Energy News Monitor I Volume II, Issue 5

Remains to be Done? – XIV, will publish in next issue.

India’s Energy Future: A need for multilateral oil diplomacy and energy mix

The background:

ndia’s energy needs are perplexed with an indomitable arrear of deficit which has accumulated over years due to gross inefficiency, bad planning and a less vibrant energy policy that lacked the imagination to sustain India’s economic growth in the twenty first century. On one hand there has been total underutilization of the existing power resources due to bad management (transmission and distribution losses), poor technology that leads to low plant load factor, while on the other hand the state policy on energy use has not been appreciative of non conventional source of energy because of the false notion of non viability and high installation costs. Also, that alternative power choices like the non conventional ones that are likely to bring in more decentralized power generation, transmission and distribution has not gained wide acceptability under the dominant discourse of centralized power supply preempted by technocracy and the lobby of ‘Big Science Policy’. The electricity act 2003 has identified the problems that has plagued the power sector of the country and calls for batter regulation, management and optimal generation of power. While power generation, transmission and distribution has been in the public hand for the last five decades, the process of privatization either in whole or in part has begun. But the million-dollar question still remains unresolved .Are these maneuvers by the government really going to find solution to the energy crisis the country currently faces? The Orissa and Delhi experiment of privatization of the power sector has not been very successful because of dilapidated infrastructure that the private players are not interested in improving and the lack of experience these firms have in their new area of business. According to the 1999 mid term review of the power sector “the private sector has failed to keep the commitment in terms of creating additional power generating capacity during the ninth plan. The actual achievement has fallen short of the target by about30% during the plan”. On the contrary public sector units like the National Thermal Power Corporation has shown enough glimmer of hope by improving the plant load factor (PLF) to optimal limits that their success only needs to be replicated by the state electricity boards. According to the World Bank “the NTPC had demonstrated that government owned power utilities can be operated at efficiency levels comparable to those of private owned utilities in India and well run utilities outside”. The increase in plant load factor of Unchahar and Badarpur plants to over100%by the NTPC are glaring examples of optimum energy generation. While efficient use of the energy generated is only one dimension of the bigger picture of energy security for the future, there are more pressing questions that need to be addressed. To highlight a few:

·          How will India create its energy security?

·          What will be the energy dynamics and the global politics of oil and gas trade and what will be India’s trade off? 3.

·          How would our energy policy look for viable alternative to oil and gas?

·          How can we continue using thermal energy as the prime source of power in the light of growing concern of global warming?

·          What are India’s energy options?

To answer these engulfing set of questions and to set guidelines for India’s energy future, multiple options should become priority with greater public –private partnership and higher level of decentralization, transparency, accountability and good governance. The policy imperative has to be streamlined so that it fulfils the present gap and can tackle the exigencies of the future. The oil diplomacy of India has so far gone well but our strongest competitor of the future China has done better by engaging in multilateral agreements in staking claims over already developed foreign oil fields which India has failed to realize. India has been more successful in bilateral agreements with countries like Russia, kazakistan while talks have shown fruitful development with countries like Iran, Bangladesh, Nigeria, Sudan, Venezuela, Vietnam and Burma.ONGC Videsh is the commercial wing that is engaged in exploring and developing foreign fields. In the recent past the bilateral agreements that ONGC signed with oil rich countries include- (Acquiring 25% of equity in the great Nile oil project, production sharing contract in Vietnam for gas fields having reserves of 2.04 TCF, with 45% stake in parterniship with BP and petro Vietnam, 20% holding in theSekhalin1 production sharing agreement inRussia and ONGC Videsh signing of MOU with Venezuelan state owned company PDVSA to develop oil fields in Venezuela).  Our oil diplomacy has to confront the pressures and lobbied of the U.S foreign policy on energy intervention in the Caspian Sea region. The ‘Velvet Revolution’ is primarily aimed at securing the Caspian oil and ensuring its safe transfer to the European and American market through the Baku-Tiblis-Cehyan (BTC) pipeline. The entry of India in this new oil rich region will have significant bearing on India’s oil imports and a safe uninterrupted corridor of supply will open up through the Asian heartland away from the sea lines controlled by the U. S and its allies. (Supply through the pipeline mode). Although terrorism and the Pakistan factor are major foreign policy issued that can disrupt the safe transfer of Caspian oil the current negotiation going on with Iran shows that multilateritism and sharing of benefits by more than one country will make it obligatory on the part of hostile nations to provide security for the oil that passes through their country- (in the Indo-Iranian gas pipeline project, China has been invited to be the third beneficiary that makes it obligatory for Pakistan to ensure disruption free oil supplies during period of external exigencies because Pakistan cannot annoy its geostretegic partner.)

Our energy option for the future:

With oil prices touching $60 a barrel and increasing political cloud prevailing over greenhouse gas emission by the developed world, which will soon turn towards the developing countries like India, that is heavily dependent on the import of hydrocarbons, it is high time that we look for fuel options. A partial solution to the crisis lies in the use of fuel extenders such as ethanol and methanol. But in India bio- diesel has been found to be the best alternative transport fuel for renewable source. Bio- diesel fuel characteristics exceed that of petroleum diesel in terms of catena number and lubricity. It offers higher power, more fuel economy and long engine wear. It is much cleaner burning fuel with the emission containing no sulphur, substantially lower carbon dioxide and cancer causing aromatics such as polyaromatic hydrocarbons. The Planning Commission has published a feasibility study report on Bio Diesel where in it has identified two endemic species Jetropa and honge (pongamia pinnata) to be the best crop for Indian condition. These two crop variety can be grown under arid condition and the vast wastelands of the country can be used for its cultivation.

The impending oil crisis can also be contained by changing the balance in our freight transport. Because of large tonnage moved by a rail rack, diesel consumption per ton of freight transported by rail is much lower than by road. Unfortunately, today more freight is being moved by road than by rail due to the inefficiency of our railways and also because of the oil lobby within the country that is increasing the dependence of freight transport through road transport. The development of super national highways although the need of the hour would further reduce the share of freight transport by our railways thus increasing the import of oil.

The non-conventional source of energy wind, solar, geothermal and biogas although having a timid share with a potential of 45000MWe when fully harnessed will supplement 10% of India’s energy demand. As the per unit cost of establishing wind mills and solar panels is decreasing with time it can play a vital role in generating power in particular regions where conditions are more favorable (e.g. coastal areas, areas where sunshine factor is longer with clear sky).

The neo-classical discourse on ‘diseconomies of scale’ arising due to high initial cost, high per unit cost of production of power and other related factors associated in harnessing non conventional sources of energy has to change under the new paradigm shift i.e. the global call for sustainable use of energy. Here the national policy on energy use will become more important. According to Dr.Anil Kane, chairman of the Indian Wind Energy Association one of the fastest growing sector in India is wind energy. At the rate at which new wind energy firms are being set up in India, he says that in less than two years electricity from wind will exceed 5,000MWe. Currently India has a capacity of 3,595 MWe of which 61 per cent is in Tamil Nadu. The government Dr. Kale suggests can play an important role in pushing for such alternative source not by providing cash subsidy but by other kind of incentives. For instance, in Tamil Nadu, wind energy received a boost last year when the Union Minister of Textiles agreed to include wind farms in the Technology Upgradation Fund Schemes (TUFS) that gives a subsidy of five percent in the rate of interest on the borrowed capital for upgrading textile mills. As a result, several textile mills in the state set up wind energy firms. Thus conventional source of energy can certainly change the dependence on power from the national system. It can create more decentralized power generation and distribution, which will meet the local and specific demands of consumers and reduce our dependence on hydrocarbons.

Hydro power stands second to thermal power in generating electricity, yet it is in disfavor today due to large scale displacement of indigenous people from their own land, deforestation and the associated problems of siltation that reduces the life of a dam. In the future multipurpose river valley project cannot be sustained and hence the only option lies in developing micro hydro power project. The Northeast (Brahmaputra basin) and Western Ghats have high potential for micro hydropower generation and reduce our dependence.

Sudha Mahalingam of the Center for Policy Research advocates that there has been an increased rejuvenation to use nuclear power to generate energy in light of climate change and the global call for reduction in emission of greenhouse gases. But harnessing nuclear power in India has been hopelessly inadequate. Against a goal of putting up 10000MWe of nuclear power capacity by the year2000, only 2770MWe has been installed. The Nuclear Power Corporation of India ltd. has very ambitious plans to install 20000MWe of nuclear power generation capacity by 2020 but, this is a pipe dream. The closest competition to petroleum in terms of energy per unit volume is another fossil fuel coal. India is comfortably placed here, with her coal reserves of 246billion ones of which 92 billion tones are proven. At a current of take level of 375 million tones per annum, the proven reserves alone shall last us for nearly 300 years.

The downside is that Indian coal is very high in ash content that leads to solid waste disposal problem in the form of fly ash .The solution to this lies in the gasification of coal which will serve dual role in reducing the problem of waste and pollution that at the same time it increase the efficiency of the plant (high plant load factor). In a type of power plant called the Integrated Gasification Combined Cycle (IGCY) facility, the overall thermal efficiency can reach 50% as against 35% achieved in conventional coal burning plant. The high temperature gasification process strips out pollutants like sulphur and mercury. A number of IGCY power plants have come up in the west. NTPC has recently announced a joint venture with BHEL to set up a 100MW IGCY power plant at Dadri near Ghaziabad. Coal gasification although entails high initial cost due to the use of hybrid technology is the only viable clean option at present. If India wants to expand its thermal capacity it has to take the coal gasification mode in order to improve the existing low plant load factor and to control pollution caused by release of greenhouse gas and fly ash from thermal power plants.

The fuel alternatives are numerous but their efficiency, economic and technical feasibility will decide fuel choices for the future.

Multilateral oil diplomacy and energy mix, the long-term policy:

According to N.N Sachitanand the popularity of an energy source is dependent on availability, convenience and cost. Petroleum has ruled the roots since its discovery as a source of energy, particularly for transport, because of its convenience of use, easy transportability (it has the highest energy density per unit volume at normal temperature and pressure) and, till recently, relatively low cost. These user friendly property in the past militated against the deployment of alternative energy sources and it is quite evident that the status quo will remain for quite some time to come until a viable and substitutive energy alternative is in place to replace the depleting ‘black gold’. In this situation India’s oil diplomacy has to be more vibrant and substantive to encapsulate the multilateral oil diplomacy that has been operating in central and west Asia. As the great game of Caspian oil unfolds India’s entry should become inevitable in order to check the increasing influence of the ‘velvet revolution’ which has presupposed the central Asian supplies for the European market. For India’s energy security through oil supply, it has to enter into multilateral trade agreements with the oil rich central Asian republics and has to join hands with China in order to co- benefit from Caspian oil supplies. The pipeline transfer of gas and oil to the power deficit south Asian region would create a safe corridor through the Asian heartland and would be free from the exigencies of sea-lane transfer currently controlled by the United States and its allies. To Siddharth Varadarajan a pan- Asian energy grid linking the two energy surplus region of west and central Asia to the energy deficit south Asian region would reduce the U.S strategic thrust in the region, along three vectors.  (First, through the direct and indirect control of the world hydrocarbon trade, second, through the signorage it derives from the ‘petro- dollars’ and thirdly, from its ability, as the worlds only maritime power, to ‘secure’ (or block) sea-lanes of communication vital to the oil import of other countries). The gamble that India’s oil diplomacy has to take is that it has to trust its rouge neighbors and create multiple benefit sharing arrangements in which all the parties involved in the agreement benefit. The pan –Asian energy grid has also the prospect of transferring hydro power in the future from central Asian republic like Tajikistan (the country that has the third largest hydro-power potential after United States and Russia) via the Wakhan corridor in Afghanistan, as the technology for constructing high voltage direct current transmission line in a cost effective manner already exists.

Back home from a long term prospective the energy sector requires radical reforms especially the state electricity board (SEBs). The chronic impunity of management (transmission and distribution losses, inefficiency leading to low plant load factor, unbalanced production and uneven spatial distribution has to be met). The energy policy 2000 highlights the weakness of organizational problems and its interface with the consumer. It advocates for more efficiency in the power sector but fails to identify the long term sustainable use of energy given the fact that the country has virtually fallen into a ‘energy trap’ with a deficit of 10,157MWe (13%) of all requirement.

The best way forward is to adopt an energy mix to contain the impending crisis. For the short and medium term extending to the next 20 years. Indias salvation from the energy crisis lies partially in further exploiting its coal reserves using cleaner coal technology (coal gasification), quickly enlarging the railway electrification programme and popularizing bio-diesel. While for a long term policy prospective the multilateral oil diplomacy has to play a catalytic role in ensuring uninterrupted and steady supply of oil under any external exigencies due to war or market fluctuation of oil prices. Also the energy policy has to be more imaginative in giving due importance to the use of renewable non-conventional source of energy and has to revamp the public sector undertakings- (the state electricity boards).     

(Views are personal)

                                          

Russia and Kazakhstan Expand Energy Cooperation

 

(Igor Tomberg, expert, for RIA Novosti)

 

s presidents Vladimir Putin and Nursultan Nazarbayev met in Astana, several energy agreements were signed in the presence of the Russian and Kazakh leaders.   The agreements deal with a joint venture based around the Ekibastuz power plant, and granting Russia's company Rosneft the right to explore the Kurmangazy deposit, part of the Caspian oil shelf under Kazakhstan's jurisdiction.   Kazakhstan's President Nursultan Nazarbayev described the document as "a major project of world significance". Russian president Putin agreed with his Kazakh opposite number's assessment, noting that "joint investments will total 22-23 billion dollars", and expected revenues will be 50 billion dollars. He also said that in the course of the next few years between 200 and 250 million dollars will be invested in the energy sector. After calling the signing of the documents the crowning of a significant effort, the Russian president recalled that work on the project had been going on since 2002.  

 

Rosneft head Sergei Bogdanchikov, Kazakhstan's Energy Minister Vladimir Shkolnik and NK Kazmunaigaz head Uzabak Karabalin signed the production-sharing agreement on Kurmangazy in the Caspian Sea between OOO RN-Kazakhstan, the republic's energy ministry, and AO Sea Oil Company KazMunaiTengiz.   Under the protocol, exploration and production on Kurmangazy will be done on a parity basis by authorised organizations of the two countries - companies KazMunaiTengiz and RN-Kazakhstan. The duration of the Kurmangazy agreement is 55 years. In the joint venture Russian company Rosneft owns 25%, and KazMunaiGaz, 50%. The remaining 25%, as Putin and Nazarbayev agreed on Wednesday, may be bought out by Russian company Zarubezhneft.  

 

As is noted in a press release, the probable recoverable oil reserves of Kurmangazy are estimated at about 1 billion tons. Plans allocate 2 years for exploration of the deposit, 3 years for assessing and announcing a commercial discovery, and 4 to 5 years for construction of field facilities and initiation of production. It is only after this that commercial development will begin. Output is contemplated at 60 million metric tons a year.   Principal receipts from the project to Kazakhstan's budget will start coming after commercial development is launched. Throughout the entire period of development, total payments to budgets of different levels may be as high as $31 billion.   The signing of major documents marking the launch of serious energy projects in Central Asia has also become a tradition at meetings within the Shanghai Cooperation Organisation. Last year, LUKoil signed a production-sharing agreement on the development of the Kandym block of gas and condensate deposits and the Khauzak and Shady fields in the Bukhara-Khiva region of Uzbekistan. The contract had been in the works since 2001 and the figures it handles run into billions. Uzbek geologists estimate industrial recoverable gas reserves of the contract territory at 283 billion cubic meters and 8 million metric tons of condensate. Continued exploration and full-scale development of the block may more than double its reserves in this category. Implementation of the project will require more than $1 billion in investments.   Interestingly enough, LUKoil concluded the contract in Tashkent, as part of Putin's visit to sign an agreement on strategic partnership and other documents with Uzbekistan's President Islam Karimov, and to attend negotiations with heads of Shanghai Cooperation Organisation (SCO) member-countries.  

 

In that way, although the problems of security, fight against terrorism and narcotics officially dominate the agenda of SCO summits, the oil and gas theme is always present.   The present agreement on Kurmangazy has an obvious international aspect not confined to the fact that the signing has coincided with the summit. India's joining the SCO as an observer will have as one of its results the invigoration of Delhi's energy policy in the region. Today India itself is able to meet only 30% per cent of its oil requirements. Over the past 10 years oil production in India has been growing at about 2.4% a year, and consumption at 6.1%. No wonder the Indians are increasingly talking of joint projects with Rosneft and their list is growing all the time. These are a stake in Yuganskneftegaz, joint development of the large Vankor deposit, and participation in the Kurmangazy project on the Caspian shelf. During his February visit to Moscow India's Oil Minister Shankar Aiyar likewise raised them. That Delhi is interested in Kazakhstan's oil and gas projects - including Kurmangazy - is evident from the fact that Aiyar arrived in Moscow from Kazakhstan.

 

Estimated Natural Gas Production (in MSCMD)
Year	ONGC	OIL	Pvt /JVC
2002-03	65.50	6.01	15.05
2003-04	63.37	6.41	20.76
2004-05	62.22	6.61	35.01
2005-06	58.83	7.69	35.47
2006-07	57.03	7.80	38.25
Total (bcm)	112.10	12.61	52.77

Source: Planning Commission of India

- Russian News -

Russian, Azerbaijani, and Iranian energy representatives to discuss cooperation between their countries' energy networks

June 18, 2005.  The second meeting between energy specialists representing Azerbaijan, Russia, and Iran will take place in Baku on June 19-21 in the form of a trilateral commission.   Cooperation between the three countries' energy systems will be discussed, according to a press release from Azerenergy.   The trilateral commission was formed to discuss the technical issues involved in synchronizing the energy systems of the three countries.   Since the commission's first meeting at the end of 2004 in Teheran, all parties have developed specific technical proposals and schemes for the practical implementation of parallel work on the countries' energy networks. At the Baku meeting, these proposals will be discussed in detail and one will be selected.   Azerenergy believes that the synchronization of the three countries' energy systems (taking into account the broad geographical range of the energy exchange due to similar work with CIS countries and the Baltic States) will, with precise organization and technical coordination, be able to unite the energy systems of Europe and Asia.   An agreement on the unification of the Azerbaijani, Russian, and Iranian energy networks was signed in 2004 in Teheran.  

(RIA Novosti, Gerai Dadashev)

Mitsui CEO to inspect Sakhalin-2 project

July 18, 2005.  A delegation from the Japanese company Mitsui, which holds a 25% stake in Sakhalin Energy, has signed on to follow the progress of the second stage of the Sakhalin-2 oil-and-gas project, the Sakhalin Department of Information announced Monday.   "The delegation came to the island to observe the project first hand, including the construction of pipelines from the north to the south of the island, and one of the world's largest natural gas liquefaction plants," said a Sakhalin Information Department spokesman.   The delegation, headed by CEO Shoei Utsuda, also met with regional Governor Ivan Malakhov.   The island has only about 600 km of oil and gas pipelines, compared to the required 1800 km.   "At the meeting, the importance of keeping to schedule was noted, as well as that of meeting obligations to buyers of the liquefied natural gas, who are largely Japanese energy companies."   Shell Sakhalin Holdings B.V., a Royal Dutch/Shell subsidiary, holds a 55% stake in Sakhalin Energy, which is managing the Sakhalin-2 project. Mitsui Sakhalin Holdings holds a 25% share and the Mitsubishi subsidiary Diamond Gas Sakhalin's stake is 20%.   The project includes the development of the Piltun-Astokhsk and the Lunsk oil and gas deposits on the northwest shelf of Sakhalin, which has a total reserve of around 150 million tons of oil and more than 500 billion cubic meters of natural gas. About 9.6 million tons of liquefied natural gas [LNG] will be processed annually through the project.   One of the largest LNG plants in the world will be built for the Sakhalin-2 project near the Korsakov port on the southernmost tip of the island. It is scheduled to begin operations in 2007.  

    (RIA Novosti, YUZHNO-SAKHALINSK)

Conflict over Russian gas in Ukraine resolved

July 18, 2005.  Gazprom will receive more than $800 million in additional revenues from the sale of gas from underground storage facilities in Ukraine, a senior Gazprom executive said.   Commenting on the agreements reached between Gazprom, Naftogas Ukrainy and RosUkrEnergo on Sunday, Alexander Medvedev, Gazprom's Deputy Chairman of the Management Committee and Gazexport Director General, said the gas would be sold at market prices to RosUkrEnergo, a joint Russian-Ukrainian company.  "The conflict over the 7.8 billion cubic meters of Russian gas stored in Ukraine is over. The parties have found a mutually acceptable solution," Medvedev said.   "We have credited the Ukrainians with 2.55 billion cubic meters of gas stored in Ukraine as payment for transit. This will cover Gazprom's gas transit requirements for the next two fall-winter periods," he said.   In addition, Medvedev said that Ukraine would increase the transit of gas through its territory by 8 billion cubic meters in 2005 and by 8-11.5 billion in 2006.   "Therefore, thanks to the gas credit and the increased transit volumes, the gas deficit problem can be resolved. Accordingly, it is in Ukraine's interests to observe its commitments to increase transit, and we are confident that we will receive substantial foreign currency revenues," Medvedev said.   The agreements confirmed Naftogas Ukrainy's obligations to RosUkrEnergo on the release of the stored gas and established compensation mechanisms in case the Ukrainian company failed to meet its obligations. "RosUkrEnergo will supply gas from stores in Ukraine to European consumers," Medvedev said.   He added that RosUkrEnergo would export gas through Gazexport, therefore using a single export channel.  

(Courtesy: RIA Novosti)

Sakhalin Energy to supply gas to South Korea

July 15, 2005.  Sakhalin Energy has signed a long-term agreement with Korea Gas Corporation (KOGAS) on liquefied gas sales, the Sakhalin Energy press office reported Friday.   The agreement provides for annual deliveries of 1.5 million tons of liquefied gas to South Korea in the next twenty years.   The agreement with KOGAS is the first long-term agreement between Russia and South Korea on energy supplies.   Ian Craig, chief executive officer of Sakhalin Energy, said the deal proved that Russia and the Sakhalin Island could become long-term strategic suppliers of energy to the Korean market. "The partnership with KOGAS, the world's largest buyer of liquefied natural gas, is extremely important to us. We will be building long-term relations with the corporation and we hope that it will continue to be interested in the Sakhalin-2 [oil and gas] project," he said.   The liquefied natural gas will be supplied from a new facility capable of producing 9.6 million metric tons of gas a year. The factory, which the company is building on the coast of Aniva Bay in southern Sakhalin, will be Russia's first facility for the production of liquefied natural gas. Over 65% of the construction work has been completed.   As the contract was being signed, the Russian Deputy Industry and Energy Minister Ivan Masterov said, "We are glad that KOGAS has become one of Sakhalin Energy's liquefied gas buyers. We believe that the proximity of the Sakhalin Island and Korea and Russia's reputation as a reliable energy supplier make Sakhalin liquefied gas a natural choice for the Korean gas giant."   Sakhalin Energy was established in April 1994 to implement a large-scale oil and gas project, Sakhalin-2. The company is headquartered in Yuzhno-Sakhalinsk, the capital of Sakhalin.   Sakhalin Energy shareholders include Shell Sakhalin Holdings B.V. (55%), Mitsui Sakhalin Holdings (25%) and Diamond Gas Sakhalin (20%). 

(Courtesy:  RIA Novosti)

Sakhalin II to cost $8 billion more than planned

July 15, 2005.  The Sakhalin Energy company that operates the Sakhalin II project has reassessed specific investment volumes, increasing the entire cost estimate for the project by $8 billion, meaning project-recoupment deadlines will soar at least two-fold, the daily Vremya Novostei reported.   The preliminary SE cost estimate sets the project at nearly $20 billion, whereas initial investments were to have totaled $12 billion. Royal Dutch/Shell, which owns 55% of SE shares, has become more secretive after the 2003 scandal in which real-life deposits were overstated. The new sum is not final and evokes many doubts, Royal Dutch/Shell CEO Jeroen van der Veer said during a July 14 Internet conference.   The project's Japanese partners, Mitsui, which has a 25% stake and Mitsubishi, which holds 20% of the shares, are likely to voice additional doubts. Russian officials consistently hindering efforts to increase cost estimates of projects that are implemented in line with production-sharing agreements will be even more skeptical. This delays real-life work and incipient production-sharing plans.   The concerned departments, namely, the Industry and Energy Ministry, Rosenergo and the Ministry of Finance, still refuse to comment on the SE estimate. Moreover, Shell and Gazprom concluded an agreement on exchanging a blocking package of Sakhalin II stakes for a 50% share in Gazprom's Zapolyarnoye-Neokom project last week. This deal is to be finalized next year. Investments will match the corporate stake, after Gazprom becomes a project shareholder.   The Sakhalin II project is developing the Piltun-Astokhskoye and Lunskoye deposits, containing 185 million tons of crude oil and 800 billion cubic meters of natural gas, in accordance with a production-sharing agreement. The project calls for building two liquefied natural gas production lines with an annual capacity of 9.6 million tons. The possible construction of a third production line is also being discussed. Liquefied natural gas deliveries were scheduled to begin in November 2007. Contracts have already been signed for 80% of Sakhalin II's gas and remaining gas sales will be formalized later in the year.

All India figures of production of Coal

from 1985-86 to 2003-04

 

Year	Production (In million tonnes)
	Coking	Non Coking	Total
1985-86	35.65	118.59	154.24
1986-87	39.53	126.24	165.77
1987-88	41.01	138.71	179.72
1988-89	42.72	151.88	194.60
1989-90	44.43	156.46	200.89
1990-91	45.30	166.43	211.73
1991-92	46.28	183.00	229.28
1992-93	45.36	192.90	238.26
1993-94	45.06	200.98	246.04
1994-95	41.97	211.76	253.73
1995-96	40.10	230.03	270.13
1996-97	40.54	245.09	285.63
1997-98	44.76	251.04	295.80
1998-99	39.18	253.09	292.27
1999-00	33.25	266.72	299.97
2000-01	30.95	278.68	309.63
2001-02	28.67	293.97	322.64
2002-03	30.49	306.38	336.87
2003-04 *	28.40	327.32	355.72

Source: Ministry of Power

 

Note:

i               * Provisional       

NEWS BRIEF

OIL & GAS

NGC gets 8 Nelp blocks, RIL wins 5

July 26, 2005. The government announced award of five oil and gas blocks to Reliance Industries Ltd and eight to public sector Oil and Natural Gas Corporation under the fifth round of bidding for New Exploration and Licensing Policy (NELP). It witheld award of two Assam blocks and referred the matter to the law ministry. Footwear major Phoenix has made a debut in oil exploration by bagging one of the most sought after block in Rajasthan. It will carry out exploration there along with Birckbeck Investment. RIL has bagged three blocks on its own which includes two deepwater blocks in the Kerala-Konkan and one onland block in Cambay basin in Gujarat.

The company has bagged one block in the Mahanadi basin along with Niko Resources. The two alreay have one block in the basin where they have recently claimed commercial discovery. ONGC has won two blocks on its own in Andaman and Cambay while it has five blocks to its share along with Cairn Energy. The other block in Andaman has also gone to ONGC which it will develop along with ENI India and Gail. 

RPL eyes Spic Petro

July 24, 2005. Mangalore Refineries and Petrochemicals Limited, the refining subsidiary of ONGC, is set to acquire a controlling stake in SPIC Petrochemicals Ltd—one of India’s most controversial PTA-PFY petrochemicals projects. The PFY plant is 75 per cent complete, the PTA plant is just 11 per cent complete. The naphtha based petrochemical (PTA-PFY) project has been valued at $559 mn (Rs 24.03 mn).

irm ethanol prices sought

July 22, 2005. Oil-marketing companies have placed orders for the purchase of ethanol from Uttar Pradesh. All the bidders in the state had asked for permission to supply ethanol at the negotiated price, without any escalation/de-escalation in the rates, for the period covered in the letter of intent, which had been agreed to by the oil-marketing companies. While Indian Oil Corporation has sought 42,750 kilolitres (kl), Bharat Petroleum Corporation 13,970 kl, Hindustan Petroleum Corporation 12,275 kl, and IBP 3,900 kl. In all the total quantity of ethanol sought is 72,895 kl. 

NGC refinery in Rajasthan

July 22, 2005. Oil and Natural Gas Corporation has proposed setting up a 7.5 mt refinery at Kausaria in the Barmer district of Rajasthan at Rs 7,967 crore (Rs 79.67 bn). ONGC wants to set up the refinery as a joint venture with its subsidiary Mangalore Refinery and Petrochemicals Ltd and UK-based Cairn Energy. Indian Oil Corporation and Hindustan Petroleum Corporation have also sought the ministry’s approval for setting up the refinery. The ministry would grant one of the companies the right over the Cairn crude. ONGC proposed its refinery would be designed to handle the crude available locally and also the Arab mix in equal quantities. Cairn Energy has discovered 2.5 billion barrels of oil reserves in the Barmer district but considering its quality a blend ratio of 50 per cent is considered appropriate. The company said since the fields would start producing oil from end-2007, the oil could be moved through a pipeline to the Mundra port and processed at MRPL's existing refinery. Once the proposed refinery is commissioned, the same pipeline could be used to transport imported crude oil for processing at the refinery. The investment requirement for the pipleine would be Rs 1,000 crore (Rs 10 bn) along with an energy cost of $0.30 a barrel. The refinery would produce 904,000 tonnes per annum of LPG, 211,000 tonnes of naphtha, 1.739 mt of gasoline of Euro-III grade, 525,000 tonnes of kerosene, 120,000 tonnes of aviation turbine fuel, 2.469 mt of diesel of Euro-III grade, 681,000 tonnes of coke and 71,000 tonnes of sulphur. 

PCL mulls green-field refinery at isakhapatnam

July 20, 2005. Hindustan Petroleum Corporation Limited has approached the state government to allocate about 2,500 acres of land in the proposed Andhra Pradesh Special Economic Zone (APSEZ) as part of its expansion plans at Vizag. It is planning to set up an export-oriented green-field refinery-cum-petro-chemical complex at Visakhapatnam. The company has indicated to invest anywhere between Rs 6,500 crore (Rs 65 bn) and 8,000 crore (Rs 80 bn) in the proposed project, including a refinery with about 5 mt capacity. The project is also expected to have a naphtha cracking unit. Around Rs 2,000 crore (Rs 20 bn) investment is required to create a 1 mt green-field refinery plant. At present, the company has a 7.5 mt capacity refinery at Vizag. 

AIL strives to clinch LNG deal

July 24, 2005. GAIL India is striving to clinch a deal for LNG supply from Australia, Malaysia and Qatar for Dabhol, especially in view of LNG prices which have shot up to $6-7 million british thermal unit (MBTU). It is learnt that GAIL India has projected every possibility of hike in the per-unit tariff to Rs 2.60-2.75 from the already-agreed Rs 2.30. Of Rs 2.30, 93 paise is towards fixed charge and Rs 1.37 towards variable charge, which comprises fuel charge and the cost of completion of LNG terminal at the power plant site. GAIL India has indicated that there is a possibility of marginal variation.

ujarat Adani Energy launches piped gas

July 22, 2005. Gujarat Adani Energy (GAEL) launched its piped natural gas (PNG) service. The company kicked off supplies to Swaminarayan Temple at Maninagar. Gas supplies were also started to two houses in the Vallbhwadi area. Its PNG is priced at Rs 13.75 per cubic metre and is over 30 per cent cheaper than LPG. GAEL has already laid an over 23 kilometre network of polyethylene pipes to cater to more than 30,000 households in Maninagar area of Ahmedabad. The company has already started registering the households and commercial units. GAEL has been supplying gas to industrial units in Nandesri in Vadodara since about a year and has also started operations in Vatva industrial area since March 2005. It is supplying gas to about 30 units in Vadodara and 25 units in Ahmedabad.

SPC to market gas on its own

July 21, 2005. State-owned Gujarat State Petroleum Corporation will market gas from the Krishna Godavari basin of its own and will not sell it to Gail (India) or any other agency for marketing. The KG -1 block is said to have 20 trillion cubic metre of reserves, the largest discovery of natural gas in the country. This decision from the corporation comes after Gail offered to market and transport gas from the KG basin. The corporation may opt for Gail's or Reliance's network to bring gas on the western coast. Gail plans to built a national gas grid across the country and as a part of the project, a pipeline connecting Kakinada in Andhra Pradesh and Uran in Maharashtra will be built. GSPC may use this pipeline to take gas from the KG basin to the lucrative market in the West. The gas may also be pumped into the Hazira-Vijapur-Jadishpur pipeline to tap the Northern markets. The state government has further decided to invest additional Rs 1,500 crore (Rs 15 bn) for the further development and exploration activities in the Krishna-Godavari block. 

SUs’ cap for investment doubled

July 26, 2005. The government has decided to double the capacity of public sector enterprises to invest in joint ventures and incur capital expenditure. Profit-making PSUs falling under the ‘navratna’ category will be able to incur up to Rs 1,000 crore (Rs 10 bn) capital expenditure without taking any permission from the government. This is a step towards empowering the central public sector enterprises (CPSEs) as mandated in the common minimum programme of the government. For leading ‘miniratnas,’ the limit for such capital expeniture has been increased to Rs 500 crore (Rs 5 bn) or equal to their net worth, whichever is less. For second category ‘miniratnas’, limit has been increased to Rs 250 crore (Rs 2 bn) or 50 per cent of their networth. For other profit-making PSUs, the limit of capital investment without government nod has been increased to Rs 150 crore (Rs 1.5 bn) or 50 per cent of their net worth, whichever is less.

NGC-Mittal ink MoU

July 25, 2005. Oil and Natural Gas Corporation Ltd and LN Mittal-promoted Mittal Investments Sarl signed a memorandum of understanding to form two Cyprus-based joint venture companies— ONGC Mittal Energy Ltd and ONGC Mittal Energy Services Ltd. While the financial institutions will hold 2 per cent stake in both the joint ventures, the remaining 98 per cent equity will be divided between the Indian and the foreign company in the ratio of 51:49. The deal with the financial institutions will be signed within the next thirty days. While ONGC Mittal Energy Ltd will focus primarily on acquiring oil equity and gas abroad, the second JV, ONGC Mittal Energy Services Ltd, will look into trading, shipping and other activities arising from the OVL-Mittal tie up. While this signals the beginning of India’s highest profit-making company, the $14bn ONGC group, moving into the big league, for the world’s largest steelmaker — the $22bn LNM group — it’s a move from steel to a whole new world of oil and gas. The joint venture consortium, expected to be registered in a EU country, will seek to concentrate primarily in countries like Indonesia, Kazakhstan, Azerbaijan, Nigeria, Trinidad and Tobago, Malaysia where the LNM group has established its presence. The new consortium will need necessary clearances from various government departments before it can become fully operational.

IL to share oil subsidy

July 25, 2005. Reliance Industries Ltd has reached an agreement with public sector oil marketing companies (OMCs) on supply of petroleum products. Under pressure to share under-recoveries being suffered by OMCs because of below-import parity retail prices, RIL agreed to a discount on a yearly basis on the supply of petroleum products. RIL has also agreed to supply 1.13 million tonnes (mt) of kerosene to OMCs which would be equivalent to the quantity supplied by the private refiner last year. It will also be supplying around 26 mt of liquefied natural gas to OMCs. The exact quantum of discount is still being worked out by the companies. In the event of shortage of kerosene for the public distribution system (PDS), companies should be asked to get government permission before exporting aviation turbine fuel (ATF). OMCs have been asked to monitor the supply of kerosene for PDS. During the production of petroleum products, refineries can produce greater quantities of ATF at the cost of kerosene. Since ATF has better price realisation, companies find it profitable to produce it more than kerosene. The government was threatening to invoke provisions under the Essential Commodities Act and direct all refining companies, including those in the private sector, and joint venture refineries, to produce 7 per cent of their total refinery crude throughput as kerosene to maintain adequate supply. The other refiner, Mangalore Refinery & Petrochemicals Ltd, will be supplying kerosene in proportion to its crude throughput. 

onopoly for CNG operators

July 25, 2005. The distribution of compressed natural gas for automobiles and piped natural gas for households and commercial establishments in cities can soon become a monopoly business. A committee of secretaries, which cleared the Bill to set up a Petroleum and Gas Regulatory Board (PGRB), has proposed that all gas distributors be given exclusive marketing rights in the cities they operate after being selected through a “competitive process”. It will be left to the PGRB to decide the process. The Bill will now be placed before a group of ministers set up to look into the matter. After this, it will be put up before the Cabinet. The idea behind the proposal was to make the business viable, given the large investments companies needed to make in setting up a city gas network. At present, companies nominated by the Centre are in the city gas business. Thus, Indraprastha Gas Ltd (a joint venture of Gail India Ltd, Bharat Petroleum Corporation Ltd and the Delhi government) operates in Delhi, Mahanagar Gas (a British Gas, Gail India Ltd and Maharashtra government joint venture) operates in Mumbai and Gujarat Gas (a subsidiary of British gas) runs the business in some cities of Gujarat. Joint ventures for Kanpur, Agra and some other cities are expected to be operational soon. The regulator would be empowered to look into the “reasonableness” of prices fixed by oil companies, though it would not directly set retail prices. However, issues relating to the refinery gate price or the retail price charged to consumers will be decided by the regulator. 

NGC's $4.84 bn project cleared

July 24, 2005. Prime Minister Manmohan Singh has cleared Oil And Natural Gas Corp's Rs 21,000 cr (Rs 210 bn) investment in LNG, power and petrochemicals projects at Mangalore. ONGC plans to set up a Rs 7,475 cr (Rs 74.75 bn) petrochemical and aromatic plant, Rs 8594 cr (Rs 85.94 bn) LNG based power project, Rs 3590 cr (Rs 35.9 bn) C2/C3 recovery plant and LNG terminal and Rs 945 cr (Rs 9.45 bn) gas transportation pipelines. The state-owned firm had already signed a MoU with Karanataka government for the project. Mangalore Refinery and Petrochemicals Ltd, a subsidiary of ONGC, would be the implementing agency for the total project while ONGC would provide finances and guarantees.

indal Power & Essar Steel seek coal-to-gas tech

July 23, 2005. Jindal Power and Essar Steel have approached SASOL of South Africa for technology to convert coal to gas for use in their steel plants. The Indian companies are interested in the SASOL-Lurgi fixed bed dry bottom technology. This yields synthesis gas, which can be used in place of natural gas (which Essar already uses for steel production). Natural gas prices in India are partially controlled, but may one day be totally decontrolled. In that case synthesis gas from coal may prove much cheaper. SASOL does not licence coal-to-liquids (CTL) technology, but is willing to licence coal-to-gas (CTG) technology.

dds against Iran gas pipe plan: PM

July 22, 2005. Observing that the proposed multi-billion dollar Indo-Iran gas pipeline via Pakistan is fraught with risks, Prime Minister Manmohan Singh has said he does not know if any international consortium of bankers will underwrite the project. He said that we are terribly short of our energy supply and we desperately need new sources of energy. And that is why with Pakistan we have agreed to explore the possibility of the pipeline.

OC yet to get nod for sale of stake in ONGC

July 22, 2005. Indian Oil Corporation is yet to decide on whether it would go in for a total sale of its equity share in upstream major Oil and Natural Gas Corporation or resort to sale in tranches. The company had recently sought the government permission to sell its holding in ONGC. The company had made a similar request earlier but with the government setting up a committee for restructuring of oil sector PSUs, the decision was put off. The ministry of petroleum and natural gas would examine the proposal in the light of recommendations of the synergy in energy committee report. IOC holds 9.61 per cent in ONGC. Going by the market value, sale of IOC's entire holding in ONGC would fetch more than Rs 12,000 crore (Rs 120 bn). 

ariff panel to take up ONGC gas prices

July 21, 2005. The ministry of petroleum and natural gas has decided to refer the pricing of natural gas produced by Oil and Natural Gas Corporation and Oil India to the Tariff Commission. The commission will also examine the option of reverting to a cost-plus pricing mechanism. This can be bad news for ONGC as it is already being paid only about one-sixth of the market price. Gas prices were to reach a 100 per cent parity with fuel oil prices by 2001-02 after which they were to be linked to the market. The fuel oil basket now stands at $6.86 for one million British thermal units though the producer price being paid to ONGC and OIL is about $1.80 even after the recent revision. Cost-plus is considered the basis for setting the prices of essential commodities but petroleum ministry said that there are other components which should go into price besides the cost. These are the market conditions, which include prices being offered by competitors, and investment and cash flow requirements, of a company. 

anel to speed up exploration

July 20, 2005. Petroleum Minister Mani Shankar Aiyar is in process of setting up of an inter-ministerial mechanism to expedite oil and gas exploration activities in the country. While the cabinet would shortly announce award of 20 new blocks for exploration to private operators, 14 blocks from the previous rounds of new exploration and licensing policy were stuck at various stages for governmental clearances. He said that the institutional framework comprises appointment of nodal officers from the ministries of finance, environment, defence and home affairs to look into various issues relating to award of the block and subsequent signing of production sharing contracts. In case there is a problem in amicable resolution to the problems, the joint committee of special secretary in the petroleum ministry and environment secretary will facilitate the clearance.

entralisation of ethanol pricing to boost demand

July 19, 2005. The centralisation of ethanol pricing and distribution policy is set to beef up supply of alternative fuel in India. The contentious issue of pricing of ethanol between the oil marketing companies and ethanol suppliers was resolved after the latter agreed to provide ethanol at Rs 18.75 per litre. Currently, as per the Indian Constitution, the alcoholic beverages sector is a state subject that gives the freedom to each state to frame its own policies/taxation regime. Divergence in policies across different states makes it difficult to determine whether the country is exploiting the full potential of the ‘biofuels movement’. Hence, there is a differential in the price of Ethanol between states. As a result oil companies had to stop selling ethanol-blended petrol some months back bringing the use of biofuels to a complete standstill. Some of the outstanding issues include implementing a uniform policy across states for the quantum of Ethanol to be earmarked for blending with petrol and other fuels have been sorted out by centralizing the entire process. The New Excise Policy appears to be very promising for all ethanol manufacturers as the policy recommends reduction of tax due to increased demand of alcohol for industrial and fuel use, regulation of the price of molasses to benefit the ethanol industry and free interstate movement of alcohol in order to maintain price and availability.

ake oil subsidies transparent: iyar

July 19, 2005. The petroleum ministry has sent a stern missive to the finance ministry asking it to provide subsidies on PDS kerosene and domestic LPG in a transparent manner. First, it has asked the finance ministry to make higher annual provisions in the Budget towards subsidising kerosene and LPG. Second, it has asked North Block to set aside Rs 5,000 crore (Rs 50 bn) a year (collected by levying a Rs 1,800 a tonne cess on domestic crude) for the Oil Industry Development Board (OIDB). Third, it has proposed exempting proportionate quantities of crude oil required to manufacture LPG and kerosene from customs duties under the Exim policy, under which a manufacturer is allowed to import 1.072 mt crude oil for producing one mt kerosene and 1.564 mt of crude oil or manufacture of 1 mt LPG.

POWER

hel to set up power project in Indonesia

July 26, 2005. Bharat Heavy Electricals Limited has got a contract for setting up a 120 MW eco-friendly co-generation power plant in Indonesia. The $100 mn plant will be set up for the captive use of PT Merak Energi group, Indonesia. This sea-side plant involves several unique features including the largest size bubbling fluidized bed (BFB) combustion boilers of over 250TPH capacity, capable of using a range of coal while enabling lower emissions. In addition, high-efficiency electro-static precipitators, complex steam extraction requirements from Steam Turbines, and a state-of-the-art maxDNA control system, will be used in the plant. 

ajasthan to get power project

July 25, 2005. The Rajasthan government has cleared a 500 MW thermal power station in the state's Baran district in the hope of tackling its 27 per cent power deficiency. A study conducted by Central Electricity Authority (CEA) had identified Chabra in Baran district as the most suitable place for setting up a thermal power station.

ttaranchal to get Bhagirathi hydel project

July 22, 2005. Uttaranchal government has signed an agreement with Canadian Commercial Corporation (CCC) for building 400 MW Bhaironghati hydel project on the river Bhagirathi in the state. A memorandum of understanding was signed in this regard. Under the agreement, the CCC would provide loan of Rs 2,000 crore (Rs 20 bn) to Uttaranchal Jal Vidyut Nigam Limited (UJVNL) through Power Finance Corporation (PFC) for building the project in Uttarankashi district. CCC would also provide expertise in hydro power, planning, design engineering, project management, technical supervision and latest equipments required for the project.

ural electrification project launched in arnataka

July 25, 2005. Karnataka launched the Rs. 977-crore (Rs 9.77 bn) Rajiv Gandhi Grameen Vidyuthikaran Yojana (RGGVY) to provide electricity to 16,168 hamlets, by signing a tripartite agreement with the Rural Electrification Corporation and the five electricity supply companies (ESCOMs) in the State. With just 9.5 per cent in power distribution losses, Bangalore topped the country in keeping losses to the minimum. The Government has drawn up a Rs. 14,000-crore (Rs 140 bn) plan for reducing losses by 2012. To bring down transmission losses, a Rs. 9,000-crore (Rs 90 bn) plan has been drafted. Karnataka Power Corporation Ltd. has announced a programme to spend Rs. 15,000 crores (Rs 150 bn) to increase power production by 3,000 MW. While the Rs. 977 crores (Rs 9.77 bn) under the RGGVY will cover 26 districts in the first phase, the State Government is seeking Rs. 250 crores (Rs 2.5 bn) in the second phase to cover the entire State.

SES bags award

July 24, 2005. Power distribution company BSES has bagged the Network Innovation award in recognition of its efficient use of information technology to help almost 2,300,000 consumers in Delhi. The award was conferred on the company by Hughes Escorts Communication Ltd. for introducing cutting edge technologies by its IT department. Interactive Voice Response System (IVRS), Outage Management System (OMS) and Automated Meter Readers (AMR) are some of the IT driven tools introduced by the IT department of the company. 

 161 mn power plan in aryana

July 22, 2005. To make the power transmission and distribution system effective and strengthen the rural electrification infrastructure, the Haryana government has finalised a Rs 700 crore (Rs 7 bn) programme. The programme formulated under the Rajiv Gandhi Vidyutikaran Yojana has been submitted to the central government for the required approval and funding. Under the scheme, 66 sub-stations will be constructed and capacity of 66 existing sub-stations will be enhanced to strengthen the transmission and distribution system. The government planned to separate supply of electricity to urban and rural areas to make the transmission and distribution system more effective. As many as 99 overloaded and lengthier feeders of 11 KV will be rehabilitated by dividing them into 198 feeders and thousands of additional distribution transformers will be installed all over the state.

B achieves 85 per cent rural electrification

July 20, 2005. West Bengal has been able to achieve 85 per cent rural electrification in the state as of 2004-05. The government was able to electrify 32,160 mouzas out of total 37,910 mouzas in the state, thereby covering 84.83 per cent of the villages. The government had said it intends to electrify close to 98 per cent villages through the rural electrification project over the next two years by targeting more 5030 mouzas. The state government is committed to 100 per cent rural electrification by the end of the 10th five year plan. The state government was planning to hand over the rural electrification of the remaining mouzas by placing turn-key contracts with the National Thermal Power Corporation, National Hydel Power Corporation, Damodar Valley Corporation and Power Grid Corporation India Ltd. A major chunk of the work of rural electrification had been assigned to West Bengal State Electricity Board. A fund of Rs 110 crore (Rs 1.10 bn), which is to be provided to WBSEB for the purpose, had been proposed to be alloted in the annual plan for the year 2005-06. In distant areas where the grid is unable to reach, rural electrification will be implemented by the West Bengal Renewable Energy Development Authority through renewable resources and Rs 268.49 crore (Rs 2.68 bn) have been earmarked in the plan budget. The total plan budget of the power department for 2005-06 has been proposed at Rs 2088.55 crore (Rs 20.89 bn), up by 70 per cent over the previous year's Rs 1212.50 crore (Rs 12.13 bn).

oa to have underground power supply

July 20, 2005. In a step to boost power supply, the Goa government plans to lay underground power cables under the centrally sponsored accelerated power development and reform programme (APDRP). This would help to reduce losses and help the state to make profits from increased sale of electricity. The central and the state governments will share the project expenses. The Rs 50 crore (Rs 500 mn) project is expected to be complete by December, 2006. 

FC assistance to tone up power sector in South

July 25, 2005. The Power Finance Corporation (PFC) has planned to extend financial assistance of about Rs.2, 000 crores (Rs 20 bn) to the southern States this year for various development schemes in the electricity sector. Of this amount, Tamil Nadu and Andhra Pradesh may get around Rs. 600 crores (Rs 6 bn) each. The corporation has been funding several major power projects in the South. During 2004-05, it sanctioned about Rs.2,500 crores (Rs 25 bn) and disbursed Rs. 1,325 crores (Rs 13.25 bn) to various power utilities in the region. The corporation provides loans under the Accelerated Generation and Supply Programme. As part of this, funds are given at concessional lending rates for renovation and modernisation projects of thermal and hydro power plants and the Union Government provides interest subsidy upto three per cent. In addition, the PFC supports transmission and distribution schemes. Among the major projects funded by the corporation is the 150 MW Pykara Ultimate Stage Hydro Electric Project in Tamil Nadu. The plant is likely to be commissioned soon. In the current financial year, Rs. 248 crores (Rs 2.48 bn) has been disbursed to the Tamil Nadu Electricity Board for this project. In addition, the PFC has received proposals for 19 transmission schemes of which it has so far sanctioned eight schemes, having a total value of around Rs. 165 crores (Rs 1.65 bn).

Nearly Rs. 350 crores (Rs 3.5 bn) is likely to be sanctioned for transmission schemes in urban areas. Chennai, Tiruchi, Madurai, Coimbatore, Vellore and Kanniyakumari are among the districts to be covered under this project for strengthening the transmission network. The governing rule under the scheme is that 80 per cent of the project cost will be provided by the PFC while the rest will be met by the TNEB. Apart from the loans, the corporation provides a grant of Rs. one crore (Rs 10 mn) to every State annually for undertaking studies on various problems in the power sector.

ovt for franchisee model to push rural electrification

July 25, 2005. The Government has taken a leaf out of the book of multinational food and retail majors to push through rural electrification projects in the country. The Ministry of Power is betting heavily on the franchisee model, under which local bodies such as cooperatives, individual entrepreneurs and panchayats would be involved to execute or manage rural electrification projects for a fee. The Ministry has already started work on handing over the management of rural distribution to franchisees in districts in Gujarat and Maharashtra. The franchisees could be non-Governmental organisations (NGOs), user associations, cooperatives, individual entrepreneurs or the panchayati institutions and they would be entrusted with a rural electrification assignment in return for a fee, which would depend on the task involved. The plan is to start with entrusting the franchisees with the entire billing and collection system as a first step. The arrangement could be extended to include execution of distribution systems, including feeders from substations or from the distribution transformer levels. The mechanism envisages execution of these project and satisfactory maintenance of the system by the franchisee in return for a payment by the State Government. Subsequently, the model aims at giving the franchisees the ownership of lines and accompanying infrastructure up to a particular point, say from the households in an area to the distribution feeder level, along with the accompanying responsibility of collecting bills from the users. State-owned Rural Electrification Corporation has been designated as the nodal agency for rural electrification at the Central Government level.

ower regulators may lose right to fix tariffs

July 23, 2005. Power regulators — CERC and state regulators — are set to lose their power over setting tariffs with the government planning to clip their wings through a fresh set of amendments to the Electricity Act. The power ministry has proposed curtailing the powers and role of the electricity regulators as part of the amendments to the Electricity Act 2003. This would mean that the government would have the final say in deciding how much a consumer pays per unit of power. Under the present regulatory arrangements, the government restricts itself to overall policy for the power sector, leaving the specifics such as tariffs and granting of licenses to the regulator, as an independent arbitrator. The finance ministry and the Planning commission have pointed out that this contradicts the guidelines of the Common Minimum Programme.

reen' buildings can reduce energy bill: TERI

July 23, 2005. The energy bill in residential or commercial buildings could be reduced by almost half if buildings are designed keeping energy efficiency in mind. The saving in energy requirement of a building could be achieved first at the design stage and then at the selection stage of the HVAC (heating, ventilation, air-conditioning) and lighting systems of the building. In a study conducted by The Energy and Resources Institute (TERI), it was found that 35 per cent energy saving was achieved by efficient lighting and HVAC systems. These measures typically have a payback time of one to three years. Energy saving measures can also be taken up for existing buildings and can be achieved up to 20 per cent. For instance, a building in a cold climatic zone needs to adopt measures to maximise its solar heat gains by embracing strategies such as maximum exposure to south, windows to capture heat, dark coloured surfaces, high thermal mass and insulation to retain the captured warmth of the sun or use of design elements such as trombe wall and sun spaces, among others. On the other hand, a building designed for a hot climate should use measures to reduce solar gain such as smaller window sizes, shaded walls, minimum exposure to west and east or use of design elements such as solar chimneys and wind towers, among others, to maximise ventilation. Use of building materials like energy efficient glass could reduce heating or cooling demands by 8-10 per cent. Further, hard paved parking lots, pathways, and courts could be minimised as they generate a heat island effect that causes a sharp temperature rise. Lighting accounts for 20-50 per cent of the electricity requirements of a building and several measures could reduce the consumption of energy. For instance, motion sensors could be installed for security purposes instead of constant lighting.

mending electricity act would be retrograde step: power regulators

July 22, 2005. Power regulators argued that the power ministry’s proposed move to amend the Electricity Act 2003 would eliminate all discretion and make the Electricity Regulatory Commissions subservient to the government of the day. The regulators, which met under the aegis of the Forum of Regulators to the power minister PM Sayeed, called upon the government to dump its proposed plan to to amend Sections 61, 66, 76, 86, 107 and 108 of the Electricity Act 2003 as it would be a retrograde step in power sector reforms.

Central Electricity Regulatory Commission chairman AK Basu, who led the team of regulators, brought to the notice of the minister that the proposed amendments would be violative of the Constitution and contrary to the spirit of the government’s Common Minimum Programme. Mr Sayeed, however, assured that the government was in favour of maintaining the independence of regulators. The Electricity Act 2003 enshrines the independence of the regulator and distancing of the government from regulatory activity, the regulators said. The regulator is sought to be insulated from government pressures so that he may function in an impartial and transparent manner in consultation with all stakeholders, including the government. They feared that the proposed amendments have the potential of being used by the government of the day so that almost every sentence of the policy instruments become a directive to the Commission. Clearly, such a drastic provision is nowhere stipulated in the Act, the regulators added.

ndia Power Videsh on the anvil: ayeed

July 22, 2005. The power ministry is contemplating setting up a new overseas company, India Power Videsh (IPV). The company will have on board National Thermal Power Corporation, Powergrid, Power Finance Corporation and National Hydroelectric Power Corporation. Bharat Heavy Electricals Limited may also be roped in as a partner. The proposed IPV will not just undertake generation projects abroad, but will also look at acquiring mines, picking stakes in gas/ LNG projects, besides undertaking EPC and operation and maintenance (O&M) activities. The aim is to get into the entire value chain.

TPC plans power plants linked to coal mines

July 22, 2005. With a view to overcoming the shortage of coal supply in the long term, NTPC has decided to go for integrated projects that involve the setting up of pithead power plants along with development of coal projects linked to the plant. In the 11th Plan, the company plans to set up two power projects having a capacity of 6,000 MW of power tied to coal mines that have a capacity of 30 million tonnes per annum (mtpa). The proposed investment in the mines has been pegged at Rs 2,500 crore (Rs 25 bn), while that in the tied-up power projects is Rs 25,000 crore (Rs 250 bn). The power plants would be set up at Talcher in Orissa and Raigarh in Chattisgarh. This would be the way forward in the future as it would facilitate cost-effective operations, besides ensuring availability of coal in the long term.

TPC to build efficiency to 42 per cent

July 20, 2005. National Thermal Power Corporation has initiated measures to increase the current efficiency level of its plants to 42 per cent by 2020. According to available parameters, current efficiency level was nearly 26 per cent.

PC project restart to cost $460 mn

July 20, 2005. The restarting of the Dabhol Power Company (DPC) plant will cost between Rs 1,500 crore (Rs 15 bn) and Rs 2,000 crore (Rs 20 bn), according to preliminary estimates by a team of General Electric (GE) specialists. The restart cost of the DPC plant is estimated in the region of Rs 15 bn to Rs 20 bn. The project restart is expected to be completed in a year. The Maharashtra government will purchase the power generated from the restarted plant at Rs 2.30 per unit at an eighty per cent plant load factor. This will include a variable and fixed cost. 

ata Sponge to invest in Orissa

July 20, 2005. Tata Sponge Iron has lined up an investment of Rs 800 crore (Rs 8 bn) for capacity expansion at the existing premises at Bilaipada near Joda, in the Keonjhar district of Orissa. The board of the company has given an in-principle approval for setting up three kilns and three additional power plants and this would be done in phases. At present, the board has approved an investment of Rs 300 crore (Rs 3 bn) for installation of the fourth kiln of 1.5 lakh tonne per annum capacity and a captive power generational facility of 18.5 MW capacity along with other related facilities. Further, the captive power generation facility would increase to 44.5 MW, including the captive power plant of 18.5 MW currently under implementation. In December, 2001 Tata Sponge commissioned a 7.5 MW captive power plant to produce electricity from the waste heat of exit gases of its second kiln. 

IL to up production by 20 mt

July 20, 2005. Coal India Ltd will increase its annual production by 20 mt to meet Rs 7,300-crore (Rs 73 bn) burden on account of wage revision. The company has ruled out any increase in coal prices to meet the additional burden. CIL chairman and managing director Shashi Kumar said 1 mt of coal on an average fetches Rs 60 crore (Rs 600 mn) for CIL. An additional 20 mt production will bring to the company Rs 1,200 crore (Rs 12 bn) which will help the company to nearly meet the five-year burden of Rs 7,500 crore (Rs 75 bn). CIL had recorded highest ever production of 323.64 mt during 2004-05. 

ndia sees export market for N-reactors

July 19, 2005. With the breakthrough achieved over the highly-contentious issue of US co-operation in nuclear energy, a potentially huge international market has opened up for India — the export of low-cost, small and medium-sized nuclear power reactors (SMRs). The Nuclear Power Corporation of India (NPCIL), the nodal agency for developing and implementing nuclear power programmes in the country, is keen on selling its indigenously-developed small-sized reactor technology in the international market. India and China are the only two countries in the world which develop SMRs (less than 600 MW). The developed world is focused on large-scale nuclear reactors with capacities over 900 MW. Compared to international standards, India’s cost in developing its nuclear reactor is also less i.e.  Rs 5-6 crore (Rs 50-60 mn) per mega watt. Countries like Turkey, Indonesia and Sri Lanka, which are implementing their nuclear power development programmes, will emerge as potential buyers for India’s nuclear technology once the country begins offering its technology in the international market. Malaysia and Thailand performed studies indicating that the nuclear option will be suitable in meeting their energy needs. All four countries are potential markets for medium-sized reactors. This apart, the North African countries (Algeria, Egypt, Libya, Morocco and Tunisia) show a high degree of interest in initiating nuclear power programmes. All have performed studies and preparations, including, in some cases, attempts to acquire nuclear power reactors. Israel has also consistently indicated interest in nuclear power; it has good nuclear technology infrastructure and could implement a nuclear project. This also applies to Syria, which intends to proceed with medium-sized units. In addition, countries like Peru, Uruguay and Bangladesh have indicated interest in nuclear power and in SMRs in particular, and are in the process of building infrastructure for the same.

OIL & GAS

as production raised to 1bcf per day in Pak

July 26 2005. The Pakistan government granted a number of incentives to attract investment in oil and gas sector. The policy resulted in substantial increase in local production share in oil and gas output. Pakistan's energy mix is highly dependent on oil and gas that provides 80 percent of total primary energy supplies of the country. Out of 51 million tonnes of oil equivalent energy during 2003-04, 50 percent came from gas and 30 percent from oil. The remaining sources of energy supplies were 12.7 percent hydro-electricity and 6.5 percent nuclear. The government was actively pursuing the operators of these new discoveries for a fast track development of fields allocated to their companies. That the gas fields production has added about 1 billion cubic feet daily. According to the state minister Pakistan meets 50 percent of total energy needs from indigenous natural gas, however domestic oil production falls much short of oil requirement.

GS-NOPEC - seismic surveys in Russia

July 25, 2005. TGS-NOPEC Geophysical Company ("TGS") and partners will initiate two new seismic programs offshore Russia beginning in August. In the Sea of Okhotsk near Sakhalin Island, TGS and partner Dalmorneftegeofizika ("DMNG") will acquire 8,000 kilometers of multi-client 2D seismic data. The new program will infill the companies' pre-existing seismic grid in the region and extend the program into the Sakhalin 6 area for the first time. In the Barents Sea, TGS and partner New Field Ventures Limited will acquire 7,000 kilometers of multi-client 2D seismic data. Both the Sea of Okhotsk and Barents Sea programs are highly prefunded by industry. Final data on both surveys is expected to be available by year end.

arathon oil discovery on Angola block 31

July 25, 2005. Marathon Oil Corporation and its subsidiary, Marathon International Petroleum Angola Block 31 Limited, has participated in the seventh deepwater discovery on Block 31 offshore Angola. The Juno-1 discovery was drilled in the southeastern part of Block 31 approximately 60 kilometers (36 miles) southeast of the planned Northeast Development Area where four previous discoveries were made (Plutao, Saturno, Marte and Venus). The Juno-1 discovery well is located approximately 165 kilometers (103 miles) off the Angolan coast in 1,601 meters (5,253 feet) of water. The well was drilled to a total depth of 3,200 meters (10,499 feet) and tested at a mechanically restricted rate of 2,676 barrels of oil per day through a 28/64 inch choke. The concessionaire of Block 31 is Sonangol, Angola's state-owned oil company. Marathon holds a 10 percent interest in Block 31, along with the operator BP Exploration Angola with 26.67 percent, Sonangol, E.P. with 20 percent, Esso Exploration and Production Angola (Block 31) Limited with 25 percent, Statoil Angola A.S. with 13.33 percent and TEPA (Block 31) Ltd. (a member of the TOTAL group) with 5 percent.

oodside petroleum raises estimate for 2005 oil, gas production

July 20, 2005. Woodside Petroleum Ltd., Australia's second-largest oil and gas producer, raised its estimate for this year's production after output increased 11 percent in the second quarter. Output for 2005 is expected to be equivalent to at least 58 million barrels of oil, up from an earlier estimate of about 56 million. Sales in the three months ended June 30 surged 40 percent, helping boost first-half sales by 30 percent to a record a$1.23 billion ($925 million). Woodside, 34 percent-owned by Royal Dutch Shell Plc, is aiming to more than double output to the equivalent of 120 million barrels of oil by 2009. Its first U.S. project is due to start this year, followed by its first Mauritanian project early next year. Woodside shares had their biggest gain in two weeks.

ehran refinery to increase feedstock by 7,000 b/d

July 25, 2005. Eliminating furnace recycle at atmospheric distillation unit of the refinery its feedstock will increase by 7,000 barrels per day crude. The feedstock hike will fetch the refinery and added value of up to $1.5 million per year. Based on studies, eliminating furnace recycle path will remove limitations for performance of the furnace. Tehran refinery processes 252,000 barrels crude per day to produce 44,500 barrels gasoline, 9,500 barrels liquefied gas, 40,000 barrels engine oil, 5,000 barrels plane fuel, 31,000 barrels kerosene, 75,000 barrels diesel, 12,000 barrels unprocessed oil, 53,000 barrels fuel oil, and 10,000 barrels pitch.

PIC eyes big refinery stake

July 23, 2005. UAE, together with two new Taiwanese partners, are in talks to join a group of five shareholders seeking to acquire a major stake of Chinese Petroleum Corp.'s (CPC) proposed refinery and petrochemical complex in southwest Taiwan, which would change the size of stakes held by the current investors. The project would be further delayed as investors renegotiate their stakes in the $11.6 billion project. The 300,000 barrel-per-day (b/d) oil refining and 1.2 million tonne-per-year (tpy) naphtha cracker project at Taixi in Yunlin County, slated to replace an ageing complex in the south by 2014, had been stalled by land issues and protests from green groups. The UAE, represented by government-linked foreign investment arm International Petroleum Investment Co. (IPIC), would invest $2.4 billion, which would translate to a 20.7 per cent stake. Other new investors could include a local petrochemical producer, USI Far East Corporation, and a Taiwanese investment firm. CPC aims to use the Taixi project to replace its 270,000-b/d refinery and 500,000-tpy No.5 cracker at Kaohsiung, while the other partners, who are largely petrochemical producers, want to secure cheap feedstock supplies. CPC recently scrapped its plan to expand the capacity of Kaohsiung's No.5 cracker by 100,000 tpy in 2006 due to objections from the local government.

uwait's new oil refinery to cost $6bn

July 21, 2005. Kuwait has raised the cost of its new oil refinery to more than 1.85 billion dinars ($6.3bn) to increase the capacity of the planned facility. The increase is aimed at raising capacity to more than 600,000 barrels per day (b/d) from the initial 460,000 b/d and to allow the use of state-of-the-art technology. Another reason for the rise is the recent increase in the prices of raw materials to be used in the construction of the refinery, the decision on the new cost was taken by Kuwait's Supreme Petroleum Council (SPC), the emirate's highest authority on oil affairs. When the decision to build a new refinery was first taken several years ago, the initial cost was put at $3.4bn.

The giant project, planned to be completed in early 2010, will be handed to at least three contractors. Kuwait currently has three refineries at Al Ahmadi, Mina Abdullah and Shuaiba, all in the emirate's southern region, which have a combined refining capacity of 915,000 b/d. KNPC plans to modernise the first two refineries at an estimated cost of $3bn and the project is slated to complete in early 2011. Once the new refinery and the upgrade project are completed, KNPC plans to shut down the Shuaiba refinery. This will leave Kuwait with three refineries producing a capacity of more than 1.2 million b/d.

yria to build new refineries and increase oil production

July 20, 2005. Syria ‘s interest to mount petroleum and mineral resources production as well oil refining by building new refineries to get a strategic role in this regard. This is to get Syria a strategic role in light of its geographical site by producing oil derivatives even if that needs to import raw oil, Syria would become an attractive country for investments in the field of oil and gas to international companies and the need to make feasibility study to achieve that. Since peaking at 590,000 barrels per day (bbl/d) in 1996, Syria's oil output has fallen, to an estimated 535,000 bbl/d in 2003, as older fields, especially the large Jebisseh field discovered in 1968, have reached maturity. Syrian oil production is expected to continue its decline over the next several years, while consumption rises, leading to a reduction in Syrian net oil exports. Sryia's two refineries are located at Banias o the Syrian coast and Homs in central Syrai. Total current production of these refineries is 239,865bbl a day and a 107,140 bbl per day respectively. Syria is planning to reconstruct a third refinery at Deir al-Zour in the Northeast.

he first oil refinery in Moldova

July 19, 2005. The investments of the AS Petrol Moldova Company into the construction of the first oil refinery in Moldova constituted 50 million lei ($4 million). The oil refinery, opened on July 15, 2005 was set up on the basis of the Comrat oil base, which is the largest one in the south of Moldova. The oil refinery can process yearly 30 thousand tons of the Moldovan oil, excavated by the Redeco Company in the vicinity of the Village of Valeni of the Cahul region. It is planned that within a year and a half the volume of the processed crude oil will be increased up to 150-200 thousand tons a year with taking into consideration the expected increase in the oil production on this oil deposit. The oil refinery in Cahul will produce gasoline, diesel and chimney fuel and black oil. According to the experts, the fuel and lubricants, produced by the oil refinery will cover 15-20per cent of the Moldova’s demand. The American Company Redeco, working on the Valeni oil deposit has an exclusive right for 20 years (up to 2015). According to the estimates by the Company experts, the deposit contains 2-3 million tons of oil.

ran, kraine ink ink MOU

July 26, 2005. Iran and Ukraine inked a memorandum of understanding on export of 30 billion cubic meters of natural gas to Ukraine. The Ukrainian counterpart has expressed his country’s interest in importing an annual 20 to 30 billion cubic meters of natural gas from Iran for domestic use. Ukraine has also agreed to allow Iran using its infrastructures for the transit of 20 billion cubic meters of natural gas to Europe. Both sides have as well decided to invite the en route countries (Armenia, Georgia, and Russia) to establish a five-sided committee for following up study, design and construction of this project. The contract parties are said to be National Iranian Gas Export Company and Ukrainian Oil and Gas Company. Given the existing problems on Iran’s gas export to Europe via Turkey, the Ukrainian alternative opens up new horizon that is of important export consideration for Iran. About 128 billion cubic meters of natural gas from Russia, Turkmenistan and other countries go through Ukrainian pipelines per year, meeting about 50 percent of European demand. Ukraine receives millions in transit revenues annually from shipping Russian natural gas to Europe through its pipelines. Given the growing demand for gas in Europe, Tehran should ship gas through Ukrainian pipelines in the future.

raham awarded $2 mn oil refinery contract

July 25, 2005. Graham Corporation a global designer, manufacturer, and supplier of ejectors, pumps, condensers, vacuum systems and heat exchangers for the oil refining, petrochemical and power generation industries, today announced it was awarded a contract valued at over $2 million for an ejector system to be installed in Petroleos Mexicanos' (PEMEX) Minatitlan Refinery. Shipment of the equipment is scheduled for Graham's fourth fiscal quarter ending March 31, 2006. The ejector system is part of a planned refinery upgrade to boost this facility's capacity for processing heavy sour crude, a lower cost raw material than higher priced sweet crude oil, as well as produce increased quantities of high-octane, cleaner burning fuels to meet stricter environmental standards.

ran to pipe gas to oil field shared with UAE

July 23, 2005. By September, Iran will have transferred gas from Salman oil field in southern Hormuzgan province to Mobarak oil field, shared with the UAE, through southern Sirri Island once a project to lay 30-inch overland pipelines with a total length of 220 kilometers is completed. The 78 percent completed project will cost $ 160 million and become operational in next week going over 74 kilometers of land. The project, "the biggest pipeline project in Iranian territorial waters, are under implementation entirely by Iranian experts... once the pipeline project is completed, operations will start to install new platforms in the region.

gypt to supply Palestinians with gas

July 23, 2005. Egypt and the Palestinian Authority have signed an agreement to study building a pipeline to supply Palestinians with natural gas. The accord deals with several technical and economic studies, including providing natural gas to Gaza's power plant and later setting up a pipeline between al-Arish (in Egypt's northern Sinai Peninsula) and Gaza for a start, following by several other Palestinian areas. This agreement embodies a new step towards strengthening cooperation between the two sides with a view to improving the Palestinian Authority's energy distribution, which will reflect well on the Palestinian living standards. Total Palestinian gas reserves off the coast of the Gaza Strip are estimated at around 40 billion cubic meters (1.4 trillion cubic feet).

nadarko strikes joint venture with ndonesian E&P firm

July 26, 2005. Anadarko Petroleum Corp. has significantly increased its access to exploration acreage in Indonesia through a joint venture agreement with Medco Energi International, Indonesia's largest independent exploration and Production Company. Under the agreement, Houston-based Anadarko subsidiaries are gaining access to 13 production sharing contracts totaling 7.8 million acres onshore and offshore Sumatra, Kalimantan, Sulawesi, Java and Papua. Anadarko has committed to a three-year work program to fund exploration activities at a cost of $80 million. Anadarko has the opportunity to earn up to a 40 percent interest in each production sharing contract where a successful exploration well is drilled at Anadarko's cost and a plan of development is approved.

il import bill higher by $646 million in Pak

July 26 2005. The oil import bill in the last fiscal year ended June 30 registered an increase of 20 percent to $3.812 billion because of higher oil prices and consumption in the country following expansion in economy. The import of oil is rising due to increase in consumption and higher oil prices.The import of petroleum products in the last fiscal year rose 23 percent to $1.723 billion as against $1.401 billion of the preceding year. The off-take of petroleum products increased by 27 percent to 5.989 million tonnes, up from 5.412 million tonnes of the previous year. Petroleum crude arrival rose 18 percent to $2.089 billion as against $1.765 billion after petroleum crude quantity registered an increase of 22 percent to 8.745 million tonnes as against 7.891 million tonnes.

According to an analyst the imports of oil are not higher as compared to current rally in the world oil markets as most of the inventories are booked in advance. For petroleum products the shipments are booked for about a month in advance and for petroleum crude for about three months, which hints that the oil import bill would be much higher in the current fiscal year. The oil import in the running fiscal year would easily cross the $4.2 billion mark as the prices are nearly 35 to 45 percent higher compared to those a year ago. Moreover, as the economy is growing and more textile units have been set up last year, the oil consumption in the country is on the rise and oil bill would go up widening the trade deficit. The trade deficit in the last fiscal year was higher by $6.2 billion because of $1.6 billion jump in the machinery group, $800 million in agricultural and other chemicals group and $700 million in oil bill.

inopec to invest in ndonesian oil refinery

July 25, 2005. China Petroleum & Chemical Corp., Asia's largest oil processor, plans to invest in Indonesia's proposed 10th oil refinery. Indonesia will sign a memorandum of understanding with Sinopec. The refinery in Tuban in east Java will have the capacity to process as much as 200,000 barrels of oil a day. The refinery will process crude oil pumped from fields operated by Exxon Mobil Corp. and Santos Ltd. Indonesia's proposed refinery plan follows the resolution of a four-year dispute between Exxon Mobil Corp. and the government over sharing revenue from Cepu, the Southeast Asian nation's largest untapped oil field. Cepu is estimated to contain 500 million barrels of oil and would add about 18 percent to Indonesia's output at a time when global crude prices have risen to records. Sinopec is increasing exploration and buying overseas assets to cut the nation's reliance on fuel imports. China, the largest energy user after the U.S., may use 9.7 percent more crude oil, chemicals and fuel this year, China Petroleum & Chemical Corp.

hina raises oil prices

July 24, 2005.  China increased the price of gasoline and diesel for the second time this year, two days after revaluing the yuan to allow it to appreciate by 2.1 per cent. In order to guarantee the supply of domestic oil and improve energy efficiency, China decided to raise the price. Effective price of gasoline rose by 300 yuan (37 dollars), while diesel went up by 250 yuan a ton. Retail prices were expected to rise accordingly. The price of aviation oil was also lifted 300 yuan a ton. China is now the world’s second largest oil consumer after the United States and its soaring demand over the past two years have roiled global oil markets.

ustralia permits new petroleum exploration

July 22, 2005. Six new petroleum exploration permits for the Carnarvon Basin in north-west Western Australia. The Western Australian permits, along with two in Tasmania, will see an additional $160 million invested in offshore exploration over the next six years. The Carnarvon Basin is believed to hold great potential for the exploration companies Chevron Texaco and Shell. Australia needs to continue to build on those resources because Australia seeing very strong demand growth right around the world, particularly in LNG, and this gives Australia an opportunity not only to export the resources, already discovered, but ensure that in the 25 to 50-year time frame have further resources to expand the market opportunities.

S FERC approved Oxy's $450 mln Texas LNG terminal

July 21, 2005. The Federal Energy Regulatory Commission approved Occidental Petroleum's plan for a $450 million liquefied natural gas terminal and associated pipeline in Texas. The terminal, to be located near Corpus Christi, will be able to unload up to 140 LNG tankers a year and deliver about 1 billion cubic feet of natural gas a day to utilities, industrial users and other businesses. The project includes a 26-mile (42 km) pipeline to connect the terminal to a nearby major pipeline system.  The project also plans to use waste heat from Occidental's existing chemical facility to vaporize the LNG. Using this heat source for the vaporization process will save an estimated 16 million cubic feet of gas per day that otherwise would have to be burned to gasify LNG.

ussia raises oil shipments

July 21, 2005. Russia increased oil shipments to China by 28 per cent in the first half of 2005, Russia's state-controlled railway said as China continues to gobble up energy supplies from its giant neighbour. The company shipped 3.75 million tonnes of oil to China between January and June. China's burgeoning economy has made it a huge customer for Russian oil, which it currently receives only by rail. Earlier this month, China said it hopes to increase oil imports by rail from Russia by 50pc next year to 15 million tonnes. Beijing is pressing Moscow to make a final decision for routing on a new eastern pipeline that would eventually carry 1.6m barrels per day and markedly increase exports. Both Japan and China have tried to persuade Russia to give them priority as the pipeline's 4,100km route is planned. Russia last year agreed the pipeline should go to Perevoznaya on the Pacific coast - an apparent victory for Japan, which wanted to be the first in line for Siberian crude. But in April, Moscow signed off on the project's $6.5bn (5.43bn euros) first stage, which will carry 600,000 barrels daily to Skovorodino, just 70km from the Chinese border.

ran to invest $17 bn to up refining capacity by 68per cent

July 21, 2005. Iran plans to invest $17 billion to boost its refining capacity by more than two-thirds within the next 10 years, as the No. 2 producer in the Organization of Petroleum Exporting Countries tries to curb fuel imports. Production of gasoline, diesel, kerosene, fuel oil and liquefied gas should rise to 370 million liters a day by 2015 from 220 million liters a day at present. Out of the $17 billion needed to finance the output expansion, $12 billion will be in the form of ‘‘foreign finance,’’ Iran, which imports more than a third of its gasoline, has said imports will rise 50 percent to a record $4.5 billion this year because the oil-rich Middle Eastern country has failed to ease subsidies, cut waste and boost refining capacity. Iran holds the world’s second-largest reserves of oil and gas. Petrol is subsidized in Iran, with a liter of gasoline costing consumers about 800 Iranian rials (9 U.S. cents). The parliament earlier this year rejected a plan to gradually remove subsidies. It may ration petrol instead, as recommended by the government. Iran’s oil-export revenue will rise by $4.5 billion to $36 billion in 2005.

akistan plays spoilsport in Iran gas pipeline plans

July 19, 2005. Pakistan has opposed India’s plan to buy gas through the proposed $7.4 billion Iran-Pakistan-India pipeline at Rajasthan border directly from Iran, saying Tehran cannot own the gas in Pakistani territory. To ensure safe delivery of gas and limiting its exposure in case of disruptions, New Delhi wanted Iran to own the gas till the delivery point at Pakistan and India border. However, Pakistan at the 1st joint working group meeting here on July 12-13 made it clear that involvement of National Iranian Gas Export Co (the gas exporting firm) in Pakistan territory will be difficult. At the meeting, India suggested a 2,135-km route for the pipeline along the thickly populated coastal areas in Pakistan so as to minimise the risk of sabotage and wanted the line to be laid by either NIGEC or a consortium of Iranian, Pakistani, Indian and international companies. But it wanted NIGEC to hold the gas throughout the 890-km pipeline stretch in Pakistan - from Gwadar on Iran-Pak border to Umarkot - and deliver it directly at Barmer district border in Rajasthan so that New Delhi’s obligations remained with NIGEC alone. Pakistan wanted India and Pakistan to buy gas from NIGEC in Iran and use the pipeline to be owned and operated by NIGEC/international firms/Indian and Pakistani firms for transporting the gas at respective delivery points. Alternately, the pipeline consortium can purchase gas from NIGEC at Assaluyah, the landfall point of gas from South Pars gas field in Persian Gulf, and sell the same to India and Pakistan at respective delivery points. India wants the point from where Pakistan is to draw its share of some 60 million standard cubic meters per day of Iranian gas, to be closer to Indo-Pak border.

POWER

ydro-electric power for Windsor

July 25, 2005. The Queen is to go "green" after full planning permission was granted to run Windsor Castle on hydro-electric power. The innovative £1m four-turbine energy-efficient plant will be built at Romney Weir on the River Thames. It will generate 200 kilowatts which will be used to power around a third of Windsor, the largest occupied castle in the world. The electricity from the new plant will be fed straight into the Queen's Berkshire Castle and not into the local grid. The plant will be the biggest of its kind in the south of England.

AARC mulls common power grid

July 24, 2005. Aiming to reach a consensus for setting up a common power grid in the region, home to one-fourth population of the world, the energy officials of SAARC countries will sit on July 27 in Delhi. DESCO will lead the Bangladesh team to the meet. The SAARC officials have also prepared this proposal which would be put forward to the heads of state and government of the region who are scheduled to meet in Dhaka from 12 to 13 November during SAARC summit.

The meet titled ‘Meeting to explore to terms of reference for study on energy trade in SAARC region’ will discuss the scope of survey for the availability of surplus power and power demand including load forecast for next 10-15 years for each of the member country. The other objectives are:

·          Study of present transmission network and augmentation plan keeping in view the intra-country and inter-country exchange of power. Techno-economic evaluation of various transmission alternatives including technology options (synchronous, asynchronous, radial etc) for inter-country exchange of power by carrying out requisite power system studies.

·          Impact/effect on socio-political aspect for inter-country exchange of power.

·          Benefit analysis for different options of exchange of power between different member countries including the evaluation of different generation options, quantum of power and transmission technology.

·          Case study (4-5) of international practices for inter-country transmission, interconnection, their experience and lessons learnt.

·          Study of the present institutional arrangements of member countries and proposal for suitable institutional mechanism for inter-country exchanges of power.

·          Evaluation of long-term commercial arrangements including generation and transmission tariff and payment security mechanism.

·          Study to develop the legal arrangements for implementation and operation of inter-country exchanges of power.

·          Methodology of implementation including financial arrangement and ownership of assets and trade of oil and natural gas.

Earlier, the South Asian Regional Initiatives (SARI), a forum of four countries - Bangladesh, Bhutan, Nepal and India - wanted to create 80,000 MW power reserve to ensure a dependable supply of electricity to the member nations. It was learnt that the SARI's objective could not be fulfilled due to India's non-cooperation. India has shown less interest in the SARI project as it wants a bilateral grid transmission line with Bangladesh. This will connect the national grid line of Bangladesh with India's at Krishnanagar point of West Bengal.

ower plant to be sold – ahrain

July 20, 2005. Bahrain has taken a major step to privatise the Hidd power and water station. It will soon sell the project to an international group, which has successfully developed at least two Independent Power Projects (IPPs). The government has started the process of tendering the transfer of the existing Hidd Phase I and Hidd Phase II assets, which currently generate about 1,000 MW of electricity and 30 million gallons a day (MIGD) of water, to the private sector. The company bidding for the project will also be responsible for the construction of a new 60 MIGD desalination unit. The project will consist of transferring ownership; operating and maintaining the 1,000 MW power generating station, in addition to the enhancement, design and construction of the water plant to the desired 90 MIGD by 2008. Tenders are being announced for the implementation of an Independent Power and Water Plant (IPWP) because of the government decision to privatise all new power generation and water production facilities.

enerators turn to coal as cost of natural gas soars

July 25, 2005. The high cost of natural gas is forcing electricity generators to burn more coal in an attempt to keep a lid on power prices. A doubling of the price of summer gas over the past two years has encouraged generators to switch back to cheaper coal, but the cost savings come at an environmental price. Powergen, Britain’s second-biggest generator said that it was using 20 per cent more coal than last summer, taking advantage of the widening gap between the costs of the two fuels. Last week the company gave in to the cost pressure of rising wholesale fuel prices, introducing steep increases in gas and electricity tariffs for its residential customers. Figures from the Department of Trade and Industry show a significant shift away from gas in the winter months. In the first quarter of 2005, major power producers burned 4.2 per cent more coal than in the same period in 2004. Over the same period, when overall fuel consumption remained static, there was an 8 per cent decline in gas consumption.

Coal was once the UK’s most important source of fuel for electricity generation, but is in sharp decline, condemned for its high sulphur and carbon dioxide emissions. The Large Combustion Plant Directive, a European Union environmental law, will between 2008 and 2015 progressively force the closure of coal-fired power stations that lack flue-gas desulphurisation units, equipment that cuts the emission of sulphur dioxide. According to Powergen, the cost of equipping old generators with such technology is huge; the company spent about £300 million refurbishing Radcliffe, a coal-fired generator in Nottinghamshire. Instead, the company expects that much of the UK’s coal-based electricity generation will be closed over the next ten to 15 years.

S mulls global commercial consortium to control N-fuel

July 22, 2005. The US energy department envisions a multinational ‘commercial consortium’ backed by governments of a group of nuclear supplier nations to manage and control nuclear fuel recycling, including uranium enrichment. Russia and the US reached an agreement over ‘liability protection’ for the US government and its officials - the major stumbling block for implementing the programmes agreed on five years ago to assist Russia in disposing of its excess plutonium totalling 68 tons for nuclear weapons.

The US intends to seek additional contributions from Japan and other countries for the construction worth $1.2 billion of a plutonium disposition plant. As for nuclear fuel recycling the US is opposed to an international management sought by the International Atomic Energy Agency. The plan puts eight to 10 nuclear facilities, including Japan’s reprocessing facility in Rokkasho, under international management to work as the respective region’s core facility to produce, provide and reprocess nuclear fuel and disposing of nuclear waste.

hipping rates for coal, iron ore slump to lowest in two years

July 21, 2005. The cost of shipping commodities such as coal and iron ore slumped to the lowest in more than two years as the world fleet of vessels expanded and as China ended its decade-old fixed exchange rate to the dollar. The Baltic Dry Index, a measure of freight rates for different-size ships carrying so-called dry-bulk cargoes on global trade routes, fell 68 points to 2133, the lowest since July 3 2003, according to London's Baltic Exchange. The 3 percent drop was the biggest since April 27. The global capacity of so-called dry-bulk carriers was at 333.6 million deadweight metric tons at the end of June, up 8 percent from a year ago, according to Drewry Shipping. China, the biggest steelmaker and user, will strengthen the yuan by 2.1 percent to 8.11 per dollar. A stronger yuan will boost the purchasing power of Chinese buyers of commodities such as iron ore, according to Oslo-based shipbroker Lorentzen & Stemoco. The country's ore imports may rise 23 percent this year to 255 million metric tons, Lorentzen & Stemoco. Freight rates for Capesizes shipping coal from the Richards Bay coal terminal in South Africa, the world's second-biggest coal-export port, to Europe fell 1.2 percent, or 12 cents, to $10.46 a ton, according to the Baltic Exchange. South Africa is the world's fourth-largest exporter of coal used in power plants, after Australia, Indonesia and China.

S approved fuel for all nuclear plants

July 20, 2005. India will able to get fuel not only for Tarapore but for any other nuclear reactor on the same basis as any nuclear weapon power. US has made a commitment to cooperate with India on nuclear energy, and New Delhi, on its part is making a reciprocal commitment to place civilian nuclear reactors and not military nuclear reactors under IAEA safeguards. The US recognised how much stability of the world, in fact, hinged upon the role India could play and Washington was willing to partner New Delhi in that quest.

HG in TN establishes biogas plant for power generation

July 23, 2005. The Amma Women self help group in Melapatti village in Theni district has successfully launched a 10-cubic-metre capacity biogas plant for generation of power, 3.5 kW per hour, using night soil. The Deenabandu model biogas plant has been constructed at a cost of Rs 190,000 with a subsidy of Rs 50,000 from the Ministry of Non-Conventional Energy Sources. The facility has come up using the sanitary complex in the village maintained by the group. The facility is being utilised to operate one hp motor for a maximum five hours and three hp compressors for pumping water for the sanitary complex and burn lamps in 10 rooms. The complex is being used by 200 persons in a day. With this, the returning electricity expenses for the panchayat have been eliminated.

 rice mill`s power plan

July 22, 2005. Luxmi Overseas Industries Ltd, one of the largest vertically integrated non-basmati rice mills of India, is the first company in the country to start power generation from rice husk. The company has set up a 30-MW power plant at the existing premises at Khamano near Chandigarh, which will be commissioned by September. The power generation will be in two phases, 15 MW in September and remaining 15 MW in December. The sale of husk fetched the firm about Rs 25 crore (Rs 250 mn) per annum and husk would produce power worth Rs 75 crore (Rs 750 bn) in a year. Luxmi Overseas Industries will invest Rs 120 crore (Rs 1.20 bn) in power generation projects in 2005-06. The company has drawn up the roadmap for the next three years, under which Rs 320 crore (Rs 3.20 bn) more will be invested to expand the power projects. The company is exploring power project possibilities in Ludhiana, Patiala, Jalandhar, Moga and Sangrur.

mrit eyes funds for green power

July 21, 2005. Kolkata-based Amrit Projects Limited (APL) would be working to secure non-refundable financial support from the Germany-based United Nations Framework Convention on Climate Change (UNFCCC). It would be eligible for funding if APL achieved the required carbon rating at its biomass power unit at Bankati, Bankura, being built now. Ernst & Young, the UNFCCC-appointed agency in India, will be conducting carbon audit at the 10 MW biomass power unit regarding grant of non-refundable financial support of Rs 14 crore (Rs 140 mn) if the unit achieved the required carbon rating. APL would set up two more biomass power projects in fiscal 2006-07. The state has laid the foundation stone of the 10 MW biomass power project, the first of its kind in the country of this capacity. The investment for this project is estimated to be around Rs 44 crore (Rs 440 mn). The commencement of commercial production is expected to begin in July 2006. Rice husk, the raw material for the biomass power plant, would be procured from rice mills based in Burdwan, Hooghly and Bankura. APL has also acquired 20 acres of land with an investment of around Rs 1 crore (Rs 10 mn) where APL shall be growing plants which could be used as alternative source of raw material for biomass power plant.

esalination plant to use wind power - ustralia

July 26, 2005. Giant wind turbines will be used to power Perth's new $387 million desalination plant. The Western Australian Government has confirmed 48 wind turbines, operated as part of the Emu Downs wind farm, north of Perth, will supply power to the new plant at Kwinana. The use of wind power will help the Government reach renewable energy targets. Emu Downs wind farm will be located about 30 kilometres east of Cervantes, with construction to start later this year. When it is operational, the desalination plant is expected to boost annual water supplies by 45 gigalitres.

ew energy capital provides equity for new iodiesel plant

July 26, 2005. New Energy Capital Corp. participated in the financing of the first large-scale biodiesel production plant in the Northeast/Mid Atlantic region. Mid Atlantic Biodiesel Company, LLC broke ground this month on a five million gallon per year facility in Clayton, Delaware that will produce biodiesel from virgin soy bean oil as well as waste vegetable oils and animal fats. Biodiesel is used in existing diesel engines and blended with home heating oil. It is distributed via current fueling infrastructure. By replacing petroleum-based diesel and home heating oil, biodiesel lowers air pollution and greenhouse gas emissions, reduces U.S. oil dependence, and stimulates the nation's farm economy.

New Energy Capital provided equity capital, along with other investors, for the $10 million project and worked closely with the developer, Rural Enterprise Management Company (REMCO), LLC, to secure financing. Greater Atlantic Bank of Reston, Virginia provided a loan for the facility. The U.S. Department of Agriculture provided a loan guarantee and grant; the State of Delaware also provided financial support.

Fagen Inc., of Granite Falls, Minnesota, a leading builder of biofuels plants, will construct the facility. Plant design and process technology will be supplied by De Smet Ballestra, a world leader in oil and fats technology that has built large biodiesel plants in Europe. The facility will be operated by REMCO. World Energy Alternatives, of Chelsea, MA, the nation's largest biodiesel marketer, will sell the biodiesel.

enya sugar firm to supply power to national grid

July 20, 2005. Mumias Sugar Company starts supplying electricity to the national grid this morning. The miller would supply two MW of electricity to the grid and start selling electrical energy to KPLC. Mumias has a power generating facility with an output capacity of 16.05 MW. The company consumes 14 MW of power for its operations, leaving an excess of two MW. Mumias and KPLC entered into an electrical energy purchase agreement on May 24. The pact enables the miller to supply the two MW of power a day to the national grid for a period of 48 weeks.

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