRIEF

OIL & GAS

OIL raises well output

February 2, 2006. Oil India Limited has successfully ventured into horizontal oil well drilling for optimising the production of hydrocarbons through state of the art technology. OIL has completed the drilling of first ever horizontal oil well by the commissioning of well no- 7 at Makum in Tinsukia district of Assam. The drilling of the well has been done in technical collaboration with Newsco Deviation and Horizontal Drilling Services, Calgary, Canada. This well is the deepest horizontal onshore oil well in the country and the first of its kind in the north east. The well initially produced 360 kilo litres per day of oil which is five times more than the normal vertical well in the same structure. However, the production rate has been subsequently optimised to a level of 230 kilo litres per day which is again 3.5 times the production rate of normal vertical well in the same structure.

ONGC plans to push Mumbai High oil production

February 1, 2006. The state-run ONGC is planning to push Mumbai High oil production to 3,00,000 barrels per day by June 2006. This is higher than 2,75,000 bpd oil production recorded from the field till fire struck the Mumbai High North platform in July, 2005. During last four months ONGC has made substantial progress in restoring oil production from India's largest oil and gas field. Oil production, which had plummeted at 1,40,000 bpd just after the fire and later stabilised at 1,90,000 bpd is currently approaching 2,40,000 bpd. ONGC recorded a production high of 2,15,000 bpd from Mumbai High in December-January. ONGC is targeting 2,75,000 bpd production in March-April.

Indian Oil Corp heads for Dubai

February 1, 2006. Indian Oil Corporation has decided to set up a wholly-owned subsidiary in Dubai for expanding its overseas operations. Given the tax benefits available in Dubai, IOC may also route its big-ticket investments for acquiring refining and exploration and production (E&P) assets abroad through this subsidiary. It may be a slow going initially, but investments through the subsidiary will be on a much larger scale compared to IOC’s existing subsidiaries in Sri Lanka and Mauritius. IOC may also consider investing in oil-rich Saudi Arabia through this new subsidiary. Besides IOC, ONGC has already made an offer to Saudi Aramco for entering into a long term strategic deal. Private sector major, Reliance Industries Limited is also understood to have chalked out plans to invest close to $8 bn (Rs 353.12 bn) in Saudi Arabia’s refining and marketing sector.

Subsidies for kerosene, LPG may rise by $453 mn

February 4, 2006. The finance ministry is considering a proposal to increase budgetary allocation for subsidies on LPG and kerosene by almost Rs 2,000 crore ($453 mn) in Budget ’06-07. The petroleum ministry is also pushing for other fiscal incentives for exploration and exemption of service tax. The increased subsidy allocation will come as a major relief to oil companies, which have been reeling under huge losses incurred on the sale of kerosene and LPG. The petroleum ministry has been pushing for higher subsidy allocation in the budget to share the subsidy bill more equitably. The subsidy load on the Centre for the petroleum sector could rise by over Rs 2,000 crore ($453 mn) in Budget ’06-07, over the budget estimates for the current fiscal, which peg it at Rs 3,644 crore ($825 mn). Part of the reason for the hike is that the subsidy phase-out formula for the oil sector that was supposed to close out in ’06-07, has been all but given up. The formula envisaged capping the Centre’s hit at about Rs 3,500 crore ($793 mn) for three years from ’03-04, and will be accompanied by gradual increase in domestic oil prices, especially LPG and kerosene, to align them with their production cost. A hike in the petroleum subsidy will raise the aggregate subsidy from Rs 47,432.2 crore ($10.74 bn) as per budget estimates.

Subsidies for kerosene, LPG may rise by $453 mn

February 7, 2006. Gail (India) Ltd has appointed Suz Tractebel of Belgium as technical consultant to carry out a study for the proposed pipeline from Myanmar to India avoiding Bangladesh. Tractebel has been commissioned to prepare a detailed feasibility report, environment management plan and a rapid risk analysis report for the Myanmar-India pipeline project via the northeast Indian territory. The proposed pipeline will be routed through Mizoram, Assam, West Bengal and Bihar. The project also has the provision to transport gas from developing fields in Tripura and Assam. The Myanmar gas will be injected at Gaya in the proposed Jagdishpur-Haldia pipeline. The basic contents of feasibility study are route selection, design parameters, system reliability, redundancy, safety, security, hydraulics, sizing, cost estimation, sensivity analysis, risk analysis and mitigation measures, project construction schedule and project implementation strategy. 

IOC, RIL for gas distribution projects

February 6, 2006. IOC is in talks with RIL to source its Krishana-Godavari (KG) basin gas for city gas distribution projects in the country. RIL’s KG basin gas is likely to be commercially available in June 2008. IOC may form a JV company to supply piped natural gas (PNG) and compressed natural gas (CNG) in various cities. Analysts believe that IOC’s city gas distribution projects will primilarly be in the states of Andhra Pradesh, Maharastra and Gujarat, through which the RIL gas pipeline will pass in order to bring gas from the east coast (KG basin) to the west coast (Gujarat). IOC has already signed a joint venture (JV) agreement with GAIL (India) Ltd for jointly implementing the city gas projects in Agra and Lucknow. IOC is also leveraging its current position to emerge as a gas supplier of the same stature as that of a liquid fuel supplier. RIL has already committed to supply 12 mmtpa of gas to NTPC for its Kawas and Gandhar projects in Gujarat.

RIL leaves onus of final gas price on government

February 6, 2006. Reliance Industries defended the pricing of proposed gas supplies to the Anil Dhirubhai Ambani Group (ADAG) saying the government had the final say as it holds 70 percent production share. RIL said that the gas price has to be negotiated on commercially viable terms as the government holds 70 percent share under the production sharing contract (PSC) for the (Krishna-Godavari) block. The company is of the view that given the global volatility there would have to be a variable price for gas supplies with periodic review.

Reliance Industries Ltd and Reliance Natural Resources Ltd have already hammered out a gas supply agreement. Reliance Natural Resources is one of the entities that have come into existence following a split of the Reliance business empire. It will be a part of the Anil Dhirubhai Ambani Enterprises (ADAE) group. The agreement sets the basis for determining quantities of gas to be made available by Reliance Industries to Reliance Natural Resources, its pricing and terms and conditions. Reliance Industries proposes to use a part of its gas discoveries for power generation of ADAE’s Reliance Energy Ltd and Reliance Patalganga Power Ltd. Reliance Natural Resources, the gas-based energy undertaking of Reliance Industries, will be the vehicle for supply of gas to Reliance Energy and Patalganga. According to the agreement, Reliance Natural Resources can buy gas up to 28 MMSCMD (million standard cubic meters per day) from Reliance Industries. The terms and conditions for supplying the gas are similar to those of Reliance’s agreement with NTPC for supply of 12 MMSCMD of gas. 

GAIL in talks with Oman Gas, Qalhat LNG

February 6, 2006. GAIL India is planning to enter into long-term LNG sourcing contract with Oman LNG and Qalhat LNG to shore up supplies to various projects including Ratnagiri Gas and Power (RGPPL). As the deadline for the commissioning of the LNG-fired Ratnagiri Gas project is fast approaching, GAIL has expedited talks with prospective gas majors. GAIL holds 28.3 per cent stake in Ratnagiri Gas and Power. Preliminary talks between both the countries are over, and the deal will be signed once both the parties reach a consensus on pricing. Other companies in the fray for a supply deal with GAIL are North West Shelf of Australia, Petronas of Malaysia, BPMIGAS of Indonesia, Brunei LNG, AdGas, RasGas of Qatar and Sonatrach of Algeria. The $2 bn (Rs 88 bn) Oman LNG plant is based in the port city of Qalhat, near Sur. Qalhat LNG, another company targeted by GAIL, is a joint stock company owned by the Sultanate's government (55.84 per cent), Oman LNG LLC (36.8 per cent) and Union Fenosa Gas (7.36 per cent). Qalhat LNG plant is being built adjacent to the Oman LNG Qalhat, allowing it to share Oman LNG storage, loading and other facilities. Oman LNG has assured Petronet LNG the availability of 0.6-0.8 mt LNG in 2006, 1.0-1.2 mt in 2007 and 1.6-1.8 mt per annum from 2008.

GAIL proposes to unbundle transmission & trading biz

February 3, 2006. GAIL (India) Limited is willing to hive off its gas transmission and trading businesses. In a note to the petroleum ministry, the gas marketer has proposed to do this in three phases — accounts separation, legal segregation (managerial/physical) and ownership separation. The company is of the view that the extent and schedule of unbundling will, however, depend on the maturity of the market as well as government policies.

Unbundling of GAIL’s operations was first recommended by the V Krishnamurthy- headed advisory committee on synergy in energy, which said that the supply and transport services of GAIL be unbundled to facilitate competition and reduce conflict among the entities. The recommendation has since been accepted by the government. The petroleum ministry, however, chose to implement the process in phases. Unbundling of the French gas major-Gaz de France (GDF) was taken as the model. In case of GDF, first the accounts were separated. This was followed by putting the transportation activity into a subsidiary before all were made independent. On these lines, GAIL has already undertaken separation of accounts. The Bill is in the final stages of Parliamentary approval and likewise the gas pipeline policy is also being finalised.

China, India may enter more oil deals

February 7, 2006. The flagship oil firms of China and India have closed their first-ever joint acquisition, the $580 mn (Rs 25.61 bn)-takeover of an asset in Syria, which would likely pave the way for more joint deals between the two Asian giants. Petro-Canada said in December it would sell its minority stake in a Syrian oil and gas venture to China National Petroleum Corp. (CNPC) and India's Oil and Natural Gas Corp. (ONGC). Some analysts have said they do not believe the partnership between ONGC and CNPC would be of a strategic nature given the two country's insatiable demand for oil, despite India's diplomatic efforts to seek more energy cooperations with China. India and China could strike more joint deals to reduce the level of competition in the fiercely competitive energy asset market.

Exploration cos seek service tax exemption

February 7, 2006. Top exploration firms including BG Group of UK, ENI Spa of Italy and Cairn Energy have sought exemption of oil field services from the purview of service tax, saying the tax was a disincentive to aggressive pursuit of oil and gas hunt. BG, Cairn Energy of UK, ENI, Premier Oil of UK and Ravva Oil (Singapore) have represented to the Finance Ministry that levy of service tax on services connected with exploration and production (E&P) operators was inconsistent with the objective of becoming self-sufficient in oil and gas production.

India is 73 per cent import dependent to meet its oil needs and has been aggressively pushing for exploration of new basins so as to find newer reserves of oil and gas. Incidence of service tax increases contract cost by another 10.2 per cent and often affects the viability of the venture itself. No other levy has such a far-reaching impact on the course of a commercial E&P activity.

Under the existing laws, on successful commercial discovery, all costs relating to E&P activities including tax are recovered from the produce (oil or gas) and the remaining shared between the Government and the companies as per agreed percentages. In case of no commercial discovery, the entire cost, including the added burden of service tax, falls on companies.

Iran to build pipeline without India

February 4, 2006. Iran will press on with a contentious gas pipeline to Pakistan even if India does not meet a May deadline to join the project, an Iranian deputy oil minister said. The original plan was to build a $7 bn (Rs 309 bn) pipeline linking Iran's abundant gas reserves, the world's second biggest, to India's booming economy. But the project has met strong U.S. objections as Tehran edges closer to the UN Security Council under suspicion of seeking nuclear arms. India and Pakistan need to balance their energy needs with diplomatic ties to Washington.

55 oil, gas blks for bids by March

February 3, 2006. India plans to offer 55 oil and gas blocks for bidding under the New Exploration and Licensing Policy (Phase-VI) by the month end. The government has relaxed some bidding conditions, which will allow more domestic companies to compete in the round. The government has also halved the required experience for bidding for highly prospective deep-sea blocks to five years. In addition, the discovery benchmark, fixed at three years earlier, is now being stretched to five. Of the 55 blocks to be offered, 24 would be deep-sea, 6 shallow offshore and 25 onland. Bidding opens on February 28 and closes on September 15. The reserve accretion through acquisitions requirement had also been removed. Global majors are more active in mergers and acquisitions and would have earned more points for the reserves they bought rather than explored. The technical criteria has also been changed. Under NELP-VI, proven technical competence of an operator will be given higher weighting. Under the new norms, 15 points will be given for technical capability of proposed operators in case of onland and shallow water blocks and 20 points in case of deepwater blocks. 

Ambitious coal-to-oil project hits roadblock

February 1, 2006. The country’s largest coal producer, Coal India Limited, has expressed its inability to supply the desired amount of coal for conversion, a move that may delay the project by almost a decade. CIL has informed the coal ministry it would be able to generate surplus coal required for the coal to oil project only by 2013-14, so the project should be planned accordingly. According to a government task force report, the proposed coal liquification project was to be implemented by two joint venture companies—one for production of coal and the other for setting up a coal liquefaction plant and its upstream activities. Oil India Limited had also approached CIL to become a partner in the new venture to be implemented at its Duliajan plant near Assam. It had also sought the supply of about 3.5 mt coal from its subsidiary North Eastern Coalfields Ltd (NEC), for the pilot project. CIL is of the view that only by 2013-14, NEC would be in a position to supply additional coal for the conversion pilot project proposed at OIL’s Duliajan project in Assam from its subsidiary NECL. CIL has also cited that coal could not be sourced from its other mines for the project as it would make conversion of coal into oil expensive, thereby making the entire exercise unviable. Coal from NECL is of right quality and is priced at Rs 3,500 per tonne, ideal for the oil from coal project. The Central Mine Planning and Design Institute Ltd (CMPDIL), which studied the possibility of producing oil from coal in India, had earlier found that it was possible to produce oil from coal at a price of US$ 35 a barrel, which at current high international crude oil prices would work in favour of the country. However, as per CIL recent estimates oil under the project would cost between US$ 40 to US$ 45 per barrel. At current international crude oil price of over US$ 65 a barrel, the project still seems viable. But CIL said that the volatile nature of oil price movement would make the entire project too risky and if prices fall at the time of commissioning of the project, the project would no longer provide the desired benefits. So, it (CIL) wants to first meet the requirements of its customers from where returns are assured before committing anything for the development project.

Petro min for lead role in sourcing LNG

February 1, 2006. The Empowered Group of Ministers (EGoM) led by defence minister Pranab Mukherjee has directed newly appointed petroleum and natural gas minister to take the lead role in sourcing LNG for the now-closed Dabhol project. EgoM has observed that an active role by the minister was necessary as efforts of Gail India, which holds 28.3 per cent stakes in Ratnagiri Gas & power Pvt Ltd (RGPPL), has not yielded the desired results. The former minister Mani Shankar Iyar had reduced the target countries from 13 to five (UAE, Oman, Qatar, Indonesia and Malaysia). EGoM’s directive is crucial especially when the Prime Minister’s Office has stepped in to expedie the process.

The likely availability of LNG will be as follows: Malaysia (Petronas from 2006), Abu Dhabi (0.6 million tons originally earmarked for Dabhol project currently being sold on very short term contracts to Tokyo Power & Gas), Oman (from 2007-08 after their short term contracts expired-originally earmarked for Dabhol project), Indonesia (Chevron against their share in Bontang -I, 2008) and Qatar (RasGas/Qatar Gas, June 2007, after they have completed the reassessment of gas reserves, which is currently in progress). According to the petroleum and natural gas ministry note, Oman has reserves of 35.1 trillion cubic feet (TCF). Oman’s Qalhat plant, with two trains, has the capacity of 6.6 million tonne (after de-bottlenecking it would be 7.3 million tonne). Qalhat’s one more plant, which would be able to supply gas after 2006 would have the capacity of 3.7 million tonne. Abu Dhabi has reserves of 213.9 TCF and its operator ADNOC has the capacity of 5.6 million tonne at Das Island I&II plants. Indonesia has reserves of 92.5 TCF and its plants have the total capacity of over 70 million tonne. These plants are operated by PTARUN NGLCO, PT BADAK NGLCO and Pertamina & BP. Malaysia has reserves of 84.9 TCF with the total installed LNG capacity of 22.70 million tonne per annum (mtpa). After de-bottlenecking (1.3 mtpa) in respect of plant operator MLNG, in respect of DUA-II plant, the estimated capacity would be 25 mtpa in October 2006. Further, subsequent to commissioning of their proposed Bintulu MLNG IV plant, the installed capacity would be 30.8 mtpa.

POWER

ONGC allowed to own 100 pc in Tripura project

February 7, 2006. The ONGC is all set to increase its stakes to 100 per cent from the present 26 per cent in the gas-based project in Tripura. The company proposes to incur expenses from internal resources and if needed will raise debt to support its investment. ONGC has been quite keen to have a larger exposure, as it wants to bear higher risk and enjoy higher benefits which otherwise would go to other stakeholders. The project cost has been pegged at Rs 4,750 crore ($1.08 bn), which comprises Rs 2,450 crore ($555 mn) for the power plant, Rs 1,600 crore ($362 mn) for transmission network and the rest for gas production. Tripura project, which has two units with a capacity of 375 MW each, may later be expanded to 1,100 MW. Currently, ONGC holds 26 per cent and the rest 74 per cent is held by the Tripura government and Infrastructure Leasing & Finance Services (IL&FS) in the special purpose vehicle titled ONGC Tripura Power Development Corporation Ltd (OTPDCL).

Power cos seek concessions for mega projects

February 5, 2006. Private power developers have demanded a host of concessions including tax benefits, a higher debt-equity ratio and option to choose technology and unit size, for taking part in the government’s five ambitious Rs 75,000 crore ($17 bn) ultra mega projects - each having 4,000 MW capacity. The big power majors Reliance Energy, Essar, Sterlite, GMR group, GVK group and Jindals also want mega power status and a payment security mechanism to ensure project viability. The financial institutions, on their part, have suggested attracting venture capitalists, activating bond market and tapping the international market for meeting the huge borrowing requirements. As of now, the government has specified that the project should be set up in a debt-equity ratio of 70:30. This means of the total investment requirement of Rs 15,000 crore ($3.4 bn), about Rs 10,500 crore ($2.38 bn) would be debt and the private company would chip in with the remaining part as equity. However, the companies have suggested a higher 80 or 90 per cent debt for financing these projects, a condition which may not be acceptable to banks and financial institutions as they would have to fund up to Rs. 13,500 crore ($3.06 bn) in each project. Power Finance corporation, which is the nodal agency for these projects, has set up five special purpose vehicles. These are Sasan Power Ltd, Alaktara Power Ltd, Coastal Gujarat Power Ltd, Coastal Karnataka Power Ltd and Coastal Maharashtra Power Ltd.

L&T to foray into power

February 4, 2006. Engineering and construction giant Larsen & Toubro (L&T) is planning to foray into power generation. The company’s initial plan is to produce hydel power. It has already made bids for three small hydropower projects in Himachal Pradesh. Initially, L&T intends to start with smaller projects of up to 250 MW. As its experience grows, it plans to handle bigger projects. As part of the 11th plan, the government has targeted 51,000 MW of power from hydroelectric projects, with a majority of the projects slated for the upper riperian states of the north-eastern region. On the construction front, L&T already has several hydel projects on hand, including one each in Nepal and Bhutan. It is also the contractor for the 2,000 MW Subansiri project in Arunachal Pradesh. It also won the contract for the 520 MW Parbati project in HP. It also has a joint venture with Hindustan Construction Co for a 900 MW project. 

JK Lakshmi to set up $45 mn power plant

February 4, 2006. JK Lakshmi Cement, one of the leading companies of the JK Group, has drawn up a plan to spend Rs 200 crore ($45 mn) in setting up a captive power plant. It also plans to improve the capacity of its plant in the Sirohi district of Rajasthan. It would also install a captive power plant worth Rs 150 crore ($34 mn). Installation work for the plant was expected to be over in a years’ time. 

Gautami Power Plant to go on stream by Sept

February 3, 2006. Gautami Power Plant, a 464 MW combined cycle power plant, is expected to be commissioned by September 2006. The company is going ahead with the implementation of the project and is confident that the project will comfortably run at 50 to 60 per cent capacity. GAIL will provide the gas for the project on a pro rata basis.

Syntex plans 18 MW captive power unit

February 3, 2006. Banswara Syntex (BSL) is planning to invest Rs 88 crore ($20 mn) in expanding its facilities by setting up one more trouser-manufacturing unit and a 18 MW captive power plant. The power plant will be functional by March 2007. A capex of Rs 42 crore ($9.5 mn) has been earmarked for setting up the coal/lignite-based power plant at Banswara, Rajasthan.

GVKPIL to set up plants in Uttaranchal, Punjab

February 1, 2006. Andhra-based GVK Power and Infrastructure Ltd (GVKPIL) will set up plants in Uttaranchal and Punjab, generating around 1200 MW power, at a cost of Rs 5,500 crore ($1.25 bn). The proposed plants, will come up in Srinagar and Napang in Uttaranchal and in Govindwal Saheb in Punjab. While the coal-based plants at Uttaranchal would produce 500 MW, the one in Punjab would produce 700 MW hydel energy. The GVKPIL now held 53.96 per cent stake in GVK Industries, which had already set up a 216 MW plant at Jegurupadu in Andhra Pradesh. The second plant under phase II of 220 MW would be commissioned by the middle of this month.

DVC power output at record high

February 1, 2006. DVC achieved all time highest power generation during the first three quarters of 2005-06. In comparison to earlier such performance of 2004-05, the increase has been 17.2 per cent in the first quarter (Q1), 23.77 per cent in the second quarter (Q2) and 12.98 per cent in the third quarter (Q3). Along with the increase of total power generation, the plant load factor (PLF), in terms of percentage, has also increased by 3.92 per cent in Q1, rising to 7.08 per cent in Q2 and 2.49 per cent in Q3. In the month of December 2005, the thermal units of DVC attained a combined PLF of 71.73 per cent, against 64.53 per cent in December 2004. The total generation capacity of DVC units in operation is 2436.5 MW, comprising 2210 MW thermal, 144 MW hydel and 82.5 MW gas turbine power. 

Franchising may help cut losses: Power Secretary

February 6, 2006. The Union power secretary, RV Shahi, said that 2,000 MW additional capacity would be added to Maharashtra’s generation capacity by December ’06. However, this is linked to an improvement in the fiscal health of the state electricity board (SEB), which has an unsustainable level of 36 per cent losses as technical and commercial (T&C) losses. This includes power theft. In the western region, Maharashtra has the biggest problem with a daily shortfall of 4,500 MW. Funding for these projects will not be an issue if the state utility improves its commercial viability. The Power Finance Corporation (PFC) and the Rural Electrification Commission (REC) would fund these projects if they see signs of financial revival. Among the innovative means being considered to reduce T&C losses is to franchise the operations from feeders, which will bring in greater accountability. It will also mean a smaller entity will manage the locality.

Power tariff for powerlooms slashed

February 3, 2006. Electricity tariff for powerlooms in Tamil Nadu has been reduced with immediate effect. Tariff would be reduced to Re 1 for the first 1,000 units, Rs 2.25 for the next 500 units and Rs 2.50 for the rest. The prevailing rates were Rs 1.40 for the first 500 units, Rs 2.25 per unit from 501 units to 1,500 units and Rs 2.50 for the rest. The reduction would benefit over 85,000 powerloom weavers, costing the exchequer Rs 30.73 crore ($7 mn).

Coal Videsh eyes Zimbabwe block

February 6, 2006. Coal Videsh Ltd is bidding for drilling, exploration and mining rights in a 75-sqkm greenfield Zimbabwean coal block in the Whangi province. It plans to set up a joint venture with Zimbabwe Electricity Supply Authority (ZESA) Holdings Pvt Ltd for the purpose. The company, Coal India’s international arm, is also in the process of firming up plans for exploration rights for a coalfield in Dinajpur district of Bangladesh, adjoining Malda in West Bengal.  The Central Mine Planning and Design Institute will carry out the exploration work on behalf of CVL in Zimbabwe. The drilling expenses are pegged at Rs 6 crore ($1.36 mn). In an attempt to get a hold abroad, CVL is also firming up plans to acquire stakes in coal mines in Mozambique, Australia and South Africa. The company may go for a mix of outright purchase, block allotment or take up an unexplored area for exploration. The company is also exploring possibilities in Australia for coking coal and in Mozambique for coking and low-ash non-coking coal and in South Africa for low-ash non-coking thermal coal. 

Nuke pact with France likely

February 5, 2006. The Indo-US nuclear pact seems to be the crucial “key” for India to open the doors for civilian nuclear co-operation with other countries as well. In fact, a civilian nuclear agreement, on the lines of the Indo-US deal, is expected to be signed between India and France during President Jacques Chirac’s visit to India. The groundwork for the deal has already been done. The deal will involve separation of Indian civilian and military nuclear establishments for which negotiations will be conducted by the two sides. Both the governments had successfully prepared a draft that could emerge as a common declaration on the peaceful uses of nuclear energy or on nuclear co-operation.

Free power is fine if State finances permit: Shinde

February 4, 2006. The new Union Minister for Power, Mr Sushil Kumar Shinde, feels free power is okay if the State finances permit. However, he don't propose free power, but would rather go by the national policy and what the Prime Minister lays down. He is of the view that free power throughout the country was just not possible. He said that if a State was sound fiscally, there was no harm if it helped the agriculture sector through free power.

Guj to invest $3.4 bn in power project

February 4, 2006. An ultra-mega power project of over 4,000 megawatt (MW) capacity at an estimated investment of about Rs 15,000 crore ($3.4 bn) is being set up by the government of India on build own and operate model in Mundra in Kutch district of Gujarat. The new coal-based project involving will be the largest power project in the country along with three other such project proposed in Chhatisgarh, Maharastra and Karnatka. The power from this project, which should start flowing by ’09, will meet the requirements of the entire Kutch and Saurashtra region. The project may change the face of this upcoming industrial hubs which currently faces severe power shortage. The Kutch district has attracted high power consuming industries like ceramic and induction steel production. In addition, the neighbouring Saurastra region which has a flourishing brass parts and engineering companies will also gain from the project. The project will be set up in phases of either 4X1000 MW or 5X800 MW. The coal for the project will be imported and tie-ups in this regard will be done by the developer which is expected to be identified by this year end. The Power Finance Corporation Ltd has already invited expression of interest for the power plant. This is the second ultra mega power plant being offered by PFC on build, own and operate basis.

WBPCB working on carbon trading report for UNDP

February 3, 2006. The United Nations Development Programme has asked the West Bengal Pollution Control Board (WBPCB) to prepare a report on the status of carbon trading in India. WBPCB would submit five or six different project proposals for certification to a designated national authority under the Ministry of Environment and Forest next week. Some of these projects include reduction of inhouse generation of greenhouse gases by introducing solar cookers for the poor at prices less that Rs 300, biological methanation and a power saving software base.

Power development plan may be revised

February 2, 2006. The Planning Commission has suggested introduction of an automatic meter reading and geographic information systems (GIS) mapping in at least one town across the 29 states of the country from the next fiscal. The issue was discussed at a performance review meeting under the chairmanship of member, Planning Commission, Kirit Parikh. The plan panel also suggested a revision of the Accelerated Power Development and Reform Programme (APDRP) by providing incentives to the states since the programme has not performed satisfactorily. The APDRP was created for upgrading the distribution system, minimising transmission and distribution losses, improved metering and assigning responsibility for realisation of user charges. The programme was started in the year 2000-01 for restoring the commercial viability of the distribution sector. A formula will be worked out to incentives the states to implement this proposal. Of the 601 district headquarters to be covered under the programme, 400 district headquarters have been covered. With respect to financial progress against the target of Rs 1,100 crore ($249 mn) for 2005-06, Rs 847 crore ($192 mn) has been released under. The total expenditure target of Rs 9,200 crore ($2.08 bn) was set up for the programme, out of which Rs 5,800 crore ($1.31 bn) have been released till date. Five states have already undertaken automatic metering and GIS mapping on a pilot basis.

GMDC to mine coal in MP and Jharkhand

February 1, 2006. The Gujarat Mineral Development Corporation is pursuing its applications for allocation of Coal Blocks outside Gujarat. GMDC has identified few potential blocks in Madhya Pradesh and Jharkhand states. GMDC is expected to sign MoU with a private sector power generating company, KSK Energy of Hyderabad which has already commissioned 4 Power Projects in Tamil Nadu, Kerala and Andhra Pradesh. Once the Coal Blocks are awarded, GMDC will carry out mining of coal to provide feed stock to the Power Stations proposed to be set up by a Jt. Venture Company to be set up with KSK Energy. In another important move, the GMDC has started lignite mining at a new site near Tadkeshwar in South Gujarat to cater to increasing demand of lignite in this textile region. At 250 MW Akrimota Power Station, construction has now been completed and the first unit of 125 MW has started generating to full capacity from December 2005 onwards. The second unit also will be put to use with full capacity generation by March, 2006. 

Global warming demands urgent solutions: scientists

February 1, 2006. The world must halt greenhouse gas emissions and reverse them within two decades or watch the planet spiraling toward destruction, scientists said. Saying that evidence of catastrophic global warming from burning fossil fuels was now incontrovertible, the experts from oceanographers to economists, climatologists and politicians stressed that inaction was unacceptable. Carbon dioxide emissions had to peak no later than 2025. Global average temperatures were already 0.6 Celsius above pre-industrial levels, and a rise of just 0.4C more would see coral reefs wiped out, flooding in the Himalayas and millions more people facing hunger. A rise of 3C — just half of what scientists have warned is possible this century — would see 400 mn people going hungry, entire species being wiped out and killer diseases such as dengue fever reaching pandemic proportions. To prevent all of this needs global emissions to peak in 2025 and then come down by 2.6 per cent a year. But even then the world would probably face a rise of 2 degrees because of the delay built into the climate system. So the world has to start to plan to adapt.

Already the effects of the change are becoming visible, with more extreme weather events and people in coastal areas put at risk from rising sea levels due to melting ice caps. The first phase of the global Kyoto protocol on cutting greenhouse gas emissions runs until 2012, and negotiations have only just started on finding a way of taking it beyond that. The United States, the world’s biggest polluter, has rejected both the protocol in its current form and any suggestion of expanding or extending it. Instead it has set up with Australia, India, China, Japan and South Korea the Asia Pacific Partnership on Clean Development.

Coal trading to rise in India, US: McCloskey Group

February 1, 2006. Global trading in thermal coal used in power generators and coking coal used in metal plants will increase this year, on increased demand from the US and India, the McCloskey Group estimated. Trade in thermal coal will rise 4.2 per cent to 520.5 mt in 2006. Sales of coking or metallurgical coal will jump 8.9 per cent to 220.8 mt. Demand for imported coal is expected to climb in India to keep pace with economic growth, forecast to expand 7.6 per cent in the year ending March, according to the Centre for Monitoring Indian Economy. At the same time, the high cost of gas and uncertainty of supply may push some power companies in the US and elsewhere to burn coal. Indian demand for thermal coal imports will rise 22 per cent to 27.4 mt this year and 30.4 mt in 2007. US demand is expected to jump 21 per cent to 31.6 mt and to 37.6 mt the next year. Demand from South Korea, Taiwan and Italy is also expected to rise while Germany and Israel are expected to cut imports. Indonesia, the largest exporter, is expected to boost shipments 8.8 per cent this year to 136.3 mt. Australia will increase shipments 5 per cent to 115.6 mt and South Africa will export 72.4 mt, a 2.1 per cent increase. Colombia will ship 59.2 mt, a 7 per cent increase, the group forecast. Shipments from China and the US will fall. Supply from Indonesia, Australia and South Africa will also rise in 2007. By 2020, Indonesia is expected to export 149 mt, lagging Australia at 174 mt, while China will export 93 mt and South Africa 84 mt. Global demand for thermal coal imports is expected to rise to 591 mt in 2008 and to 679 mt in 2020.

OIL & GAS

N. Sea oilfield starts output -Norsk Hydro

February 9, 2006. A small oilfield linked to the North Sea Oseberg field has started production from one of three planned wells that will produce 25,000 barrels of oil per day when all running. The subsea Oseberg West Flank field is about 10 kilometres northwest of the Oseberg field centre and contains about 27 million barrels of oil and 3.5 billion cubic metres of gas, Hydro. Hydro is operator with a 34 per cent stake in the field. Its partners are Norway's state-owned Petoro, Statoil, Total, ExxonMobil and Conoco-Phillips.

LUKoil's Siberian fields to drive production increase

February 9 2006. LUKoil plans to invest more in Siberian oil and gas fields to increase production and make liquefied petroleum gas. LUKoil will spend 5 billion rubles ($177 million) this year at its largest gas field. The capacity of the field will rise to 12 bcm of gas per year. Moscow-based LUKoil produces about one-fifth of the crude in Russia, the world's second-biggest supplier of the fuel. Nakhodkinskoye is part of the Bolshekhetskaya group, which hold 920 bcm of natural gas, enough to supply the European Union for more than two years. The five fields are expected to produce 30 bcm per year from 2012. The company plans to pump more than 10 bcm at the field this year. LUKoil increased oil production by 4.8 percent to 1.81 million barrels per day last year. The oil company is examining a plan to build a 400-kilometer oil pipeline from the Bolshekhetskaya area. LUKoil also plans a refinery to process petroleum gas in the Purovsk area of Yamal-Nenets. It will need about $450 million over at least three years.

Gulfsands sees potential in Syrian structure

February 8, 2006. Gulfsands Petroleum PLC, Houston, has identified nine potentially productive zones in Paleozoic reservoirs in the sole existing wellbore on the large Tigris structure in 11,000-sq-km Block 26 in northeast Syria. The findings are the result of a reserves study of the structure. The study, by Ryder Scott Co. LP, was based on a 1994 well and 3D seismic data. If the Tigris structure, estimated to be as large as 75 sq km, is primarily a natural gas accumulation, the nine reservoirs could contain nearly 883 bcf. If mainly oil, it might hold 104 million bbl and 64 bcf of gas in the identified zones.

Also, based on potential below the base of the hydrocarbon-bearing zones encountered in the wellbore and the lack of definitive water contact evident in the existing data, unrisked prospective resources were determined to be 3.4 tcf of gas or, if primarily oil, 408 million bbl and 245 bcf. Overall, the gas case equates to total resource potential of 722 million boe, while the oil case equates to 512 million bbl and 308 bcf. Gulfsands reviewed in detail the six wells previously drilled to test Paleozoic reservoirs in the block. It concluded that three of the wells encountered potentially commercial hydrocarbon accumulations, based on drilling and independent wireline log evaluation. Gulfsands is scheduled to spud the first well on the Tigris structure by late August. It has recently signed a letter of intent with MB Drilling Overseas Ltd., Damascus, Syria, for two land rigs.

S. Korea oil, gas reserves in Vietnam field

February 6, 2006. Vietnam's Su Tu Trang oil and gas field holds 300 million barrels of oil reserves, much more than initially estimated, and 3 trillion to 4 trillion cubic feet of natural gas. State-run Korea National Oil Corp. (KNOC) and the country's biggest refiner, SK Corp. have a combined 23.25 percent stake in Vietnam's 15-1 block, where Su Tu Trang is located. Petrovietnam holds a 50 percent stake in the block, U.S. oil major ConocoPhillips 23.25 percent and France's Geopetrol 3.5 percent. The production at the Su Tu Trang field is expected to start from 2011.

Nigeria to pump 200,000 bpd by yr end-Exxon

February 6, 2006. Field operator Exxon Mobil expects output at its deep water Nigerian oilfield Erha to rise to about 200,000 barrels per day (bpd) by the end of the year. The Erha field is due to start production in March and initial output is expected to be 150,000 bpd. But production will be boosted by about 50,000 bpd by the end of the year through the addition of output from the satellite field, Erha North. Erha is sweet light crude of the type favoured by U.S. refiners to make fuels such as gasoline and diesel. Nigeria expects $10 billion of foreign investment in its deep water oilfields over the next five years to increase production to 4.0 million bpd from 2.5 million. U.S. major Exxon Mobil is Nigeria's second largest oil producer, with about 720,000 barrels of oil equivalent per day (boepd) of crude, condensate and natural gas liquids.

Transocean in $805 mn rig deal with ONGC

February 6, 2006. Transocean Inc. awarded has awarded it contracts for five of its jackup rigs worth an estimated $805 million in revenues from Oil and Natural Gas Corporation Ltd. The rigs have each been awarded three-year contracts with revenues of about $161 million per unit possible over the period, excluding certain services.

Indonesia seen unlikely to meet oil output target

February 6, 2006. Indonesia is unlikely to raise its planned output to 1.3 million b/d of crude oil by 2009 due to the lack of exploration and development. The government's target of 1.3 million b/d of crude oil could be achieved only from discoveries and improvement to production from existing fields. The significant recent discoveries include only wells on the Cepu Block in Centra Java and Jeruk Block in Madura and require development. Despite falling production, the value of Indonesia's oil and gas exports rose 16.58 per cent year-on-year in December 2005 to $1.86 billion, as both oil export volumes and prices rose. Despite the improved income, the Indonesian economy has been struggling to keep pace with the cost of the country's own increasing imports of oil. Indonesia consumes 1.35 million b/d and imports about 390,000 b/d.

Transocean gets Brazil offshore drilling contract

February 3, 2006. Oil drilling rig company Transocean Inc. received a contract from Devon Energy Corp. for drilling operations off Brazil.  Its ultra-deepwater drillship Deepwater Discovery was granted a minimum three-year contract by Devon that could generate $520 million to $775 million in revenue over the life of the project, excluding revenues for mobilization, demobilization and client reimbursables.

Petrobras to buy stake in Texas Refinery

February 3, 2006. Brazil's state-owned oil company will pay US$370 million (euro306.8 million) for a 50 per cent stake in a Texas refinery as part of its plan to expand into the United States. Petroleo Brasileiro SA, or Petrobras, will buy the stake from Astra Oil Trading NV, a division of Belgium's Transcor International NV. The Pasadena, Texas refinery can process 100,000 barrels of petroleum products daily and is being upgraded to handle more. The Latin American energy titan, which will operate the refinery with Astra, is seeking direct access to the huge North American market.

Foreign companies eye oil reserves in Iraq

February 3, 2006. Kurdish is inviting foreign oil companies to explore untapped reserves in their northern region, angering Arab countrymen and raising concern about chaos in Iraq's oil industry. Kurds, their self-ruled federation firmly enshrined in Iraq's constitution, believe they are reclaiming their right to control northern oil fields after successive Iraqi regimes purged Kurds from the industry to bring it under exclusive Arab control. Despite the Iraqi industry's many problems - falling production, crumbling infrastructure and relentless insurgent attacks - the prospect of drilling in the world's second-largest proven reserves has led eight small foreign companies to invest in Kurdish-ruled territory. One of them, Det Norske Oljeselskap, or DNO, of Norway, struck oil in December, less than a month after starting to drill in Zakho near the Turkish border.

Major oil companies have so far shied away from Kurdistan until the new Iraqi parliament elected in December clarifies articles in the constitution on the control of oil and until security improves. The constitution stipulates that the federal and regional governments will share management of existing oil fields, as well as strategies for developing future areas and distributing the profits.

The document, however, also makes ambiguous references providing compensation for areas such as the Kurdish and Shiite regions that were "damaged" and "unjustly deprived" under Saddam Hussein. The constitution, ratified in a referendum in October, defers a decision on the future of Kirkuk, the center of the northern oil fields, which Kurds want to be part of the Kurdish federation.

Statoil signs deals for Tyrihans development

February 3, 2006. Statoil ASA has let a pipeline contract and signed a letter of intent for supply of subsea systems for its development of Tyrihans oil and gas field in the Norwegian Sea. It let a 550 million kroner ($82.5 million) contract to Stolt Offshore SA for two 45 km pipelines between Tyrihans and the Kristin platform, which will handle processing. One pipeline will carry the well stream, and the other will carry gas from the Aasgard B platform near Kristin for injection for pressure maintenance.

Both pipelines are to be laid within 5 months, starting in May 2007. Tyrihans, with reserves of 182 million bbl of oil condensate and 34.8 billion cu m of rich gas, is scheduled to come on stream in July 2009. The notice of intent for subsea systems is with FMC Kongsberg. Worth about 1.5 billion kroner, the agreement covers assistance and maintenance of the facility during installation and operation.  It calls for FMC Kongsberg to deliver 13 subsea trees and five template structures with manifolds. It includes production control systems and umbilicals and workover systems for well interventions. The development involves four subsea structures for production and gas injection and a template for injection of seawater.

India's ONGC seeks Nigeria oil blocks

February 2, 2006.  India's Oil and Natural Gas Corp. Ltd. is seeking government approval to acquire 90 percent stakes in two offshore Nigerian oil exploration blocks, but South Korea's state oil firm denied it had ceded its majority share. India's flagship oil producer ONGC lost out last August in its bid for prime Nigerian deepwater acreage after the Korea National Oil Company (KNOC) pledged massive infrastructure investment in exchange for preferential rights. Now state-owned ONGC, which was initially granted a 25 percent stake after KNOC took the majority 65 percent share, is seeking permission from the Indian cabinet to buy a 90 percent stake in exploration blocks 321 and 322.

Kuwaiti firm eyes third oil, gas

February 3, 2006. Exploration block off Palawan confident that the Philippines has unexplored resources for oil and natural-gas exploration, the Foreign Petroleum Exploration Co. (Kufpec) is expanding its operation in the country to include a third block in its search for possible oil and gas reserves. Kufpec is poised to make a third exploration in the Philippines as part of its expansion program in the Asia-Pacific region, citing the opportunities in the country as the main driver for this development. The exploration will take seven years. In case of an oil or gas find, the contract provides for a 25-year commercial production for the consortium. All parties are optimistic that the area would yield a huge find since it has been identified as one of the promising sites by the Philippine Petroleum Resource Assessment Project Study, which was conducted by the Norwegian Agency for Development Cooperation and the Department of Energy. Kufpec also signed the SC 46 with the Japan Petroleum Exploration Co. Ltd. for oil and gas exploration activities at the Tanon Straits in Cebu basin. The project is yet to start commercial production.

Gazprom Seeks Reserves in Africa

February 1, 2006. Gazprom will expand oil and gas exploration in Algeria and Libya to secure access to reserves in Africa. Gazprom and Sonatrach, Algeria's state oil company, agreed "to develop full-scale cooperation in exploration, production, transportation, processing and marketing" of oil and gas. The company also wants to produce oil and gas in Libya and market the fuel. Libya holds 5 billion tons of proved light-grade oil reserves (37 billion barrels), the largest in Africa and the fifth-largest among the Organization of Petroleum Exporting Countries.

Gazprom plans to expand in Algeria, which holds 4.6 trillion cubic meters of gas reserves, Africa's second-largest after Nigeria. Gazprom's pipeline construction unit, Stroitransgaz, last year signed a contact with Sonatrach to build a $226 million gas pipeline to feed Algerian power generators. Algeria also holds 1.5 billion barrels (11 billion barrels) of proved oil reserves, the largest in Africa after Libya and Nigeria.  Zarubezhneftegaz, a unit of Gazprom, plans to invest in oil and gas exploration in Pakistan and may buy stakes in the South Asian nation's energy companies.

India eyes $1 bn investment in Canadian oil sands

January 31, 2006. India has jumped into the intense competition for Canadian oil sands assets with plans to invest $1 billion over the next 12 months. India, which has mounted a high-profile hunt for foreign reserves to help power its growing economy, is not worried its plans will put it head-to-head with longtime rival China in bidding for Canadian oil sands assets. Chinese firms have been enthusiastic investors in northeastern Alberta's vast oil sands resources over the past year, taking stakes in a handful of development projects and a pipeline proposal.

As many as four Indian companies are looking to invest in the region, with an eye to early-stage developments. Such Indian firms as Oil and Natural Gas Corp. and Indian Oil Corp. Ltd. have been bidders in auctions for big foreign reserves. Another big consideration is the ability to get the crude wrung from the oil sands to refineries. Alberta's oil sands are already the target of an estimated $100 billion of investments in new projects and expansions of those that are already producing. Current output is more than one million barrels a day, or about 40 percent of total Canadian crude production.

The resources rival Saudi Arabia's conventional oil reserves in size, but are far more expensive to develop and refine into petroleum products like gasoline. With surging oil prices and tight energy supplies making headlines in the United States, oil sands have over the past year taken center stage amid the quest for secure reserves. Canada's industry estimates production of tar-like bitumen and synthetic crude processed from the unconventional resources will nearly triple to 2.7 million barrels a day by 2015, as a host of projects start up.

Italian Govt approved for exploration

January 31, 2006. The Italian government issued preliminary approval for a unit of Cygam Energy Inc., Calgary, to explore the 83,264-acre Aretusa Permit (d348 C.R.-VG) on the Ragusa plateau in the Mediterranean southeast of Sicily. Other companies have expressed interest in participating with Cygam's Vega Oil SPA on Aretusa, the company's fifth permit in Italy. Targets include Upper Triassic Taormina carbonate and Lower Jurassic Inici carbonates. Reprocessing of existing seismic data and more seismic data acquisition will follow pending final ministerial approval.

CNOOC-Shell China cracker seeks 75KT naphtha

February 8, 2006. A Royal Dutch Shell and China National Offshore Oil Corp. (CNOOC) joint-venture is seeking 75,000 tonnes of March naphtha for its cracker in China, and its monthly imports are set to at least double that amount. The 800,000-tonne-per-year (tpy) naphtha cracker in Huizhou, southern Guangdong province, is running at about 60-70 percent of its capacity after successfully kicking off commercial production last month. The market had been anticipating the cracker would consume a maximum of 600,000 tonnes of the petrochemical feedstock for the first three months of its operations as it needs 2.4 million tonnes a year. However, it was unlikely to run at full capacity initially.

Iraq 'needs vast funds to upgrade and rehabilitate oil refineries'

February 7, 2006. Iraq's current refining capacity is 750,000 barrels per day but the war-torn country requires large financing to rehabilitate and upgrade refineries. The Iraqi refining sector with its present 750,000 bpd crude input capacity is operating today at conditions far from satisfactory. A great deal of reconstruction, rehabilitation and upgrading is required to enable the sector to meet future needs for products with better specifications. The structural changes expected to take place in the economy and consequently in the energy consumption trends in Iraq in addition to the more stringent environmental and quality standards of the future will influence the planning for new refineries.

To meet the emerging needs, a lot of work, close cooperation with international engineering and construction companies as well as technology owners will be of vital importance to provide Iraq with the required skills and knowhow needed to build the sector. Funding this enormous work will be diversified and may range from cash funding to loans from local and foreign financing institutions as well as through partial or total ownership by the private sector of refineries in Iraq which is likely to be regulated by issuing appropriate legislation by the Iraqi legislative body. Nearly two-thirds of current refining capacity is provided by three major refining centres namely Salahuddin refining complex near Baiji, Daura refinery in Baghdad and Shuaiba refinery in Basrah. The remaining capacity is provided by a number of 10,000 bpd crude units installed either within the major refining centres or scattered on other sites.

BP to buy Nigerian LNG to help meet UK/U.S. demand

February 9, 2006. Oil major BP Plc has agreed to buy liquefied natural gas (LNG) from the new Brass project in Nigeria to help meet growing demand in the UK and United States. The deal, to be finalised later this year, is for annual shipment of two million tonnes of LNG for 20 years starting in 2010. The Nigerian gas will be delivered by Brass LNG and used by BP, one of the world's largest suppliers of LNG, to supply multiple markets in the Atlantic basin.

Demand for imported LNG, gas cooled for easy transport by tanker, is booming as Europe and the United States turn to the fuel to compensate for falling local gas production. The Brass LNG project is backed by Italian oil and Gas Company Eni, U.S. oil majors Chevron and ConocoPhillips and state-owned Nigerian National Petroleum Corp. It is expected to export an initial 10 million tonnes a year of LNG. Brass LNG earlier this month signed a similar agreement with British oil and gas producer BG. For BP, the supply of Nigerian LNG will complement equity LNG from Trinidad, Australia, Indonesia and Abu Dhabi, which make up most of its portfolio, together with LNG from Egypt and third party purchase agreements with Oman and Qatar.

Petrobras plans 975-km ethanol pipeline

February 8, 2006. Petroleo Brasileiro SA (Petrobras) has signed an accord with the Goias state government to build a $226 million, 975-km pipeline to transport 4 billion l./year ethanol. It will be Brazil's first ethanol pipeline. Brazil is the world's largest producer of ethanol and plans to increase exports, now limited by the need to supply local markets. Current and prospective customers include Venezuela, Nigeria, China, South Korea, India, and the US. The US charges a tariff on ethanol to offset a tax credit for US producers of fuel ethanol made from grain. Brazil is expected to take this matter up with the World Trade Organization.

Firms to develop LNG scheme for Pakistan

February 7, 2006. Pakistan's Associated Group has signed a MoU with Excelerate Energy LLC, The Woodlands, Tex., to jointly develop a $50 million LNG import option for Pakistan based on Excelerate's "energy bridge" technology for regasifying LNG aboard LNG carriers. The gas would be transmitted from the carrier to onshore facilities through submarine pipelines. The technology would enable Pakistan to receive LNG within 6 months following receipt of all government approvals.

India hopes to get contracted 5 mt LNG from Iran

February 6, 2006. With the UN referral issue creating uncertainty about India's future relations with Iran, the Petroleum Ministry is fairly assured of the supply of five-million-ton contracted liquefied natural gas (LNG) from Iran. Putting to rest speculations that the $20-billion LNG deal with Iran may be in trouble, the 5 mt per annum LNG deal was legally binding, and that there was no need to address it afresh. The ongoing negotiations with Iran are for the additional 2.5 mt per annum, which India wants to buy. The issue of pricing for the contracted 5 mt LNG was not discussed during the recent high-level meeting between the two countries in Tehran.

While the Ministry feels that the contracted gas deal would come through, there is realization that the negotiations for additional 2.5 mt per annum would be tough, not just because of the way India finally votes on the referral issue but also because the new Government in Iran has some new ideas about gas exports. As regards the delay in ratification of the contracted 5 mt from the economic commission of Iran, was a delay, but it was mainly due to internal discussions in that country. Since LNG supply is scheduled from the second-half of 2009-10, there is no cause of immediate concern. The LNG supply is also linked to ONGC Videsh Ltd getting 10 per cent interest in the development of the onshore Yadavaran oilfield and 100 per cent in the 30,000 barrels per day Juffair field.

Recently, there were reports that Iran had sought an increase in the price, not only for the additional 2.5 mt per annum but also for the contracted 5 mt. These reports said that after having signed a Sale Purchase Agreement (SPA) last June to export five-mt per annum of LNG at a price linked to $31 per barrel crude, the National Iranian Gas Export Company (NIGEC) had now informed India that the price agreed to was no longer valid. Three separate SPAs were signed in June 2005 between NIGEC and GAIL (India) Ltd, Indian Oil Corporation and Bharat Petroleum Corporation for export of five-mt of LNG. An agreement for an additional 2.5 mt could not be reached due to the higher price being sought by NIGEC than what was agreed for the 5 mt.

Gazprom urges new Black Sea pipeline after Ukraine gas siphoning

January 4, 2006. Russian energy giant Gazprom called for a new pipeline to be built across the Black Sea to deliver gas through Turkey to third countries in the wake of Ukraine's recent tapping of Russian Europe-bound gas. The new gas pipeline would deliver gas to third countries, including Italy, Greece and Israel, via Turkey. The negotiations in the Turkish capital had also considered a project to build a pipeline from Turkey's Samsun on the Black Sea to Ceyhan on the Mediterranean to deliver Russian oil to world markets. The negotiating sides agreed to develop the projects at the expert level by April 15 and to meet again to reconsider the issues.

El Paso to sell Macae plant to Petrobras

February 2, 2006. Brazil's state oil company Petrobras has agreed to buy control of Macae power plant from El Paso Corp. for $358 million, which would settle a dispute with the U.S. natural gas company. The deal would rid his company of the obligation to cough up an estimated $735 million in additional contingency payments until 2007 under the existing contract. El Paso to sign a deal by mid-March and complete the sale in the first half of 2006. The companies will suspend arbitration proceedings as they work on the deal.

BG to buy LNG from Nigeria's Brass LNG

January 31, 2006. BG Group PLC subsidiary BG Gas Marketing Ltd. signed a MoU to buy 2 million tonnes/year of LNG from Nigeria's Brass LNG for 20 years. BG expects deliveries to start during 2010 to Lake Charles, La., and Elba Island, Ga. The liquefaction plant is to be built near Nigeria's Brass oil export terminal. BGGM retained the right to divert cargoes to other destinations, including facilities under development in Milford Haven, UK, and Brindisi, Italy.

EU in challenge to Russia over energy

February 9 2006. Leading European nations will challenge Russia to make good on its declared commitment to put energy security at the centre of its G8 presidency. Moscow will be offered incentives to liberalise its gas industry with a view to safeguarding European supplies. Amid rising concern about Russia's reliability as a supplier of gas to western Europe, France intends to use this weekend's meeting of G8 finance ministers to offer the hope of financial support if Moscow agrees to diversify its energy exports. Britain, Italy and the European Commission support the French objective for Russia to sign up to energy rules. In a plan, France will offer to provide longer term contracts to Russia for energy supply and help arrange financing from the World Bank and other international bodies to build more gas pipelines. In return they want Moscow to loosen its grip on the Russian oil and gas sectors alongside measures to help poor countries deal with record high oil prices.

Talks continue with the other 50 signatories to the treaty over a set of rules for the transit of oil, gas and power across borders. A European Commission had prepared a new version of the Transit Protocol, which it hoped would be acceptable to Russia and other ECT members. Earlier this year Russia cut gas supplies to Ukraine, Moldova and Georgia in disputes over prices. Ukraine is a key transit point for gas to western Europe which is Russia's main gas market. The EU is expected to grow ever more dependent on Russia to satisfy its appetite for oil and gas.

Spain's Repsol studying LNG JV in Russia

February 9, 2006. Spanish oil firm Repsol YPF was studying setting up a joint venture with Tambeyneftgaz and Anadarko Petroleum Corp for an integrated liquefied natural gas (LNG) project in Russia's Yamal peninsula.The project under discussion with Tambeyneftgaz and Anadarko would include developing the South Tambey gas field and building an LNG plant. The project would allow gas to be shipped to the west coast of Canada for its regasification at the Repsol plant at Canaport and it would then be sold into the U.S. east coast market. The Yamal-Nenets region, located north of the Arctic Circle in Siberia, accounts for 90 per cent of Russia's gas production and 20 per cent of world output.

Rosneft wins 3 oil and gas deposits

February 9, 2006. Russian state-owned oil major Rosneft won licenses to develop three oil and natural gas deposits in Siberia. Rosneft paid 429 billion rubles (more than $15 billion), 2.1 billion rubles (more than $74) and 2.8 billion rubles (about $100 million) for deposits with estimated recoverable reserves of 23.2 million metric tons, 14.4 million metric tons and 9.7 million metric tons of oil, respectively.  The former two deposits, with an area of 678 sq km (about 262 sq mi) and 778 sq km (more than 300 sq mi) are located in the Evenki Autonomous Area in eastern Siberia. The third deposit, with an area of 462 sq km (more than 178 sq mi), is on the border between the Yamal-Nenets and Taimyr autonomous areas in the center of northern Siberia.  They are located close to the large Vankor field, which the company began developing in 2003. Commercial production at the field is planned for 2008.

The ambitious energy project is currently under discussion at the corporate level. The East Siberian pipeline will pump up to 80 million metric tons (1.6 mln of bbl/d) a year from Siberia to the Russian Far East before being sent on to the Asia-Pacific region to Japan and energy-hungry China. The first stage of the pipeline's construction is expected to be completed by the end of 2008. However, environmentalists' concerns over the pipeline's planned route around Lake Baikal, the world's largest fresh water body, have yet to be addressed.

Sweden plans to be world's first oil-free economy

February 8, 2006. Sweden is to take the biggest energy step of any advanced western economy by trying to wean itself off oil completely within 15 years - without building a new generation of nuclear power stations. The attempt by the country of 9 million people to become the world's first practically oil-free economy is being planned by a committee of industrialists, academics, farmers, carmakers, civil servants and others, who will report to parliament in several months. The Swedish government wants to replace all fossil fuels with renewables before climate change destroys economies and growing oil scarcity leads to huge new price rises. The energy committee of the Royal Swedish Academy of Sciences, there is growing concern that global oil supplies are peaking and will shortly dwindle, and that a global economic recession could result from high oil prices.

Sweden, which was badly hit by the oil price rises in the 1970s, now gets almost all its electricity from nuclear and hydroelectric power, and relies on fossil fuels mainly for transport. Almost all its heating has been converted in the past decade to schemes which distribute steam or hot water generated by geothermal energy or waste heat. A 1980 referendum decided that nuclear power should be phased out, but this has still not been finalised. The decision to abandon oil puts Sweden at the top of the world green league table. Iceland hopes by 2050 to power all its cars and boats with hydrogen made from electricity drawn from renewable resources, and Brazil intends to power 80% of its transport fleet with ethanol derived mainly from sugar cane within five years. The British government, which is committed to generating 10% of its electricity from renewable sources by 2012, last month launched an energy review which has a specific remit to consider a large increase in nuclear power.

Indonesia issues new energy policy

February 8, 2006. Indonesia has issued a new presidential regulation on energy policy that prioritises domestic gas consumption over export sales. The regulation was issued after a Cabinet meeting and was aimed at emphasizing the country's new policy of reducing its dependence on oil-based fuels. As a result of the new policy, Indonesia would no longer prioritize the planned construction of the trans-ASEAN (Association of Southeast Asian Nations) gas pipeline, at least until such time as it had constructed an integrated gas pipeline network serving the domestic market. Indonesia's gas reserves of 188.34 trillion standard cubic feet are among the most extensive in the world. It has become one of the biggest liquefied natural gas suppliers to major economies such as Japan. At present, the country sells 44 per cent of its annual gas production domestically.

Venezuela terminates $3 bn Exxon olefins JV plan

February 7, 2006. Venezuela has "terminated" an agreement with Exxon Mobil to build a $3 billion olefins plant with state petrochemical firm Pequiven. On Jan. 20, Pequiven informed Exxon Mobil Chemical that Pequiven would not be able to complete the Jose Petrochemical Project feasibility study under the terms and conditions agreed in August 2004 and therefore have elected to terminate the PDA. Pequiven had signed a Project Development Agreement (PDA) with ExxonMobil Chemical for the development of the olefins plant in 2004. The decision came after Exxon Mobil in December sold its 25 per cent stake in the 15,000 Quiamare-La Ceiba operating agreement to majority partner Repsol-YPF to avoid a forced migration to a joint venture with state oil firm PDVSA ordered by the Venezuelan government. The Houston-based oil giant operates Cerro Negro, a heavy crude upgrader that processes 120,000 barrels per day of Orinoco extra heavy crude. Exxon Mobil is currently negotiating with state oil giant PDVSA for development rights to the La Ceiba field in Western Venezuela.

BP denies TNK-BP offered Kovykta field to Gazprom

February 7, 2006. BP Plc the joint owner of Russian oil major TNK-BP, denied a report that the firm had offered Russian gas monopoly Gazprom control of Kovykta, a huge East Siberian gas field. TNK-BP wanted to create an Eastern Siberian consortium where Gazprom would have a 50 per cent plus one share, with the remainder owned by TNK-BP.

Kovykta's development has been blocked for years as Gazprom opposes the use of the field's gas output for exports. Gazprom, which has monopoly control of Russian gas exports, says the country should supply Asia from Sakhalin Island instead. Gazprom has been reluctant to buy a stake in Kovykta despite repeated offers from BP, which wants the gas to go to China and South Korea. Without approval for a pipeline to take Kovykta gas to lucrative Asian markets the field can only supply a limited number of local Siberian customers. TNK-BP controls 62.42 per cent of Rusia Petroleum, while the Irkutsk administration has the remaining 10.78 per cent.

Gazprom, Pakistani firm to align work

February 7, 2006. Zarubezhneftegaz, a subsidiary of Russia's OAO Gazprom, has signed a MOU with Shahzad International, Islamabad, to cooperate on energy projects in Pakistan and other countries. The MOU covers exploration, development, production, processing and marketing, and oil and gas pipelines. The companies also agreed to bid jointly for Pakistani oil and gas assets that are to be privatized.

Shell unveils $1bn developments in alternative energy

February 7, 2006. Royal Dutch Shell Plc has invested over US$1 billion (about N130billion) in alternative energies including Bio-fuels, Wind, Solar and Hydrogen, making it one of the world's leading companies in the sector as the world grapples with spiraling crude oil prices. Shell has an established position as the world's largest marketer of Biofuels, as well as a leading developer of advanced Biofuels technologies. Biofuels are fuels derived from biomass such as plant crops like oil seed, or plant wastes like straw. They can be used either pure or blended with standard automotive fuels dispensed at today's filling stations with the potential for much lower CO2 emissions.

In partnership with Iogen of Canada, cellulose ethanol Biofuels are being successfully produced from plant waste. By producing Biofuels from plant waste instead of food crops, the potential stress on the food chain is alleviated. The Iogen process produces a fuel which can be used in today's cars, cutting CO2 life cycle emissions by 90 per cent compared with conventional fuels. Shell recently announced a MoU with Volkswagen and Iogen to explore the economic feasibility of producing cellulose ethanol in Germany. Shell Canada has been working with Iogen to develop a viable commercial framework for a facility in Canada. These projects complement Shell's existing partnership with CHOREN Industries of Germany. CHOREN have a patented Biomass-gasification process that converts biomass such as wood chips into ultra-clean synthetic gas that can then be converted for use in diesel through Shell's Gas-to-Liquids technology. CHOREN is preparing construction of the world's first commercial biomass-to-liquids facility in Freiberg, Germany.

Wind is currently one of the most promising sources of renewable energy. Shell's share of wind energy capacity is currently greater than 350MW, and is expected to reach approximately 500MW in 2007. Included in this growth is the first Dutch offshore wind project, the 108MW Offshore Windpark Egmond aan Zee. Full construction is expected to begin on this project in March 2006, and first electricity production is expected around the end of the year. Progress has also been made with the development of the London Array offshore project in the UK. This project has a potential capacity of 1,000MW, making it one of the world's largest planned wind farms. Shell has also announced a MoU outlining plans to explore the potential for wind energy developments in China in partnership with Guohua Energy Investment Corporation of the China Shenhua Group, a leading national energy supplier. In the area of Solar energy, Shell has been progressing the next generation of technologies, including CIS 'thin-film.' Shell believes that non-silicon-based technologies such as CIS are more likely to become competitive with retail electricity in the coming years.

Shell's CIS technology is supported by four years of manufacturing and marketing experience. The technology recently achieved a 13.5% world record efficiency for thin-film products, and is supported by International Electrotechnical Commission certification. Shell will continue to provide solar energy to the developing world, and has signed a Letter of Intent with Good Energies Inc. with a view to further expanding the business. Shell is also set open at least two new Hydrogen stations in the U.S.A. in 2006, supporting continued efforts to demonstrate the viability of a future hydrogen economy. Shell is also active in this area in Asia, and is supporting the recently announced Hydrogen station at Tongji University in Shanghai. Shell Hydrogen continues to take a leading role in joint government/industry discussions and partnerships to plan and develop hydrogen and fuel cell activities, including the EU Hydrogen & Fuel Cell Technology Platform, the California Fuel Cell Partnership and the Japan Hydrogen and Fuel Cell Demonstration Project.

New role for Middle East as energy consumer

February 7, 2006.The Middle East, long recognised as a top oil producer, is taking on a new role as one of the world's fastest-growing regions for energy consumption. The increased clip at which it burns petroleum - twice its historical average and close to the growth rate of the Asia-Pacific region - is contributing to tight oil supplies around the globe while demand continues to rise in the United States and China. The growing thirst for fuel in countries such as Saudi Arabia, Qatar and Kuwait reflects strong economic growth induced by soaring global energy prices. Another factor is that US military operations in Iraq and Afghanistan greatly depend on diesel and jet fuel. This increased demand, which is only now starting to register with many experts, comes at a time when a debate is intensifying about whether a supply glut may develop in the next few years. With the Organisation of Petroleum Exporting Countries pumping as much as it can - and threatening to cut output if there is any significant drop in demand - some analysts believe the group should be able to put a floor underneath prices wherever it sees fit for several years to come. Opec recently suggested that the group is comfortable with an average price of $60 a barrel - so long as the global economy continues to grow at those levels.

But a different camp contends that the group's ability to prop up prices could weaken in the coming years if projections prove correct that global production capacity will soon rise faster than demand. They point to projects scheduled to come on stream through the end of the decade in Opec countries, such as Nigeria and Iran, and in non-Opec countries like Russia and Brazil. Cambridge Energy Research Associates, which is sponsoring a conference on the energy outlook this week in Houston, estimates that worldwide oil-production capacity will rise to 101.5 million barrels per day by 2010, leaving a healthy 7.5m barrels per day emergency supply cushion in the event of an output disruption. The six GCC countries are in the midst of an economic boom that brought them an estimated $300 billion in oil revenues last year, which has, in turn, helped convert desert towns into some of the fastest-growing cities in the world. Dubai - which has little oil of its own - has attracted much of the investment.

Worldwide energy needed for globalization

February 7, 2006. The rest of the world also would look kindly on this if energy prices would come down from the artificially high levels they currently are at. Lower energy prices would also stimulate economic growth worldwide, to the benefit of all, instead of a privileged few who are already filthy rich. Oil production is expected to peak soon, which means that oil will thereafter become less available and more expensive. That will mean that the non-oil producers will have to spend more money on things that oil produces and less on other things. Since oil is used in transportation and processing of many goods and food, that will mean that prices will rise generally. There is lots of thought but little action on how to replace oil with oil derived from natural gas and coal. Since Nepal has no oil, it will suffer economically like many other countries.

Coal, oil and gas, hydrocarbons, give off carbon dioxide when burned. Much of the CO2 remains in the atmosphere, which makes it more difficult for the heat on the earth to escape outside. That raises the earth's temperature and causes droughs, flooding, ocean acids, more disease, and lots of other effects that are harmful to humans. This is global warming and affects ALL countries. There is much talk but only a little action to reduce global warming, e.g., Kyoto Protocol, which the U.S. did not sign. The U.S. is the biggest global warmer because it uses more hydrocarbons than any other country and therefore allows much CO2 into the air. Globalization means that more and more countries are trading with each other and removing some of their production and services from the rich to the poor countries. Developing world also is getting much more production like is getting many services, such as call-answering, programming and accounting. The result of globalization is that wages will converge for those jobs, usually at the low end of the scale. An example is Wal-Mart where the workers receive low wages and no benefits. That is why in the U.S., parents want their children to attend college to maintain higher income levels.

In the U.S. since 1970s the average real wage has declined, with the lowest jobs receiving lesss. Their money goes to foreign workers and to the upper U.S. economic classes. Countries like Nepal cannot benefit much from globalization because they have no ocean shores from which they can send goods to other parts of the world cheaply. The greatest imbalance seems to occur when those who receive the greatest benefits in Life, such as wealth, success, honor, greatness and other material treasures take the least amount of responsibility for returning a significant portion to society at large, from whence it came. The imbalance between benefits and responsibility inevitably results in Change, either in individual lives or in societies. The greater the imbalance, the more rapid, violent and tumultuous will the be the resultant Change. Globalization seems to assign responsibility.

Chinese Petroleum may invest in India

February 7, 2006. State-owned oil company Chinese Petroleum Corp may invest in an Indian refiner, as the government bars it from investing in China. Nagarjuna Oil Corp, a subsidiary of Nagarjuna Fertilizers and Chemicals Ltd, offered to sell a 26 percent stake to Chinese Petroleum. Chinese Petroleum aims to expand overseas as its competition with Formosa Petrochemical Corp and government control limits the room for refiners to raise fuel prices. Crude oil in New York is 46 percent higher than a year ago, about six times the rise in Chinese Petroleum's domestic gasoline prices. Chinese Petroleum is assessing the Nagarjuna Oil offer, which may become its first investment in an overseas refiner. Chinese Petroleum may allocate funds for the project in 2008 if approved by the Cabinet and parliament. The government will encourage local manufacturers to invest in India to reduce the current emphasis on China.

Saudi Arabia hikes March OSPs to Asia and Europe but cuts to US

February 7, 2006. Top oil exporter Saudi Arabia has hiked all its March selling prices (OSPs) for European and Asian destinations, but cut the price of crude it sells to the United States. The increase in Asian prices which put some OSPs at their highest level in half a year was greeted with disbelief by Asian refiners, whose margins have slumped lately amid soaring crude markets and lagging product prices. The price differential for naphtha-rich Arab Super Light crude for March was raised by 30 cents to a $6.05 per barrel premium to the Oman/Dubai average, leaving the OSP at its highest premium since last November. Flagship Arab Light was set at a 40-cent premium, its highest premium since September. The kingdom has also raised prices on heavier grades, despite gas oil's premium to Dubai crude declining to around $8 a barrel, compared with more than $10 last month, while fuel oil's discount remained weak at about $10 a barrel. Arab Medium was set at its highest differential since the August OSP when it was set at a $1.55 discount.

World cannot afford to lose Iran oil: EIA

February 6, 2006. A disruption in Iran's crude oil exports because of a dispute over that country's nuclear program would further crimp the already tight global oil market and lead to higher petroleum prices. Though the United States does not directly import Iranian crude. Iran's oil would affect the US market because other countries that buy Iranian crude would compete with America to find new supplies. The United States and European Union want the United Nations Security Council to consider action against Iran to prevent, or punish, that country for moving forward with an uranium enrichment program that the West fears could lead the development of a nuclear bomb. Iran says its uranium programme is intended to produce fuel to run nuclear power plants and boost electricity supplies. Economic sanctions, which could affect Iran's oil exports, are possible but thought to be unlikely. Iran, the world's fourth biggest oil exporter, has warned that global crude prices would go higher if the UN imposes sanctions.

Meanwhile, Iran has reached "preliminary agreements" on exports of gas to Japan, Spain, France and the UK despite the threat of sanctions. Japanese companies, which Petroenergy didn't identify, are interested in importing one to 2.5 million metric tonnes of LNG. European companies are seeking another 8 to 9 million metric tonnes. Gas deliveries to Europe were interrupted on January 1 after Gazprom choked supplies to Ukraine in a dispute over prices. Iran is unlikely to curtail its crude oil exports in response to pressure from the United States and the European Union over Iran's nuclear programme.

India's L&T eyeing projects in Kuwait, Saudi

February 5, 2006. Larsen & Toubro Ltd., India's largest engineering and construction company, expects to win a petrochemical project in Saudi Arabia worth more than $100 million and is in talks for a joint venture in Kuwait. The firm is seeking yearly growth of 25 to 30 per cent to gain orders worth $1.6 billion within the next four years in the booming Gulf Arab markets. The company has won a handful of engineering orders, including with Abu Dhabi Gas Industries Ltd., Qatar Petroleum, Kuwait National Petroleum Company, and the Bunduq Oil Company in Abu Dhabi. Larsen & Toubro has also signed a letter of intent for a project in the Saudi petrochemical sector. The firm is also quoting for nine engineering projects in Abu Dhabi, Qatar, Saudi Arabia and Oman in sectors ranging from oil and gas to power generation to cement. Qatar is seeking to boost its gas exports via GTL projects, which convert gas into petroleum products including low-sulphur diesel that meets tough new European Union and U.S. environmental rules. Larsen & Toubro also currently has four construction joint venture projects, in Saudi Arabia, Qatar, the UAE and Oman, and is eyeing Kuwait.

Russian gas giant looks to Britain

January 4, 2006. Gazprom is examining the possibility of expanding its presence on the British energy market. The gas company is considering all possible options, any energy assets in Britain. Gazprom has had short-term gas contracts with Britain since 1999. In 2003, it supplied more than 2.1 billion cubic meters of gas to British consumers, and about 4 billion cubic meters in 2004. In 2005, it sold an estimated 4.2 billion cubic meters. By 2010, Gazprom’s export to this country could rise to between 10 billion and 12 bcm. Centrica is Britain’s biggest residential gas and electricity supplier, accounting for 63 percent of the local gas market and 23 percent of the electricity market.

Ukraine, Russia strike new gas deal

February 2, 2006. Russia has agreed to supply Ukraine with some of the cheapest supplies of natural gas through to 2010. The agreement ends a bitter feud between the two countries over prices. It comes close to doubling the price of gas for Ukraine, but the hike is less than half what Russia originally proposed. Russia's state-controlled gas agency says the price agreed to is the lowest for all post-Soviet countries except Belarus. A dispute over gas prices prompted Russia to turn off the taps to Ukraine late last year, sparking concern about energy security across the continent.

Power

Alstom wins order for German power station

February 9, 2006. The German unit of French electrical engineering group Alstom had won a major order to build a huge power station in Germany burning low-grade brown coal. Rated at 2,100 MW, the plant next to a lignite-mining field near the German city of Cologne will provide about 2 percent of German power needs. Germany is prematurely closing down its nuclear-power stations because of public fears over their safety.  The customer, RWE Power, is to invest 450 million euro in the new plant at Neurath which will be the world's biggest fired by lignite. Germany has very little hard coal and mostly mines brown coal although it is generally more polluting when burned. The new site's carbon dioxide emissions would be about 30 per cent less than at existing similar plants. The Alstom unit, based in the southwestern German town of Mannheim, is to supply and install the two steam-powered turbine systems.

Shaw to build 750MWpower plant

February 6, 2006. The Shaw Group Inc. has been awarded an engineering, procurement and construction contract for a 750 MW coal-fired unit at Xcel Energy Inc.'s Comanche Generating Station in Pueblo, Colorado. The work is to be done by 2009. Initial construction began in mid-December and now that Shaw has been awarded its contract, major construction can begin. The value of Shaw's contract was not disclosed, but the entire cost of the 750-MW unit is $1.35 billion. Shaw will build and engineer most of the basics of the new unit, including the concrete foundation, putting the steam turbine in place, supplying and erecting plant systems including pipes, pumps, heat exchangers and electricity equipment. Xcel is to sign other contracts for the steam generator, air quality control systems and stack. The Comanche station has two existing coal-fired units, the 325-MW unit 1 and 335-MW unit 2. Upgrades for emissions control of those two units is to be completed by the time the larger unit 3 is constructed. Based in Minneapolis, Xcel operates in Colorado as Public Service Co. of Colorado. In terms of customers, it is the fourth-largest U.S. electricity and natural gas company.

China dam project 'ready by May'

February 5, 2006. China's Three Gorges Dam, the world's largest hydroelectricity project, is expected to be completed by May, nine months ahead of schedule. The project, launched in 1993, will have 26 generators with a combined generating capacity of 18.2 kilowatt hours, easing a power crunch in energy-starved China. It has already generated more than 80 billion kilowatt hours of electricity since its first generator started production in 2003. The project will have cost a total $21.7 billion by the time it is completed, using 16 million cubic metres of concrete.

Southwestern Montana to build coal fired plants

February 2, 2006. Southwestern Montana Electric Generation & Transmission Cooperative, Inc. to building one of the world's cleanest coal fired electric plants as they presented technical data to two companies that are competing to build the plant's boiler. The plant, which will be built near Great Falls and is known as the Highwood Generating Station, will provide an affordable, reliable and stable source of electricity to the member of the five rural co-ops that make up SME and the City of Great Falls. The Highwood Generating Station will provide many economic benefits to the community. But right now SME is focused on the health and safety of people in the Great Falls area and "down stream" communities that could be influenced by the plant's emissions.

Allegheny Energy wins 1.3 MWh bid in Maryland

January 31, 2006. Allegheny Energy Supply Co. won a bid to provide 1.3 million megawatt hours of power generation and associated services to some small business customers in Maryland. In three contracts, Allegheny Energy Supply will provide the power starting June 1 with contracts expiring at various times in 2007 and 2008. Allegheny Energy Inc. is based in Greensburg, Pennsylvania and is an investor-owned utility. It's two major components are Allegheny Energy Supply which has 11,000 MW of generating capacity, and Allegheny Power, which delivers electricity to about 1.8 million customers in Maryland, Pennsylvania, West Virginia and Virginia.

AEP seeks to build $3B transmission superhighway

January 31, 2006. American Electric Power Co Inc. filed with the U.S. Federal Energy Regulatory Commission and the PJM Interconnection to build a $3 billion 765-kilovolt (kV) transmission line stretching from West Virginia to New Jersey. AEP anticipated the line would enter service in 2014 assuming three years to site and acquire rights-of-way and five years to build. The transmission line would enhance reliability and reduce congestion costs in the PJM power grid by substantially improving west-east transfer capability by about 5,000 MW and reducing transmission line losses by about 280 MW.

India, US discuss steps to enhance energy security

February 9, 2006. US and India discussed ways to buttress energy security and a Global Nuclear Energy Partnership (GNEP) that aims to expand nuclear power production through technologies that address proliferation and environmental concerns. In an effort to broaden their energy partnership, the two sides decided during the second meeting of the steering committee of the India-US Energy Dialogue to enhance cooperation in oil and gas and to collaborate in environment-friendly coal-based technologies. The discussions on GNEP - the Bush administration's new brainwave - begin at a critical stage in negotiations between the two sides on a civil nuclear agreement, with India's Atomic Energy Commission was not ready to place its indigenous fast breeder reactor programme in the list of civilian nuclear facilities.

Despite differences over New Delhi's plan to separate its civilian and military nuclear facilities, the two sides decided to hold a workshop on civil nuclear energy cooperation in the US later this year.  They also agreed to step up efforts to ensure strong US participation at a natural gas conference in India in May. Three memorandums of understanding to be signed on various aspects of cooperation in oil and natural gas were discussed.  Both sides also discussed pilot projects in coal preparation and coal liquefaction and the need for setting up a clearing house for coal bed methane and coal mine methane.

Exploring non-conventional energy sources like solar-thermal and wind energy were discussed by the steering committee. To promote energy efficiency, a conference involving the industry of both countries will be held in India later this year. The two sides discussed the possibility of India's participation in new-age Generation IV nuclear reactors and the $1-billion FutureGen project aimed at building the world's first "zero-emission" coal-fuelled power plant. Garman is likely to meet other officials from India's department of energy and environment.  GNEP, which is part of Bush's Advanced Energy Initiative, seeks a partnership with other nuclear power producing countries such as Britain, France, Russia, China and Japan to export nuclear fuel waste to developing countries and encourage them to use so-called fast reactors that burn plutonium and other by-products from conventional reactors.

India, China will lead green tech demand -UK

February 8, 2006. Capturing carbon from burning fossil fuels can be a quick fix to the problem of global warming and Britain can take a world lead in the technology. Not only can carbon capture and storage (CCS) technology be developed rapidly, but there will be a booming demand for it from rapidly developing countries like India and China whose economies rely heavily on coal for electricity. The available evidence indicates that CCS could and should make a valuable contribution to reducing CO2 emissions and safeguarding energy security in the UK. It also appears likely that CCS technology could play a key role in mitigating CO2 emissions internationally and, more specifically, from China and India's ever-growing fleet of coal-fired power stations. CCS, also known as carbon sequestration, is still in its infancy but has been grasped at by politicians the world over as offering a quick and relatively painless way of cutting greenhouse gas emissions from burning fossil fuels.

In essence it involves grabbing carbon emissions from smokestacks and injecting it deep into the earth in geological structures like exhausted oil wells and aquifers from which it cannot escape back into the atmosphere. Although renewable technologies for energy generation will be essential, especially in the medium to long term, the capacity of CCS to make a large contribution to reducing CO2 emissions in a short space of time could make it a very valuable tool for climate change mitigation. Scientists have predicted that global average temperatures could rise by between two and six degrees Celsius this century due to global warming, triggering droughts and storms, melting polar icecaps and raising sea levels by up to several metres. Most of the world has signed up to the Kyoto Protocol on cutting greenhouse gas emissions. But the world's biggest polluter the United States has rejected it as economic suicide and neither China - which is building one coal-fired power station a week - nor India are bound by its targets. But Kyoto only runs to 2012, and the diplomatic search is now on to find ways of taking it forward, broadening both its scope and membership. The British government is in the throes of drawing up a new energy policy that must meet its international obligations to slash carbon emissions and fill a huge gap in electricity output when its ageing nuclear plants close in the next few years.

US proposes global N-power 'partnership'

February 7, 2006. The US Energy Department proposed a broad-based nuclear power plan designed to meet surging domestic and world energy needs by encouraging the construction of nuclear power plants in the US for the first time in a generation, and setting up an international programme for the exchange of nuclear fuel. The initiative, called the Global Nuclear Energy Partnership (GNEP), would seek a partnership with other established nuclear countries such as the UK, France, Russia, China and Japan to export nuclear fuel waste to developing countries and encourage them to use so-called fast reactors that burn plutonium and other by-products from conventional reactors.

The US and other countries would then dispose of the final waste, reducing the overall waste burden and preventing nations from acquiring weapons-grade nuclear material. The GNEP proposal represented a "nuclear renaissance" that was crucial to meeting the world's growing energy needs, which were expected to double by 2050, as well as cutting the overall amount of nuclear waste. The Energy Department announced the $250m GNEP initiative as part of President George W. Bush's Advanced Energy Initiative and included it in the administration's 2007 budget proposal. The department's overall proposed budget for 2007 remains fixed at $23.6bn, but the department is requesting a $500m increase in science funding for Mr Bush's American Competitiveness Initiative. The department is also proposing significant increases in funding for alternative energy sources, such as biomass and solar energy, that were highlighted in the president's State of the Union pledge to end America's "addiction to oil". But overall spending on energy efficiency and alternative energy would rise by just 0.2 per cent under the proposal, which calls for eliminating funding for development of hydropower and geothermal technologies and would cut funding for new vehicle technologies.

The GNEP seeks to harness new technology that can reprocess nuclear fuel without separating plutonium - technology that was not available when the US stopped reprocessing fuel more than 35 years ago due to proliferation fears. The new reactor technology reduces the threat that the transferred fuel can be used for nuclear weaponry. The recipient of the fuel would then use Advance Burner Reactors, or "fast reactors", capable of burning down the spent fuel for power and then return it to its country of origin.

China’s Energy law aims at power conservation

February 7, 2006. A high-profile drafting group has prepared a new law of energy, which is expected to encourage conservation as China's development has become constrained because of a shortage of energy. The energy law will offer a legal foundation to set up a cabinet energy department to govern the thorny issue. The office of the State Council Energy Leading Group, which headed the draft work, did not elaborate on the comments, but said the law will focus on basic principles of energy saving, cleaner utilization, security and energy trade with overseas partners.

Minister of National Development and Reform Commission Ma Kai is acting as head of the drafting group, which is scheduled to be finished within this year. Laws covering electricity, coal, oil and energy saving have been enforced for years, and the law of renewable energy has started to take effect this year.  The country's top authorities have set two goals for the next five years. The first is to double the per capita gross domestic product (GDP) in 2000 by 2010, and the other is to reduce energy costs per unit of GDP by 20 per cent. There is a tremendous potential for energy conservation in China, which should be beefed up with the energy law. Energy consumption per unit of GDP in China is 2.4 times higher compared with the global average, 4.9 times higher than European Union countries, and 8.7 times higher than Japan.

Magor forms JV for biodiesel production

February 7, 2006. Williamson Magor & company Ltd has entered into a MoU with UK-based global producer of biodiesel, D1 Oils Plc to form a joint venture company. The JV company would develop, promote and facilitate jatropha plantations in North Eastern India. The joint venture company would also arrange for necessary logistics and facilities for production of biodiesel from the oil seeds harvested by the farmers.

Photon Energy to expand its solar thermal division

February 6, 2006. Hyderabad-based Photon Energy Systems Limited plans to further expand its solar thermal division. The company, which is into manufacturing of solar photovoltaic products and solar thermal products, expects the earnings through its solar thermal division to touch Rs 6 crore ($1.36 mn) as against Rs 3 crore ($0.68 mn) achieved in the last fiscal. Photon Energy achieved a total turnover of Rs 18 crore ($4.1 mn) last year and is targeting Rs 35 crore ($7.9 mn) this financial year. The company entered into a joint venture with a Chinese company, Haiyan Solarbridge Company Ltd, last year for import of evacuated glass tubes and has so far successfully test marketed evacuated glass tubes solar geyser. The solar geyser based on the evacuated glass tube technology has been approved by the Union ministry of non-conventional energy sources and sold to organisations such as the Indian Space Research Organisation (Isro) and Divi’s Laboratories. In a bid to expand its thermal division, Photon is now targeting process industries, hotels, resorts, hospitals, hostels and restaurants. 

BP to fund TERI's biodiesel project

February 3, 2006. British Petroleum will fund a $9.4-mn (Rs 415 bn) project by The Energy and Resources Institute (TERI) in Andhra Pradesh to produce biodiesel from Jatropha Curcas, a non-edible oil bearing crop. The project, expected to take 10 years, would cultivate around 8,000 hectares of land currently designated as wasteland with Jatropha and install all the equipments necessary for seed crushing, oil extraction and processing -to produce 9 million litres of biodiesel per annum. A full Environmental and Social Impact Assessment of elements of the supply chain and life cycle analysis of greenhouse gas emissions would be completed as part of the project. TERI will be responsible for the day to day management and execution of the project.

Suzlon bags $140 mn Australian firm project

February 3, 2006. Wind turbine manufacturer Suzlon has bagged a contract to develop a wind farm with 45 turbines for the Australian utility major Australia Gas Light (AGL). The farm will have a capacity to generate 95 MW power. The contract which envisages design, procurement, construction and commissioning of the wind farm, is valued at Rs 620 crore ($140 mn). Suzlon Energy Australia (SEA) a subsidiary company of Suzlon Energy A/S of Aarhus, Denmark has bagged the contract. The contract also includes maintenance and service of the turbines for five years.

Sugar sector for mandatory ethanol blending

February 2, 2006. The sugar industry has asked the government to revive and accelerate the ethanol blending programme by making it mandatory for production units. The industry believes that this would strengthen the cash flow of sugar producers and save huge foreign currency. Ethanol demand would increase substantially to 434 million litres if 5 per cent blending is mandated across 9 states and 4 union territories. The same would double if 10 per cent is blended. The industry estimates that the total ethanol production this financial year could be around 400 million litres against 300 million litres in June 2004. 

Ethanol has emerged a sustainable, renewable and viable alternative to the fast-depleting, non-renewable fossil fuels. It is also a comparitevly environment-friendly energy source. India’s oil imports bill doubled to $26 bn (Rs 1.15 trillion) in 2004-05, from $12.5 bn (Rs 552 bn) in 1999-2000. The country’s crude oil imports in 2005-06 are expected to cost $37 bn (Rs 1.63 trillion). Demand for crude oil in India more than doubled to 110 mt in 2004-05, from 54.1 mt in 1989-90. The demand is expected to spiral to 138 mt by 2006-07 and 155 mt by 2011-12. Massive use of ethanol, as one of the options, can help India meet its commitment to curb its greenhouse gas emissions. The use of ethanol as an alternative to conventional fuels reduces carbon dioxide (CO2) emissions by 25 per cent. Each tonne of sugarcane used to produce ethanol absorbs 0.17 tonne of CO2 from the atmosphere. Ethanol production can be sustainable if the government provides subsidies, as in the case of all major ethanol producers such as Brazil, the US and Australia. Brazil has offered subsidies by reducing excise duty on ethanol-powered vehicles and the US a tax break of about $0.12 a litre. The Australian government has been providing nearly A$17 mn (Rs 567 mn) in subsidies to ethanol producers, while the Canadian government has introduced 5-8 per cent ethanol-blended gasoline and set a target of producing 1.3 billion litres a year by 2010.  The ethanol-producing countries around the world are already implementing policies to promote the blending of petrol with ethanol as vehicular fuel. Brazil had started doping petrol with ethanol, up to a level of 5 per cent, way back in 1931. Today, 3 million cars or 40 per cent of all the cars in the country use only ethanol as fuel.

World's largest solar photovoltaic project to be built in Nevada

February 6, 2006. Nevada will partner with SunEdison of Maryland to develop the world's largest solar photovoltaic (PV) project in Nevada. The 18 MW project almost doubles what is currently the world's largest PV project (10MW) located in Germany. PBR and SunEdison will develop a total of 36 MW of PV projects in Nevada, enough energy to power 36,000 homes.  Construction in Clark County is expected to begin in July and at other sites in early 2007. The proposed project will be privately owned and operated. The military intends to purchase electricity from the project. Projects developed by PBR and SunEdison will provide sustainable solutions to Nevada's growing energy needs, help reduce the state's $3 billion a year energy deficit, increase energy security, reduce energy-related emissions, and diversify Nevada's economy.

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