Energy Hierarchy

he booming oil consumption growth in Asia and Asia’s increasing dependence on supplies from the Middle East is said to be developing into the developed world’s worst nightmare in the form of an ‘arms for oil’ coalition.  More rational views have argued that energy related stress in Asia would be relieved through markets and investment.  Mobilizing massive investment needs that are estimated to exceed $ 1 trillion is expected to displace competition for hydrocarbon real estate.  In this view, commerce and market forces would shape relationships between nations rather than ideological or nationalistic sentiments. 

Developing countries have followed the Western model of development. Technology transfer is skewed toward hard technology and industrial development. The dependency of developing countries on developed countries also takes other forms.    Increase in the price of oil makes developing countries increasingly dependent on developed countries for additional credit to pay for petroleum products.   Countries with oil and gas resources remain dependent on western capital and technologies for developing their resources. 

Despite the rule of the market, the system of international interdependencies thus remains one of hierarchical dependence, one of asymmetric vulnerability, i.e., unequal ability of the interacting units to inflict damage on one another, therefore making the welfare of some units dependent on the will of others. Nuclear energy is, of course, the ultimate example. Developed societies hold most of the cards in nuclear materials and technology and have some well-grounded fears regarding nuclear proliferation.   But the developed countries (or, more accurately, the multi-nationals in the developed countries) desperately want markets for these and other hard technologies in the developing world. Thus, the developing countries that want to go the nuclear energy route will probably be able to do so, but in doing so will have to increase their dependence on and dominance by the developed world.

Critics of nuclear energy point out not only its weapon capability and environmental risks in the present situation; they also point to the way that the spread of nuclear energy to developing countries will tend inevitably to increase these risks while simultaneously, in trying to avoid the risks, reinforce international inequities because of the hierarchical relations necessary for nuclear monitoring and control. Nuclear energy, consequently, is the ultimate symbol of dependency and therefore, the main target renewable energy advocates.

Environmentalists in many developing countries attempt to eliminate this unjust system of asymmetric vulnerability through self-sufficiency.   They have highlighted this concern demonstrating that a system of international interdependence based on hard energy technologies that exploit fossil fuels has created ecosystem vulnerability, i.e., one that has a high potential for damage.   They have used this argument to promote soft energy technologies such as solar, wind and small hydropower. They have argued that these relatively simple, small-scale technologies that convert renewable energy sources to useful forms of energy are the only ones that are affordable and capable of providing a meaningful, ecologically sustainable quality of life for all persons.

Fundamental to the soft energy path notion is an emphasis on the decentralization of energy supply. This means increased energy self-sufficiency for households, communities, and firms, a self-sufficiency that eventually aggregates to national energy self-sufficiency. This, in turn, implies less vulnerability of energy supplies to outside actors at all levels of social organization, i.e. less energy interdependence and, for developing countries, development without dependency.   This ideal situation however goes against the grain of everything that has improved human welfare: specialization in resource development and in the division of labour, structural differentiation and interdependence, economies of scale, the substitution of energy for labour. 

The benefits of international interdependence may or may not be zero-sum for the interacting parties. Interdependencies create mutual benefits, even if the benefits are asymmetric. Developing nations should ask whether in their particular case the advantages of interdependence outweigh whatever disadvantages may result from dependency.

ITER: Global Energy Solution

The European Union – along with six other countries including India – has inked an agreement on the potential of fusion as an energy source.

ndia along with six other partners, EU, Russia, China, Japan, South Korea, and the Untied States has made history by signing in Brussels the international agreement for ITER (International Thermo nuclear Experience Reactor). ITER, a project to demonstrate the potential of fusion as an energy source, will be the world’s biggest scientific collaboration of its kind and involve countries representing over half the world’s population.

The 7 Parties engaged in the project – including India and EU – met in Brussels on 24 May, 2006 to confirm the agreements negotiated over the past year, following the decision to select the site for the construction and operation of ITER in Europe at Cadarache in southern France, The ITER project is an international collaborative research project on an unprecedented scale, which will reproduce the physical  - fusion- that occurs in the sun and stars.

 Fusion has several attractions as a large-scale energy source; its basic fuels are abundant and available everywhere; no greenhouse gas emission; no transportation of radio-active materials; no possibility of “meltdown” or “runway reactions”; no long-lasting radioactive waste to be passed on to future generations.

“This is a truly crucial moment, for the ITER project and for global scientific co-operation in general” said European Science and Research Commissioner Janez Potocnik. “Together we are forging a new model for large-scale global scientific and technical co-operation. We are sending an important message about seeing the value in working together to address our common challenges.”

Since the decision in June 2005 to locate the project at Cadarache the 7 ITER Parties have been working together in a spirit of mutual confidence and co-operation, and have made remarkable progress towards the common objective of making ITER a reality as the next step in the path to developing fusion as an attractive, long-term option for supplying the energy needs of the world.

The initialling of the agreements brings to an end a long and complex negotiation process. Now each partner will confirm the adoption of the agreement according to their national laws and practice. (In the EU, this means that the Council of Ministers will be asked to adopt a decision endorsing the agreement. The EU is representing by the EURATOM Community, within which Switzerland has all the same rights and obligations as EU Member States). It is hoped that all parties will have completed the process by the end of 2006, which, in tandem with the completion of the process of gaining all necessary construction permits at the site, will mean actual construction can start in 2007.

“This signifies the start of a major international effort towards developing an energy technology which provides virtually limitless energy for supporting global development,” Dr. Anil Kakodkar, Secretary, Department of Atomic Energy and Chairman, Atomic Energy Commission, said after initialling the agreement on India’s behalf.

“Energy is an issue for the whole world but it is much more crucial for the developing world, particularly for India which is one-sixth of the world’s population,” he said. According to Kadodkar the “ program has potential to provide access to a much larger quantum of energy,” for India’s galloping energy needs. “Even if we are talking about 5000 kiowatt hour per capita per year which is nothing compared to the per capita energy consumption of Europe, even this very modest target would mean enhancing the electricity consumption in India by a factor of 11 or 12”.

India is contributing 10% in the form of manufacturing equipment to the ITER Project, situated in Cadarache, France, The ITER Project is expected to produce nuclear fusion energy (fusion that occurs in the sun and the stars) in conditions that will demonstrate the scientific and technological feasibility of fusion as an energy source.

Dr. P.K. Kaw, Director of the Institute for Plasma Research who was also representing the Indian side in Brussels said that India based industries would manufacture components for ITER such as the key configurations and high-tech heating sources and diagnostic equipments.

The ITER project is expected to start in 2007 and be completed in 2015 after which experiments will be commissioned and. After that we will have to design and develop demonstration conducted. “By 2025 we will have sustained fusion reactors which will eventually produce commercial power,” Kaw explained. The ITER project is expected to become a commercially viable reality in 2040 at the earliest.

Referring to India’s contribution, Kaw continued, “We also have access to the other 90 per cent of the work done elsewhere. This will get our scientists and engineers trained in those ways also. So it is hoped that by the end of the ITER Project our scientists and engineers will know how to make fusion reactors ourselves.” Dr. R.B. Grover, Director, Strategic Planning Group, Department of Atomic Energy stressed ITER’s significance, saying “this is scientific break-through for half the world.”

EU Commissioner for Science and Research Janez Potocnik told journalists, “We are making history in two ways. We have made a historical decision in the search of potential energy far the future and we have also make a historical decision about global cooperation the world has never seen until now.”

When asked about India’s rapport with its six other partners, Kaw replied, “The experience has been very rewarding and we have been welcomed with open arms. We have been given lots of support. Nothing was kept away from us.” India was the last member to join the ITER Project following the establishment of a joint EU-India energy panel set up to co-operate and address issues of energy security and alternative energy resources.

India and six other ITER partners together make up more than half of the word’s population. Every country besides that EU has contributed 10 per cent to the ITER Project while the EU will finance about 50 per cent of the project’s cost estimated to be euro 5 billion.

 

 

 

 

 

 

Source: Ministry of Petroleum and Natural Gas

 

NEWS BRIEF

OIL & GAS

IOC to rope in foreign partners for exploration under NELP-VI

September 1, 2006. India's largest refiner IndianOil seems to getting ready to participate in NELP-VI with a new strategy. Under NELP-V, it rode piggyback on Oil India Ltd (OIL), unsuccessfully bidding for minority stakes ranging between 15 and 25 per cent for all kinds of oil and gas exploration blocks, ranging from deep-waters to onshore. In NELP-VI, IOC will eye majority stake in only shallow water and on-land blocks. While its association with OIL will continue, the company is gearing up to rope in new foreign partners to impart the necessary technical as well as financial strength to the consortium.  The company had bid for six blocks including one in Krishna-Godavari deepwater, one shallow-water block in Cambay basin and four on-land blocks in Assam-Arakan basin, Rajasthan and Cambay. Excluding one one-shore block (CB-ONN-2003/2) where IOC (75 per cent) partnered with Exspan Exploration of Indonesia (25 per cent), the company was a minority partner of consortium with OIL also joined by GAIL, Zakros, Suntera and HPCL. None of the bids, however, were successful.

RIL hits more gas in KG

September 1, 2006. The company has struck gas in the cretaceous sedimentary basins of the KG block, which could translate to a quantum jump in reserves. Riding high on the latest discoveries, whose commerciality is being studied, the company is now drawing up a new development plan, which will double its production to 80 mmscmd from 40 mmscmd and will begin pumping gas from June ’08. The total gas production in the country today is 90 mmscmd. If RIL’s revised estimates on production bear fruit, India is set to double gas production in the next 22 months. It may be recalled that RIL’s partner Canada-based Niko Resources had recently put out a report where it had pegged the in-place reserves in RIL’s D6 blocks higher by 197 per cent to 35.4 trillion cubic feet. The recent finds by RIL may lead to higher reserves.

RIL’s earlier finds here have been in the shallow sedimentary basins which are relatively recent in origin. The latest gas discoveries in cretaceous sedimentary basins are similar to the ones found by Gujarat State Petroleum Corporation as they belong to older and deeper gas-bearing formations which normally yield a higher and sustained flow of gas. RIL had initially indicated a development cost of $2.6bn. However, high costs of rigs and equipment is now likely to impact the development costs. RIL, which will now have 80 mmscmd of gas at its disposal as against its earlier projection of 40 mmscmd will call for competitive bids to develop a market for the gas. Earlier, the company had planned to sell 12 mmscmd to NTPC and about 28 mmscmd of gas to ADAG’s Dadri project. However, RIL will now have to find new takers and is expected to go through a competitive bidding route to attract buyers for the gas.

DGH projects huge gas outflow from KG basin by 2011-12

August 31, 2006. The Directorate General of Hydrocarbons (DGH) has projected 134 million stand cubic metre per day (MMSCMD) of gas from new exploration licensing policy (NELP) blocks by 2011-12 in Krishna-Godavari basin. In its recent communication to the petroleum ministry, DGH has said the total gas availability of 134 MMSCMD by 2011-12 form NELP blocks were offered to Reliance Industries Ltd., (RIL) and Gujarat State Petroleum Corporation (GSPC) under different rounds of NELP global bidding rounds. The blocks from which the above gas would be available are operated under Production Sharing Contract (PSC), signed between the Centre and RIL and GSPC. As per the PSC, these companies/contractors are free to market the gas at arms’ length, at market driven prices. DGH has projected gas production of 40 MMSCMD in 2008-09 with progressive increase to 80 MMSCMD by 2011-12 in Dhirubhai field.

Essar Oil to start Vadinar refinery plant in Oct

September 5, 2006. Essar Oil is all set to kick-start its troubled refinery next month. The company will receive the first cargo of crude for its Vadinar refinery by the third week of September, while the second crude cargo would be imported by the end of the month.  The two initial cargoes of crude would launch the seven million-tonne capacity mother unit of Vadinar refinery during the second half of October.  The production capacity is expected to reach its full 10.5 million-tonne level by April 2007 according to the deadline set by the company.

Each tanker is carrying one million barrels of crude and the company will continue importing one or two tankers every month depending on the availability and preparedness of the mother unit or the first phase of the refinery.  Essar is expected to commission the fluid catalytic cracker (FCC) and a diesel hydro desulfurizer (DHDS) during the following couple of months.  Essar has also commissioned its utilities, which include a 120-MW captive combined cycle power plant.  The mother unit of the refinery would be commissioned during the second half of October with support facility. The first two parcels are sweet crude and the company is expected to continue to import sweet crude till the operation stabilises. 

Once the refinery reached its full capacity, Essar was expected to expand it to 14 million tonne. The refinery has been designed in such a way that removing bottlenecks would increase the capacity from 10.5 to 14 million tonne per annum.  Like Reliance Industries, Essar is also eyeing the export market. In fact, the FCC and DHDS plants have already been modified so as to be compliant with the cleaner Euro III and Euro IV fuel norms.  Essar also has plans to have a separate dedicated refinery in the proposed SEZ to cater to the export market in the US and even in Europe. 

ONGC, Cairn shelve Rajasthan refinery

September 5, 2006. India's Oil and Natural Gas Corp and its British partner Cairn Energy Plc have shelved plans to build a Rs 8,000 crore refinery in Rajasthan and instead may sell the crude oil found in the state to Reliance Industries or Essar Oil. Building a refinery in a landlocked state is uneconomical. With IOC's Mathura and the expanded Panipat refinery in the region and HPCL building a nine million tonne per annum refinery at Bhatinda by 2010, there will be no market for the planned refinery at Barmer (Rajasthan). ONGC plans to get its subsidiary, Mangalore Refinery and Petrochemicals Ltd (MRPL), denominated as the official offtaker of crude oil found by Cairn Energy in Rajasthan and instead sell it to refiners.  Earlier, Indian Oil Corp (IOC) had done an economic analysis of Cairn's Rajasthan crude and concluded that it posed a transport dilemma.  ONGC-Cairn, 30:70 owners of the Rajasthan oilfields, would build a crude oil transportation pipeline from Barmer to Jamnagar and bear the cost in the field development. 

Panda Ethanol to build ethanol plant in Texas

August 29, 2006. Panda Ethanol Inc. intends to build a 100 million gallon per year ethanol plant in Sherman County, Texas. The facility will annually refine approximately 40 million bushels of corn and milo into a clean-burning, renewable fuel for the nation's transportation needs. The Sherman plant will generate the steam used in the ethanol manufacturing process by gasifying more than 1 billion pounds of cattle manure a year. Once complete, it will be one of the most fuel efficient ethanol refineries in the nation and equal in size to Panda's Hereford facility which is the largest biomass-fueled ethanol plant in the United States. The Sherman facility is the fourth 100 million gallon ethanol project announced by Panda, and the third to be powered by cattle manure.

GSPL to transport gas for Reliance refinery

September 5, 2006. Gujarat State Petronet Ltd, a gas distribution arm of Gujarat Petroleum Corporation Limited, has signed an agreement with Reliance Industries Ltd for transportation of 11 mmscmd gas from Bharuch to Jamnagar for a period of 15 years starting from the first quarter of 2008-2009.  The agreement has paved the way for further understanding between GSPC and RIL to transport GSPC gas from KG basin to the west coast through a pipeline, which will land in Uran, Maharashtra.  RIL is laying a 40-inch pipeline between Kakinada and Uran, which is capable of transporting gas discovered by Reliance in the KG basin along with GSPC’s gas.  Both GSPC and RIL discovered gas in adjoining blocks and are expected to have landfall point just next to each other to facilitate transport of gas. RIL has landfall point at Gadimoga village, about 30 km south of Kakinada.  To bring gas from Dhirubhai discoveries of D6 block and pump it to the Kakinada-Uran pipeline, Reliance is planning to set up sub-sea controls to connect 18 sub-sea wells and six manifolds.  Two 24-inch pipelines will ship gas to the offshore shallow water central receiving platform from where two shallow water pipelines of the same diameter will each transport gas to its proposed onshore terminal at Gadimoga village, where work is already underway. 

Cairn mulls pipeline to carry Rajasthan crude

September 5, 2006. Cairn Energy, the Scottish oil explorer, was actively contemplating entering India’s midstream sector and planning to construct a pipeline for evacuation and transportation of its Rajasthan crude to a refinery or a suitable port location. While the details on structuring and cost-recovery of the pipeline project is yet to be firmed up, the estimated cost will be close to $1 billion and may be shared by Cairn and ONGC’s refining arm-MRPL. The projected in-place reserves of Cairn’s Rajasthan oil block are estimated at 3.6 billion barrels of oil and oil equivalent, which will result in a production of 1,50,000 barrels of oil a day. Cairn’s entry into midstream assumes significance as under the terms of the Rajasthan block production sharing contract, the responsibility of evacuation and transportation of crude oil from the Rajasthan oilfields rests with the Indian government or its nominee, which in this case is MRPL. On its part, Cairn is under no obligation to either evacuate or finalise sales tie-ups with the buyers/refiners. Cairn has made it clear that although it has agreed to explore the possibility of laying a pipeline for its crude evacuation and transportation, it will go ahead only if “suitable commercial arrangements can be reached with the government and potential third parties”. In this case, third parties include potential buyers like Reliance, Essar and Indian Oil Corporation.

Amidst various options being considered for laying the pipeline, one possibility being discussed is to cover the cost of laying the pipeline under a field development plan and recover the cost later under a promoters, cost recovery plans. This is not in step with the existing PSC terms and may draw objection from the oil regulator—the Directorate General of Hydrocarbons. Moreover, the government’s take on this issue will have far-reaching implications as this will set an important precedent in the industry. If it agrees to allow Cairn and its partner ONGC to recover the cost of laying the pipeline by making it a part of the FDP, other companies will also quote this as a precedent to include the cost of its proposed Rs 20,000 crore East-West pipeline under its FDP, which will make the cost its pipeline fully recoverable.

BPCL to take Mumbai-Mangalia pipeline to Delhi

August 30, 2006. Bharat Petroleum Corporation will lay a pipeline between Mangalia, a railway station in Indore, to Pidawa in Delhi to extend the existing Mumbai-Mangalia pipeline.  The pipeline, which will carry petro products such as petrol, diesel, kerosene and aviation fuel via Manmad, are currently being transported by railway wagons. The transportation cost through the pipeline will be very low in comparison to that incurred via the railway route.  The whole system would be operated by modern computerised technique. Moreover, a similar pipeline is also being laid at Kota and Jhalawad. The work of laying pipeline between Sherpur to Dewchi near Jhalawad is on a fast track.  The estimated cost of the entire project of laying a pipeline between Mumbai and Delhi, is around Rs 3,500 crore, which has partly been completed and a further 716 km will be added from Indore to Delhi. The main purpose of laying the pipeline is to make the petroleum free from the hurdles of transportation via roads and railways as well as supply kerosene and other fuels promptly to benefit the consumers.  The consumers will not suffer from scarcity, as their demands would be accomplished from time to time very comfortably. However, in the process, the railways will suffer a great loss.  The railways earn crores of rupees as transportation freight from Manglia depot to other stations, up to Delhi.  When completed, the pipeline will serve as a secured device to carry petroleum liquids promptly. The hurdles of paucity and non-availability of railway wagons in time, as well as delay due to shunting, etc, will also be done away with.  

Plan panel calls for regulators in hydrocarbon sector

August 31, 2006.  The Planning Commission has proposed the setting up of independent regulators for upstream and downstream segments in the hydrocarbon sector. It has also called for the strengthening of powers of the Directorate General of Hydrocarbons (DGH), the upstream regulator. The recommendations form part of an expert group on the integrated energy policy headed by Planning Commission member Kirit Parikh. The committee, which submitted its report, has also favoured regulating domestic natural gas (LPG) prices on a cost plus basis. The expert group has suggested an independent regulatory body for the downstream sector to ensure competition on level terms in refining, transportation, distribution and retailing of oil and gas. There is already a proposal to enact a legislation to put in place a downstream regulator.  About the proposed downstream regulator, the committee has said that the regulator must review the current regime that limits competition from both foreign and domestic private players in downstream sectors. It has said that the proposed regulator should also enforce service obligations by marketing companies active in a region as well as in other markets globally. It would also subsidise access to public distribution system kerosene and LPG by intended beneficiaries, the committee has suggested. On the pricing front, the expert committee has suggested adjustment of ad valorem taxes and levies in a revenue neutral manner to cushion consumers from sky rocketing international crude prices. It has said that if the continuous price change cannot be absorbed by change in taxes and duties, it should be passed on to the consumer.

The committee has also suggested that prices of different fuels should not be set independently of each other and all commercial primary energy sources must be priced at trade parity prices at the point of sale. On fuel oils, the committee has suggested a mechanism where international volatility could be cushioned through a formula where domestic prices are set on the basis of median prices over the previous month or a three-month period.

Qatar money, gas to power NTPC projects

August 31, 2006. The National Thermal Power Corporation (NTPC) has found an investor willing to pump in money and gas into its power projects - the Qatar government.  For starters, Qatar plans to enter into a joint venture with NTPC for the expansion of the 350-MW Kayamkulam gas-fuelled power project in Kerala by 1,950 MW. The sweetener for the deal is likely to be an assured supply of LPG from Qatar for the project.  The expansion project involves a total investment of Rs 6,000 crore, of which a substantial amount may be provided by Qatar.  The plant is currently running below capacity due to constraints in fuel supply. It sells power at around Rs five per unit to meet the peak power demands of Kerala and Tamil Nadu.  Of the 12,600 MW installed capacity of gas-based power plants in the country, NTPC has got seven power generation plants fuelled by gas or liquid fuel with a commissioned capacity of 3,955 MW.  The commissioned gas plants through joint ventures have a capacity of 314 MW. Most are operating at a reduced capacity due to inadequate availability of gas. 

POWER

NLC & CCL plan 1000 MW power plant unit

September 5, 2006. The Neyveli Lignite Corporation (NLC) plans to set up a 1,000 MW power plant with an investiment of Rs 5000 crore in Jharkhand in collaboration with Central Coalfields Ltd. (CCL). NLC recently started dialogue with the management of CCL at Ranchi to set up the 1,000MW power plant in North Karanpura coalfields area of CCL in Jharkhand.  The proposed site of the power plant would be at Tandwa of Chtra district where coal reserve is sufficient to meet the demand of the power plant. 

Government-owned National Thermal Power Corporation (NTPC) had done some groundwork for setting up a super thermal power plant in the Tandwa area seven years ago but failed to start the construction of the project due to strong resistance by locals against land acquisition for the NTPC power plant.  Recently NTPC management has taken a decision to revive the project in view of the country's growing power demand and started dialogue with the state government for land allotment through land acquisition process.  National Hydroelectric Power Corporation (NHPC) which had also initiated to install a 710 MW hydel power plant in Jharkhand's Ranchi district several years ago had to shelve the project for want of land as the locals resisted the land acquisition process for the power project of NHPC.  They also pointed out that the similar resistance was facing the on-going land acquisition process started by the Jharkhand government for the companies which had signed MoUs with the state for investing in steel, coal, power and allied industrial units. 

Haryana allocated large coal block

August 31, 2006. The Haryana Power Generation Corporation Ltd (HPGCL) and the Delhi government have been allocated a big coal block for the first time by the Centre.  The coal block would be Mara-II, Mahan, located in Madhya Pradesh. Earlier, Haryana used to buy coal for power generation from central PSUs like Coal India Ltd. This allocation is likely to bring down the unit cost of generation of electricity.  The power-generating companies were authorised to undertake coal mining for their projects. In view of present and future requirements, HPGCL had requested the Centre to allocate a coal block for the state. 

The state needed 8.5 mt of coal every year for Faridabad and Panipat thermal power stations. With the synchronisation of two units of 300 MW each at Thermal Yamuna Nagar, there would be an increase in demand of coal by 3 mt per annum. Also, HPGCL had speedily started the process of setting up another 1,000/1,200 MW coal-based thermal power project at Hisar for which the annual requirement of coal would be 5.83 MT. In all, the coal requirement for all these projects would be 17.33 mt every year. 

JSW Steel plans three power plants

August 31, 2006. Leading domestic steelmaker JSW Steel is planning to diversify into the commercial power business.  The company plans to invest Rs 12,000 crore in the next three years to set up three new power projects totalling to 2,800 MW in Maharashtra, Rajasthan and Karnataka, said MVS Sheshagiri Rao, director, finance, JSW Steel.  JSW has plans to set up a 1,200 MW power plant in Maharashtra (Ratnagiri), 1,000 MW plant in Rajasthan (Barmer) and a 600 MW plant in Karnataka (Vijayanagar).  The Vijayanagar and Ratnagiri projects will be coal-based and the Barmer project which lignite-based, which will be arranged by the Rajasthan government.  Governments of Maharashtra and Rajasthan have in principle agreed to the projects. The signing of memorandum of understandings (MoU) and the necessary clearances from the respective state governments, like land acquisition and environmental clearance, will be taken in a few months. The investment will be made by JSW Energy, a subsidiary of the company, through three special purpose vehicles (SPV) set up for the purpose, and will be a mixture of debt and equity. 

Tata Power buys 60000 tonnes LSFO in Oct-Nov

September 4, 2006. India's Tata Power has bought 60,000 tonnes of October/November-delivery low-sulphur fuel oil (LSFO) via tender at lower premiums, bringing its total volume for the year to at least 150,000 tonnes. The utility, India's largest private power company, bought two 0.3 percent sulphur parcels, for delivery to Mumbai, at premiums of $65-$70 a tonne to Singapore spot 180-centistoke (cst) quotes, on a cost-and-freight (C&F) basis. Tata, which did not import any LSWR cargoes last year and had been a regular buyer before that, has bought at least three parcels, for March-May delivery.

Tata Power has been buying less than 80,000 tonnes of fuel oil including LSWR each month from domestic refiners since its conversion to coal for power generation. LSFO, like the larger high-sulphur fuel oil market, has been in the doldrums since June, due to falling demand in key consuming countries such as Japan, South Korea, Taiwan and Thailand. However, an import tender by Taiwan refiner Chinese Petroleum Corp. (CPC) for two October-delivery parcels, completed at higher premiums, which indicates that the market is picking up.

Power sector to get a facelift

September 4, 2006. Power transmission sector in India is all set for a mega changeover. Privatisation of transmission lines and newly-introduced tariff-based bidding have caught financiers’ fancy, as this low-risk business entails lower capital expenditure compared to power generation and ensures a steady revenue stream. Many leading players such as Tata Power, Reliance Energy, KEC International and Kalpataru Power Transmission are betting on new transmission projects, while financial institutions and banks are gung-ho about the sector.

The state-owned Power Grid Corporation (PGCIL) is in the process of building new networks with the help of government funding as well as private parties. PGCIL has now invited bids for strengthening the western region based on tariff-based bidding for the first time. Every bidder will quote wheeling charge in two parts — fixed and variable — after arriving at their respective capital expenditure. Central Electricity Authority (CEA), ministry of power and Central Electricity Regulatory Commission (CERC) will evaluate the bid and the project is expected to be awarded by early next year.

The capex for the project will be around Rs 1600-1700 crore, and the rate of return on the project is fixed at 14 per cent. Once the project is operational, the project doesn’t face any other issues such as fuel linkage or plant shutdown that usually beset generation projects. The country’s transmission perspective for the 10th and 11th Plan focuses on the creation of a national grid in a phased manner by adding over 60,000 circuit km of transmission network by ’12. Such an integrated grid will evacuate additional 1,00,000 MW by ’12 and carry 60 per cent of the power generated in India. The existing inter-regional power transfer capacity is 9,000 MW, which is to be further enhanced to 30,000 MW by ’12 through creation of ‘transmission super highways’. The ministry has estimated an investment of Rs 71,000 crore to create such a national grid, of which Rs 50,000 crore is planned to be mobilised by PGCIL and the remaining through private sector participation.

Power cos in talk with Rlys for long-term supply

September 1, 2006. Several domestic companies such as Ashok Leyland, NTPC, Nuclear Power Corporation, Tata Power as well as American and Russian firms are learnt to be in talks with the Indian Railways for entering into long-term agreements for supplying electricity. The Railways proposes to draw power from independent power producers (IPPs), to further reduce the cost of electricity per unit. The Railways had floated a tender inviting bids from independent power producers for supplying 350 MW power in Gujarat and Maharashtra. It was considering floating tenders for other areas, including Andhra Pradesh, Tamil Nadu, Bihar and West Bengal. The Railways consumes about 2,000 MW annually. Power companies want to do business with the Railways as it is a long-term customer with a high demand, regular paymaster and the Railways draw more power at night, when the industrial and domestic demand is relatively low.

Private power cos left in the dark

September 5, 2006. Private power companies, who have been pitching hard to get the fuel linkage through captive coal blocks, may end up missing the bus with the power ministry not including most of them in the recommended list.  The power ministry has set an out a priority list for the allocation of captive coal blocks. While top priority is being accorded to projects being executed by the central and state public undertakings, greenfield independent power projects (IPPs) do not seem to be anywhere in the reckoning. The power ministry has included only those IPPs which have not been able to reach a financial closure for want of a fuel linkage. These private projects are primarily those which were shortlisted by the power ministry for the consortium lending route. The Tubed coal block in Jharkhand which has attracted 108 applications.

A screening committee under the ministry of coal is considering the allotment of some 20 coal blocks to various power projects. Of these, the most significant block is the Tubed block, as it has sufficient coal to power a 1,000 MW plant. Companies like Reliance Energy, CESC, DVC, Essar, Gujarat Ambuja, GVK, Tata Power have applied for this block. The coal ministry has been asked by the power ministry to keep the priority list in mind while allocating the blocks. It is expected that while greenfield central sector and state sector projects would get first priority, expansion of existing projects by public sector undertakings both at the centre and state levels will also be considered on a priority. Interestingly, captive power projects, even those which are not supplying power to the grid have been accorded a higher priority when it comes to preference for coal block allotments. The power ministry has made no clear provisions for non-competitively bid greenfield IPPs because there is no possibility of such a project under the tariff policy. All future generation projects will have to come through the competitive bidding route.

Govt plans new coal royalty system

September 4, 2006. The Government is planning a new royalty structure for coal that would have a fixed as well as a variable component to replace the existing system of a fixed rate per tonne of coal extracted. If the new system is put in place, revenues from coal royalties could go up by 5-10 per cent. That may eventually lead to an equivalent increase in coal prices if the producing companies decide to pass on the increased costs to the consumers. The current formula being put forward by the Coal Ministry was originally suggested by the Prime Minister's Advisory Council headed by Dr C. Rangarajan.

The Hoda committee set up by the Planning Commission had also recommended a transition to the ad valorem system from the current fixed sum system. In the latest formula, State Governments receive a predetermined fixed amount per tonne of coal mined. So, even if coal prices go up, the State Governments do not get a share of it, and the mining companies book all the profits. As per the new formula, the new royalty amount would be determined by the summation of a fixed amount per tonne that would be decided by the Government plus a fixed percentage of the selling price of the coal. The coal-producing States had been demanding the introduction of an ad valorem royalty system since it would add to their revenues with the dynamics of coal prices. On the other hand, States without coal reserves, but with some of the major consuming sectors such as cement, steel and power, had been demanding continuation of the existing system and status quo be maintained.

M’rashtra asked to make decision on Dabhol power

September 3, 2006. The power ministry has asked the Maharashtra government to make up its mind on the drawal of naphtha-based power from the revived Dabhol project for being costly at Rs 6.10 per unit by the Maharashtra State Electricity Distribution Company (MahaVitaran). The ministry has expressed concerns over lack of any decision by MahaVitaran especially when the project remains closed since July 4 for want of buyer. The ministry has told the state government that the MahaVitaran's argument that the power was costly and thus not in a position to draw it cannot stand especially when the power is purchased from the captive power producers at Pune at Rs 10-11 to those consumers whose consumption is more than 300 units under the load shed free scheme.

The MahaVitaran would need more and more power for the implementation of load shed free concept across the country. In view of MahaVitaran's refusal to purchase power, the RGPPL has revised the commissioning of block II of 740 MW in March next year from the original target of October. The revised deadline coincides with the delivery schedule of liquefied natural gas (LNG for the project. The centre has already waived customs duty on naphtha and it is not possible to reduce fuel cost. Based on the MahaVitaran's decision, the RGPPL will place order for naphtha and will be able to restart the project from October.

Nepal’s hydro sector lures Indian biz

September 1, 2006. Leading power developers like Tata Power Company, GMR Energy, Reliance Energy Ltd (REL), Essar Power, Torrent Group and Jaypee Group have evinced interest to tap opportunities in Nepal’s hydropower sector, which has a potential of 42,000 MW. Indian contracting firms Larson & Toubro and Marubeni, equipment manufacturers BHEL, GE Power Systems, Alstom Systems and Voith-Siemens are also shown interested in investing in Nepal’s hydro sector. Moreover, lenders and bankers comprising Asian Development Bank (ADB), ICICI Bank, Standard Chartered, Citigroup, State Bank of India, Canara Bank, Bank of Baroda and Punjab National Bank, and insurance companies like Tata AIG, ICICI Lombard and Bajaj Allianz, are looking at the various funding models.

These agencies will identify projects that are ready for development and others in the pre-development stage as well as identify models for financing. With the new government, which has recently taken over in Nepal, the developers in particular will also assess the security aspect which is quite crucial for the long term investments. About 50 big players from the Indian industry and 90 from Nepal are expected to attend the power summit. The summit will present a realistic identification of significant risks from the investor’s point of view and come up with recommendations. Nepal’s ministry of water resources, ministry of finance, Department of Electricity Development and Nepal Electricity Authority, Nepali project developers, financial institutions and insurance companies would also take part in the summit.

L&T-Mitsubishi in power JV

August 30, 2006. Japanese equipment major Mitsubishi Heavy Industries (MHI) is joining hands with domestic engineering and construction conglomerate Larsen & Toubro Limited (L&T) to set up a manufacturing facility for super-critical boilers in India. The two may also collaborate to make steam turbines. A greenfield capacity to manufacture boilers, turbines and auxiliary units will cost anywhere close to Rs 15,000 to Rs 20,000 crore. Super-critical boilers are highly efficient boilers and are economical when used in power plants with a single-unit size of at least 800 MW. At present, BHEL is the only other domestic company capable of making super-critical boilers, after a similar technology-transfer deal with French equipment major Alstom.

The market for such boilers is expected to take off in power-deficit India, which recently invited global tenders for setting up seven ultra-mega power projects, each with a capacity of about 4,000 MW. NTPC, too, plans to set up a 6,400 MW capacity, using the super-critical technology. Recent communications from both MHI and L&T to the government reveal that MHI has agreed to transfer the design and engineering technology for super-critical boilers to L&T, which already has a boiler designing centre at Fariabad in Haryana. This unit will start functioning once the technical collaboration agreement with MHI is in place.

Pvt players to enter Haryana power sector

August 30, 2006. Private players are soon going to change the power supply scenario in Haryana. In order to ease the power crisis in the state and to ensure uninterrupted power supply shortly, the state has invited corporate players to set up power generation facilities in the state.  Experts in the industry say this move of the state government would definitely help the industries in the state, which are reeling under a power crisis.  Commenting upon power projects that have been finalised and developed by the private sector, the Haryana Power Generation Corporation(HPGC) was coming up with a 600 MW power generation system in Yamunanagar, which is to be built by Reliance and will be handed over to the HPGC for operation.  Also, a power plant of 1,000-1,200 MW by HPGC is coming up in Hisar. This too would be built by private players and the pre-bid conference for it is going on. 

Besides this, the government is also inviting Independent power players to generate power ranging from 5 MW-2,000 MW under scheme 1 (according to this scheme, anywhere in India one can operate and supply power to the state government, as per government of India tariff policy). The state government has also identified the site, Jhajjar, to set up 1,000-1,200 MW power stations by private players under Scheme 2(the site has to be identified by the government and developed by private players.).  Currently, the installed capacity in the state for power generation is 4,033 MW. Out of this, the state is utilising 50-70 per cent because of routine shutdown and certain other problems like silting (in case of hydro electric power) and non-availability of raw material like gas for gas generation plants. 

OIL & GAS

Russia welcomes China to join in oil, gas exploration

September 4, 2006. Russia is hoping that China would join in the exploration of oil and gas reserves in its Far East Sakhalin Island. The Chinese investors are welcomed to develop the rich oil and gas deposits on the Sakhalin shelf, and they are expected to take part in the exploration and export of offshore oil resources. By now, Russia's state-owned energy company Rosneft and China's leading oil company Sinopec had set up a joint venture to explore oil and natural gas under the Sakhalin-3 project. The project has an estimated oil reserve of 168 million tons and natural gas reserve of 258 bcm.

OPEC unlikely to change output: Iran

September 4, 2006. OPEC is unlikely to change production at its meeting this month and, due to high prices, is likely to continue supplying the market more than demand.

CNPC to tap oil and natural gas in Uzbekistan

September 3, 2006. China National Petroleum Corporation (CNPC), China's largest oil producer, has entered into two cooperative contracts with Uzbekistan, in Central Asia. The company's in-house journal has announced the ratification of a production-sharing agreement with Uzbekistan's Uzbekneftegaz, Russia's Lukoil, Malaysia's Petronas and South Korea's National Oil Corporation to explore and develop prospective natural gas deposits in the Aral Sea. The contract was signed after CNPC received exploration permission in five onshore blocks in Uzbekistan nearly ten days ago.

The launch of the two projects brings the countries receiving investment from CNPC to 24. Uzbekistan claims a 10,000-square-km area in the Aral Sea, which is considered to have great oil and gas reserves. The partners plan to collect seismic data and drill two wildcat wells in the first three years. Then they will establish a joint venture to carry out exploration work. Uzbekistan has oil reserves of more than five billion tons and natural gas reserves exceeding five trillion cubic meters. Its proven oil reserve is 530 million tons and natural gas, 3.4 trillion cubic meters. CNPC signed oil and gas cooperation contracts with Uzbekneftegaz during Chinese President Hu Jintao's visit to Uzbekistan in June 2004. The two companies signed the exploration agreements for the five onshore blocks in June this year, under which they will collect two- and three-dimensional seismic data and drill 27 wells in the 34,000 square-km area in five years. The two projects would avail CNPC of a gradual exploration of the country and contain potential for oil and gas discoveries of good commercial scale.

UK's BG Group makes big North Sea gas find

September 1, 2006. Britain's BG Group has made one of the biggest recent North Sea gas discoveries in a joint project with U.S. energy company ConocoPhillips and Italy's ENI. BG Group called the new field "substantial" and estimated its recoverable reserves at between 100 million and 275 million barrels or oil equivalent. The consortium would look to move early on developing the field. The find comes as production from Britain's established North Sea fields declines, sending energy bills soaring to record levels and triggering a wave of investment in projects to import gas to fill a supply gap. The discovery straddles blocks P011 and P0032 30/7a. An initial exploration well was drilled earlier this year and a further well had confirmed the find. BG holds a 30.5 percent interest in the discovery along with operator ConocoPhillips, which holds a 36.5 percent interest, and ENI UK Limited with 33.0 percent.

India, China in race for gas reserves in Myanmar

September 1, 2006. After competing with each other for overseas energy assets, Indian and Chinese firms are now gearing up for yet another face off to secure monetisation rights for the huge gas reserves in the A1 and A3 blocks in Myanmar. A recent certification by Gaffney Cline and Associates (GCA) has put the total estimated gas reserves in these two blocks at 5.7 to 10 trillion cubic feet. India’s share in these blocks is 30 per cent, with 20 per cent participating interest held by ONGC Videsh Limited and 10 per cent by state-owned GAIL India. Daewoo of South Korea is the operator of these blocks with 60 per cent interest and KOGAS of Korea holds the remaining 10 per cent each. Significantly, GAIL was earlier (in February 2004) given the status of ‘preferential buyer’ of gas from these two blocks, subject to various conditions including pricing and approval of other partners.

The petroleum ministry had earlier opposed submission of a bid by GAIL and instead wanted the Myanmar government to enforce its decision to sell the entire gas to GAIL. However, as this could have even resulted into delays and a loss of opportunity for India, the petroleum ministry is believed to have now permitted GAIL to bid for monetising gas from the A1 and A3 blocks. Although companies from Korea and Thailand will also be in the race to secure rights to export gas from these blocks, India and China are the strongest contenders as the two countries had earlier approached Myanmar for purchasing the entire quantum of gas from these fields. Thailand is already importing huge quantities of gas from Myanmar through an existing pipeline and Korea is keen to import gas through the sea route in the form of LNG. Block A1 has two discovered gas fields, Shwe and Shwe Phyu, and Block A3 has one discovered field, Mya. A recently concluded feasibility study for field development by GAIL has forecast that the three fields from A1 and A3 can produce about 16 million cubic meter gas per day for 20 to 25 years.

Chevron eyes next Angola oilfield with platform deal

August 31, 2006. U.S. oil firm Chevron Corp. is poised to start up its next major Angolan oilfield before the end of this decade after ordering the world's biggest drilling and production platform from a South Korean builder. Daewoo Shipbuilding and Marine Engineering Co, the world's second-largest shipbuilder, it had won a 1.22 trillion won ($1.27 billion) order to build the platform for Cabinda Gulf Oil Co. Ltd., Chevron's unit in the West African country, by May 2009.

It said the platform would produce 130,000 barrels of oil a day at the Tombua Landana field in Angola's prolific deepwater Block 14, which has yielded nine discoveries since 1997. Daewoo's announcement was the first public indication of when output will begin and at what rate the field will pump. Block 14 already hosts two other developments, Kuito and the $2.3 billion, 200,000-bpd Benguela-Belize-Lobito-Tomboco (BBLT), which saw first oil in January. Chevron, which has been in Africa since the early 1900s, is a major investor in Angola, where output from deepwater areas is a key source of new supplies for a tight global market.

The U.S. major operates and owns 31 percent of Block 14, while state oil firm Sonangol holds 20 percent, Italy's ENI Angola has 20 percent, Europe's Total SA has 20 percent and Portugal's Galp Energia holds 9 percent. Angola, sub-Saharan Africa's number two crude producer after Nigeria, is aiming to boost daily output to 2 million barrels by 2008, up from around 1.4 million barrels, which would rank it even with the United Kingdom, where production is in a steep decline. Its deep offshore waters were hotly contested when exploration began in the late 1990s and have yielded more than half a dozen major finds, making it an attractive destination for oil majors desperate for unfettered access to prime acreage. In addition to Chevron, Exxon Mobil Corp. has already launched two platforms on its Kizomba discovery, with two more due before the end of the decade, while Total will add to its Girassol development with a Dalia platform in 2007, the same year BP Plc will start up Plutonia.

BP to invest $50 mn in exploration

August 30, 2006. British Petroleum Company will explore oil and gas offshore blocks covering an area of 21,000 sq-km in ultra deep water and will initially invest $50 million. The government was taking tangible steps to accelerate the pace of oil and gas exploration activities in onshore and offshore areas aimed at putting the country on the road to self-reliance in the energy sector. The government would facilitate investors in the oil and gas exploration activities and would provide all-out cooperation in this regard. British Petroleum has been operating in Pakistan since 1977, with a focus on Badin where it has over 2,300 sq-km areas. It has so far drilled 159 exploratory/appraisal wells, resulting in 62 oil and gas discoveries with current production of 13000 barrels of oil per day and 220 million cubic feet of gas per day. BP Pakistan has so far made an investment of approximately $800 million (net) in the Badin joint venture.

Iran to take part in East Asian refineries

September 1, 2006. Iran plans to take part in four refinery projects in East Asia. Iran signed a preliminary agreement with Indonesia in May to build a $5 billion, 300,000-barrel-a-day oil refinery in Java. It's negotiating a $3 billion refinery project with Malaysia, and holding talks with China and Singapore. The talks with China are over a refinery with a capacity of 300,000 barrels per day. Those with Singapore are over a 75,000-barrel-per-day refinery. Iran, site of the world's second-largest oil and natural gas reserves, imports more than 40 per cent of its gasoline because of waste, smuggling and a lack of refining capacity. Gasoline consumption rose 10.5 per cent to 73.5 million liters a day in the first five months of this Iranian year.

Meanwhile, Japan's Inpex has until September 15 to finalise a deal to develop Iran's giant Azadegan oilfield or Russian, Chinese and Iranian firms could be offered the deal,. Resource-poor Japan has rights to Azadegan tipped as one of the largest untapped oil reserves in the world but talks have been deadlocked since the deal was signed in 2004, when the project was thought to require an investment of $2 billion. Iran previously said it expected a deal by August 22, which was the end of the Iranian month of Mordad, but the date passed without any agreement. Inpex had said then that no date was set. If the contract cannot be finalised with Japan's Inpex by September 15, then we will use Iran's eye-catching potentials for tenders and use local contractors.

Statoil to expand its gas station chain by ‘08

August 30, 2006. Norway's Statoil is planning to increase its gas station chain in Murmansk region to 10 in 2007-2008 from the current six. A memorandum of mutual understanding and cooperation was signed last year between the Murmansk regional government and Statoil.  It envisions the further expansion of our chain in 2007-2008 to ten gas stations.  Imported Norwegian fuel accounts for about 1.5 per cent-2 per cent of the fuel at Statoil's gas stations. Only diesel fuel and Ai-95 gasoline is supplied, since "this is a luxury class product, and cleaner than the similar Russian product. Russian petroleum products are mainly supplied by the Yaroslavl Oil Refinery, owned by Slavneft, and some fuel comes from the Kirishi Oil Refinery, owned by Surgutneftegas.  Statoil estimates that it accounts for at least 20 per cent of the retail market in Murmansk region.

Acergy S.A. awarded $150 mn contract in Angola

September 4, 2006. Acergy S.A. had been awarded a contract by Cabinda Gulf Oil Company, a subsidiary of Chevron, for the installation of the export pipeline system on the Tombua Landana development offshore Cabinda, Angola. The contract, valued at approximately $150 million, is for the installation and tie-in of two export pipelines that will connect the Tombua Landana drilling and production platform and the Benguela-Belize oil and gas pipeline transportation system. Offshore installation is planned for mid 2008.

Tripartite gas pipeline deal by year-end

September 4, 2006. Russia agreed with Greece and Bulgaria to speed up preparations for a new 280-kilometre Balkan pipeline transporting Russian oil to Europe and the United States, a project stalled for the past 13 years. Originally drawn up in 1993, the plan envisages transporting Russian oil by sea to the Bulgarian port of Burgas, and from there by pipeline to the Greek Aegean Sea port of Alexandroupolis. A declaration signed by the three leaders pledges to speed up the process to create a project company, and to have a tripartite state agreement signed in the next three months. With an estimated cost of $1.15 billion the pipeline aims at reducing the expense and time of transporting Russian oil from the Caspian Sea to Europe and the United States. Oil tankers currently have to negotiate the narrow Bosphorus Straits, where increasing traffic has raised concerns over congestion.

Saudi Aramco buys first-ever fuel oil cargoes

September 2, 2006. Saudi Aramco, a major fuel oil exporter to East Asia, has imported its first-ever cargoes of the residual fuel, taking a total of around 160,000 tonnes for August and September deliveries, to meet peak summer utility demand amid a depressed global market. The two 380-centistoke (cst) cargoes, for delivery to Rabigh, by the Red Sea, were sold from Europe by a Western trader at a discount of around $15 a tonne to Singapore spot quotes, on a cost-and-freight basis.

TNK-BP, Rosneft change plans on E. Siberia pipeline

September 1, 2006. TNK-BP had reached am agreement with Rosneft on building a regular oil pipeline in East Siberia instead of a previously coordinated provisional route. Verkhnechonskneftegaz, a regional energy company licensed to develop the Verkhnechonsk hydrocarbon deposit and in which TNK-BP and Rosneft own 62.7 per cent and 25.94 per cent respectively, will build a pipeline from the site to the Talakan deposit, operated by oil and gas company Sugurtneftegaz, to link it to the East Siberia-Pacific Ocean oil pipeline. The ESPO is an ambitious project Russia is developing to pump oil from Siberia to Russia's Far East for exports to the Asia-Pacific region, particularly to energy-hungry China.

The change to the original plans has been enabled by the re-routing and confirmation of timing of works on the ESPO and the stated intention of Transneft to commission reversal of the Ust-Kut -Talakan pipeline section. TNK-BP said it had signaled its intention to accelerate the construction of the supply pipeline from the Verkhnechonsk deposit to align with Transneft plans. The Russian-British joint venture also said Verkhnechonskneftegaz had already started surveys along the proposed pipeline route.

In the near future the company will hold a tender among Russian design institutes for the right to develop the feasibility study for construction of the 120-km (75-mile) line to the cut-in point of the main ESPO. The Verkhnechonsk deposit is at the center of Russia's plans to be the dominant energy supplier to Asian markets. Exploratory drilling is yet to be completed, but its probable and possible reserve base is estimated at 1.48 billion barrels of oil, 129 billion cubic meters of natural gas and 25 billion barrels of condensate - enough to meet China's current oil import needs for more than two years.

Construction on ESPO, preliminarily estimated at $11.5 billion, started in April 2006. Since then, more than 100 kilometers (62 miles) have been laid and 330 kilometers (205 miles) have been prepared for pipe installation. The plan had been at the center of controversy and protests by environmental groups, who said Lake Baikal, a Unesco-listed World Heritage Site, could suffer irreparable damage in the event of an accident on the pipeline. The first stage of the project, which is slated to pump up to 80 million metric tons of crude a year (1.6 mln bbl/d) from Siberia to Russia's Far East, will connect Taishet in the Irkutsk Region to Skovorodino in the Amur Region in the Far East in the second half of 2008. The second stage will link Skovorodino to the Pacific coast.

Oil Search, BG eye Papua New Guinea LNG project

August 31, 2006. Australia's Oil Search Ltd. had agreed with BG International Plc. to look at the potential for a liquefied natural gas (LNG) project in Papua New Guinea. The move comes as a project to export gas by pipeline from Oil Search's fields to Australia is in doubt, so could avoid the country's proven reserves of over 15 trillion cubic feet from being stranded and attract the interest of buyers such as China. Oil Search said the LNG studies would focus on areas outside the licences that contain the 40 percent of its gas reserves dedicated to the pipeline. LNG project would be difficult to achieve but would be more flexible than a pipeline, as it could ship gas to utility buyers in North Asia or to the highest bidder in a world increasingly hungry for the clean fuel.  Companies plan to bring gas onstream in a host of new fields off Western Australia by 2010, some destined for Asian buyers such as Tokyo Gas , and seen as a more reliable source than impoverished PNG.

Russia tells Shell to review Sakhalin pipelines

August 30, 2006. Russia's environmental watchdog, which has already ordered to Royal Dutch Shell to stop work on onshore pipelines on Sakhalin, the group needed to redraw the plan. Onshore pipeline construction can be resumed only after the project is reworked, that it meets all environmental requirements and is discussed with scientists and independent environmental organisations. The halt, which came as the project is already 75 percent completed, may cause further delays to Shell $20 billion liquefied natural gas project off Russia's remote Pacific island. The increased pressure from Russia comes amid attempts by gas monopoly Gazprom to secure 25 percent in the project. Shell has had stopped building two onshore pipelines and would restart work only after ironing out differences with Russian authorities. The project, known as Sakhalin Energy, is already producing over 70,000 barrels of oil per day for around half the year, but plans to more than double that output all year round when its platforms and pipelines are fully up and running. It plans to ship its first cargo of LNG, which will be the mainstay of the project, in mid-2008. Sakhalin Energy, in which Shell is a 55 percent shareholder, is Russia's biggest foreign investment project and the world's largest LNG development.

New berths to be built for import of liquefied gas

August 30, 2006. A high-level meeting decided to facilitate increased liquefied natural gas and liquefied petroleum gas (LPG) imports by the private sector. It was also decided to ask the Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Limited (SNGPL) to extend their pipeline network to cities and towns in order to overcome the energy shortages in the country. A decision had also been taken that the government will construct new berths at Port Qasim, Karachi, to help store the imported liquefied natural gas and liquefied petroleum gas.

The private sector would be provided necessary facilities to invest in energy related projects with a view to cut the growing energy shortages. The government will provide land to the investors at the proposed new berths at Port Qasim so as to extensively facilitate them. The private sector's participation in the oil and gas sector was essential to give much needed impetus for ensuring fuel for Pakistan's sustained high growth rate, employment generation and socio-economic development. The participants of the meeting were briefed about various incentives being taken by the concerned government agencies for attracting foreign investment in this vital sector and progress on provision of gas to various parts of the country. The  need for greater private sector participation in oil and gas and expressed the hope that all the concerned government bodies would take necessary steps to facilitate the investors.

Chinese petroleum buys 75,000 metric tons of naphtha

August 30, 2006. Chinese Petroleum Corp., Taiwan's state oil refiner, bought 75,000 metric tons of so called full-range naphtha for delivery in September at a discount of about U.S.$7 a metric ton below benchmark prices. The cargo will be delivered to Kaohsiung port in southern Taiwan between Sept. 16 and Sept. 30. Chinese Petroleum, which can process 720,000 barrels of crude oil a day, also operates three naphtha processing units, or crackers, with a combined capacity to produce 1.1 million tons of ethylene a year. Ethylene is the building block of plastics used in the manufacture of electronics, auto parts, and soft drink bottles. Naphtha, distilled from crude oil, is a raw material for chemicals and gasoline. Full-range naphtha is preferred by chemical makers because of the fuel's high ethylene yield.

Russia, Greece, Bulgaria sign energy declaration

September 5, 2006. The leaders of Russia, Bulgaria and Greece signed a joint declaration on energy cooperation in Athens. The declaration said the sides assign priority to the creation of new gas transportation systems, and will consider new projects in this field. The Russian, Bulgarian and Greek governments signed a memorandum on the construction of a pipeline stretching 280 kilometers (175 miles) from the Bulgarian port of Burgas, on the Black Sea, to Greece's Alexandroupolis on the Aegean in April 2005. Under the declaration, the sides agree to speed up the creation of an international project team, and to sign an intergovernmental agreement to support the pipeline project by year's end.

China turns large ethanol exporter

September 5, 2006. China is unexpectedly emerging as a major exporter of ethanol as record- high crude oil prices and a US deficit in the biofuel have pushed up its international price, triggering an investment boom. China's 2006 exports of ethanol, or ethyl alcohol made largely from corn or cassava, were set to exceed 500,000 tonnes or about 11,000 barrels per day. Shipments may reach 900,000 tonnes. It had virtually no ethanol exports for fuel last year. Most of the ethanol cargoes go directly or indirectly to the United States due to a switch this year to use ethanol as an additive for cleaner gasoline. Some are dehydrated in Caribbean countries for use in the US, helped by favorable taxes. However, not many are convinced that China can maintain a competitive edge for fuel ethanol exports in the future, especially if it has to keep importing cassava and as there is a ethanol plant building boom in the United States.

China is the world's third largest ethanol producer, behind Brazil and the US, but in the past has used most of its output domestically, much of it for use in alcohol or chemicals but increasingly as a gasoline blend in agricultural provinces. Brazil exported about 360,000 tonnes to the United States last year, only about 4percent of its total production. For many, Chinese exports of fuel ethanol came as a surprise as there were only four fuel ethanol plants until 2005. The product is heavily subsidized by Beijing, eager to develop alternative fuels to cut China's dependence on imported oil. Coupled with high crude oil prices, this has encouraged small food ethanol producers to dehydrate their products for use as fuel, they said. Many have expanded capacity and built new plants. Data and details of the trade are patchy, partly as it is difficult to distinguish between fuel ethanol and other alcohols, including hydrous ethanol, used also in liquors or chemicals.

Customs data showed exports of ethanol, including hydrous ethanol, totaled 381,000 tonnes in the first seven months of this year, up 336 percent from the same period in 2005. Ethanol plants were also sprouting across the country, especially with the National Development and Reform Commission, the country's top planning body, predicting Chinese fuel ethanol consumption will reach six million tonnes by 2020. It was unclear how much ethanol China was producing this year, in addition to 1.02 million tonnes by the four government-sponsored plants in Jilin, Henan, Heilongjiang and Henan. Ji'an, China's top ethanol exporter, is also expanding its capacity to 450,000 tonnes by end-2006. China's total alcohol capacity, including fuel ethanol, would climb by three million tonnes to 10 million tonnes in 2006.

NIOC invites intl. companies to invest on Iran’s oil, gas

September 3, 2006. The National Iranian Oil Company (NIOC) called on international oil companies, financial institutions and foreign direct investors to invest in Iran’s oil and gas industries.  Iran has taken added measures to boost its bilateral cooperation with oil industries of states and their agents including increased stability and security of supplies. Oil and gas cooperation with other states is impossible without ensuring stability and security of energy supplies, Iran welcomed the cooperation of oil and gas companies all over the world.

The active participation of international oil and gas companies in Iran will be a positive step toward achieving stability in the global energy market. Iran’s special strategic position, both from the geographical and energy viewpoints, makes the country one of the most important in the world, he said adding that this position will continue to strengthen in the international arena. The Islamic Republic of Iran is situated in two rich energy regions — the Persian Gulf and the Caspian Sea. Lack of access to markets as a result of the inability to access open waters and difficulty in establishing pipelines are major obstacles faced by Central Asian republics and Caspian littoral states in developing their oil and gas industries.

Oil experts believe that the Iran route for oil and gas from Central Asia to other parts of the globe is the most economical and feasible, that Iran for this reason should be able to play a greater role in supplying energy to European and Asian countries. Some 24 million barrels out of the 30 million barrels of oil produced by the OPEC pass through Strait of Hormuz - a strait between Iran and the United Arab Emirates, connecting the Persian Gulf and the Gulf of Oman. Iran’s strategic situation has created a special niche for the nation in terms of its geographic location and energy issues.

Iran, an energy highway for Central Asia

September 3, 2006. Iran could act as a highway for energy transfer to the Central Asian nations. Some 24 million barrels out of the 30 million barrels of oil produced by the OPEC pass through Strait of Hormuz - a strait between Iran and the United Arab Emirates, connecting the Persian Gulf and the Gulf of Oman. Iran’s strategic situation has created a special niche for the nation in terms of its geographic location and energy issues. The Islamic Republic’s location between the Persian Gulf and the Caspian Sea that are the world’s two energy rich regions, is perhaps its most significant particularity in the world arena. The company was aspiring to increase its oil production form the present 4.2 million barrels per day (bpd) to five million (bpd) by 2010.

S. Korea, Kazakhstan seal offshore oil field development pact

September 3, 2006. South Korea and Kazakhstan have sealed a deal to jointly develop a prospective offshore oil field in the Caspian Sea. The agreement, signed in Astana between state-run Korea National Oil Corp. and its Kazakh counterpart KazMunaiGaz (KMG), is expected to give South Korea access to up to 500 million barrels of crude oil.

Ukraine, Azerbaijan initial oil cooperation agreement

September 1, 2006. Ukraine and Azerbaijan have initialed an agreement on cooperation between their national oil and gas companies. The document was initialed by Naftogaz and the State Oil Company of Azerbaijan following the seventh session of the Ukraine-Azerbaijan intergovernmental commission on economic cooperation in Baku. The intergovernmental commission also considered the terms and projected volumes of Azerbaijani crude and petroleum product exports to Ukraine for the near future. The two ex-Soviet republics are both members of the GUAM group, along with Georgia and Moldova. The group, widely seen as a counterweight to Russian influence, aims to create a free-trade scheme between its members and ensure cooperation in energy and other areas.

Belarus refuses to pay more than Europe for Russian gas

September 1, 2006. Belarus country would not pay more for Russian natural gas than Germany does. Russia sells Belarus oil for a price higher than that for Ukraine, and the gas prices it offers Belarus are higher than those for Germany. Belarus was not against increased prices for Russian gas supplies, but it should not be higher than domestic gas prices in Russia. Belarus had alternative sources of energy supplies, including from Venezuela. Belarus currently pays $46.68 for a thousand cubic meters of Russian natural gas, while average gas prices for European Union countries are $180-200 per 1,000 cubic meters.

Libya's $7 bn oil boost plan

August 31 2006. Libya expects international oil companies to invest more than $7 billion and discover an extra 20 billion barrels of oil equivalent under a 10-year exploration master plan.  Production in the 1970s was more than three million barrels per day compared with around 1.6 million bpd now. The target of the master plan is to discover 20 billion barrels of oil. There would be four to five further exploration rounds offering a total of 220 blocks.  A first round offered 57 blocks, a second 44 and the third round, which is seeking bids by Sept. 9, is inviting proposals from foreign companies for 41 blocks. The exploration master plan will call for the drilling of 50 exploration wells a year. The cost, including the shooting of thousands of square kilometres of two dimensional and three dimensional seismic surveys, would be around $4 billion. The NOC says less than a third of Libya, Africa's fourth largest country, has been explored for hydrocarbons. Its estimated reserves of 37 billion barrels so far have put it among the top 10 oil reserves owners.

Alaska gov. plans 3rd try at $20 bn gas pipeline

August 30, 2006. Alaska Gov. plans to call a third legislative session to try to win approval for a more than $20 billion natural gas pipeline deal that would pump badly needed fuel to the U.S. Midwest. The North Slope oil producers  - BP, ConocoPhillips and Exxon Mobil have invited lawmakers to participate in a new round of negotiations. The lawmakers, to be selected for their committee positions and other special expertise, will help rewrite contract provisions that have drawn the most public criticism. The provisions include promises for a long-term oil tax freeze that critics believe violates the state constitution and construction and labor commitments that critics consider vague and inadequate.  The gas pipeline, a decades-long dream of Alaska officials, would run about 3,600 miles (5,800 km) from Prudhoe Bay to Chicago or some other U.S. Midwest hub. It would provide a means for shipping the known 35 trillion cubic feet of natural gas reserves in North Slope oil fields, primarily Prudhoe Bay. The pipeline would take several years to build. The proposed contract with the North Slope producers, unveiled in May, establishes terms for taxes, royalties, lease duration and a 20 percent state investment in the project. Critics say the deal's terms concede far too much to the oil companies and would surrender important state powers necessary to protect the public interest, including the power to take disputes to court. The gas pipeline contract, if signed, would negate the reserves tax and its associated threat of litigation by the oil companies.  Delays in getting the contract in force would also increase the likelihood of natural gas from elsewhere displacing the potential for Alaska gas in the U.S. market.

LNG project gets govt approval

August 31, 2006. The Regional Development Council (RDC) of Region IV-A has approved the proposal of Hong Kong-based Energy World International Ltd. (EWI) to construct a liquefied natural gas (LNG) power plant in Quezon province.  The council adopted the firm’s proposal for the construction of a 300 MW power plant fueled by LNG in Quezon province.  By adopting EWI’s project proposal, RDC IV-A thus welcomes and supports the firm’s intent to explore the possibility and legality of investing in power generation using LNG in the region. The council and its member agencies extend support as EWI prepares the project’s feasibility study and secures local development council endorsements, environment compliance certificate and other requirements before approval and implementation. The LNG project is consistent with the country’s program of developing the natural-gas industry and promoting private-sector investment in the energy sector. It is also in line with Calabarzon’s Regional Energy Plan for 2005-2014 and its Regional Development Plan 2005-2010. The project will involve the construction of a new 300 MW combined cycle gas turbine power plant in two phases of 150 MW each, construction of a central LNG terminal, and development of a network of storage and distribution facilities throughout the country, among others.  The Department of Energy will evaluate the project and will send it to the NEDA Investment Coordination Committee for approval before its eventual implementation.

Korea, Uzbekistan agree on $20 mn gas deal

August 30, 2006. South Korea and Uzbekistan signed a gas production sharing agreement that will raise the country’s self sufficiency in the energy sector. The $20 million deal gives South Korea’s state-run Korea National Oil Corp. (KNOC) a 20 percent stake in the gas field in the Aral Sea. This share is equal to 18 months of the country’s average gas needs. Actual gas production is expected to start in 2012 after exploratory drilling has been completed. In addition to KNOC, Russian, Malay, Chinese and Uzbek energy companies are other partners in the consortium. The Aral field is estimated to hold a total of 8 trillion cubic feet of gas. Uzbekistan has the 11th largest known natural gas reserves in the world. The pact marks the first conclusive energy development contract with the central Asian country and comes as countries like Japan and the European Union have shown an interest in Uzbekistan’s energy resources. The pact will give the country a steady supply of liquefied natural gas, particularly during winter time. There had been some shortages in the past during the colder months due to increased heating needs. In addition to the Aral gas field, the ministry said South Korea and Uzbekistan agreed on the joint development of the Djantaur uranium mine. The 50-50 joint venture between the Korea Resources Corp. and its Uzbek counterpart can provide South Korea with a stable means to import the uranium needed to power its 20 commercial nuclear reactors. The country imports roughly 4,000 tons of uranium per year.

S. Korea, China in energy cooperation pact

August 29, 2006. South Korea and China agreed to pursue joint projects in the energy sector to cope with rising global oil prices.  The two sides agreed to strengthen cooperation in their policies related with high oil prices and the issue of global energy supply. Under the agreement, South Korea and China agreed to pursue joint projects in the fields of renewable energy, oil reserves, electricity and gas, without mentioning exactly how the two countries will cooperate. South Korea and China also agreed to increase exchanges between small- and medium-sized businesses and increase cooperation in their industrial policies. China replaced the United States as South Korea's largest trading partner in 2004.

Gazprom, E.ON prolong gas contracts for 15 years

August 29, 2006. Gazprom and Germany's E.ON Ruhrgas AG signed an agreement to prolong the existing contracts on Russian natural gas supplies via the German-Czech border for 15 years from 2020 to 2035. Gazprom said supplies would total 300 billion cubic meters. Gazprom and E.ON Ruhrgas AG, the world's largest private energy concern, also signed a contract on additional supplies of 100 bcm gas via the North European Gas Pipeline (NEGP) between 2010-2011 and 2036. Long-term cooperation in the natural-gas business not only provides an opportunity to fulfill current obligations but also allows us to establish a foundation for the future and develop modern infrastructure to ensure reliable natural-gas supplies in the following decades.

German companies BASF and E.ON are Gazprom's partners in the $10.5-billion NEGP project to supply western Europe with gas via a pipeline leading from Russia to Germany across the floor of the Baltic Sea. The new contract on gas supplies via the NEGP was further proof that the project is being successfully implemented. The NEGP, which is to include two parallel legs measuring 750 miles each, will connect the Baltic seashore near the Russian city of Vyborg with the Greifswald region on the German coast.  The first leg of the pipeline is expected to have annual capacity of 27.5 billion cubic meters, and the second will double the capacity to 55 bcm.

Natural gas consumption has increased -NAER

August 28 2006.A report by the National Agency for Energy Regulation (ANRE) on the developments on the natural gas market shows that the natural gas consumption in Moldova in the first half of the year has increased by 9.0 per cent compared with the corresponding period last year and totaled 762.55 million cubic meters.  The energy enterprises in the mentioned period consumed 319.4 million cubic meters of gas or by 6.0 per cent more than in the first half 2005, other economic agents – 179.9 million cubic meters of by 3.2 per cent more. The budgetary institutions consumed by 29.0 per cent more gas, from 20.7 million cubic meters in 2005 to 26.7 million cubic meters in 2006, while the population by 16.3 per cent more, from 203.4 million cubic meters to 236.5 million cubic meters. The energy enterprises accounted for 41.9 per cent of the gas consumption, domestic consumers – 31.0 per cent, other economic agents – 23.6 per cent, budgetary institutions – 3.5 per cent. 

The natural gas consumption was paid in proportion of 101.6 per cent. In the first half of the year there were purchased 818.7 million cubic meters of gas to the value of 1.19 billion lei. Under an agreement signed with Russia’s gas giant Gazprom at the beginning of 2006, in January-June this year Moldova bought Russian gas for $110 per thousand cubic meters, price higher by 37 per cent compared with the previous years. From 1 July 2006, the price of gas rose by 45.5 per cent, to $160 per thousand cubic meters.

Power

S.A. Firm to build Karuma power plant

September 1, 2006. A South African company, Infrastructural Development Finance Ltd., to construct the Karuma power station. The firm would co-develop the power plant at Karuma with Norwegian investors who are working with the government. Their entry into the project, taking over the government stake, is expected to expedite the project and complete it in 36 weeks. The group has undertaken hydro-power projects in other African countries such as Congo Brazzaville and the Central African Republic.

US plans to build new nuclear generation

August 31, 2006. TXU Corp. plans to apply for licenses to add 2 to 6 gigawatts of nuclear-fueled power generation capacity. The company said it expects to submit the applications for the construction and operating licenses to the U.S. Nuclear Regulatory Commission in 2008, which would allow the company to bring the new capacity on line between 2015 and 2020. It said its plan includes expanding capacity at its Comanche Peak nuclear power plant, as well as looking at sites in Texas and other states.

Australia could export uranium to China within months

September 4, 2006.  Australia could start exporting uranium to China within months and expects to corner about a third of the market for Beijing's giant nuclear power programme. Australia could earn some 250 million dollars (187 million US) a year from the deal once it is ratified. The committee is looking into treaties covering the export of the nuclear material signed earlier this year. China has announced plans to build 28 new nuclear reactors and by 2020 the annual uranium requirement would be about 8,000 tonnes a year, almost as big as Australia's current uranium output. Australia, which has the world's largest known reserves of the nuclear fuel, could hope to provide about one-third of that. There would be no direct Australian involvement in inspections of China's nuclear facilities and stores as that was up to the International Atomic Energy Agency.

First contracts for nuclear plant

September 2, 2006. French power utility Electricite de France has begun awarding contracts for a 3.3bn euro (£2.2bn) nuclear plant. Engineering company Alstom will build a steam turbine, the largest it has ever constructed, for the Flamanville plant in Northern France. Alstom's slice of the project is worth 350m euros, while the 300m contract to build the plant has gone to Bouygues. The winners of the other 150-odd contracts for the project have yet to be announced. Current plans call for the plant to start generating electricity in 2012.

Iran hopes Russia will be main bidder in two new NPP projects

August 29, 2006. Iran would like to see Russia as a principal bidder in a tender for the construction of two new nuclear power plants, one of them possibly at Bushehr. Atomstroiexport, Russia's nuclear power equipment and service export monopoly, is working on the $1-billion plant in Bushehr, 400 kilometers (250 miles) southwest of Tehran on the coast, which was previously scheduled to become operational by the end of 2006. That date has been set back to the second half of 2007. Iran has been at the center of an international dispute this year over its nuclear ambitions. Some countries suspect the Islamic Republic of pursuing a covert weapons program, but Tehran has consistently denied the claims and says its needs nuclear energy for civilian needs.

IEC in $3.5 bn Indian power plant tender

August 31, 2006. Israel Electric Corporation (IEC) has initialed an agreement to provide planning and consultancy services to Indian company LTDDS Construction Ltd., which is participating in a $3.5 billion BOO (build, operate, own) tender to build a 3,500 MW coal-fired power station in eastern India. Construction will take five years, and the building and operation contract is for 25 years. The plant will use imported coal. IEC is expected to earn 10-12 percent of the project $350-420 million and employ 400 Israelis. International economic consultancy company Genesis IMAP brokered the agreement between IEC and LTDDS. The Indian tender is still in the initial preliminary sorting stage. IEC will not participate in the consortium because of regulatory restrictions, but will serve as a sub-contractor for the design, construction, and possibly subsequent maintenance.

Sino Bio signs deal over coal-to-chemicals plant

September 4, 2006. Sino Biopharmaceutical (1177), a Hong Kong-based company that makes and distributes medicines and drugs in China, signed an agreement to establish a 5 billion yuan (HK$4.88 billion) coal-to-chemicals project to meet rising demand in the nation. Sino Biopharmaceutical, Shaanxi Coal Chemical Industry, Shaanxi Province Investment Group and Shaanxi New Coal Chemical Science and Technology Development will form the venture in the city of Yulin in northwestern Shaanxi province. The plant will produce chemicals such as ethylene and propylene from coal. Record crude oil prices are spurring China to build plants that can turn some of its coal reserves, the world's third- largest, into fuels and raw materials for making plastic. Registered capital of the venture will be 1.75 billion yuan, of which 750 million yuan will come from Sino Biopharmaceutical and 630 million yuan from Shaanxi Coal Chemical. The balance will be provided by the other partners. The plant is expected to start operating in the first quarter of next year.

Russia and Norway to sign nuclear cooperation agreement

September 4, 2006. The Federal Atomic Energy Agency (Rosatom) will hold negotiations with Norway to sign a cooperation agreement in the nuclear and radiation safety field. If the contracts signed under the agreement envisage providing access to the Defense Ministry's facilities to foreign citizens they should first be reviewed by the Russian Defense Ministry.

Turkey offers $130bn energy projects

September 2, 2006. Turkey will offer $130 bn in energy projects, including nuclear, for the private sector over coming years, to reduce the EU-applicant country’s reliance on imports. The ruling AK Party’s plans to turn Turkey into a regional energy hub by building several multi-billion-dollar transit pipelines to pump oil and gas to Europe from Central Asia. It’s $5 billion to $6 billion investments per year; the electricity sector alone was worth $105 billion out the total $130 billion sum. One of the single biggest projects will be the construction of three nuclear power plants with a total 5,000 MW capacity. Turkey’s previous efforts to build a nuclear power plant, stretching back 30 years, failed due to cost, legal issues and opposition from environmental groups. Construction of the nuclear power plant will start in 2007.

China power firm investing over $31bn

September 1, 2006. China's largest electricity provider Huaneng plans to invest more than US$31bn over the next four years in a bid to double its generation capacity. The bulk of the investment would go to coal power stations, while a portion would be used on new hydro and wind plants. The new facilities to be installed will be large-scale coal-fired units and renewable energy-fuelled plants. 

Agrium mulls coal gas for Alaska fertilizer plant

August 31, 2006. Agrium Inc. will go ahead with a feasibility study on a coal-gasification plant to supply gas for its Alaskan fertilizer operations. Agrium is considering the plant in order to supply feedstock for its fertilizer manufacturing operations near Kenai on the Cook Inlet, southwest of Anchorage. The facility, which makes urea and ammonia, is only operating at three-quarters of its capacity because of a shortage of natural gas feedstock from the depleting fields under the inlet. The coal-gasification plant, using low-sulphur coal from the Beluga field across the Cook Inlet, would replace the 53 bcf of natural gas needed each year to run the operation at full capacity, It would also supply power into the state grid and carbon dioxide for enhanced oil recovery. Agrium is also searching for other companies to participate in building the gasification plant, which could be in service by 2011. Agrium, Canada's No. 2 fertilizer company, will take at least half a year to complete the feasibility study.

India's signing of nuclear treaty vital for uranium deal: expert

August 31, 2006. The Government's strategic policy think tank says Australia should not sell uranium to India unless India signs the nuclear non proliferation treaty (NPT). The United States and India have signed a nuclear pact even though India has not signed the treaty. Until now, Australia has refused to export uranium to India because it has not signed the treaty, although it has agreed to sell to Taiwan which has not signed up because it is not a sovereign country.

Chile's Colbun closes deal on big hydro project

August 31, 2006. Chile's second-largest electricity generator, Colbun, approved an association with Endesa Chile that will allow the firms to develop a $4 billion hydroelectric project in southern Chile. It will form "Centrales Hidroelectricas de Aysen S.A." with Spanish-controlled Endesa Chile. Colbun will have 49 percent control of the corporation and Endesa Chile, the remaining 51 percent. The 2,355 MW project includes the construction of up to five hydroelectric power plants and is said to involve an investment of some $4 billion. The project has faced opposition from environmental and community groups who say it will spoil the natural areas in Chile's mountainous and remote Patagonian region. Chile, which imports nearly all of its fuel needs, aims to develop its hydroelectric energy potential to meet growing demand.

Western firms can help Iran build power plants

August 30, 2006. Iran is willing to have Western firms construct its planned nuclear power plants, but if they refuse the nation will carry out the construction itself. Iran have had the approval of another 21 thousand MW of nuclear power plants approved by the parliament that will be built in the next 20 years. The international tenders for building of two of these nuclear power plants have been so far presented, and would be willing to see the Western companies participate in these projects.

China seeks to cool coal-conversion industry

August 30, 2006. The Chinese government will soon issue an industry policy to regulate the coal-chemicals sector, after a circular last month ordered local authorities to tighten their grip on the approval of new coal-to-petrochemicals projects in China. Industry insiders familiar with the situation said the move aimed to ward off a potential investment spree as soaring global crude prices press China to turn to alternatives based on its abundant coal resources. The coal-chemicals industry included coking, coal gasification, liquefaction and the production of calcium carbide. Most of the under-construction coal-to-oil and coal-to-olefin projects in China, with a combined annual capacity of more than 100,000 tons, had not ensured viable technology and their single capacity did not satisfy government requirements.

The government would likely publicize the new industry policy by the end of the year, in line with last month's circular. The new industry policy would not place curbs on foreign companies' participation in China's coal-to-petrochemicals projects, although some industry analysts had suggested the government encourage China's homegrown technology and engineering.  An increasing number of global giants in the coal conversion field, such as Royal Dutch Shell and South Africa-based Sasol, have shown strong enthusiasm for China, the world's second largest energy consumer and top coal producer. Shell has so far clinched 15 deals to supply coal gasification technology to China, one of which is a 50-50 joint venture with the country's biggest oil refiner Sinopec. It has so far been used to produce synthetic gas for the manufacture of fertilizers, hydrogen and methanol.

Vestas sells stake to Vestas RRB India

September 5, 2006. Vestas Wind Systems A/S of Denmark has decided to sell its 49 per cent stake to its joint venture partner, Vestas RRB India Ltd. Though Vestas - the world’s largest wind energy generators (WEG) manufacturer - will continue its presence in India through its 100 per cent subsidiary, NEG Micon India Ltd. This would make Vestas RRB India Ltd a wholly-owned Indian company. Vestas would manufacture and market wind turbines of 750 kw capacity and above in India through NEG Micon India. Vestas RRB India’s focus would be on wind turbines of up to 600 kw capacity. Vestas, however, would continue to assist Vestas RRB India Ltd in its endeavour to further ‘indigenise’ components like blades and control systems for the wind turbine models being built by it now. Vestas has also confirmed that it would continue with its obligation to a technological cooperation with Vestas RRB India Ltd thus enabling Vestas RRB India Ltd to continue its business. Vestas RRB India Ltd is setting up a state-of-the-art WEG blade manufacturing facility near Chennai investing Rs 35 crore.

Wind projects to earn more from GERC

August 31, 2006. Gujarat Electricity Regulatory Commission (GERC) has announced its new tariff for purchasing power from wind energy power projects in the state. The new rate will be Rs 3.37 per unit. Gujarat Energy Transmission Company (GETCO), a distribution licensee wing of Gujarat Urja Vikas Nigam Limited (GUVNL), will be purchasing power generated by various wind power projects in the State.

India Biofuels to invest $30 mn in MP

August 30, 2006. To tap wasteland in Madhya Pradesh, India Biofuels Corporation will invest $30 million in the state to cultivate jatropha.  The state government has recently changed its policy to attract investment in developing wasteland through the participation of local people and self-help groups.  The Project Clearance and Implementation Board has given its nod to the project and has asked the company to make a survey and assured its support.  India Biofuels Corporation has taken the help of experts and made a strategy to tap opportunities to develop a large-scale biofuel industry in India.  With its objective to bring more than one million hectares of unused, uneconomic rural wasteland under full-scale commercial biofuel production over the next 10 years, the company has asked for at least 50,000 hectares of wasteland for jatropha cultivation.  The National Commission on Biofuels has sought plenty of options for developing the biofuel sector in India. 

Wind power set for boost

August 30, 2006. The Central government is planning to make the depreciation claims available for investments made in wind turbines tradeable.  The move can attract more investments in the wind energy sector.  The idea is being discussed by the ministries of finance and revenues and a decision will hopefully be made before the presentation of Union Budget 2007. 

California to cut greenhouse gas emissions

September 1, 2006. California govt have agreed on a plan to cut by 25 per cent the amount of greenhouse gases emitted from California's electric power plants, refineries and other sources by the year 2020.The Bill, which was expected to win final legislative approval and go to the governor, would make California the first state in the nation to fight global warming by slapping caps on carbon dioxide and related emissions.  California, world's 12th largest producer of greenhouse gases, will cap emissions at 1990 levels by 2020, by almost 25 per cent. By 2008, the California Air Resources Board will begin requiring reporting of greenhouse gas emissions by the biggest polluters.  By 2011, the state will set greenhouse gas emissions limits and reduction measures to go into effect in 2012. Failure to comply will lead to penalties.  The state board is allowed to draw up market mechanisms to achieve greenhouse gas emission reductions, including carbon credit trading.  The governor can halt implementation of regulations for up to a year in the event of "extraordinary circumstances" such as a natural disaster or economic crisis.

Sharp sees solar power costs halving by 2010

August 31, 2006. Japan's Sharp Corp. the world's biggest maker of solar cells, expects the cost of generating solar power to halve by 2010 and to be comparable with that of nuclear power by 2030. By 2030 the cost will be comparable to electricity produced by a nuclear power plant. Solar electricity currently costs about $0.50 per kilowatt hour to produce, more than eight times as much as that produced from fossil fuel. The market is growing at a rate of more than 30 percent per year but solar power still produces just a small fraction of one percent of the world's energy. The solar industry in general expects the cost of producing solar power to fall by about 5 percent per year, on average. Sharp has also been moving toward producing more so-called thin-film solar panels, which use less silicon but are less efficient than traditional solar panels.

Duke signs wind-power deal in Indiana

August 30, 2006. Duke Energy Indiana will buy up to 100 MW of wind-generated electricity from a wind farm an independent company is building in Benton County, Ind. The 20-year agreement is the first significant, long-term purchase of wind power in that state. If regulators approve the contract, Duke Energy Indiana will begin purchasing the power in 2007. It is a small percentage of the 7,200 MW of electricity the company produces each year for 750,000 customers in Indiana.

Imperial Petroleum signs agreement for biodiesel sales

August 29, 2006. Imperial Petroleum, Inc. has signed a definitive Marketing and Sales Agreement with Domestic Energy Partners ("DEP") for the sale of biodiesel fuel from the DEP Plant located in the Salt Lake City area. Under the Agreement the Company will have the right to market up to 140 million gallons annually of B100 produced by DEP. In addition, HBC can construct biodiesel production plants in certain states using the DEP technology. HBC already has purchase orders for the sales of 840,000 gallons of B100 annually that will begin delivery next week. HBC and DEP share equally in the profits of the sales of B100 under the agreement.

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