Don’t do as I do, do as I say

 

 

Contents
Analysis / Issues
5		Mega sized coal fired power projects in West Coast (Part – III)
8		CDM Potential in Oil and Gas Industry (Part – III)
News Brief
	National: Oil & Gas
11	Upstream
	SAAG RR foray into work-over rig services biz
	ONGC may buy 5% in Rosneft IPO for $4bn
	Gail consortium signs deal for Oman oil block
	Downstream
	Chennai Petro to set up $239 mn propylene plant
	HPCL doubles diesel tender purchase to 100KT
	Asia`s largest gas station in India
	RIL plans $648 mn Venezuela JV
	Transportation / Trade
	BPCL seeks low-sulphur crude for Aug, Sept
	$0.7mn USTDA grant for gas grid in India
	RIL has supply deals with NTPC
	Policy / Performance
	Kalpataru, Russia's ZanGas win GAIL order
	Rajasthan seeks 50:50 ratio in petro profit
	Draft gas policy moots national advisory body
	Reliance Energy wants Plan panel to intervene in its gas price row
	IOC firm on corporate restructuring plan
	MCX to launch gas, coal futures trading soon
	ONGC’s JV route for expansion
	Russia welcomes more Indian oil firms
	'India needs to increase strategic oil reserves' – Exim Bank
	National: Power
	Generation
	Goa may install two 250 MW power plants
	BHEL bags $183 mn contracts in Rajasthan
	US co Dodson-Lindblom to enter Indian hydel biz
	BHEL bags $47 mn contract in Afghan
	12 cos line up to sell power to Haryana
	Transmission / Distribution / Trade
	L&T bags $72 mn order from IOC, Bongaigaon
	MSEB to buy Dabhol power at Rs 5 a unit
	Policy / Performance
	IFC approves $150 mn loan to Cairn Energy
	Tatas to pull out of $3 bn Bangla foray
	CERC study to plug power losses
	Metal Junction-NCDEX may launch coal futures
	13 cos qualify for 2 power projects
	SAIL, RINL join hands for foreign coal mines
	MIDC mulling group captive power projects
	West India worst hit by power crisis: Assocham
	International: Oil & Gas
	Upstream
	Brazil to begin natural gas exploration
	LUKoil starts drilling southwest Uzbekistan
	ConcoPhillips & Citgo reserve to lend 750,000 barrels
	Gazprom to invest in Belgian gas
	Husky to drill Norsk Hydro Newfoundland prospect
	Downstream
	Shell sells 29 gas stations in Central Ohio
	Pak Govt offers free land for oil refinery
	Transportation / Trade
	Europe seeks Russian trade deal to open up its energy sector
	Petroecuador sells 2 mn barrels of Napo crude oil
	FPL route for new transmission line
	ConocoPhillips buys share of gas pipeline
	Russia to export 65 mn tons of oil in 3Q06
	Talisman starts up northern Alberta gas pipeline
	US’s Daybreak enters into oil sales agreement
	Nabucco gas pipeline is approved
	Policy / Performance
	Iran plans to cut gas imports, subsidies
	Hydro reduces 2006 oil and gas production target
	Turkmenistan wants to increase gas price for Ukraine
	Bush urges alaska on natural gas pipeline
	Turkmens threaten to stop gas in 2 months
	Pak privatisation of gas firms delayed
	India, Russia set to expand oil, gas cooperation
	International: Power
	Generation
	Russia mulling construction of power stations in Angola
	Policy / Performance
	PG&E eyes $12.5 bn for power plants
	Renewable Energy Trends
	National
	Green share in electricity generation to rise
	Bio-diesel industry seeks duty sops
	CPCL plans $22 mn wind farm
	Global
	Brazil develops new biofuel through vegoil blend
	US to help Pak develop coal, hydel energy

 

 

Production and Average sale price of crude by ONGC

 

Year ended March 31( in US$)
	2001	2002	2003
Average Sales Prices of Petroleum Produced
Per barrel of crude oil sold	17.8	17.8	30.3
Per thousand cubic meters of Natural Gas sold	53.5	53.1	52.8
Average Production Costs per barrel of oil produced
Domestic – Onshore
Independent	18.7	13.4	18.6
Production-Sharing Contracts	-	-	-
Combined Operations	13.7	13.4	18.6
Domestic – Offshore
Independent	12.0	11.8	17.2
Production-Sharing Contracts	8.8	10.5	10.0
Combined Operations	11.6	11.5	16.4

 

Source: http://www.myiris.com/shares/ipo/draft/OILNATGC/OILNATGC.pdf

 

 

Mega sized coal fired power projects in West Coast (Part – III)

(Shankar Sharma – Energy Consultant)

- Socio-environmental impacts and viable alternatives

 

ther alternatives: Once the above mentioned alternatives have been fully exploited, if there is additional need for energy, the other alternatives available to individual states like Karnataka and Maharastra for the longer term energy security could be suitable understanding with other states like Uttaranchal, Jharkand, Himachal Pradesh, Arunachal Pradesh or private agencies like Reliance or Tatas to provide us power supply.  Some of the issues that could be of relevance in this scenario are:

·          Many states like Uttaranchal, Jharkand, Orissa, Himachal Pradesh, Arunachal Pradesh etc. are keen on harnessing their rich energy sources like hydro power and coal power.  A long term agreement with these state governments to supply assured quantity of power is one credible alternative.  Already many states are understood to be availing this opportunity. However, the environmental issues in each of the individual locations should be properly addressed.

·          The private agencies like Reliance and Tatas are reported to be planning super thermal projects in UP, Jharkahand and Orissa, who can provide assured supply of power on long term basis.

·          Karnataka Power Corporation should also consider investing in some of these projects outside of Karnataka as a partner and secure power supply as return on investment.  Such an option is certainly better than the ill conceived idea of transporting coal over thousands of kM and putting up coal fired power station in environmentally sensitive areas with all the attended problems.

The alternative sites for such mega sized coal fires stations: If, in the overall objective analysis, it turns out that the proposed mega sized coal fired power stations are in the best interest of the nation aren’t there alternative sites with lesser societal impact?

·          Why can we not consider the sites of old and inefficient coal power stations in many states like UP, Bihar, Orissa etc? There are a large number of such stations with very low PLF in many states.  Such inefficient stations are severe drains of the nation’s resources; why cannot we use such sites, even if it means building entirely new facilities?

·          If an existing station site (say of few 60/110 MW units) is not adequate to house the proposed 4,000 MW station, the possibility is always there to spread 660/800 MW units at more locations than in two locations as proposed. Such an approach may also address the issue of evacuation paths for 4,000 MW in one location.

·          The resources like existing power station land, coal & ash handling facilities, fresh water sources, transmission corridors etc, if needed to be upgraded or even built a new shall be lot more acceptable to the society.

·          The Raichur Thermal Power Station in Karnataka has 7 units of 210 MW capacity each and the 8th Unit is being planned.  The first unit was commissioned in 1980s, and is nearing the end of its economic life.  KPCL should consider whether it is feasible to put one unit of either 500/660/800 MW in place of Unit 1 and the proposed Unit 8. Such a consideration can assist in increasing the overall efficiency of the station, and also can produce more power at the existing location.  If this is feasible, the other units also, could be considered for replacement by 800/1000 MW units at appropriate time.

Such old power station sites should be seriously considered instead of looking to set up large coal fired power stations in environmentally sensitive areas, and in the process destroy the thick forests or fertile agricultural lands.  As a resource constrained society with a large and growing population, we have to be extremely conscious of the need to optimize the use of our meager resources, so that we achieve the social, economical and environmental goals on a sustainable basis. 

At a time when many of the developed countries like USA and in Europe, who had depended upon coal fired power stations and had bitter experiences, are moving away from such high pollution industries, we should learn lessons from their experiences than re-inventing the wheels.

The need for a paradigm shift: All the points discussed in part I and II of this series should serve to initiate a review of our national level priorities on large power projects.  As already experienced during last few decades, the electricity industry has the potential to become the worst abuser of our natural resources, if not managed properly.  In this regard some of the critical issues we, as a society, should address urgently are:

·          We cannot hope to attain energy security unless we increase the overall efficiency of the electricity industry to the maximum extent possible, adopt the best possible demand side management techniques, and conserve energy. We should be able to clearly distinguish between the energy needs and energy profligacy, and make all out efforts to reduce the wastage to the minimum.

·          The entire electricity industry has to assume very high level of responsibility, accountability and transparency, and achieve the levels of international benchmarking in all business processes.

·          The western world’s practice of associating high per capita energy consumption with progress is not suitable to our scenario, because it is more than likely to encourage profligacy by certain sections of the society than ensuring affordable energy for all. The earlier we stop comparing the per capita electricity consumption of our country with that of OECD countries like USA and Canada, it will be better for us to focus on issues specific to our society.

·          We should assign objectively realistic value to forests, agricultural fields, human displacement, and water resources in order to arrive at realistic cost of supplying energy.

·          Tariff mechanisms can play a crucial role in encouraging energy efficiency and energy conservation, and in discouraging energy profligacy.  Suitable tariff mechanisms should be implemented not only to achieve these objectives but also to protect the weaker sections of the society.

·          For a modern welfare society it should be anathema that all the concerned stake holders are not part of the decision making process. There should be action plan to mandate effective public consultation at the stage of application registration stage itself on all aspects of large project. Such pro-active action will reduce the incidences of subsequent public opposition to the approved projects, and corresponding project completion delays. The bitter experience of Bedthi project in Uttara Kannada district and Silent Valley project in Kerala, which had to be stopped because of the popular opposition are examples of how things can go wrong without public’s co-operation.

·          The energy supplied at present is highly subsidized in many ways. What our society doing at present is to supply inefficiently derived energy from limited conventional sources at subsidized rates for highly inefficient/wasteful end uses, for which the real subsidy cost will be debited to the account of future generations.  If we take into account all the relevant costs, whether direct and indirect, in an objective manner the energy derived from such large projects based on conventional technology will be much higher than that is being projected by the project developers.

·          At a time when other primary sectors of our economy like poverty alleviation, health and education are starving of funds shall we continue to pour thousands of crores of Rupee worth precious resources in adding new generating capacity through conventional technology only to end up with productive and economic usage of about 20%, without first exploring cheaper alternatives?

·          In view of the fact that because of the extensive cultivation technique adopted in our country we probably need more and more land areas to come under the agricultural cover to cater to the growing population, such projects will take away some of the most productive agricultural lands. 

·          Since any human endeavor has a deleterious impact on the nature, we have to be extremely cautious before even considering such large projects.  There cannot be any argument that the compensatory forests can never substitute for natural forests, which have taken thousands of years to develop.

·          As a civilized society we should demonstrate adequate farsightedness by constantly reminding ourselves of the obligations to our future generations.  As Mahatma Gandhi said, we should consider ourselves the Trustees of the nature, which we inherited from our ancestors, only to hand it over to the future generations in as pristine a condition as humanly possible.

·          In view of the present and future difficulties in getting adequate energy through conventional energy sources, which is so vividly discussed in the draft report on integrated energy policy by Planning Commission, the inevitability of harnessing the renewable non-conventional sources become evidently clear.  Our society has a lot at stake in actively encouraging the increased use of such sources and in participating in R&D activities to reduce the relevant costs.

·          With only initial capital cost and negligible recurring costs, the efficient deployment of non-conventional energy sources will not only eliminate all the issues with conventional energy sources, but also will slowly shift the burden of supplying energy from the State to individuals.  It may be safe to assert that the present day crises of meeting the basic needs, including energy, is because the State has assumed the responsibility of supplying basic needs to every one, as compared to past centuries when the onus of arranging energy and the basic needs was with the individual, which had naturally lead to higher efficiency and high level of conservation.  As a society we must debate whether the State can revert back to this system as best as possible within the constraints of present day life.

·          Many energy intensive industries like steel, alumina, cement etc. are embarking on measures like energy audits and conservation measures and are reported to have reaped huge benefits. Why can’t our electricity supply companies undertake similar measures to establish highest possible efficiencies?

Conclusions:

In view of the close relationship between energy availability and the progress of all sections of the society, and since the State has failed to ensure adequate electricity to all by conventional means during the past 58 years, we should adopt suitable non-conventional methods.  Electricity should not necessarily be viewed as grid quality electricity alone, and the role of generating companies should be modified to that of a champion of non-conventional energy also.  Demand side management, energy efficiency, and energy conservation should be considered as an integral part of the corporate objective of all electricity companies.

The society has to carefully deliberate on how much forest land and agricultural land can it afford to loose to get additional power.  The forest cover as of today is only 19.1 % of the total land area against the national forest policy target of 33%.  With more and more of such large size projects more and more forest cover and fertile agricultural lands would be lost. With such policies we may never be able to attain the forest cover goal. What would happen when we require more power in few years’ time?  Shall we go for more of coal fired stations in such environmentally sensitive areas?  Since the states like Karnataka have no known reserve of fossil fuel sources it would not be a wise decision to opt for a coal fired station/gas fired station and depend on imported energy sources on a perpetual basis. From the energy efficiency point of view it is considered ideal to generate electricity (if, by conventional means) very close to the source of primary energy, and transmit it to the load centres. 

The state governments have a serious case to address the electricity requirement on a sustainable basis to achieve energy security without compromising on our fragile environment.  The Western Ghats and coastal areas are too precious from the welfare point of view of the entire region, and hence we should not do anything which will damage them irreversibly. The state governments should initiate public discussions in this regard before taking any decision. A high powered committee of energy experts, environmentalists and economists should debate these issues objectively, and come up with a sustainable energy policy for each state.

The serious implications of such large size polluting projects in a bio-diversity hotspot have become a serious concern to the environmental scientists and all the concerned citizens in Karnataka, who have already started a mass based agitation against the proposal.  The public would expect all responsible governments to take such popular oppositions in the past into account, and to avoid the wastage of public money by taking the progressive route of effective public consultation.

(Concluded)

 (Views are personal)

International Commodity Prices

Source: http://rbidocs.rbi.org.in/rdocs/Publications/PDFs/69825.pdf

CDM Potential in Oil and Gas Industry part – III

 

3.        Introduction On Clean Development Mechanism

he Kyoto Protocol to the UN Framework Convention on Climate Change (UNFCCC) fixes legally binding targets for the reduction in the emissions of green house gases (GHGs) by the rich industrialized countries listed in the Annex I to the UNFCCC (Annex I countries). The Kyoto Protocol exempts the developing and the least developed countries (non-Annex I countries) from any GHG emission reduction targets, at least for the time being.

The Kyoto Protocol established three market mechanisms to help the Annex I countries meet their GHG emissions reduction targets cost effectively and Clean Development Mechanism (CDM) is one of them. This market mechanism encourages environment-friendly projects by Annex I countries in non-Annex I counties that do not have GHG emission reduction restrictions under the Protocol. The CDM envisages technology transfer and financial flow from developed countries to developing countries for environment-friendly projects that are in tune with the sustainable developmental needs of the people in the developing countries in the tropics and subtropics.

The Kyoto Protocol to the Framework Convention on Climate Change specifies emission reduction targets for developed countries for the period 2008-2012. These targets can be achieved either through domestic reductions or the use of the protocol’s three flexible mechanisms namely:

1.        Joint implementation [JI] - article 6 of the protocol 

2.        Clean Development Mechanism [CDM] - article 12 of the protocol

3.        Emissions trading [ET] - article 17 of the protocol.

The CDM is a project-specific mechanism, with basic objective to assist developed countries in achieving compliance with their quantified emissions targets in a cost-effective manner, assist developing countries in achieving their sustainable development objectives, and contribute to the ultimate objective of the UFCCC. It allows developed country entities to invest in greenhouse gas [GHG] mitigation projects in developing countries, and to use the resulting Certified Emissions Reductions (CERs) towards meeting their Kyoto targets.

3.1Institutional support for CDM projects in India

Institutional support for the CDM is already in place in India. A designated national authority has been appointed by MoEF, India to evaluate and support all CDM projects at the national level. The MoEF and several private sector bodies are also co-coordinating the CDM Program, which aims to promote the production and use of green and clean fuel as alternative such as bio-diesel, liquefied coal, etc.

The Indian Government ratified the Kyoto Protocol in August 2002 and thereafter established the National Clean Development Mechanism Authority (NCDMA) within the MoEF. This institution is India's Designated National Authority responsible for giving host country approvals for CDM projects. The NCDMA has established an efficient project approval process with clear and transparent approval criteria. It is committed to promoting India as a preferred destination for CDM projects. India is playing an important role in helping to shape the international rules concerning CDM through its representation on the CDM Executive Board.

As of May 2005, the NCDMA has approved 78 potential CDM projects. These include 45 projects in the renewable energy sector, 28 projects in energy efficiency and fuel switch sector and 5 projects in the fugitive gas abatement sector. Category-wise 32 biomass based (including cogeneration) projects have been approved, followed by 12 projects related to energy efficiency measures in the iron and steel industries.

The portfolio of 78 projects approved by the NCDMA to date has the potential to generate approximately 117 million tonnes of CERs (cumulative) until the end of 2012, according to the project developers' estimates. India continues to be a leader in both small and large scale projects. Two HFC-23 destruction projects and one PFC reduction project from a large aluminum smelter have been approved. In addition, projects related to renewable energy and energy efficiency & fuel switch have the potential to generate another 17 and 37.4 million tonnes of CERs until 2012, respectively. 

Some of the organizations and research agencies that are involved in climate change and CDM activities and that could be a useful source of information for CDM project development and implementation.

Teri	Development Alternatives
IT Power	IRG International
Ernest& Young	EscosmartIndia Limited
Winrock	Pricewaterhousecooper
Suzlon Energy	Tüv Süddeutschland India
ADB	Rabobank International
World Bank	Deloitte Touche India Pvt. Ltd.
IDFC	Indian Wind Energy Association
Vestas RRB	The Louis Berger Group
GTZ	University of Petroleum & Energy Studies

4.       CDM PROJECT CYCLE

Because of the various regulatory requirements, the development of a CDM project necessarily has to follow a certain order. The description of a typical CDM project cycle, according to the latest proposals submitted by the Parties, is given below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

a.       Project design

The project design phase is the process of conceiving the project concept, estimating the GHG mitigation potential of the project, undertaking the feasibility analysis, identifying the various project partners and developing a working plan. The output of this phase is usually a Project Design Document (PDD), which includes, at least:

·          Parties involved in the project, addresses and contact directions

·          Description of project activities and background

·          Rationale for eligibility as a CDM project

·          Estimation of GHG mitigation potential, based on an analysis of project and baseline carbon flows

·          Estimated sustainable development objectives

·          Implementation work plan

b.        Host country approval and validation of project design

The next steps in the CDM/JI project cycle are to seek host country approval and validation of the project by an independent certification body. All projects willing to participate in the CDM will have to have their Project Design Documents validated by an independent certification body. This process of validation will probably be conducted by Operational Agencies (certification companies) accredited by the CDM.

c.        Registration of the project with the CDM Executive Board

After the project has been successfully validated and approved by the host country, it will have to be registered with the CDM Executive Board, which will give it a unique registration number.

d.       Verification, certification and issuance of credits

Carbon offset projects under the CDM will need to be independently verified by an Operational Entity (OE) accredited by the CDM ex post delivery before any carbon credits can be issued for trading.

The successful output of the verification process is the certification of the project. Certification consists of issuing a statement indicating that the project has successfully created a given amount of carbon credits in accordance with the rules of the Kyoto Protocol and the UNFCCC. Based on this certificate, the CDM Executive Board can then issue credits for the project. The CDM will deduct from the project’s gains two per cent of the credits generated, to support countries likely to be most affected by climate change (the Adaptation Levy. The levy to cover administrative costs is yet to be decided).

5.       CONCLUSION

India currently holds the major share of approved CDM projects in the world. Out of total 175 projects approved till now India has 42 of them (alone hold 25%). Mostly the sectors covered are Energy industry like power generation based on renewable energy sources, waste management and industrial efficiency. The Oil and gas sector is till now remained untapped market.

Oil and Gas industry in India are emitting a significant amount of greenhouse gases i.e. CO2 and Methane. This amount is estimated as 13146 Giga gram of CO2 equivalent according to the report of ALGAS (Asia least-cost Greenhouse gas abatement strategy by Asian Development Bank) “India’s GHG Inventory, 1990”.

The country could emerge as one of the first nations “reaping fuel” at the same time it contributes to limiting warming. Unfortunately, the country’s current socio-economic crisis is hindering investment decisions and is the main barrier to be overcome. But the CDM can offer a triggering incentive to encourage producers and investors to develop project activities compatible with additionality requirements.

REFERENCES

Implementation of CDM in ASEAN Member Countries. ASEAN Secretariat, Jakarta, 18-19 March, 2004

Barber, T.R., Sackett, W.M.: Anthropogenic Fossil Carbon Sources of Atmospheric Methane.

In Geyer, R.A. (ed.): A Global Warming Forum – Scientific, Economic and Legal Overview, pp 213 – 218. CRC Press. Boca Raton. 1993

Begg, D., Fischer, S., Dornbusch, R.: Economics. McGraw – Hill. Berkshire. 2003

Bosi, M.: IEA’s Work on Assessing Emission Reductions in the Natural Gas Sector through Project-Based Mechanisms. Presentation at IPIECA Workshop on Reporting, CDM and JI in Lillehammer, March 16, 2004

Dudek, D., Wiener, J.: Joint Implementation, transaction costs and climate change, OCDE/GD(96)173, Paris. 1996

Dutschke, M., Michaelowa, A.: Development Aid and the CDM – How to interpret “Financial Additionality”. HWWA Discussion Paper No. 228. 2003

Embassy of the United States of America in Indonesia: Petroleum Report Indonesia

2002 – 2003. Jakarta. 2004c

Energy Information Administration: Annual Energy Outlook 2004 with Projections to 2025. U.S. Department of Energy, January 2004a

Energy Information Administration: International Energy Outlook 2004. U.S. Department of Energy, April 2004c

Langrock, T., Michaelowa, A., Greiner, S.: Defining Investment Additionality for CDM Projects – Practical Approaches. HWWA Discussion Paper no. 106. 2000

Murdiyarso, D.: Sepuluh Tahun Perjalanan Negosiasi Konvensi Perubahan Iklim. Penerbit Buku Kompas. Jakarta. 2003c

Sari, A.P., Purnomo, A., Soejachmoen, M.H., Chrisandini: Progress of the Designation of the Indonesian CDM Authority. Presentation at Global Gas Flaring Reduction’s Regulatory Capacity Building Workshop in Bandung, Indonesia, March 15 – 16, 2004

Schelling, T.C.: Some Economics of Global Warming.

In Dorfman, R., Dorfman, N.S. (eds.): Economics of the Environment – Selected Readings. W.W. Norton & Company. New York. 1993

(Concluded)

NEWS BRIEF

OIL & GAS

SAAG RR foray into work-over rig services biz

July 1, 2006. SAAG RR Infra Ltd is holding talks with Oil and Natural Gas Corporation and others to launch itself in the oil and gas industry.  A subsidiary of SAAG Consolidated, listed on the Malaysian Stock Exchange, SAAG RR has announced its foray into the business of providing work-over rig services on offshore platforms, which is a niche segment with ample opportunity and minimal competition. The company currently had orders worth Rs 45 crore ($9.8 mn) and already built projects worth Rs 36 crore ($7.8 mn).

The Chennai-based company, whose annual turnover in 2005-06 was Rs 32 crore ($6.9 mn), is expected to touch the Rs 100-crore ($22 mn) mark in two years. SAAG RR, having restructured and consolidated its core business, would derive the benefit of the parent company's database of 5,000 engineers to diversify into oil and gas sector.  The domain knowledge in work-over rig services segment of the industry is available in-house with the Malaysian company's another subsidiary, SAAG Drilling and Well Services, in Malaysia. With this in-house expertise available, SAAG RR aimed to capitalise on the business opportunities in India and West Asia.

ONGC may buy 5% in Rosneft IPO for $4bn

June 30, 2006. ONGC is looking north for making some strategic investments in the Russian oil empire. Initial round of talks have been held between senior ONGC officials and the Russian government officials for a possible stake in some oilfields in Russia. As an icing on the cake, OVL (ONGC Videsh), the overseas investment arm of ONGC, would buy up to 5 per cent stake in Roseneft by subscribing to its IPO. The IPO would be open to foreign investors and institutional investors in the first week of July. Rosneft plans to mop up $11.6bn through the offering. ONGC has told the Russian authorities that it might participate in the IPO provided it gets a stake in Sakhalin-3, Vankor or Timano-Pechora oil fields. The IPO values Rosneft at between $60bn and $80bn. A 5 per cent stake would mean $3-4bn investments. ONGC has been eyeing Russian oil properties for some time now after it made a foray into the country by taking a stake in the Sakhalin-1 blocks, which is now into production. OVL currently has 20 per cent stake in ExxonMobil—operated Sakhalin-I project, which is to pump to 250,000 barrels of oil per day by ’06.

Gail consortium signs deal for Oman oil block

June 30, 2006. A consortium consisting of Gail, Oilex Australia, Videocon, Hindustan Petroleum and Bharat Petroleum has signed an exploration and production sharing agreement (EPSA) with the government of Oman for a 5,809 sq km block. The pact was signed in Muscat. Gail, Oilex and Videocon hold 25 per cent each in the consortium with Oilex Australia as the operator. The block 56 is an onshore block located in the south Oman Salt Basin area. Drilling by the consortium is to begin in ‘07. In January, Oman had offered five blocks (block 54, 55, 56, 57, 58) in the fringes of the south Oman salt Basin under competitive bidding round. The blocks 54, 55 and 56 were in the eastern flank where as blocks 57 and 58 are in the western flank. As per the commitment made by the consortium under the EPSA, work will commence with reprocessing of existing seismic data followed by acquisition of 2D and 3D seismic in last quarter of ‘06, depending on availability of seismic contractors. 

Chennai Petro to set up $239 mn propylene plant

July 4, 2006. Chennai Petroleum Corporation, the subsidiary of Indian Oil Corporation (IOC), has put off its plan to set up a Rs 1,100 crore ($239 mn) poly-propylene plant in Manali near Chennai. The decision comes in the wake of IOC setting up a much larger poly-propylene unit at its Paradip petrochemical complex.  Poly-propylene is a plastic used in the production of car dash boards, chairs, etc, is extracted from propylene, which in turn, is obtained from liquefied petroleum gas. Poly-propylene fetches Rs 5,000 to Rs 7,500 higher price than propylene.  The company is working on a feasibility study to commission a propylene plant with a project cost of Rs 300 crore ($65.2 mn) instead of setting up the poly-propylene plant. 

This propylene plant would have a capacity of 80,000 tonne per annum and would take two years to start production. At present, the subsidiary produces about 30,000 tonne per annum of propylene which its sells to Manali Industries.  IndianOil has envisaged a 15 million tonne refinery and petrochemical complex which will also have the poly-propylene unit, along with a peraxylene unit with a capacity of 12 lakh tonne per annum and a styrine monomera unit with a capacity of 60 lakh tonne.  This entire project outlay is estimated at about Rs 30,000 crore. IOC has another refinery at Panipat with a capacity of 12 million tonne.  Chennai Petroleum Corporation expects to raise its throughput capacity from 9.5 million tonne to 11.2 million tonne in two years. The company will invest Rs 150 crore ($32.6 mn) for this project. 

HPCL doubles diesel tender purchase to 100KT

July 3, 2006. Hindustan Petroleum Corp Ltd (HPCL) has bought by tender 100,000 tonnes of low-sulphur diesel for August and September, twice the amount requested to cover low domestic supplies.  HPCL also bought in the same tender 25,000 tonnes of kerosene for delivery into Mumbai on July 18-22.

Asia`s largest gas station in India

July 1, 2006. Punjab-based Reliant Infrastructure is going to set up Asia’s largest gas station on NH 1 near Rajpura. The state-of-the-art gas station will be set up in an area of 10 acres in association with HPCL.  The gas station will have a capacity of filling forty vehicles simultaneously. The first phase of the project will be operational by the year end.  The project will cost Rs 25 crore ($5.43 mn) and HPCL will invest Rs 6 crore ($1.3 mn). The construction of the project would commence in two months and the first phase, including the club house and 124 serviced apartments will be ready in one and a half year.  The total cost of the project is about Rs 100 crore (21.7 mn) including an investment of Rs 30 crore ($6.52 mn) in land. 

RIL plans $648 mn Venezuela JV

June 29, 2006. Reliance Industries is in talks with Venezuela's state-owned Pequiven to form a joint venture to manufacture plastics, resins and other petrochemicals from refinery by-products.  A Reliance delegation is expected to visit Venezuela in the next few weeks to sew up the deal. The plan is to set up a project at Paraguana in Falcon state of Venezuela, utilising Reliance's experience in producing petrochemicals from refinery by-products. The by-products would come from the 9,56,000 bpd refining complex in Paraguana.  RIL could invest anywhere between Rs 2,000 crore (432 mn) and Rs 3,000 crore ($648 mn) for the project. Reliance officials were not available for comments.  State-owned profit-making firm, Pequiven (Petroqu¡micas de Venezuela), is the largest petrochemical company in Venezuela, incorporated in 1977.  The invitation to Reliance is part of Venezuela's plans to more than double petrochemical production – from 11.4 million tonne to 25 million tonne – by 2012 at an investment of $10 billion. About 50 per cent of the investment will be made by the state, and the rest will come from foreign investors. 

BPCL seeks low-sulphur crude for Aug, Sept

July 3, 2006. Bharat Petroleum Corp (BPCL) has issued a regular tender to buy crude oil for late-August and September loading. The state-run refiner is looking for low-sulphur crude, such as West African. In the previous tender, BPCL bought its first cargo of Nigeria's new Erha crude oil. It took 950,000 barrels of the grade for August loading from European trader Glencore, after having skipped purchases of West African grades in the previous three months. It also bought 500,000 barrels of Dubai crude and 600,000 barrels of Yemeni Masila grade for loading in August from Japanese trader Mitsui in the previous tender. 

$0.7 mn USTDA grant for gas grid in India

July 1, 2006. The United States Trade and Development Agency (USTDA) will part fund the feasibility study for setting up of $4 billion plus national gas grid project in India. USTDA concluded an agreement with the petroleum ministry’s Petroleum Planning and Analysis Cell (PPAC) by awarding a grant of $690,000 for this feasibility study. The feasibility study is divided into six phases that will evaluate technologies and practices for the construction, operation and management of the proposed $4.3 billion natural gas transmission pipeline network project.

In total, the national pipeline grid will involve constructing approximately 7,900 km of line in addition to a number of compressor stations, metering stations, gas storage, control systems and communications. Petroleum ministry officials said the conclusion of this agreement constitutes concrete progress in the Indo-US Energy Dialogue and will contribute significantly to India’s ambitious plans to create an efficient national gas grid. PPAC is facilitating the building of the natural gas transmission pipeline network that will eventually reach all major energy consuming areas in India. The ministry has prioritized this project to promote the increased use of natural gas as a preferred fuel. As India’s energy demand grows, expanded access to, and utilization of, natural gas is expected to maintain sufficient energy supplies and avoid potential shortages.

RIL has supply deals with NTPC

June 29, 2006. Niko Resources has revised its estimate of the gas reserves in D6 block in KG basin by 197 per cent to 35.4 tcf from 11.9 tcf. Finding and estimating gas reserves is one thing, while selling it is another. Reliance has already tied up supply agreements with National Thermal Power Corporation (NTPC) and Reliance Natural Resources, but the agreements are under dispute. The gas is being sold at $3.11/mmbtu (million metric british thermal units), a price much below the current market price of natural gas internationally. Of the $3.11, the pipeline tariff is 70 cents, which will be payable to the pipeline transportation company leaving RIL with a realisation of about $2.23 per mmbtu. RIL will have to share about 85% of the cash flow on the gas sales with the government, according to the production sharing agreement.

However, the sharing comes into effect after the company recovers 2.5 times its capex into the development of the project. GCA has further estimated 8.2 tcf reserves in block NEC-25, off the Orissa coast. NEC-25 also has same shareholding as D6. Niko reported a loss for fourth-quarter ended March 31 of C$17.5m ($15.6m), or 45 Canadian cents a share, after earning a profit of C$47.3m, or C$1.26 a share, a year ago. The loss was due to low production from other properties in India and the stronger Canadian dollar. 

Kalpataru, Russia's ZanGas win GAIL order

July 4, 2006. State-run gas firm GAIL (India) Ltd has awarded a 1.81-billion-rupee ($39 million) pipeline contract to a consortium of Kalpataru Power Transmission Ltd and Russia's ZanGas. Indian construction firm Punj Lloyd Ltd won the remaining part of the order for the pipeline in western India, estimated at 1.6 billion rupees. GAIL is building a gas pipeline between a power plant in Dabhol in the western state of Maharashtra and Panvel near the state capital Mumbai, as part of its nationwide gas grid project. GAIL said on the condition of anonymity that the gas firm would award pipeline contracts worth about 3.4 billion rupees to two Indian firms for a project in Maharashtra state. Kalpataru, was buying equipment worth 350 million rupees for the project, expected to be commissioned by March 2007.

Rajasthan seeks 50:50 ratio in petro profit

July 3, 2006. Rajasthan has asked the central government for a higher share of profits in a 50:50 ratio from sale of oil or gas produced from exploration blocks within the state and operated as joint venture. The request for equal share in profits has been made "not as part of the recommendation but as a special union government dispensation based on the principle of profit petroleum already established for joint venture and NELP blocks. 'Profit petroleum' is made when exploration blocks start to pay returns after the investments costs have been recovered. The state government has sought a higher share in profits from blocks held by Cairns Energy and Focus Energy, both of whom has made good discoveries of oil and gas discoveries in their joint venture blocks. The central government will get profit petroleum from JV blocks at par in NELP blocks but no similar dispensation of share with the state government has been considered for JV blocks.  Although the production of oil from blocks held by Cairn Energy will commence from 2006-07, optimum production would be in 2011-12. 

Draft gas policy moots national advisory body

July 3, 2006. The government’s draft natural gas pipeline policy has proposed that permission for laying gas pipelines would be granted only to entities with pipeline capacity of at least 33 per cent more than their total capacity requirements. The policy, which also moots the setting up of a National Gas Advisory Body (NGAB), has said that this extra capacity would be accessible to a third party and would be allocated on a first-come-first-serve basis. The policy has also proposed that the Petroleum and Natural Gas Regulatory Board will be responsible for the selection of entities for gas transmission pipelines or a city or local gas distribution network. 

The policy has also mooted that the entity proposing to lay, build, operate or expand a transmission pipeline will be required to furnish to the Petroleum and Natural Gas Regulatory Board an irrevocable bank guarantee of an amount equivalent to 2 per cent of the project cost or Rs 20 crore ($4.35 mn) whichever is lower. This guarantee may be furnished for commissioning the project according to the approved time schedule and the outer time-limit specified by the board.  A similar bank guarantee of 10 per cent or Rs 5 crore ($1 mn) whichever is lower, shall be required to be furnished for the city or local gas distribution network. With increased exploration efforts under the New Exploration Licensing Policy, large-scale discoveries of gas in the east coast, commissioning of LNG import terminals in the west coast, projected LNG terminals and the government’s plans to import natural gas through transnational pipelines, there is an imminent need for this policy.

Reliance Energy wants Plan panel to intervene in its gas price row

July 3, 2006. The Anil Ambani controlled, Reliance Energy has sought the Planning Commission’s intervention in resolving the gas price issue for its 7,480 MW power plant by advising petroleum ministry to grant necessary approvals on the formula or basis of pricing gas. In a letter to the deputy chairman, Planning commission, Montek Singh Ahluwalia, REL said all approvals for the project were in place barring the single “stumbling block” with regard to gas supply to the project.

Reliance Energy has once again alleged in its letter that Reliance Industries Limited (RIL) was seeking deviations in its agreed contract with both NTPC and Reliance Natural Resources Limited (RNRL), another Anil Ambani group company.  On the deviations sought by RIL (both for NTPC and RNRL) from the agreed contract, REL said,” The deviations include among other limitation, a cap on the liability of gas supplier, in case of shortfall in supply. As per international practice, in general there is no limitation on the liability of gas supplier, in case of shortfall in supply.”

Considering that the gas price was approved on arms length basis, REL has sought Planning Commission’s support in asking the petroleum ministry to grant necessary approvals. RNRL has also written to the petroleum minister, Murli Deora that the gas price of $2.34 per mmbtu is the same as the price quoted by RIL to NTPC for supply of 12 mmscmd gas under an international competitive bidding process in 2004 and 2005.

IOC firm on corporate restructuring plan

June 30, 2006. Despite IndianOil suffering delays in its corporate restructuring programme, the company has decided to stick to its guns on the programme's successful completion. Awaiting completion of merger of IBP Ltd in another six months, IOC has now focussed on the long pending agenda of merging Chennai Petroleum Corporation Ltd (CPCL).

All other merger proposals including Bongaigaon Refinery and Petrochemicals Ltd and Indian Oil Blending Ltd have already been accomplished. On whether CPCL's minority Iranian promoter Naftiran Intertrade Company Ltd (NICL) was now agreeable to the proposal.  IOC holds 51.88 per cent stake in CPCL and was consistent in proposing merger of the company for leveraging better value, during last few years. The latter was apparently against the idea of losing its command over the Rs 25,409-crore ($5.48 bn) CPCL, for a marginal stake in IOC.

MCX to launch gas, coal futures trading soon

June 30, 2006. Multi Commodity Exchange (MCX) will soon launch natural gas and coal futures. MCX has already got the Forward Market Commission’s approval, to launch futures trading in the two commodities. The exchange will first launch natural gas futures, followed by the coal contract.

ONGC’s JV route for expansion

June 29, 2006. Upstream major ONGC has taken a strong liking to the JV route for its new ventures. Bypassing cumbersome procedures that slow down decision making is a bane for PSUs, especially for large investments. ONGC’s latest addition to the string of JVs it has started is a company that will implement a Rs 4,900 crore ($1 bn) project to make 9.5 lakh tonnes of petrochemical paraxylene. ONGC will have a 46 per cent stake in this company, while MRPL has a 3 per cent stake, capping the total PSU stake at 49 per cent and the rest will be offered to financial institutions. Despite not having a majority stake, ONGC will have management control over the company. Investment and other decisions are expected to be faster, and there will be no caps on salaries that have to be paid to attract and retain the right talent.

A talent exodus to the private sector is an ill that afflicts PSUs. Earlier, the company had formed two JVs with the Mittal Group to scout for overseas oil & gas assets. It had also signed an MoU with Shipping Corporation to form a JV to invest in offshore services, though that is yet to take off. This month, ONGC Mittal bagged two oil blocks in Nigeria, the first success for any of these joint ventures.  Given that ONGC’s projects, because of the nature of the sector, are usually large, the structure is important.

The structure has worked so far, and is important a lot for ONGC, as its projects are usually large projects, given the sectors it operates in. Since management control rests with ONGC, the government too should not have any objection. Even other PSUs could use this route to expedite their investments, though not all have the clout and credibility that ONGC has to attract financial institutions as investors. Shipping Corporation of India is another PSU to have set up a few JVs on these lines. 

Russia welcomes more Indian oil firms

June 29, 2006. Russia welcomed the interest shown by Indian oil companies to participate in more projects in the country and expressed hope that the arrangements would be worked out during the forthcoming visit of the Indian Prime Minister.  Petroleum minister said Indian companies were keen to work with Russian companies both in India and Russia as well as in third countries.  Indian companies led by ONGC Videsh (OVL) were eyeing participation in more such ventures including the Sakhalin-III project in Russia. The issue of evacuation of gas from Sakhalin-I field was also discussed in the meeting.  OVL has prepared a feasibility study for export of gas as LNG, which is currently under examination.  OVL has a 20 per cent participating interest in Sakhalin-I oil and gas project along with carrying another 20 per cent on behalf of Roseneft, a Russian national oil company. 

'India needs to increase strategic oil reserves' – Exim Bank

June 28, 2006. The country needs to increase its strategic reserves and also strengthen oil diplomacy with both oil producing and consuming nations to make its presence felt in the global market for petroleum products. The Bank said the Indian petroleum products industry will also have to integrate existing refineries, with forward and backward linkages, expand infrastructure facilities for faster transport, augment refining capacities and improve quality of products by increasing research activities. The country's petroleum products industry has a lot of potential for expanding in other Asian markets.

The country holds more than one per cent market share in major petroleum products importing countries such as Singapore, Japan, United Kingdom, Belgium and Korea. India is the sixth largest producer of petroleum products with 118 million tonnes of production in 2004-05. The increasing production has positioned India as a net exporter of petroleum products since 2001-02. The country exported $6.8 billion worth of petroleum products during 2004-05. The share of petroleum products in the country's total exports has also increased from 4.29 per cent in 2000-01 to 8.57 per cent in 2004-05. Middle distillates comprising kerosene, aviation turbine fuel, high-speed diesel oil and light diesel oil form the major part of exports. The study also pointed out that price volatility of crude oil, supply disruptions and imparting capital intensive technology hinders the growth of exports from the industry. 

POWER

Goa may install two 250 MW power plants

July 4, 2006. The Goa government is seriously looking at the Union government’s proposal to install two separate 250 MW coal-based power plants, one in the north and the other in the south.  The government plans public-private participation to set up these Rs 600-crore ($130 mn) coal-based mega power plants in Goa.  The government plans to give the plants to private participants on build, operate and transfer (BOT) basis, instead of going in for a mega power plant at one place.  The proposal is being prepared and is to be placed before the government for clearance.  Once the proposal is cleared, the government will invite a team from the National Thermal Power Corporation (NTPC) to assist the state government and use its expertise in selecting the consultant.

BHEL bags $183 mn contracts in Rajasthan

July 3, 2006. State-run Bharat Heavy Electricals Ltd has bagged two contracts worth Rs 842 crore ($183 mn) for setting up two thermal power projects in Rajasthan. The contracts, placed by Rajasthan Vidyut Utpadan Ltd (RVUNL), are for setting up a 250 MW unit at Suratgarh Thermal Power Station and a 195 MW unit at Kota Thermal Power Station. The units, which are expected to ease the power crisis in the state, are expected to be commissioned in 2008-09. BHEL has so far commissioned over 2,400 MW of power-generating sets in Rajasthan, which include both coal and gas-based units.

The company is presently executing two units of 125 MW each at lignite-based power project at Giral, a 330 MW project at Dholpur and two 250 MW units at Chhabra in the state. BHEL's scope of work in the present projects includes design, manufacture, testing, erection and commissioning of main plant along with associated auxiliaries. The main equipment for these projects would be supplied by BHEL's manufacturing units at Haridwar, Trichy and Bangalore.

US co Dodson-Lindblom to enter Indian hydel biz

July 1, 2006. Dodson-Lindblom International Inc of the US plans to penetrate the Indian hydel power generation business by setting up a series of small and medium projects. The Ohio-based company has quietly established its credibility by reviving and profitably running an old 12 MW capacity hydel project in Maharashtra, which it took over through a global bidding in 2001. The 34 MW capacity project at Bhandargarh was also obtained through a global bidding. An estimated Rs 146 crore ($31.5 mn) would be invested to revamp the project in two phases.

In addition to turning around the existing sick hydel projects, the company was equally interested in greenfield hydel projects. The company would shortly commission a 2.2 MW capacity greenfield hydel project at Birsingpur in Madhya Pradesh. This project attracted an investment of about Rs 17 crore ($3.7 mn). Meanwhile, it has obtained necessary clearances from the Himachal Pradesh Government for setting up a total of five hydel projects in the State, each of which will have a capacity ranging from 4 MW to 4.5 MW. Dodson-Lindblom had firmed up a Rs 330 crore ($71 mn)plan for the projects under various stages of implementation in India. Of the total investment, about 80 per cent of funds were being sourced from the Washington-based International Financial Corporation and also from domestic FIs, leaving the rest to be met from internal resources.

BHEL bags $47 mn contract in Afghan

June 29, 2006. Bharat Heavy Electricals Ltd has bagged two contracts cumulatively worth Rs 220 crore ($47 mn) for power projects in Afghanistan. The first contract is from Power Grid Corporation of India for setting up a substation at Kabul. The second project is from Water and Power Consultancy Services for supply and installation of equipment for 42 MW Salma hydel project. The company's scope of work in the first project includes design, manufacture, supply and commissioning of a 220 KV substation in Kabul. BHEL would also supply turbines and generators for Salma hydroelectric project. The main equipment for these projects would be supplied by BHEL's manufacturing units at Bhopal, Jhansi and Bangalore.

12 cos line up to sell power to Haryana

June 29, 2006. Representatives of more than 12 companies of the power sector participated in a “pre-bid conference of bidders” on the invitation of the Haryana Power Generation Corporation (HGPC) for supply of 2,000 MW of power from projects to be set up at non-identified locations.  The government had plans of adding 7,676 MW power in the Eleventh Plan and efforts were also on to add about 4,000 MW power during the next three-four years.  Nearly 2,000 MW capacity will be acquired through competitive bids and a 1,000-MW coal-based thermal plant would be set up at Mattenhail, at Jhajjar also, through the competitive bidding route.  The last date of sale and submission of the request-for-qualification document had been extended by a fortnight, till July 14, on the request of the companies’ representatives. 

L&T bags $72 mn order from IOC, Bongaigaon

July 3, 2006. Larsen & Toubro Ltd (L&T) has bagged four orders together valued at Rs 329 crore ($72 mn) from Indian Oil Corporation and Bongaigaon Refinery & Petrochemicals Ltd (BRPL) for their on-going expansion projects. L&T's Heavy Engineering Division will be executing the order. While one of these contracts is for design, manufacture and supply of two ethylene oxide reactors, involving special tubes made of duplex stainless steel, the other contracts are for critical reactors for the diesel hydro-treating units of the IOC and BRPL refineries. These hi-tech reactors, which are in forged construction, are made up of special grade steel — each of these reactors would weigh between 350 tonnes and 500 tonnes.

MSEB to buy Dabhol power at Rs 5 a unit

June 30, 2006. The Maharashtra State Electricity Board (MSEB) has indicated it will be willing to buy power from Ratnagiri Gas and Power Ltd’s Dabhol plant at around Rs 5 per unit, which will be the price if naphtha continues to be used as fuel.  The operations of the plant will commence in October after a three-month shutdown beginning July 1. The plant will stop production not only because of its naphtha stock being exhausted but also the MSEB’s unwillingness to buy its costly power.  The views on the likely pricing of power purchased by MSEB from the Dabhol plant were expressed by power sector officials from Maharashtra at a meeting organised by the Central Electricity Regulatory Authority in New Delhi. 

MSEB also planned to buy 1,400 MW from the Dabhol plant at base load, if the second phase was operational by December.  As for fuel supply to the plant, RGPL may buy gas from the spot market when the plant starts operations in October.  The CERC has suggested that Ratnagiri Gas and Power Company Limited (RGPL) should buy gas from the spot market instead of waiting for costly naphtha or LNG supplies. Shell recently approached RGPL for sale of natural gas at rates lower than naphtha and the company is studying the offer. If the Dabhol plant is run on natural gas, there will be a significant fall in the price of power. RGPL is constructing a terminal at Dahej, located adjacent to the plant. The terminal may be completed by March 31, 2007. It is also expected that gas sourced from Qatar will be available to RGPL by March 2007. 

IFC approves $150 mn loan to Cairn Energy

July 3, 2006. The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has approved a loan of $150 million to Cairn Energy PLC’s capital expenditure plan in the energy sector of India and Bangladesh. IFC would also support Cairn Energy’s plan to raise a total loan of $1 bn which is needed for the development of its recent discoveries in Rajasthan. IFC and Cairn would help small, local firms to provide support services such as food, transportation, security and grounds keeping the oil and gas operations. It would also work with farmers in developing cooperative dairy ventures to improve production.

Tatas to pull out of $3 bn Bangla foray

July 3, 2006. The Tata group is withdrawing the $3 bn investment proposal for Bangladesh, which included a 2.4-million-tonne steel plant, two power plants, an open-pit coal mine, and a one-million-tonne urea plant. The Tatas had been waiting for Dhaka’s reply to its revised investment proposal of May 1 when it raised the investment plan by $600 mn to $3 bn and offered the Bangladesh government 10 per cent equity in all projects. The Tatas’ projects required 200 mcf of gas a day, while Bangladesh has 14 tcf of proven and recoverable gas reserves. The board of directors of Tata group companies and their project partners are going to discuss a pullout.

CERC study to plug power losses

July 3, 2006. The Central Electricity Regulatory Commission has commissioned a regulatory information management study to get reliable baseline data by the year-end. The study, to be conducted by KPMG, will also help states to shift to multi-year tariffs compared to yearly tariffs at present.  The study will help in keeping a check on the AT&C losses and present a realistic situation without going by the data provided by the distribution companies. The study will take into consideration five states and on the basis of data collected from them a system will be developed for other states as well.  A committee under the Forum of Regulators had called for bids to select the organisation to undertake the study. According to power ministry data, transmission and distribution losses are at present in the range of 18 per cent to 62 per cent in various states. The AT&C losses are in the range of 50 per cent. The commercial losses are mainly due to low metering efficiency and pilferage. The ministry feels this may be eliminated by improving metering efficiency, proper energy accounting and auditing. 

Metal Junction-NCDEX may launch coal futures

July 3, 2006.  MetalJunction Services Ltd and NCDEX combine is expected to launch delivery-backed futures for domestic and imported coal in September. The forward contracts will be traded at NCDEX based on daily spot prices released by CoalJunction, the coal e-auction wing of MetalJunction Services. The company had entered into agreements with MMTC and Adani group for sourcing imported thermal coal. Adani group is one of the major traders in imported coal. In the domestic front, the company has supply agreement with Coal India Ltd (CIL). On the e-auction of coal, the company was working to expand its scope and offering by including imported thermal coal. CIL has agreed to enhance the supplies from 20 million tonnes in 2005-06 to 36 mt in 2006-07. The company is expected to maintain 50 per cent growth during the current fiscal over roughly Rs 4,500-crore ($0.98 bn) turnover reported in 2005-06.

13 cos qualify for 2 power projects

July 3, 2006. In all 13 companies each including Tata Power, Reliance Energy, NTPC Ltd, AES India, CLP Power India, L&T and Torrent have crossed the first hurdle as they have been qualified under request for qualification (RFQ) category for the 4,000MW Sasan (MP) and Mundra (Gujarat) ultra mega power projects. These companies are qualified for submission of request for proposal (RFP) and are expected to file final bids by November 22 with the Power Finance Corporation (PFC), which is the nodal agency for the implementation of these projects. PFC aims to offer these projects to the successful bidders by December 31this year. The list of qualified bidders for Sasan project include GMR-China Light Power Consortium, NTPC Ltd, AES India, Sterlite Industries, Tata Power Company (TPC), Reliance Energy Generation (REG), L&T, Globeleq Singapore Pte-Lanco Infratech consortium, Essar Power, Torrent Power AEC, Jindal Steel & Power and CESC. In case of Mundra project, the qualified bidders include CLP Power India, AES India, TPC, REG, Sterlite Industries, Essar Power, L&T, Lanco-SNC Lavalin International Inc consortium, Sumitomo Corporation, Torrent Power, Adani Exports-IDFC consortium and Khanjee Holdings (US)-General Meditarranean Holding-TXU consortium.

SAIL, RINL join hands for foreign coal mines

July 1, 2006. Public sector steel manufacturers Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) are looking to acquire coal mines abroad in order to meet the needs of their steel-making units here and have appointed consultants to valuate the mines in question.  Both companies rely heavily on markets abroad for the supply of coking coal as the domestically available variety has a relatively high ash content.  While SAIL imports about 70 per cent of its requirement, mainly from Australia, RINL imports all its coking coal from foreign markets.  While the companies are in a joint bid for a mine in Australia, they will bid separately for mines in the USA and Canada. Both companies were, however, tightlipped on the number of mines they were seeking to bid for or other quantitative and financial aspects. 

MIDC mulling group captive power projects

June 30, 2006. The Maharashtra Industrial Development Corporation (MIDC) is considering picking up equity in the upcoming Group Captive Power Plants (GCPP) projects that are being set up in the various industrial estates in the State. Rising demand for power from industries and large-scale investment in the GCPP by power companies has led to this move. The generated power would be used for industries and surplus would be fed to the State grid. There are plans to even wheel the power to industrial areas in the neighbouring states.

West India worst hit by power crisis: Assocham

June 30, 2006. Industrial production in the country's western region dropped by 30 per cent due to shortage of power, highest when compared to other parts of India. The western region faced a power deficit of 17 per cent against the all India deficit of 10.7 per cent during April-May, forcing it to cut its industrial production by over 30 per cent, industry chamber Assocham said in its paper on 'Gap between Power Requirement and its Availability of five regions of the country. During the April-May '06 period, the all India power requirement rose to 113,868 Million Units (MU), while only 101,666 MU was available, a deficit of 10.7 per cent.  Mismatch between supply and demand of power rose disproportionately leading to higher power deficit in almost all regions of the country, barring the eastern region where the deficit was only 3.4 per cent during April-May 2006. The northern region saw a power deficit of 12.5 per cent over its total power requirement of 32,336 MU as against the available power of 28,301 MU.  Uttar Pradesh and Jammu and Kashmir were the worst hit with a deficit of a little over 23 per cent. Madhya Pradesh and Maharasthra witnessed a 20.9 per cent and 21.5 per cent power deficit during the period. For the southern region, power requirement during April-May was 29,541 MU, of which 28,615 MU was available, a shortage of 3.1 per cent. Power deficit in the eastern region was 384 MU in April-May while the requirement stood at 11301 MU against the available 10917 MU. 

OIL & GAS

Brazil to begin natural gas exploration

July 3, 2006. Brazil's government-operated energy company will begin exploring for natural gas in central Venezuela this year. Petroleo Brasileiro SA, would explore near San Carlos, a small city 300 kilometers (185 miles) west of Caracas. Venezuela the world's fifth largest oil exporter has the largest proven natural gas reserves in South America with 147.5 tcf (4.18 tcm). Venezuela is developing its gas fields in order to meet its domestic needs and eventually export. Venezuela plans to become the top supplier of natural gas to fellow Latin American and Caribbean nations.

LUKoil starts drilling in southwest Uzbekistan

July 1, 2006. LUKoil had started drilling natural gas wells in the southwest of Uzbekistan. The drilling works at the Khauzak deposit are conducted by LUKoil Overseas within the framework of the Kandym-Khauzak-Shady-Kungard production sharing agreement. The drilling of the first well would be completed in four months. In all 37 new development wells were planned to be drilled at the Khauzak block. The 35-year agreement on the Kandym-Khauzak-Shady-Kungrad project was signed June 16, 2004 in Tashkent and came into force November 24, 2004. The project is implemented by a consortium of investors, which includes LUKoil Overseas (90 per cent) and Uzbekneftegaz (10 per cent). The estimated natural gas production of 10 bcm per year had been planned to start in the fourth quarter of 2007.

ConcoPhillips & Citgo reserve to lend 750,000 barrels

June 28, 2006. The Energy Department has agreed to lend ConocoPhillips and Citgo Petroleum Corp. a total of 750,000 barrels for two refineries unable to receive crude after the closing of a Louisiana ship channel. Energy department approved requests to loan 500,000 barrels of crude to ConocoPhillips' Westlake refinery and another 250,000 barrels to Citgo's Lake Charles refinery. The two refineries needed crude because tanker traffic along the 60-mile Calcasieu Ship Channel was stopped after 47,000 barrels of oil spilled at a Citgo terminal in that area. The Strategic Petroleum Reserve is a national asset that can be used in times of supply disruption. This loan will allow these two refineries to continue operations and help us maintain our nation's supply of gasoline leading into the holiday weekend. The two facilities represent nearly 4 percent of the nation's refining capacity. Both have been operating at reduced rates until the new barrels can arrive.  Citgo will receive oil from the petroleum reserve via pipeline.

Gazprom to invest in Belgian gas

June 28, 2006. Gazprom's export arm Gazexport and Belgian gas transport firm Fluxys would work together to explore underground natural gas storage possibilities in northern Belgium. Gasexport was interested in investing in a site in Poederlee where Fluxys holds an exploration permit. Both companies will form a joint venture to explore the area. The site is geologically similar to Fluxys' 600-million-cubic-meter storage space in nearby Loenhout, where gas can be sealed into a natural aquifer. Fluxys' other gas storage site in Belgium is in Zeebrugge, the main gas trading hub.

Belgium has to open its energy markets by July 2007 and has faced EU criticism for not doing enough to meet that deadline because the country's energy sector is still controlled by a few major players. Belgium wants to build gas capacity to become a European gas hub, importing the fuel and transporting it within Europe for consumption. Belgium has enough storage capacity to supply the country for 30 days.

Husky to drill Norsk Hydro Newfoundland prospect

June 27, 2006. Husky Energy Inc. is drilling a well offshore Newfoundland to earn a stake in properties owned by Norsk Hydro's Canadian unit. Husky is exploring Norsk Hydro's West Bonne Bay prospect, 320 Km (200 miles) southeast of St. John's, Newfoundland. The prospect is near the Terra Nova field operated by Petro-Canada. Husky will drill the well to receive a 25 percent stake in the West Bonne Bay prospect.

Norsk Hydro now has a 90 percent share of that field. Along with the West Bonne Bay stake, drilling the well will also earn Husky a 7.5 percent interest in the North Ben Nevis significant discovery license, adding to Husky's existing 65.6 percent ownership of that offshore prospect. Calgary-based Husky, majority owned by Hong Kong billionaire Li Ka-shing, already controls Newfoundland's White Rose offshore project, which currently produces 85,000 barrels of oil a day. The company also owns a 12.5 percent share of Terra Nova. That field normally pumps 160,000 barrels a day but has been shut since early May for maintenance.

Shell sells 29 gas stations in Central Ohio

June 29, 2006. Gas refiner Shell Oil Products has sold 29 Columbus-area gas stations to True North Energy LLC of Toledo. Shell would exit the retail business in 16 regions. It operates about 6,500 gas stations, mainly in the West. True North was created as a joint venture between Shell Oil Products and Youngstown-based gas station operator Lyden Co. It operates about 200 Shell gas stations and provides wholesale fuel. It will supply about 335 million gallons of fuel a year to 230 Shell gas stations in Ohio and Michigan.

Pak Govt offers free land for oil refinery

June 29, 2006. The government will provide 2,000 acres free of cost for setting up a deep conversion grass-root oil refinery at Khalifa Point and allow unlimited import of crude oil without any customs duty. The refinery would have the capacity to refine 200,000-300,000 bpd at Khalifa Point, near Hub in Balochistan. The refinery would be given all facilities as per Export Promotion Zone Authority (EPZA) rules. In addition, the land owned by State Petroleum Refining and Petrochemical (Perac) would be provided free of cost and would be used only for a new refinery and not as a government equity. The Economic Coordination Committee (ECC) of the Cabinet had approved the project at a cost of $2 billion. However, it was kept as a guarded secret that Perac’s land would be provided to the sponsors of the refinery free and crude imports would be duty-free. The refinery would be commissioned by December 31, 2010. The company would meet the EURO-III product specifications both for export and local market and would be free to sell surplus products in the international market at internationally competitive prices. The refinery would have a maximum refining capacity of 13 million tons of petroleum products - which would be higher than the country’s total existing capacity of 12.8 million tons.

Europe seeks Russian trade deal to open up its energy sector

July 3, 2006. The European Union wants a free-trade deal with Russia once the country joins the World Trade Organization. The Commission was proposing that EU member states give Brussels the mandate to negotiate with the Russian government. The EU wants to tie Russia to free trade to open up its energy sector. At present Europe has expressed concern at the lack of competition within the energy industry in Russia, most notably the continuing monopoly of state-run Russian gas firm Gazprom. Gazprom raised concern in Western Europe last winter when it cut supplies to Ukraine in a dispute over the amount Kiev paid for its gas. The move caused a knock-on reduction in Russian gas supplies going through Ukraine to Western Europe.

Petroecuador sells 2 mn barrels of Napo crude oil

June 30, 2006. Ecuador's state oil company Petroecuador sold five cargoes with 400,000 barrels of Napo crude oil per cargo to three companies. Taurus Petroleum bought two cargoes for $17.75 a barrel below U.S. benchmark West Texas Intermediate (WTI). Taurus bought a third shipment for a $17.50 differential. Mitsubishi Corporation and Mitsubishi International bought one cargo each for a $17.75 differential. Petroecuador was forced to auction 2 million barrels extracted from the oilfields seized from Occidental Petroleum because it lacks capacity to store the oil. The five cargoes will be lifted between July 12 to July 23.Ecuador terminated its contract with Occidental on May 15 over accusations that the Los Angeles-based company sold part of an oil block without government authorization. Petroecuador took over operation at the fields that average production of 100,000 barrels of oil per day. Ecuador, South America's fifth-largest oil producer, has an output of around 530,000 bpd.

FPL route for new transmission line

June 30, 2006. Florida Power & Light Company announced the preferred route for a new transmission line that will expand its power line system in northeast Miami-Dade County. The proposed 138-kilovolt transmission line will connect two existing substations, one located on NE 127th Street and NE 14th Avenue, and the other one on NW 93rd Street, between NW 5th and 6th Avenue, east of I-95. From the substation located on NW 93rd Street, the preferred route will go north on NW 6th Avenue, then west on 103rd Street, north on NW 7th Avenue, east on 135th Street, and south on NE 14th Avenue to the substation located at NE 127th Street. Construction of the new transmission line will begin summer of 2007 and will be completed by the summer of 2008.

ConocoPhillips buys share of gas pipeline

June 30, 2006. ConocoPhillips has exercised its option to buy a 25 percent interest in the massive natural gas pipeline being built from the Rocky Mountains to Eastern manufacturing states.  The 1,663-mile pipeline will be one of the largest natural gas pipelines ever built in North America, and will transport natural gas from Wyoming and Colorado to the upper Midwest and eastern United States. Built at a cost of about $4.4 billion, the project will be able to transport 1.8 billion cubic feet per day of natural gas. Binding firm commitments from creditworthy shippers have been secured for virtually all of the capacity on the pipeline. The companies are assessing interest in extending the pipeline from Ohio to Oakford, Pa. Service has started on the first segment from Meeker, on Colorado's Western Slope, to the Wamsutter Hub in Wyoming.

Construction on the 192-mile segment from the Wamsutter Hub to the Cheyenne Hub in Weld County is scheduled to begin this summer and to be in service by Jan. 1, 2007. Service on the 713-mile segment from the Cheyenne Hub to eastern Missouri, called REX West, is scheduled to begin Jan. 1, 2008.  The 622-mile segment from eastern Missouri to the Clarington Hub, called REX East, is expected to be in interim service as early as Jan. 1, 2009, and fully completed by June 2009. The projected dates are subject to regulatory approvals.

Russia to export 65 mn tons of oil in 3Q06

June 30, 2006. Russia will export 65 million metric tons (486 million barrels) of oil in the third quarter of 2006. The ministry said 9.1 million tons (68 million barrels) would be exported to the CIS countries. Russia was planning to produce 122 million tons (912 million barrels) of oil in the third quarter, a 2.5 per cent growth year-on-year. Russia is set to produce 145.7 bcm and to export 43.3 bcm of natural gas in the third quarter.

Talisman starts up northern Alberta gas pipeline

June 28, 2006. Talisman Energy Inc. has started a C$98 million ($88 million) pipeline system in northern Alberta it expects will open up a large region for natural gas exploration and development. The 72 km (45 mile) Lynx system has a capacity of 130 million cubic feet and throughput should be 40 mmcf a day by the end of this month, which owns 45 percent. The pipeline will help get production to market in a region where the company has been exploring extensively. A squeeze on construction services amid booming industry conditions and wet weather delayed the start-up from the original target date in April.

US’s Daybreak enters into oil sales agreement

June 28. Daybreak Oil and Gas, Inc. a Washington Corporation has entered into an agreement to sell its oil production from the F-1 well located in NE Louisiana. Daybreak will transport the oil production via truck to a local refinery and will not incur any transportation costs under the agreement.  Daybreak has initiated the preparation involved with the permitting process for a drilling location on the North Schuteston project in St. Landry Parish, Louisiana. The Richter No. 1 Well will test a low risk 3-D seismic supported anomaly. A pipeline is located approximately 2 miles from this well location.

Nabucco gas pipeline is approved

June 27, 2006. Five European states have backed a $5.8bn (£3.2bn) gas pipeline to run from central Asia to Austria. The Nabucco pipeline will go through Turkey, Bulgaria, Romania, Hungary and Austria and is due to be built in 2008. The European Union (EU) has given the project its backing as it looks to cut its dependence on gas from Russia. Energy supply has become a matter of concern for many nations after problems last winter led to shortages and fears that consumers may have to go without.

Iran plans to cut gas imports, subsidies

July 3, 2006. Iran, which relies on imports for almost half its refined petroleum products, plans to halt those imports and introduce gasoline rationing later this year. The decision appears related to a plan to allow the nation's heavily subsidized gasoline to spike in price in order to reduce the smuggling of fuel to neighboring countries, a practice that aggravates shortages and costs the country billions of dollars every year.

Iran is the world's second-largest producer and exporter of crude oil, but its antiquated refineries are able to meet barely 60 percent of the domestic demand. Production stands at 10.5 million gallons a day, compared with daily demand standing at 18.5 million gallons.  Heavy subsidies which keep gasoline prices as low as 9 cents to 45 cents a gallon, depending on the quality and location meanwhile allow for huge profits on gasoline smuggled into neighboring countries, such as Afghanistan, Iraq, Pakistan and Turkey.

Iran had been expected to spend $5 billion importing refined oil products in 2006. But the parliament budgeted only $4 billion for the purpose and, then in February, slashed that to $2.5 billion. At the same time, the parliament backed a government initiative to limit the number of people permitted to purchase gasoline at subsidized prices, an initiative that has not been implemented. The fuel smuggled from Iran is colored pink, while that from the refineries in Iraq has a clear color. Because substitution of inferior Iranian fuel is frequent, motorists typically smell and rub a sample of gasoline between their hands to see whether it has been watered down and color added before sale. Afghanistan is another recipient of smuggled Iranian fuel. Fuel thieves typically carry barrels full of oil products across the border at night.

Hydro reduces 2006 oil and gas production target

June 30, 2006. Norsk Hydro ASA has revised its oil and gas production target for 2006 down with about 5 per cent from 615,000 to 585,000 barrels of oil equivalents per day (boed). The reduction of 30,000 boed is equally divided between Hydro's Norwegian and international portfolio and is mainly due to unforeseen events in Norway, Canada and U.S. Gulf of Mexico, and somewhat lower gas export from Norway than planned.

Hydro is experiencing production shortfall from the non-Hydro-operated fields in Norway, primarily due to the unplanned shutdown of the Visund field and delayed production build-up from new fields and delayed drilling of production wells at other fields. Internationally, Hydro's short-term production outlook in the U.S. Gulf of Mexico continues to be negatively impacted by the high demand for oil and gas services following hurricanes in 2005 resulting in lower production on the shelf. In addition, deepwater production has been lower than Hydro's initial projections. In Canada the Terra Nova field will be out of production until September due to mechanical problems and an extended maintenance shutdown.

Hydro-operated fields in Norway are producing according to plan. The Grane field continues to produce above planned levels, and compensates for somewhat reduced production from other fields. Any negative consequences of the ongoing oil services strike on the Norwegian Continental Shelf have not been accounted for in the revised target. Hydro's oil and gas production in the second quarter 2006 is estimated to be about 535,000 boed of which 32 percent is gas. The revised production target for 2006 is a result of delayed production and has no impact on Hydro's oil and gas reserves.

Turkmenistan wants to increase gas price for Ukraine

June 30, 2006. Ashgabat has notified Kyiv it would like to revise the terms and conditions of a December 2005 agreement under which Ukraine buys Turkmen natural gas to increase the price to $100 from $60 per 1,000 cubic meters, starting from the second half of 2006, Liliya Klochko.

Bush urges Alaska on natural gas pipeline

June 30, 2006. The Bush administration is pressuring state lawmakers to pass legislation that would advance a proposed multibillion-dollar natural gas pipeline. In letters to the Alaska House and Senate, urged prompt action during the upcoming special session.  Adding to the pressure was an announcement from the federal energy department, which said plans were in place to expedite the federal permitting process once a final contract is signed. Alaska lawmakers will convene July 12 for a second special session to consider replacing the production tax on oil companies operating in the state. Lawmakers also will again consider legislation granting Gov.

If the Legislature reaches agreement, the governor will negotiate a deal with ConocoPhillips, BP PLC and Exxon Mobil Corp. The companies will decide whether to build the pipeline about four years after the contract is signed. The MoU between the Department of Energy and 14 other departments and agencies lays out a framework for streamlining federal review of the project and reducing bureaucratic delays if the project moves forward. The federal Alaska Natural Gas Pipeline Act in 2004 established the expedited review and incentives for the Alaska project. The estimated $19 billion to $27 billion pipeline would stretch at least 2,100 miles from Prudhoe Bay to Alberta, Canada, and perhaps another 1,500 miles to Chicago. The pipeline would carry about 4 billion cubic feet of natural gas each day. It would supply about 10 percent of future U.S natural gas demand.

Turkmens threaten to stop gas in 2 months

June 30, 2006. Turkmenistan would cut off natural gas supplies to Russia from September after the two countries failed to reach a new price deal, raising the possibility that shipments to Europe might be disrupted. Imports of Turkmen gas are vital for gas monopoly Gazprom as its own output stagnates and it needs more gas to cover growing demand at home and in Europe.

Pak privatisation of gas firms delayed

June 29, 2006. The privatisation of the Pakistan Petroleum Limited and the two Sui gas utilities has been put on the back burner because of ‘some unsettled issues’ on their transaction structure and tariff, Privatisation. The three gas firms had not been taken off the privatisation list but there were certain issues to be settled before their sale. It is expected that the units would be prepared for privatisation during the 2006-7 financial year. The privatisation of the PPL was the top priority of the Privatisation Commission as the prime minister had directed it about two months ago to complete the sale of Pakistan State Oil and the PPL before June 30. The PSO’s privatization has also moved into the next fiscal year but remains on the priority list. The privatisation of the Sui Southern Gas Company and the Sui Northern Gas Pipelines was expected to be completed during 2006-7. The 10-15 per cent disinvestment of the Oil and Gas Development Company through issue of global depository receipts in London and New York and secondary public offerings in domestic market would hopefully be completed by September.

India, Russia set to expand oil, gas cooperation

June 28, 2006. India and Russia are set to foster oil and gas cooperation and will soon announce about new projects. India and Russia emphasized the need for further enhancing cooperation in the oil and gas sector between the two countries. The two sides agreed to take forward the cordial and fruitful relations in general and in hydrocarbon sector in particular. India was looking to cooperate with Russia in bilateral oil and gas projects and with third countries as well. India and Russia have a very good experience of working together in the Sakhalin-I project which went on stream last year. The Indian companies are also keen to work with Russian companies both in India and Russia as well as in third countries.

Power

Russia mulling construction of power stations in Angola

June 28, 2006. Technopromexport, Russia's state builder of energy facilities and electricity exporter is planning to get involved in two power station projects in Angola worth a total of over $1 billion. The Angolan expressed interest in getting the Russian company Technopromexport involved in building two large electric power stations - Nyanga, with capacity of 450 MW, and Lauka, which has yet to be finalized. Technopromexport is currently building a second unit of the Kapanda hydroelectric power station in Angola under a $112 million contract. Under the contract, the company will carry out design work, and deliver, assemble and put equipment into operation. The second 260 MW units will bring the hydropower station's capacity to 520 MW and stabilize the Angolan electric power system, which has been damaged by many years of fighting in the country. Technopromexport is building Angola's largest hydroelectric power station under a contract with the Angolan Ministry of Energy and Water.

PG&E eyes $12.5 bn for power plants

June 30, 2006. More than two years after emerging from bankruptcy, Pacific Gas and Electric Co. has launched plans to spend about $12.5 bn in the next five years for capital improvements, including new power plants, power lines and high-tech gas and electric meters. The utility, a subsidiary of PG&E Corp. plans to spend $2.5 bn annually for infrastructure projects through 2010 with the aim of improving service, stabilizing power costs and operating more efficiently. The company expects to spend $300 million on the 530 MW Mirant plant by 2008. Mirant agreed to give PG&E equipment, permits and contracts for the plant to settle a court dispute alleging Mirant manipulated electricity prices during the power crisis. PG&E also plans to build a 657 MW power plant in Colusa County and renovate its outdated Humboldt Bay Power Plant. All three of the new projects would burn natural gas, and as a group would produce enough electricity for up to 1.35 million homes.

Green share in electricity generation to rise

July 4, 2006. The generation of electricity in India by conventional methods is expected to come down by 10 per cent by 2019 and by 20 per cent by 2047 due to depletion of resources. Conventional power generation methods, therefore, will not only need to get partially replaced by non-conventional power generation methods, but efforts will also need to be made to reduce wastage of resources and power from the current procedures. In West Bengal, 97 per cent electricity generated came from thermal power, with 4,500 MW coming during peak hours and 2,200 MW during the non-peak. Peak demand has been growing at the rate of 4.25 per cent and energy demand in general was growing at five per cent.  The rice husk gassification method currently being used by rice mills in the state which have a combined generation capacity of 22 MW of electricity. 

Bio-diesel industry seeks duty sops

July 4, 2006. An apex bio-diesel industry body sought duty sops for manufacturing units on imported raw materials used in the fuel.  The government should bring down duty on imported raw material used in bio-diesel for manufacturing units. The bio-diesel manufacturing facilities of 2 lakh tonnes would come up by next year in the country. Producers would need palm oil to produce bio-diesel as it is the cheapest raw material available now. The association has submitted memorandums to Panchayati Raj Ministry, Planning Commission and Petroleum Ministry seeking such concessions.  It also asked the government to revise minimum support price formula for fixing the price of bio-diesel. The cost of producing a litre of bio-diesel comes out to be Rs 45, so the Rs 25 per litre offered by the government is not feasible. It also favoured promotion of Jatropha plantation in the country. The total installed capacity of edible oil is 22 million tonnes against existing production of 7 million tonnes. The 15 million tonnes capacity is lying idle, which could be used for producing bio-diesel.

CPCL plans $22 mn wind farm

June 29, 2006. Chennai Petroleum Corporation Ltd plans to invest Rs 100 crore ($22 mn) in a wind farm to supply power to its desalination plant coming up at Ennore to the north of Chennai. Chennai Petroleum was keen on making its refinery self-sufficient in water. It was recycling its own effluent, recycling the city's sewage and putting up a seawater desalination facility. But desalination is power-intensive and to keep costs low the company plans to set up a 17 MW wind farm at the Palakkad Pass, near Coimbatore. The proposal is coming up for board approval soon. Recycling and reuse are key options for industries to conserve and use water cost effectively.

Chennai Petroleum has a 2.5 million litre a day sewage water treatment plant and another of equal capacity would soon go on stream. The 5-million-litre desalination plant will start production mid-2007. These would make the refinery entirely self-sufficient. The refinery needs about 7 million gallons a day. Though desalination is a costly option, it is comparable to the piped water supply at about Rs 60 a kilolitre. The cost of treated sewage water is over Rs 30 a kilolitre.

Brazil develops new biofuel through vegoil blend

July 1, 2006. Brazil, the world leader in production, consumption and export of bio-ethanol, has designed and developed a new type of diesel fuel that is mixed with various vegetable oils. While biodiesel is popularly produced out of either rapeseed oil (mainly in Europe) or soyabean oil (mainly in the US) through the process of trans-esterification, Brazil's new biofuel — H-Bio — is a mixture of cotton, castorbean, sunflowerseed and soyabean oils. Unlike other forms of biodiesel, H-Bio is mixed by the fuel distributor and not at the refinery. This can lead to cost saving for the manufacturer. Biodiesel is becoming increasingly popular not only since it represents a renewable energy source, but also for its lubricity characteristics.

Brazil' success in using organic-petroleum fuel blends like sugarcane-based ethanol fuel is well known. It is a matter of law in the country that all Brazilian gasoline must contain 25 per cent ethanol and most vehicles manufactured in the country can run on any mixture of the two fuels. It took over 25 years for Brazil to attain this leadership position in the world. Last year, the country produced 13 million gallons of ethanol mostly for domestic consumption. The country is not only self-sufficient, but is also profitable and looking to expanding its exports. With the global energy market soaring to newer heights in the last couple of years, the search for low-cost alternative fuels has heightened. Asian economies are fast emerging as major growth markets for energy products. Brazilian is in talks with several nations including the US, China and India to export 65 million gallons in the coming years.

US to help Pak develop coal, hydel energy

June 29, 2006. The United States may provide substantive assistance to Pakistan to make optimum use of its coal reserves and develop hydel energy. They discussed the possibility of commercialisation of thar. They are interested in coal-mining and power-generation and also in the development of coal-bed methane potentials.  Pakistan reportedly has the world’s fourth or fifth largest coal deposits but coal’s contribution to the country’s total energy supplies is only 8 per cent.

The Americans have a vast experience in producing energy from coal and they want to benefit from their experience. They need clean coal technology from them and also the coal gasification technology. Pakistan has so far utilises only 16 per cent of its hydel potential and is looking for US assistance to further develop this sector. Pakistan interested in developing civilian nuclear technology as well. The Pakistani delegation presented a comprehensive review of Pakistan’s energy needs for the next 20 years.  Pakistan is looking development of coal reserves and alternative energy, import of gas from central Asia, development of the power sub-sectors and improving the way utilise energy in Pakistan.

 

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