MonitorsPublished on Nov 07, 2006
Energy News Monitor I Volume III, Issue 20
Wind Power in India: Myth and Reality

(Hrudanand Misra, Observer Research Foundation)



ndia is power-starved country. The total installed power generation capacity in India stood at 118,506 MW in 2005 including thermal, hydel, nuclear and renewable. The contribution of thermal, hydel, nuclear and renewable sources of power towards the total installed power generation capacity were 68.30%, 26.13%, 2.34% and 3.23% respectively. According to Central Electricity Authority there is a demand gap of 8-10 percent and peak load demand gap of 11-13 percent in the country. The renewable sources such as wind power contributes to power sector in a large extent. The problem is serious because there are very few rural segments, which are connected by grid power. This is where the wind energy for grid power quality can be immense help to the country. India is now become the fourth largest producer in the world in terms of wind power generation. The aim of this paper is to show the important role-played by the wind power in the power generation and its contribution to power sector particularly and also to economy generally. This paper also highlights the real situation as far as wind power is concerned.

In India, electricity is in short supply all over the country and the energy shortfall affects business, industry and daily life. Maharashtra, India’s most industrialized state faces a deficit of 40,000 MW forcing power cut ranging from four to eight hours a day. Similar situation is faced by capital city Delhi that affects the development of the economy. On the other hand, in rural area most of the villages, where people continue to live in dark. It is found that on paper, 80 percent of India’s villages and 44 percent of rural households get electricity. But the fact is that most of them receive electricity only for few hours in a day. This means water cannot be pumped for drinking and agriculture, homes have no light after dark that ultimately affect the households living. Without electricity, there is little hope that villages can think beyond the agriculture and make a beginning in newer sectors such as food processing or other industries. Thus, the lack of electricity facility ensures that villages remain deprived of the fruits of the economic growth.

To solve these problems there are alternative energy sources, which are helpful to fulfill the shortage of electricity such as wind, solar, biogas etc. Today wind power is considered as the good form of electricity generation because it is environment friendly and omits fewer amounts of dangerous gases. In India, both wind and nuclear power have almost equal share i.e. nuclear 2.3 percent and wind 2.5 percent as on March 2005. Wind energy is indigenous and can help reducing dependency on the fossil fuels. At the time of decreasing global reserves of fossil fuels, renewable energy provides national energy security. With the abundance of wind energy resources in many parts of the country particularly along the coastal line, electricity generation through wind energy provides a viable and environment friendly option.[1]

Apart from direct benefits of generating electricity, wind power projects also results in substantial socio-economic and environmental benefits. It is estimated that environmental benefits of installing wind farms would be reduction of following emissions annually.

                CO2                          2100 metric tons/MW

                SO2                          2.5 metric tons/MW

                NOx                         1.7 metric tons/MW

Total suspended particulate 0.5 metric tons/MW

The introduction of grid connected wind power project results in direct and indirect generation of employment. It has been estimated that for each MW of installed capacity of wind farms, there is an employment potential of 3 skilled operators and 2 unskilled persons. The indirect employment opportunities are about 4 times of direct employment.[2]

Status of Wind Energy in India

The importance of tapping renewable energy for power generation is recognized more than two decade ago. India’s wind energy has grown dramatically. The first wind farm was setup in Mandvi in the state of Gujarat in 1986 with a capacity of only 55 kW. After that Ministry of non-renewable energy sources conducted an extensive program on wind power consisting of wind monitoring, wind mapping and complex terrain projects covering 25 out of India’s 26 states/union territories.

The Government of India also realized the importance of private sector participation in the wind power sector as early as 1983-84. A national programme was initiated to tap the estimated potential of 20,000 MW by adopting a market-oriented strategy. This initiative led to successful commercial development of wind power technology and substantial additions to power generation capacity in the country.[3]

In March 1998, private sector investment of the 968 MW of installed capacity, 95 percent had come from industries, entrepreneurs and businessmen’s. One of the most efficient private sector company i.e. Suzlon energy has invested in wind energy sector in India over a period of time. Suzlon energy is one of the most efficient Dutch company entered the wind energy sector in India way back in 1995. This industry produces wind turbines of higher capacity and quality. With the growth of the Suzlon energy, the industry collaborates with various Indian industries for the production of wind turbines.

Beside this the article published in New York Times dated 28th September 2006 that Suzlon energy is a Gujarati Company producing turbines in Gujarat. But the fact is that the Gujarati Company adapted the technology used by Suzlon energy to produce turbine. Due to significant progress of the sector on one hand, government announced range of policy support measures and incentives for inducting wind energy technologies. On the other hand, government encourages private entrepreneurs to take up commercial projects.

During last ten years wind power generation has achieved spectacular progress. The reason is quoted as investment mainly flown from the private sectors. Wind power potential in India is predicted as gross of 45,000 MW and technical feasibility has been identified as 13,390 MW. Maharashtra has the highest potential of 3040 MW and the lowest in West Bengal (only 450 MW). During the period 1994-2004, the cumulative wind energy generation installation stands at 2483 MW, which is 18.5 percent of the estimated feasible capacity.

Table 1 depicts the state wise wind power installation capacity in India. It is found from the table that more than half of India’s wind power is generated in the southern state of Tamil Nadu. The reason is that Tamil Nadu has a double advantage of getting wind from the South West and the North East. As a result 1 MW machine can generate 3.5 million units a year as compared to 2 million units in Western states. West Bengal has an installation of 1.1 MW, which is likely to increase by three times within a year.

Table 1. Wind Power Installed Capacity (MW) by 2003-04 in India



Andhra Pradesh








Madhya Pradesh






Tamil Nadu


West Bengal






Source: MNES

There is vast increase in the wind power generation in India. Therefore, it is important to analyse the year-wise growth of wind energy generation. Table 2 indicates the year-wise growth of wind power generation. It is apparent from the table that over the period (1994-2004) there has been significant rise in the installed capacity and a consequently increase in energy generation from 191.3 to 2811 MU (Million Units) or a growth by nearly 15 times.

The table indicates that there is a gradual improvement in CUF (Capacity Utilization Factor) from a low of 6.2 percent in 1994-95 to reaching nearly 14 percent in 2003-04. The initial costs of start-up wind energy are expensive, which is nearly Rs. 45 to 50 million per MW. But since more than 90 percent of the cost of wind power generation is in the form of servicing it’s financing, these costs can be recovered in 10 years.


Table 2. Year-Wise Growth of Wind Energy Generation


Capacity (MW)

Addition (MW)

Generation (Million Unit)

CUF (%)



















































Source: MNES

Wind energy generation has the highest contribution to power generation as compared to other renewable energy sources. Table 3 depicts that wind power contributes more than 50 percent of renewable energy to power generation. Further, small hydro contributes 33 percent to power generation followed by biomass power (14 percent), photovoltaic (0.05 percent) and energy recovery from waste (0.86) respectively. In the analysis table 3 does not included the contribution of SPV (Solar Photo Voltaics) in water pumping, domestic lighting, solar lantern etc, which is when added will exceeds to 130 MW under the SPV group.

Table 3. Power Generation Installation Capacity of Renewable Energy Sources (MW) as on 2003-04



Wind Power


Small hydro (up to 25 MW)


Biomass Power




Energy recovery from waste




Source: MNES

Further it is found from the Government reports that a number of potential wind power sites have been identified all over India. Of these, not all the sites have wind turbine generators installed for power generation. Experiences with the existing wind farms have shown that some of the wind power plants have failed completely or are performing poorly because the installed wind turbine generator systems do not optimally match the characteristics of the site. Table 4 shows that out of 207 potential wind power stations, only 37 are working whereas other stations are either closed or not working.

Table 4. State-wise Data of Wind Monitoring Stations for potential sites in India (Upto 2003)


Number of Wind Power Stations

Number of Wind Power Stations Working

Andaman & Nicobar Islands



Andhra Pradesh















Madhya Pradesh












Tamil Nadu






West Bengal






Source: Indian Wind Power Association.

(Views are personal)

To be continued

A Revolutionary Nuclear Energy Technology: PBMR

By Paul Driessen


very day life of 2 billion people in developing countries is without electricity i.e. no lights, refrigeration, heating, air-conditioning, radio, television, computers safe running eater, or mechanized equipment for homes, schools, shops, hospitals, offices and factories. Viewed at night from outer space, Africa really is the Dark Continent: only 10 percent of its 700 million people regularly have electricity. While 75 percent of South Africa is now fully electrified, only 5 percent of Malawi, Mozambique and other countries are so fortunate. Much of poor and rural Asia and Latin America is in a similar predicament.

Instead of rolling blackouts, neighborhoods have rolling power. In the western part of the country, families get electricity maybe three hours every two weeks. While Eastern communities get it may be once a month. Instead of turning on a light or stove, millions of women and children spend their days gathering wood, grass and dung, to burn in primitive hearths for cooking and heating. Instead of turning a faucet, they spend hours carrying water from distant lakes and rivers that are often contaminated with bacteria. Pollution from their fires causes 4 million deaths a year from lung infections. Tainted water and spoiled food cause intestinal diseases that kill another 2 million annually.

The dearth of electricity also means minimal medical facilities, manufacturing and commerce -- and impoverished countries forever dependent on foreign aid. Abundant, reliable, affordable electricity is thus a critical priority for developing nations. Hydroelectric projects offer one solution - coal-fired power plants another. They aren't perfect ecologically, but neither are wind turbines, which require extensive acreage, kill birds, and provide inadequate amounts of intermittent, expensive electricity that cannot possibly sustain modern societies.

Now a revolutionary nuclear energy technology is being designed and built in South Africa, but with suppliers and partners in many other nations. The 165-megawatt Pebble Bed Modular Reactors (PBMR) are small and inexpensive enough to provide electrical power for emerging economies, individual cities or large industrial complexes. However, multiple units can be connected and operated from one control room, to meet the needs of large or growing communities. Process heat from PBMR reactors can also be used directly to desalinate sea water, produce hydrogen from water, turn coal, oil shale and tar sands into liquid petroleum, and power refineries, chemical plants and tertiary recovery operations at mature oil fields.

The fuel comes in the form of baseball-sized graphite balls, each containing sugar-grain-sized particles of uranium encapsulated in high-temperature graphite and ceramic. This makes them easier and safer to handle than conventional fuel rods. It also reduces waste disposal problems and the danger of nuclear weapons proliferation. Conventional fuel rod assemblies are removed long before complete burn-up, to avoid damage to their housings; but PBMR fuel balls are burnt to depletion. Because they are cooled by helium, the modules can be sited anywhere, not just near bodies of water, and reactors cannot suffer meltdowns. If the chain reaction must be shut down in an emergency, the fuel's residual decay heat dissipates slowly and naturally.

Since PBMRs can be built where needed, long, expensive power lines are unnecessary. Moreover, the simple design permits rapid construction (in about 24 months), and the plants don't emit carbon dioxide. PBMR technology could soon generate millions of jobs in research, design and construction industries - and millions in industries that will prosper from having plentiful low-cost heat and electricity. It will help save habitats that are now being chopped into firewood - and improve health and living standards for countless families. 

Not surprisingly, dozens of companies and countries are keenly interested in PBMR technology, and the first pilot plant will go online in 2011. But assorted special interest groups have lined up against it. George Soros's Open Society Foundation supports anti-nuclear organizations that oppose PBMR. Danish interests see it as undesirable competition to their wind turbine businesses. Others assert that electricity "destroys" traditional cultures. Poor people everywhere hope these patronizing attitudes will soon be replaced by a recognition that they have an inalienable right to take their place among the Earth's healthy and prosperous people.

Paul Driessen is senior policy adviser and author of "Eco-Imperialism: Green power. Black death"

Courtesy: The Washington Times.






Govt gives out 9 CBM blocks

November 7, 2006. The government is expecting about $1 billion of investments in exploration of gas trapped below coal seams in the areas offered recently to developers under the third round of coal bed methane (CBM-III) bidding. Contracts for 9 of 10 blocks offered under CBM-III were signed by the government with three consortia, namely, the one led by the Anil Ambani group’s RNRL-REL-Geopetrol, Australia’s Arrow Energy and Coalgas Mart-Deep Industries. While RNRL-led consortium signed production sharing contracts (PSCs) for four blocks, Arrow energy-led group inked the pact for three blocks and the Coalgas Mart-Deep industries joint venture signed the PSC for two blocks. The Anil Ambani group has assured an investment of Rs 100 crore for exploring its four blocks. The Arrow Energy-led group has committed $500-600 million worth investment in 20 years in exploring CBM in its three blocks. The Cabinet committee on economic affairs had, on September 29, awarded 10 coal bed methane blocks. But, contracts for only nine have been signed as the agreement for one block with BP of the UK has not been firmed up.

Reliance to link KG, Orissa gas sources

November 7, 2006. Reliance Industries Limited plans to link Kakinada and Basudebpur, the landing points of its two-mega gas sources the D6 block in the Krishna Godavari basin and the NEC-25 block off the Orissa coast with an 890-km pipeline. While Kakinada in Andhra Pradesh is the landfall point for gas coming from the D6 block, gas from the NEC-25 block will land at Basudebpur in Orissa. Going by discoveries already announced by RIL, the current estimated gas reserves from these two blocks stand at over 25 trillion cubic feet.

According to a plan submitted by RIL to the petroleum ministry, such a multi-source system will not only ensure continuity in supplies to consumers but also enhance their reliability and security. RIL has planned a large network of pipelines to evacuate gas from these two gas sources. With an investment running into billions of dollars, the three mega gas pipeline projects proposed by the company include the 1,500-km Kakinada-Uran (Maharashtra), 1,400-km Kakinada-Chennai-Coimbatore (Tamil Nadu) and the 1,100-km Kakinada-Basudebpur-Howrah (West Bengal) routes.

The petroleum ministry has already floated expressions of interest for booking capacities from these three pipelines, to be built on a common carrier basis. Reliance also proposes to extend its pipeline from Chennai to Tuticorin, besides covering Bangalore and Mangalore. Two more pipelines have been planned from Basudebpur to Cuttack in Orissa and Bhopal in Madhya Pradesh, and from Basudebpur to Howrah, Hooghly and Bardhaman in West Bengal. RIL has also written to the ministry to later extend them to cover Chattisgarh and Bihar. Following the upscaling in production from its KG basin D6 block, from 40 mmscmd to 80 mmscmd, Reliance has for the time being put on hold plans to develop its NEC-25 offshore gas block in Orissa. As a consequence, the markets of West Bengal, Bihar and Madhya Pradesh, which Reliance had earlier proposed to supply gas from its offshore block, will now be fuelled by supplies from its D6 blocks from 2008-09.

Hindujas & ONGC tie up to exploration

November 5, 2006. The Hinduja group-promoted Gulf Oil and Ashok Leyland Project Services will sign agreements with ONGC to form two new companies for jointly undertaking a wide range of oil and gas projects in India and abroad. The first JV company, likely to be named ONGC Gulf Energy Ltd, will undertake projects in exploration and production, procurement of crude oil, LNG and condensate, besides shipping oil and gas. ONGC and Gulf Oil have identified 11 countries of which the two would work on an exclusive basis in Iran, Kuwait, Oman, Qatar and the UAE. In the others, they will identify specific projects on merit and form consortia/JVs with third parties. These countries are Brunei, Libya, Russia, Ukraine, the UK and Saudi Arabia. The second JV will develop LNG terminals with associated power, petrochemical and gas pipeline grid projects in the southern peninsula of India. ONGC and the Hindujas will hold 98 per cent equity in the two JVs in the ratio of 51 per cent and 49 per cent, respectively. The remaining 2 per cent will be held by one or more FIs. A formal tie-up between the two has been hanging in the balance for the last two years.

OVL not to offer equity to OIL for Sudanese sites

November 2, 2006. ONGC Videsh Limited (OVL) has sought exemption from compliance to the government’s decision to offer an equity stake to Oil India Limited (OIL) in its two exploration blocks—5A and 5B in Sudan. OVL holds 26.12 per cent in block 5A and 24.5 per cent in block 5B. In return, OVL has agreed to waive off the Rs 39-crore loan payable by Oil India to OVL, relating to the acquisition of 100 per cent equity shares of OVL’s wholly owned subsidiary in USA—Sakhalin India Inc.

OIL had acquired SII in 2002 for $7.69 million to help OVL avoid US sanctions at a time it was in the process of acquiring a 25 per cent stake in the Greater Nile oil project in Sudan from Talisman Energy Inc of Canada. Talisman had quit Sudan following action against it by Presbyterian Church. Due to the failure of the exploration of the Lousiana project, SII had to be discontinued and OIL wound up the company and wrote off the entire expenditure of around Rs 32 lakh, which has now mounted to Rs 39 crores. It is this amount that OVL has agreed to waive off with the condition that it would no longer be required to transfer any equity to OIL in the 5A and 5B blocks in Sudan.

Later when OVL decided to purchase equity in the two blocks in Sudan, the cabinet at the time of approving OVL’s investment had asked OVL to take OIL along with it in these blocks. However, OVL has now pointed out that any assignment of a stake to OIL will not only require the approval of the Sudan government but also the consent of OVL’s other partners in these blocks who have pre-emption rights.


Andhra allots 1,500 acres to HPCL in SEZ

November 2, 2006. The Andhra Pradesh government decided to allot 1,500 acres of land to Hindustan Petroleum Corporation Limited (HPCL) in the AP Special Economic Zone (APSEZ) at Visakhapatnam. HPCL would utilise the land to establish a refinery, an aromatic plant and a naptha cracker unit with a total investment of Rs 30,000 crore. While the companies such as Gangavaram Port Limited are also seeking land in SEZ for industrial purpose, today's meeting was only confined to the HPCL's request for land. In addition to 1,500 acres, the public sector oil company was also seeking around 2,000 acres of land near Visakhapatnam for its proposed investments.

Transportation / Distribution / Trade

REL to build gas distribution network in B'lore

November 4, 2006. Reliance Industries is off the block unfurling the ambitious city gas distribution plans. It is expected that the Centre‘s policy will allow companies to have monopoly in retailing natural gas to households for a limited period based on investments and the market growth. RIL and ADAG will compete for gas distribution in other markets, and Bangalore is expected to attract the attention of any private firm looking at developing CGD network. It is learnt that RIL proposes to bring gas into Bangalore from the Kakinada-Bharuch trunk pipeline, which passes through Karnataka’s northern districts. RIL expects gas to start flowing into the trunk line from KG Basin by mid ’08. This means that RIL could be in a position to bring gas into Bangalore as early as late ’08. Incidentally, two days ago, RIL had sought the exploration regulator’s permission to double the gas production target in KG Basin, which is currently pegged at 40 mmscmd.

Policy / Performance

REL in gas JV talks with IOC, GAIL

November 6, 2006. Reliance Industries Ltd is in talks with state-run firms Indian Oil Corp and GAIL India Ltd over possible pipeline and gas distribution joint ventures. In some parts GAIL has a network and permission to lay pipelines and supply gas to domestic users. In other parts IOC has a strong presence. Reliance is keen to have a 51% stake in the possible tie-ups with refiner and retailer IOC and gas transmission firm GAIL. Commercial production from Reliance’s Krishna-Godavari gas block will begin from mid-2008. Reliance plans to lay pipelines to supply gas to domestic households once a pipeline and city gas distribution policy is announced. The government is expected to release details by the end of this month.

Competitive bidding to discover gas price

November 5, 2006. Government is likely to prescribe competitive bidding to arrive at the price of natural gas produced from new fields and recommend different price in different regions. A Committee, formed by Ministry of Petroleum and Natural Gas to formulate guidelines for approving natural gas price formula/basis for giving Government approval, has suggested discovering price of natural gas from fields like Reliance Industries D6 in Krishna Godavari basin, by inviting bids from different consumers.

The Committee was formed after the ministry rejected Mukesh Ambani-run RIL selling gas from D6 to a firm run by his estranged brother Anil at 2.34 dollars per million British thermal units on grounds that the price was not arrived on arms length basis. The five-member Committee suggested competitive bidding despite the entire industry public and private rejecting such an idea since the Indian gas market was as yet highly underdeveloped. The industry was of the view that the economic price of gas cannot be passed onto the final consumer in case of bulk consumers like power and fertilizer units. The Committee further recommended different price of natural gas in different regions and indexation of the price in the interim period. It also resolution of disagreement by an independent regulator. 

RIL to raise $2 bn for gas projects

November 1, 2006. RIL is raising $2 billion to help fund oil and gas exploration, as well as production, through syndicated loans, bonds or foreign currency convertible bonds. The company will seek board approval on November 9 for this. RIL has capex plans requiring Rs 39,710 crore ($8.8 billion) over the next three years, of which oil and gas exploration accounts for Rs 1,743.4 crore ($388 million). A major chunk, (42 per cent), will go towards gas discovery and production. Its estimated investment in the Krishna-Godavari Basin project has been revised upwards from $ 2.47 billion to $5.2 billion, with plans to double output from the D6 block. RIL has already filed an amended development plan for KG-D6 with the directorate general of hydrocarbons, along with enhanced facilities for production, collection, evacuation and handling of both offshore and onshore gas.

HPCL steps back on Shell stake buy

November 1, 2006. State-owned Hindustan Petroleum Corp (HPCL) which was in race to acquire a substantial stake in Royal Dutch Shell’s LNG terminal at Hazira has now backed out. This was after submitting a non-binding offer and completing the due diligence of the terminal. People familiar with the development attributed the move to Shell’s inability to give a commitment of assured LNG supply on a long-term basis. Besides HPCL, Bharat Petroleum Corp, Indian Oil Corp and GAIL are said to be in talks with Shell for buying stake in the terminal.

Total of France has 26 per cent interest in each of the three companies that comprise the Hazira LNG terminal and the port: the port company, the LNG terminal company and the marketing company. The company is now thinking of developing a 5-MMTPA LNG import terminal at Mundra on its own. HPCL has already conducted a detailed feasibility study for this project and the project cost is pegged at around Rs 2,600 crore. The scope of developing LNG terminal at Mundra also includes associated gas evacuation pipelines from Mundra to Delhi.

Centre may grant tax sops to energy sector

November 1, 2006. The government is considering granting tax incentives to the oil and gas sector. Some of the incentives under consideration include a 10-year tax holiday under Section 80 IA of the Income-Tax Act for gas pipelines, storage terminals and other related facilities for transportation and storage of petroleum products.  The contention of the industry is that gas pipelines and associated infrastructure are important to ensure quick and timely distribution of petroleum products. There are indications that the notification granting tax breaks to the oil and gas sector may be issued soon. 



Reliance Energy buys Rosa Power

November 5, 2006. Reliance Energy will now set up the 600-MW Rosa thermal power project in Shahajhanpur, Uttar Pradesh. REL has signed the power purchase agreement (PPA) with Uttar Pradesh Rajya Vidyut Utpadan Nigam (UPRVUNL) and will make electricity available to the Uttar Pradesh Power Corporation (UPPCL) at the rate of Rs 2.69 per unit. According to the PPA, the Rs 2,641-crore project will be completed in 44 months. REL will set up two coal-based units of 300 MW each and the plant construction will begin after the cabinet approval. The UP Electricity Regulatory Commission has already approved the revised power purchase agreement signed between the REL and the UPRVUNL. The Rosa Power Project, initially a 51:49 joint venture between the AV Birla Group and PowerGen of UK, was initiated in the early 1990s. The earlier estimates had pegged the project’s total cost at Rs 2,603 crore with a debt component of Rs 1,814 crore and equity of Rs 789 crore.

Lanco to set up a 1,320 MW plant in Orissa

November 3, 2006. Hyderabad-based Lanco Infratech has firmed up plans to set up a 1,320 MW power plant in Orissa at an investment of nearly Rs 5,000 crore. It is also planning to enter power distribution. The Lanco group has interests in power generation, construction and property development. The group comprises 18 entities, several of which are special purpose vehicles set up to implement its proposed power and real estate projects. Lanco Infratech is the group flagship. The proposed plant will have two units of 660 MW each. Lanco Infratech is mulling the possibility of locating it in Talcher. Cost of power generation is likely to be in Rs 2.30-Rs 2.40 per unit range

It has signed a 25-year power purchase agreement (PPA) with the Orissa government. Under the PPA, the Orissa government, through Power Grid Corporation of India (PGCIL) will buy about 26% of power generated by the plant. In the power sector, the Lanco Group operates plants with a total installed capacity of 518 mw. It is also in various stages of implementing an additional 3,275 MW of generation capacity by calender 2010. These include a 600 MW coal-fired plant in Chattisgarh, two 1000 MW thermal plants - one each in Karnataka and Uttar Pradesh and a 500 MW hydel station in Sikkim. Lanco Infratech has decided to enter the transmission and distribution (T&D) business. To this effect, it recently bid for a Rs 2,500 crore project for installing 1,500 km of T&D infrastructure for PowerGrid in Gujarat and Maharashtra.

Lanco plans 1000 MW plant in Gujarat

November 3, 2006. The Lanco Group plans to set up a 1,000-MW gas-based power project on the west coast in Gujarat.  Lanco will join hands with Gujarat State Petroleum Corporation (GSPC) for the proposed project. The location and the time frame of the project would depend largely on the availability of gas in the Krishan-Godavari Basin on the west coast.  Lanco also plans to acquire coal mines in Indonesia to support fuel requirements of its ambitious Nagarjuna Power Project, which is scheduled to go on stream by 2009. The infrastructure company also plans to acquire some of the coal blocks in the country available for long lease to support the company’s existing and future plans for coal-based power projects. 

TN atomic power plant to go on stream by ’08

November 2, 2006. The additional two units of Koodamkulam atomic power plant in Tamil Nadu will be operational by 2008. As the consumption of energy is on the rise, atomic energy is the key to solve the shortage problem in the country.  The commission is also exploring the possibility of commissioning more atomic power units at the Koodamkulam power station.  Though mineral sand mining was opened up to the private sector in 1998, no company has so far started mining due to a host of reasons. There are a lot of environmental issues involved in mining minerals from sea beds.  Higher energy cost involved in mining of minerals is a problem area for private sector companies. The processing capacity of the company's units at Chavara in Kerala, Manavalakkurichi in Tamil Nadu and another unit in Orissa, would be enhanced to one million tonne in four years.  The three units have a combined capacity of 4.6 lakh tonne per annum.  The company is seeking participation of foreign companies for further expansion of projects.  An MoU has been signed with a Russian company for the development of the unit in Orissa and the company is in the process of signing similar tie ups for other units as well. 

Alstom opens electrical shop in facility

November 2, 2006. Alstom Projects India Limited, part of the Alstom group, has opened an electrical shop at its Vadodara-based hydro equipment manufacturing facility.  The new electrical shop would further strengthen Alstom’s hydro electric equipment manufacturing capability in India.  The Vadodara facility would cater to nearly 70 per cent of the global demand for equipment in the hydro power sector while around 30 per cent of the capacity would be used for the domestic projects. The company has undertaken the 2,000-MW Subansiri project in Arunachal Pradesh. The project will have eight units each consisting of 250 MW capacity.  The Vadodara plant is the third largest hydro equipment manufacturing facility of the group. Two other similar facilities are located in Brazil and China.  The company is now focusing on gas-based power projects.

Tata Power plans power project at Haldia

November 1, 2006. Tata Power will debut in West Bengal shortly with a 120 MW greenfield project at the industrial town of Haldia in East Midnapore district. The project was conceived by Hoogly Met Coke & Power Co Ltd (HMCPL), a Tata Steel subsidiary, along with a 1.6 million tonne met coke plant. HMPCL is a JV between Tata Steel and the West Bengal Industrial Development Corporation. The Rs 1650 crore met coke project (including the 120 MW power project) will commence commercial production from July 2007 and full 1.6 million tonne capacity will be reached by December.

Transmission / Distribution / Trade

NTPC may seal LNG pact with Nigeria

November 7, 2006. State-owned power company NTPC Ltd has secured a commitment from Nigeria for 3 million tonnes per annum of liquified natural gas (LNG) for its domestic gas-based power projects. The federal government of Nigeria forwarded a draft MoU to NTPC, agreeing to allocate NTPC proven onshore gas blocks and gas resources of up to 3 mtpa. NTPC would be required to develop these blocks and later set up a liquefaction terminal in Nigeria to export the LNG to its gas-fired stations in India.

The move assumed significance given that India’s current LNG imports stood at just around 5 mtpa. NTPC’s deal also came at a time when most other Indian oil and gas companies were struggling to get similar commitments from gas rich nations. The government of Nigeria also agreed to NTPC’s participation in the privatisation and commercialisation of existing power stations in that country. Under the draft MoU, this would be done to turn them around and improve their residual life and performance.

NTPC may partner with ONGC to develop these blocks and build liquefaction facilities in Nigeria for exporting the gas to India as LNG. ONGC, along with the LN Mittal group, already owned oil and gas properties in Nigeria. The duo were recently awarded two exploration blocks in Nigeria under the recent bidding rounds. In return for the 3 mtpa gas commitment, NTPC would be required to set up a 500 MW coal-based power plant and a 700 MW gas-based project in Nigeria. NTPC would help in the fast-track restoration of the Egbin power station in Nigeria, which was shut after a boiler explosion.

Essar, Lanco set for Indonesian power play

November 1, 2006. Essar Group and Hyderabad-based Lanco Infratech are in the race to bid for two proposed coal-fired power projects in Indonesia with an aggregate capacity of 400 MW. These projects — a 200-MW plant in Bali and a 200-MW plant in Sumatra — need an investment of Rs 1,500 crore, reports Nevin John & Nishanth Vasudevan in Mumbai. Indonesian state electricity firm PT Perusahaan Listrik Negara (PLN) has started the pre-qualification bid process and the names of the qualified companies will be announced by December ’06.

In addition to these two projects, Essar Power (EPL) had submitted pre-qualification bid for a 1200-MW project at Cerebon in western Java in March ’06. But the process has not been completed as yet due to objections raised by an international consortium led by Japan’s Marubeni against the bidding procedure, said sources. Marubeni has demanded government guarantee for the project but nothing has been decided by PLN. This project needs as investment of Rs 4,500 crore. If Essar wins the bids, the company will have to shell out Rs 6,000 crore to set up three power plants with an aggregate capacity of 1,600 MW. Other two bidders for the 1,200-MW project include consortiums led by Malaysia’s YTL and Japan’s Marubeni.

For the Bali and Sumatra projects, EPL and Lanco have submitted pre-qualification bids and the selection would be completed by December ’06. Lanco is the sole Indian contender for EPL and has tied up with a local partner as well. PLN will be the exclusive buyer for the power generated from these three plants. Cerebon plant will have two 600 MW units, which are scheduled to be completed by ’10. The Bali and Sumatra projects are likely to be completed in two years. Both the companies have plans to source coal from Indonesia for their projects in India. Indonesian coal is cheaper when compared with the Australian variety, though the quality is not good enough. The coal sourcing is important since EPL has an ambitious Rs 7,000-crore expansion plan in India and aims to produce 3,000 MW, mostly coal-based, by ’10. Lanco, on the other hand, wants to produce 3,800 MW by ’10, a large majority of which is coal-based.

Policy / Performance

NHPC, NTPC to route power funds from W Asia

November 7, 2006. National Thermal Power Corporation (NTPC), National Hydel Power Corporation (NHPC), and Power Grid Corporation of India (PGCIL) will be the three agencies through which investments from West Asia will be channelled into the power sector.  The government had initiated talks with governments of Dubai, Qatar, Abu Dhabi and Kuwait for the purpose.  The talks, would be taken forward by these public sector companies, which were in the process of identifying suitable projects.  The NTPC has already identified its Kayankulam power plant in Tamil Nadu as a possible destination for attracting investment from Qatar. 

A Qatari team recently visited the plant and is said to be waiting for an evaluation report. Teams from the other two companies have visited these countries prior to identifying probable ventures.  Once the projects were identified and agreed upon, they would be spun off as separate special purpose vehicles to facilitate investment.

The governments of the West Asian countries had expressed interest in putting up both equity and debt for the projects. However, they were not interested in taking a controlling stake in any of the projects. As part of its negotiations with the oil-rich countries, the NTPC was also considering joint ventures for combined cycle gas-based power plants, with commitments for long-term gas supply.   

The empowered committee on transmission set up by the ministry had identified 15 transmission lines for private sector participation. Of these, expressions of interest for two — the North Karanpura line in Jharkhand and strengthening of the Talchar (Orissa) to Kolar (Karnataka) line — would be invited in the next two weeks.  The Rural Electrification Corporation (REC) would be the nodal agency for the projects, which would be modelled on the ultra mega power projects (UMPPs). The REC would form shell firms and do the groundwork for the projects, including obtaining environmental clearances. 

NTPC powers overseas forays with Lanka

November 7, 2006. The state-owned power major will shortly sign an agreement with Ceylon Electricity Company for developing a 500-MW imported coal-based power plant in Sri Lanka. A new joint venture company will be floated in Sri Lanka for executing this Rs 2,500 crore project. Both NTPC and Ceylon Electricity will each hold 50 per cent equity in the company. Around 2.5 million tonnes of coal per annum was likely to be imported for this project from Indonesia at the Trinkomali port in Sri Lanka. At current prices, this will cost around Rs 600 crore annually and will contribute towards the variable cost of the project.

This is the first project that NTPC will be setting up abroad on a build, operate, own and transfer (BOOT) basis. Also on the board are plans to set up similar projects in Nigeria, Qatar and Kuwait. A similar power project has also been awarded to a Chinese national company through the negotiations route. NTPC is also moving fast on the nuclear power front. It is ready with its consultants’ report on setting up of two 2,000 MW projects each at two sites in India. Talks were on with various technology suppliers for setting up nuclear power projects in the country. These include GE, Alstom besides French and European companies.

Bhel-NTPC price debate hinders supply contract of critical units

November 6, 2006. The country’s power generating major NTPC and power equipment manufacturing major Bharat Heavy Electricals (Bhel) have so far been unable to come to an agreement over a possible contract to supply super critical units. Price continues to be the big stumbling block for the Bhel-Alstom-Siemens combine when it comes to obtaining an assured order of eight to ten 800-MW units from state-owned power major NTPC. While NTPC wants the price to be benchmarked to the Sipat Stage I project, which has three 660-MW super critical units, the Bhel combine would prefer benchmarking to international prices for 800-MW units.

Sipat stage I project was awarded to Russian firm Power Machines and a Korean firm, Doosan. OJSC Power Machines of Russia was to supply the turbine generator, valued at Rs 1,135 crore and Doosan was awarded the Rs 1,860-crore order to supply the steam generator.  The Bhel-Alstom combine was unable to match the prices offered by the Russian-Korean combine. The ministry of power fears that as in the case of Sipat bid, when it comes to the 800-MW super critical technology the Bhel consortia may not be competitive in its price. Nonetheless, it would seem that the ministry of power has given enough indication to NTPC that the country needs the 800-MW supercritical technology and that should be considered when the NTPC board takes a final view. NTPC would prefer Sipat as benchmark for both its low price, and the fact it is the first power project in India to be executed using the energy efficient 660-MW super critical technology.

Nod for coal-based power plant in Chhattisgarh

November 3, 2006. The Cabinet Committee on Economic Affairs (CCEA) gave its approval for setting up a coal-based power plant and undertaking captive coal mining in Chhattisgarh at a cost of $1.22 billion.  The plant will be set up by Mauritius-based AES OPGC Holding and other affiliated entities of AES Corporation, US. It will be a greenfield plant and will undertake coal mining for captive consumption.  AES expects to bring in $370 million as FDI and the remaining $852 million will be raised through loan from domestic and international banks and financial institutions. 

The CCEA has also waived off the ceiling of Rs 1,000 crore for equity investments by NTPC Ltd to establish financial joint ventures with Bharat Heavy Electricals Ltd to bid for development of ultra mega power projects. The bidding will be limited to a maximum of two projects.  The construction of 1000 km of expressways under Phase VI at a cost of Rs 16,680 crore has also been approved by CCEA. The government will seek Rs 9,000 crore through PPP and the balance of Rs 7,680 crore will be funded through viability gap funding. The project is likely to be completed by December 2015. 

Cos oppose qualification norms for big power units

November 2, 2006.  The ultra-mega power projects are facing fresh problems as the companies in the race have expressed concerns on the qualification criteria, tariff quotes, coal mine development and environmental clearance to the ministry of power. In its letter to the ministry, Tata Power Company (TPCL) said there is no qualification criteria indicated in the bid for the choice of equipment in respect of its past proven performance. Recently, global power major Allied Energy Services’ Indian subsidiary, AES India, had planned to pull out of the race for the Mundra project due to the risks involved in fuel linkage. Power Finance Corporation, the nodal agency that conducts the bidding of ultra mega projects, had received 13 requests for qualification (RoQ) for Mundra (Gujarat) and 15 for Sasan (Madhya Pradesh) projects, and signed power purchase agreements with beneficiary states.

As the projects are a matter of national prestige and are critical, TPCL said that at least 8,000 hours of successful track record should be included as criteria to make choice of boiler, turbine-generator units. The company has requested to extend the benefit of ultra-mega power project status to Sasan coal mine involved in it and the equipment imported for mining. For the development of the Moher coal block, TPCL has requested to acquire 300 hectares of land adjacent to the block. The companies are awaiting environmental clearance for Sasan and Mundra projects and demanded modification in the draft issued by Central Electricity Regulatory Commission (CERC) to enable tie-up for fuel linkage.

To reduce the risk perception of banks and financial institutions, the companies have requested to permit a reset of interest rates at the end of a particular period. TPCL recommended that Madhya Pradesh and Gujarat governments should issue a commitment communication in terms of state-related aspects. Domestic companies such as National Thermal Power Corporation (NTPC), TPCL, Reliance Energy, GMR Industries, GVK Power and Infrastructure, Essar Group, Torrent Power, Jindal Steel and Power and Jai Prakash Industries are in the race for ultra-mega power projects. YTL Corp Berhard, Israel Electric, China Light and Power, Korea Electric Power Corporation, Mitsui and Company, Suez Energy and Sumitomo Corporation are also in the pre-qualification round. 

Centre may jettison Dabhol project over pricing

November 1, 2006. The government may consider selling off Dabhol power project if it fails to tie up fuel for the project at an affordable rate. The project would be sold to a “company which can operate the plant on a sustainable basis”. The government has asked petroleum ministry to make a last-ditch effort in providing cheaper fuel to the Ratnagiri Gas and Power Private, before it would consider selling off the project.

In a recently-held meeting of empowered Group of Ministers (E-GoM), Cabinet secretary said even after making an all-out effort, if government was unable to source gas for the project at a price which can ensure viable functioning of RGPPL, “then the only option left to consider would be to sell the project to a company that can operate the plant on a sustainable basis”.

It’s understood that the ministry is awaiting the outcome of its negotiation with Qatar for fuel supply. While negotiating with Qatar, the ministry has been asked to keep in mind the existing global prices of LNG, which have declined substantially and are expected to fall significantly over ’07-09 when the 200-odd LNG carrying vessels currently being built start plying.

The Cabinet secretary has said arranging reasonably-priced LNG for the project is one of the critical issues. Pointing at contracts of the petroleum ministry and Petronet LNG, where gas is being supplied at $2-3 per mmbtu. They should not load the entire high cost on one single contract of Ratnagiri project and attempt should be made to provide LNG to all, including RGPPL, at an average or pooled price, which is the practice followed by similar companies.”

DVC to raise $3.12 bn for thermal projects

November 1, 2006. Damodar Valley Corporation (DVC) plans to raise Rs 14,000 crore ($3.12 bn) to fund its ambitious expansion plan for 6,000 MW thermal projects over the 11th Plan period. It will invest Rs 6,000 crore from its internal accruals in the projects. The loan will be syndicated by SBI Caps, with the SBI itself putting in around Rs 1,700 crore. SBI had pledged Rs 700 crore for investment in the current year and would lend an additional Rs 1,000 crore over the next five years. DVC has three 1,000 Mw greenfield projects lined up for completion during the 11th Plan period at Kodarma in Jharkhand, and Durgapur and Raghunathpur in West Bengal. The projects would all be awarded by the end of 2007. The company had already been allotted coal blocks for these projects.   The company also plans to expand capacity at its Mejia plant in West Bengal from 840 MW to 1,340 MW by the end of the current year and to 2,340 MW by 2011. It was also implementing a 1,000 MW project with Tata Power at Maithon and a 500 MW project with SAIL, as well as expanding the capacity of the power plant at Bokaro by another 500 MW.




Total says makes two "significant" N. Sea finds

November 6, 2006. French oil major Total had made two "significant" oil and gas finds in British territorial waters in the North Sea. It said one discovery at Jura West, some 160 kilometres east of the Shetland isles, could enter production in 2008. The discoveries would enable Total to keep its Alwyn production platform going until "well after 2010".

Malaysia’s pecd wins $36.5 mn contract

November 6, 2006. PECD Berhad has won an award for the construction of crude storage tanks for phase 2 of the second refinery of Petronas in the southern state of Melaka. The project for a contract price of RM132,976,220 (US$36.5 million) was awarded by Malaysian Refining Company Sdn Bhd. The project duration is 26 months from 2 November 2006.The scope of the project comprise the construction and erection of 2 crude storage tanks at the second refinery of Petronas in Melaka and includes the construction of all general services engineering works and necessary tie-ins for the project facilities. PECD expects the project to contribute positively to its earnings for the financial year ending 31 December 2007.

Australia reports second gas find in Mexico

November 6, 2006. Oil and gas explorer and producer Petsec Energy Ltd has reported its second gas discovery at Mobile Bay in the Gulf of Mexico. The independent producer said drilling had reached the target depth of 991metres and encountered 10.3 metres of net gas pay in two sands. The well has been cased, and will be completed for production together with installation of a caisson which will support production facilities. Tthe company planning to drill a third well. The third well will be spud after the first two wells are completed and caissons set, which is expected to take 3-4 weeks. It is expected that the wells can be brought into production within four months from the completion of the three well drilling program.

Dolphin gas ready to flow

November 6, 2006. The first Qatari gas supplies to the UAE under the Dolphin Gas Project will flow in the second quarter of 2007. The another agreement may be signed with Qatar to expand the project up to 3.2 billion standard cubic feet per day of gas. The export pipeline was completed in August this year, the production platforms are ready and the Taweelah reception facilities near Abu Dhabi are 90 per cent complete. Although initial capacity through the export pipeline was only 2 billion scfpd of gas, the pipeline has been designed and built to export 3.2 billion scfpd, some 60 per cent higher than initial throughput.

Kuwait investing heavily to boost oil production

November 6, 2006. Kuwait is investing $26 billion to ramp up crude oil output to four million barrels per day by 2020. Kuwait has a strategy 2004-2020 to increase oil production to four million bpd. The company will make most investments in the upstream sector.  Kwait, an Opec member currently produces some 2.5 million bpd of crude oil. Kuwait is also increasing production in phases of natural gas and condensates in the north of the country. In the first phase, output will increase to 180 million standard cubic feet (scf) of gas per day by 2007 and in the second phase it will go up to 600 million scf of gas per day by 2010-11. Ultimately, based on the reserves estimates, it could go up to one billion scf of gas per day. The country has substantial oil and gas reserves and needs to partner with international companies to bring in technology.

Kuwait sees 200,000 bpd oil capacity boost by 2009

November 5, 2006. State-run Kuwait Oil Co. (KOC) expects to add around 200,000 bpd from the Burgan oil field by 2009 under a plan to boost production capacity to 3 million bpd by 2010. Burgan is the country's largest oil field. OPEC Gulf producer Kuwait also plans to gradually increase its production capacity to 4 million bpd by 2020. KOC and Kuwait look at increasing production as a strategic action that is not pinned to prices.

Brazil's Petrobras wins operating rights in Angola

November 5, 2006. Brazil's state oil company Petrobras has signed four production-sharing deals with Angola's national oil company Sonangol, winning operating rights for the first time in the southwest African country. Under the agreements, Petrobras will acquire 3D seismic data and drill exploration wells at the shallow-water 6/06 block in the Kwanza basin, the deep-water 18/06 block in the Lower Congo basin and Block 26 at the deep-water frontier Benguela basin. Petrobras got a 40-percent stake in the 6/06 area, 30 percent in 18/06 and 80 percent in Block 26, all with operating rights. The operator will drill seven exploration wells in the 18/06 area and two wells in each of the other two blocks. It will also be a nonoperating partner with a 5-percent stake in the 15/06 area of the Lower Congo basin. Block 26 represented a geological and geophysical model similar to those found off Brazil's coast. Petrobras is one of the world's leading companies in deep-sea oil prospecting and production. It has been working in Angola since 1979 and Petrobras said the country is one of its investment priorities. Apart from Angola, Petrobras overseas oil or natural gas production operations include Argentina, Bolivia, Colombia, Ecuador, Peru, the United States and Venezuela.

UAE's GASCO investing $6 bn to boost gas output

November 4, 2006. Abu Dhabi Gas Industries (GASCO), a unit of Abu Dhabi National Oil Co (ADNOC), is investing 22 billion dirhams ($6 billion) to boost gas output in the Gulf emirate. The projects included the third phase of the Habshan gas complex expansion whose cost he put at 5.5 billion dirhams. Upon completion in April 2008, it will be one of the biggest gas plants in the world. The gas reserves in Abu Dhabi are estimated at around 200 trillion cubic feet. GASCO currently operates and maintains three NGL plants, two gas plants, one NGL fractionation plant, two gas injection plants and two gas distribution hubs. ADNOC holds a 68 percent stake in GASCO while Shell and Total each hold 15 percent and Partex 2 percent. UAE was working to boost its crude oil output capacity to 3.5 million barrels per day by 2010 despite its decision to reduce output by 100,000 bpd from November under an OPEC deal to curb supplies.

Norsk Hydro offers OVL stake in Angolan Block

November 3, 2006. Norway's Norsk Hydro has offered ONGC Videsh Ltd a stake in an Angolan exploration block and an oil field in Iran. Norsk Hydro has agreed for participation of OVL in the Angolan block number 34 in which it has 50 per cent participation interest. In the onshore Aranan field of Iran, Norsk Hydro has offered OVL a part of its 50 per cent stake. OVL has offered Norsk Hydro participation in two deep water exploratory blocks in Cuba. The PSU major has sought the Norwegian company's assistance in developing ONGC's field in Krishna Godavari basin.Norsk Hydro has agreed to detailed exploration technology for development of thin oil rim of Vasai east and Bassinn field of western offshore.

MOPU begins production at Cendor, Malaysia

November 3, 2006. The Mobile Offshore Production Unit (MOPU) supplied by Global Process Systems to oil and gas operator Petrofac has commenced production on the Cendor Field in Block PM034 offshore Malaysia. The innovative solution, the first application of its kind in Malaysian waters, sees the MOPU connected to a spread moored floating storage and offloading unit (FSO) via a flexible submarine pipeline. The MOPU, which is being supplied to Petrofac on a two year asset lease basis, is owned by Cendor MOPU Producer Limited. Global Process Systems holds an 80 percent stake in Cendor MOPU with the remaining 20 percent held by Tanjong Offshore Services Berhad.

The Cendor MOPU is one of two such assets currently being operated by Global Process Systems. The second is already in operation on the Santos Maleo field in Indonesia. A further asset, GPS Producer 1, is currently undergoing upgrade work in Galveston, USA, in preparation for a similar contract under bid. The lease, operate, maintain business is becoming significant as regional exploration and production companies continue to look for innovative marginal field solutions. GPS has delivered this cost-effective solution safely and within fast track schedules for both the Cendor MOPU Producer and the Maleo MOPU Producer.

Talisman explored well offshore Trinidad

November 2, 2006. Talisman Energy Inc. has announced that the Ruby-1 exploration well offshore Trinidad has tested oil. The Ruby-1 well is located in Block 3(a), 30 miles off the northeast coast of Trinidad, approximately five miles east of the central processing platform for the Greater Angostura Field on Block 2©. The well was drilled to a total depth of 5,750 feet and encountered approximately 1,200 feet of hydrocarbon bearing sands, including more than 800 feet of net pay. The well tested at a rate of nearly 5,000 bbls/d of oil on a 7/8th inch choke from a limited interval within the pay section. Kingbird-1, an exploration well drilled prior to the Ruby-1 well, encountered approximately 80 feet of gross hydrocarbon pay and was abandoned without testing pending further technical studies.

China to help Pakistan drill oil, gas wells

November 2, 2006. China will help Pakistan initiate an aggressive drive to explore oil and gas to meet the country’s energy requirement. Chinese companies have demanded 48 concessions to drill wells as part of efforts to explore oil and gas across the country. Pakistan has limited drilling capacity as it has only 30 rigs that is why the country is unable to find oil and gas reserves at the required pace. At present, 19 companies have 53 drilling licences, including 14 foreign companies, which are exploring oil and gas in the country. The Chinese Petroleum Chamber comprising 1,000 members had shown its desire to participate in the drive to drill oil and gas wells. Chinese Petroleum Chamber has 2,000 rigs, of these 500 are capable of drilling more than 3,000 metres deep to explore oil and gas reserves. The Pakistan authorities have been asked to attract Chinese companies, urging them to bring in at least 200 rigs in the country for expediting the pace of drilling. A task force would be constituted to negotiate with Chinese companies. Pakistan had made a plan to increase its capacity of drilling to 500 wells in 2005-10, 1,800 in 2010-20 and 3,000 wells in 2020-30.

Petro-Canada buys Syria gas assets from Marathon

November 1, 2006. Petro-Canada has agreed to pay Marathon Oil Corp. C$54 million ($46 million) for a 90 percent stake in two Syrian natural-gas fields. Petro-Canada will develop the fields under a production-sharing contract with the Syrian government and expects to produce 80 million cubic feet of gas a day from the properties by 2010. The Ash Shaer and Cherrife fields in Central Syria contain an estimated 500 billion cubic feet of producible gas, though Petro-Canada said it expected that could double as it does additional work on the fields. The Calgary-based company said it expects to spend C$550 million to C$800 million developing its new properties. The purchase marks a quick return to Syria by the Calgary-based company. Earlier this year it sold its stake in Syrian oilfields to a joint venture formed by Chinese and Indian oil companies for C$676 million. The Calgary-based company said the transfer has been approved by the Syrian government. Petro-Canada has the option to acquire Marathon's remaining 10 percent stake in the two fields within five years.

Norsk Hydro starts new production in Troll area

November 1, 2006. Norwegian energy and metals group Norsk Hydro had begun production at the Fram East field in the promising Troll area in the Norwegian Sea. At peak production in 2008, Fram East will contribute to a 50,000 barrel-per-day increase in oil production from the Troll C platform, which Hydro operates and plans to build up further. Production from the first Fram East well started on schedule on Oct. 30. Total development costs for production and transport at Fram East amount to 2.4 billion crowns ($367 million). The Fram East field, discovered in 1990, contains 61 million barrels of recoverable oil and 3.1 billion cubic metres of recoverable gas. Fram East has been developed with two subsea production templates with a total of eight drilling slots connected to the Troll platform where oil and gas are processed and transported.

Transportation / Distribution / Trade

Thailand enters east china's energy market

November 7, 2006. The biggest foreign investment project in East China's Shandong Province has got the green light from the Ministry of Commerce. The Chai Tai Group of Thailand has joined hand with the Yantai Electric Power Development Co Ltd in east China's Shandong Province to found the Chai Tai Energy Development (China) Co Ltd, with a total investment of US$297 million. Chai Tai contributed US$178 million to account for 60 per cent of the total registered capital, and Yantai Electric Power contributed US$119 million with its stocked assets to take up 40 per cent. The two side has a broad field of cooperation, including electricity development and natural gas transmission pipeline facilities, and Yantai-Dalian railway ferry.

France Suez and Chile's Gas Atacama to build plant

November 6, 2006. France's Suez Energy and Chile's Gas Atacama reached an agreement to develop a liquid natural gas terminal in northern Chile for investment of as much as $350 million. The plant is to be located in Mejillones and would be used to receive, store and "re-gassify" liquid gas. The plant would help diversify energy resources in northern Chile, home to the country's massive mining industry and subject to supply restrictions from its only gas provider, Argentina.

The plant is to be built in two phases, with the first, "fast-track" phase to be ready in 2008 and the second phase potentially to be ready in 2010. The fast track phase is to involve the construction of a loading dock and a land-based re-gassification plant to funnel natural gas into the northern grid and for industrial use. During the fast track phase, liquid natural gas will be unloaded from the transport ship, which will serve as a storage facility in the interim. The second phase of the project will include the construction of a land storage facility for the liquid natural gas shipments.

CB&I win $400 mn Middle East contract

November 6, 2006. Engineering firm Chicago Bridge and Iron won $400 mn engineering, procurement and construction contract for storage facilities, pipelines and related buildings in the Middle East. The contract includes two storage facilities with a combined capacity of 900,000 cubic meters, 120 kilometers (75 miles) of piping systems, and associated mechanical, civil, building, electrical and instrumentation works. The Woodlands, Texas, company expects to complete the project in the fourth quarter of 2009.

Shell to lease vessel to produce oil and gas in Brazil

November 6, 2006. Anglo-Dutch energy group Royal Dutch Shell will lease a FPSO (floating, production, storage and offloading) vessel to produce oil and gas in Brazil. The operation is a part of the company's project to develop oil in the Ostra, Abalone and Argonauta oil fields in the Campos Basin, which is located in the southeastern coast of Brazil. The FPSO vessel has a capacity of processing 100,000 barrels of oil and 50 million cubic feet of natural gas per day. The vessel is expected to start its production by the beginning of 2010. Shell owns 13 exploitation blocks in the Campos, Santos and Espirito Santos basins in Brazil, which are all located in the southeast of the country.Besides, it has a 50-percent share in a consortium that runs the BC-10 block, where the acquisitions will operate. Brazil's state-owned company Petrobras has a 35-percent share, while India's ONGC has 15 percent.

Shell, RAK plan to pipe Iran gas into UAE

November 2, 2006. Royal Dutch Shell Plc, Europe’s biggest oil company, may pipe gas into the United Arab Emirates from Iran as the U.S. presses the international community to enforce sanctions to halt Tehran’s nuclear program. Shortages of gas in the UAE, spurred by demand from power plants, industries and new infrastructure, could derail the booming economy that is expected to gain by 11.5 per cent this year, the fastest growing in the Middle East.

Shell and RAK would compete with Dolphin Energy Ltd, a partnership between Abu Dhabi, Occidental Petroleum Corp and Total SA, and Dana Gas PJSC, which are both planning to import gas into the federation of seven emirates to help meet rising demand spurred by a booming economy. The U.S. wants the UN Security Council to punish Iran for refusing to abide by an August 31 deadline to suspend uranium enrichment.

The Bush administration says the Islamic Republic’s nuclear program is cover for the development of a weapon while Iran, a signatory to the nuclear Non-Proliferation Treaty (NPT), while the Islamic Republic of Iran says its uranium enrichment program is purely peaceful and is designed just to fuel power plants. Total SA, ENI SpA and Statoil ASA are among international oil companies to have completed projects in Iran even though their U.S. competitors are prohibited from working there. Shell’s European rival BP Plc is avoiding doing business in Iran for fear of retribution from the U.S. which forbids oil companies from investing directly in Iran.

NPCC wins $390m contract from India

November 1, 2006. Abu Dhabi-based National Petroleum Construction Company (NPCC) won a $390 million (Dh1.431 billion) contract from India's Oil and Natural Gas Corporation (ONGC). The latest contract takes the total value of NPCC's contracts with ONGC to over Dh2.2 billion. The scope of the project extends to survey, design and detailed engineering, procurement, fabrication, transportation, installation, hook-up, pre-commissioning and commissioning of four wellhead platforms, anti-corrosion, weight coating and laying of 185 km of submarine pipelines and modification of an existing process platform NQG at the Mumbai High offshore field. This project is expected to be completed by April 2007.

Policy / Performance

South Korea, Nigeria reach railway-energy swap deal

November 7, 2006. South Korea and Nigeria reached an initial deal under which Seoul will help the African country modernize its railway network in return for a stake in one of its oilfields. The two sides signed a memorandum of understanding. Under the agreement, yet to be worked out in detail, South Korea will modernize Nigeria's 1,500 kilometer (930-mile) railway line from Port Harcourt to Maiduguri, and also partially finance the estimated 10 billion dollar total cost of the project with commercial loans. In return, Nigeria would transfer a stake in an operational oilfield to Seoul.

Iran to dispatch oil, petrochemical industry experts to China

November 6, 2006. Iran's Fund for Export Development of Oil Derivatives planned to dispatch a delegation of 30 experts in oil and petrochemical industry to Beijing and Hong Kong. China is currently Iran's major partner in the field of oil and petrochemical products and Iran is keen on Chinese investment in the sector. According to existence of opportunities to develop Iran-China cooperation in the field of oil and petrochemical industry, the fund has planned to send an expert delegation to China in cooperation with Ministry of Foreign Affairs and the Trade Promotion Organization of Iran (TPOI) on November 12-19. The delegation is comprised of managers of major private companies active in the oil and petrochemical products.

Coordination has been made to hold seminar in both Beijing and Hong Kong to introduce opportunities for investment in Iran's petrochemical, oil and gas industries concurrent with arrival of the delegation in order to get Chinese investors, tradesmen and industry owners acquainted with Iranian industry sector. Soltani expressed hope that the tour will bolster economic relations between the two countries and encourage Chinese investors to invest in Iran's oil and gas downstream projects.

China spends $1.9bn on African safari

November 6, 2006. China is launching a sweeping effort to expand its access to Africa’s oil and markets, pledging billions of dollars in aid and loans. Chinese entrepreneurs signed deals with African governments and firms worth $1.9bn. Chinese companies including ZTE and Huawei Technologies signed 16 contracts with 11 African nations to buy minerals, build infrastructure and phone networks, in the country’s biggest investments on the continent. China, the world’s fastest-growing major economy, is increasing investment in Africa, as it seeks more supplies of oil, iron ore and other resources to meet local demand. Chinese President pledged to double aid to Africa in three years by extending more credit and waiving tariffs on more of its exports to strengthen economic and political ties.

China is targeting projects in nations including Angola, Libya and Nigeria in order to satisfy its demand for oil, which has almost doubled in a decade. It has projects in South Africa and Egypt for iron ore and aluminum. China imported about 38m metric tons, 763,000 barrels a day, of crude oil from Africa last year, accounting for 30 per cent of its total shipments of the fuel. Oil purchases from the continent will expand according to the needs of Chinese companies and the willingness of African producers to sell to China.

Oman investing $4bn to raise output

November 5, 2006. Oman is investing about $4 billion in the short term to lift crude oil production to higher levels. Oman will not cut output following Opec's decision. The current production is 800,000 bpd including condendates but Oman is increasing that in say, five years to at least 900,000 bpd. Oman is investing in a few projects like Enhanced Oil Recovery (EOR), steam injection and others. The investment will be around $4 billion. Oman is a small producer and output falls sometimes due to technical glitches.

RussNeft set to invest $100-150 mn in Azerbaijan

November 3, 2006. Russian oil company RussNeft and the State Oil Company of Azerbaijan (SOCAR) have signed a production-sharing agreement to develop two oil fields in Azerbaijan. The Govsany-Zykh fields are in the southern part of the Apsheron Peninsula, with recoverable reserves of 87 million barrels of oil. The agreement was signed by RussNeft and SOCAR.  Of the $100-150 million that the company is going to invest in the project, 15 per cent will go into environmental conservation programs. RussNeft, Russia's newest vertically integrated oil company, is among the country's top 10 crude producers. Its recoverable reserves exceed 630 million metric tons (4.6 billion barrels).

Beijing and Tokyo keen to develop oilfields

November 3, 2006. China and Japan have staked their claim to develop Iraq's vast oil reserves with Tokyo offering billions of dollars in loans and Beijing agreeing to renegotiate a deal signed with Saddam. Iraq, which has the world's third largest oil reserves, is in urgent need of billions of dollars in foreign investment after years of sanctions and war crushed the industry. The Baghdad government is working towards its first foreign oilfield development contract and is readying a legal framework. All the big oil companies are eyeing deals. Right now there is a Japanese loan of $3.5 billion. More than one billion will be spent to develop the Basra refinery. Also on building a floating port and an export pipeline.

Exxon says to hold Natuna gas talks with Indonesia

November 2, 2006. Exxon Mobil Corp. has agreed to talks with the Indonesian government on the huge Natuna D-Alpha gas block after Jakarta said the operating contract it holds had expired. Indonesian government had terminated the contract held by Exxon, amid high extraction costs and a lack of buyers for the gas. The U.S. firm has disputed this and said the contract allows for two more years for it and Indonesian state energy firm Pertamina to satisfy conditions or proceed with development even if the terms for development of the field are not met by Jan. 8, 2007. While Exxon Mobil still believes the current Natuna contract remains valid, Exxon Mobil has agreed to enter mutually beneficial discussions. The firm has said it has made significant progress marketing Natuna gas to credible buyers. Separately, state oil company Pertamina said it should be possible to resolve any disputes over the Natuna gas block. Pertamina has 24 percent stake in block, while Exxon has 76 percent.

The Natuna D-Alpha block contains around 222 tcf of gas, of which 46 tcf is thought to be commercially recoverable, but the field contains about 70 percent carbon dioxide, making it expensive to develop and difficult to sell. Despite the difficulties developing the field, the move to end Exxon's contract may cause concern among foreign investors about uncertainties of doing business in Indonesia, compounding worries over the legal system, labour and corruption.  Indonesia and Exxon Mobil signed a basic agreement in 1995 covering an estimated $40 billion to be invested in the offshore gas project in the South China Sea. The gas in Natuna D-Alpha, about 1,100 km (680 miles) north of capital Jakarta and 200 km east of the West Natuna fields that are currently feeding gas to Singapore, accounts for about a quarter of Indonesia's total gas reserves of 182 tcf. Asia Pacific's sole OPEC member has far more gas than oil, and is trying to phase out costly oil-fired power generation and uses more of its cheaper, cleaner natural gas domestically. But the country faces limited supplies due to long-term LNG export commitments, which it is reviewing.

Russia wants double gas price for Georgia in 2007

November 2, 2006. The price Georgia pays for Russian natural gas could rise from the current $110 to $230 per 1,000 cubic meters in 2007. The Georgian foreign minister, who is on a three-day visit to Moscow, talks are under way. If approved, it would be the highest gas price Russia currently charges from its former Soviet allies, and the closest one to an average European level, something Moscow has consistently sought since switching to a free market economy.

In 2007, Ukraine will pay Russia $130 per 1,000 cubic meters of gas under a recent agreement between the new pro-Russian premier and Moscow; Moldova will pay $170; Latvia is still in talks on a price rise to $217. And Moscow has repeatedly said it plans to raise the price for Belarus. For Georgia, the price rise would be a major blow for its struggling economy. The South Caucasus nation, which imports 1.2-1.5 billion cubic meters of natural gas per year, has been in talks with Iran and Azerbaijan on gas supplies to make up for a possible disruption in Russian deliveries in the upcoming heating season this winter. A disruption in Russian supplies earlier this year deepened the rift between Tbilisi and Moscow. In late January, two blasts on pipelines running through southern Russia cut natural gas supplies to Georgia, and an explosion in a high-power electricity transmission tower in Russia's North Caucasus caused blackouts in much of the country.

Korean firms in talks for $10bn Nigeria project

November 2, 2006. The construction arm of South Korean steel company Posco Co Ltd said it is part of a consortium in talks to upgrade a railway and build a gas plant in Nigeria in a deal worth about $10 billion. The consortium, which includes state-run Korea National Oil Corp (Knoc) and state-run power monopoly Korea Electric Power Corp (Kepco), would also build a gas pipeline in Nigeria as part of the deal. In return for building facilities in infrastructure-poor Nigeria, South Korea is seeking to get an advantage in buying oil licences from Africa's top oil producer in the future. Nigeria, also the world's eighth-biggest crude exporter, sold 16 oil licences in May in return for promises by mostly Asian investors largely Chinese and Indian companies of $20 billion investment in refining, power and other projects.

Govt blocks gas tariff reduction by Ogra

November 2, 2006. In an unusual financial review, the Oil and Gas Regulatory Authority has ordered reduction in average gas tariff by 14 per cent and 10 per cent for the consumers of the Sui northern and Sui southern gas companies, respectively, with retrospective effect from July. The government is, however, reluctant in notifying the revised gas rates to earn a windfall gain of over Rs24 billion in the form of gas development surcharge. The government is required under the Ogra ordinance to notify revised tariff on or before November 7. However, it is likely to take advantage of another clause in the ordinance to retain Rs24.272 billion during the current fiscal year.

If the reduction in tariff determined by Ogra if notified by the government will reduce the operating income of the SNGPL and the SSGCL by more than Rs16.203 billion and Rs8.069 billion, respectively. This would, however, not benefit the consumers but yield over Rs24 billion additional revenue to the government. In its determination on the gas rates of the SNGPL, Ogra found out that the revised estimates of the company’s net operating income was Rs147.343 billion as against its revenue requirement of Rs131.140 billion for financial year 2006-07. As such to adjust the difference of Rs16.203 billion, Ogra made a downward revision of Rs26.20 per MBTU (million British thermal unit) in the SNGPL’s average prescribed price for the current year.

Ogra has ordered that the gas tariff for commercial consumers and ice factories be reduced by Rs40.45 per MBTU, followed by Rs35.95 per MBTU for industrial consumers, captive power plants, Wapda s power plants and CNG stations. In the case of the SSGCL, Ogra determined that revised estimate of the company’s net operating income was at Rs87.712 billion as against revenue requirement of Rs79.643 billion. To adjust the difference of Rs8.069 billion, the authority made downward revision of Rs22.37 per MBTU in its average prescribed price for 2006-07.

Statoil keen on new oil & gas projects in Iran

November 1, 2006. Norwegian oil giant is keen to take up new oil and gas projects in Iran. Statoil welcomes cooperation on new projects to produce gas, increase production from oilfields, and develop exploration blocks. Statoil, currently working on offshore development of phases 6-8 at South Pars in the cooperation with Iranian Petropars Company, an affiliate to the National Iranian Oil Company (NIOC).



Iran’s 1,000-MW power plant to kick off in 2007

November 6, 2006. All units of the 1000-MW power plant at Assaluyeh, southern Iran, are expected to put into operation in the next Iranian year, Mehdi Khabbaz-Pisheh. The power plant has six units each with the capacity of 160 MW, and is under construction by Iran Power Plant Projects Management Company (MAPNA). MAPNA has sought to increase the capacity by another 1000 MW. Energy Ministry will also set up a 500-MW power plant in Assaluyeh, the project is invested by Mostazafan Foundation (MF), expected to come on stream early 2009. The power plant has two 270-MW units.

Indonesia signed $2 bn deal for coal power plant

November 3, 2006. Indonesia's state-run electricity distributor has signed a tentative deal with a US-led consortium for the construction of a coal-fired power plant costing up to two billion dollars. Indonesia's Perusahaan Listrik Negara (PLN) signed a MoU with the consortium led by AES Transpower Ltd for the 1,200 MW plant to be built in South Sumatra. The consortium will be responsible for supplying the coal and building the power plant. The project was not among those on offer to foreign and domestic investors. Power generated by the plant will be purchased by PLN.

The construction of the plant may cost 1.2 billion dollars but if the mining equipment was included, the total cost could reach two billion dollars. The AES consortium includes AES Transpower, Japan's Sojitz and local firm PT Triaryani. The construction of the project is expected to take three years from the signing of a contract. Rising demand for electricity has led to increasing numbers of blackouts across Southeast Asia's largest economy in the past few years despite the huge archipelago's vast resources of oil, natural gas and geothermal energy.

Navasota Energy to build out two Texas power plants

November 1, 2006. Privately held Navasota Energy Partners LP will expand two 275-MW natural gas-fired power plants now under construction in Texas to 550-MW to meet soaring power demand seen in 2008. Navasota Energy said in Wharton County, southwest of Houston; and in Odessa in Ector County that they are on schedule to complete the first phase at each site by early May to meet 2007 summer power demand and committed to build out the second phase at each site by 2008. Texas is one of several U.S. power markets that will need additional power generation by the summer of 2008 to maintain a reserve margin sufficient to avoid blackouts.

Indonesia's PLN signs deal on 1,200 MW power plant

November 1, 2006. Indonesia state electricity firm PT Perusahaan Listrik Negara (PLN) signed a preliminary deal with U.S. energy firm AES Corp., Japanese trading firm Sojitz  and local firm PT Triaryani to build a 1,200 MW coal-fired power plant.  The cost of the project, to be located in South Sumatra, in the west of the archipelago, is estimated at about $1.5 billion. After the signing ceremony during the country's second major infrastructure meeting in Jakarta. Indonesia, struggling to cope with electricity shortages, has said it will speed up the construction of power plants to add 10,000 MW of generating capacity between 2006 and 2010, as the world's fourth most populous country tries to catch up with rising electricity demand. Indonesian domestic electricity demand is growing around 10 percent a year.

PLN operates 24,000 MW of generation capacity currently, but most of its plants are ageing, so daily output is far below capacity. Indonesia, Asia's only OPEC member, is tapping alternative sources of energy such as coal and natural gas for power generation to cut down on consumption of expensive crude oil as its own reserves dwindle. Some 30 percent of the plants use oil products such as diesel and fuel oil. Coal and natural gas dominate in the others.

Transmission / Distribution / Trade

Russia set to boost electricity exports to China in 2008

November 6, 2006. Russia is planning to start large-scale exports of electricity to China in 2008. Russia was going to sign 17 agreements with China during the visit of the Russian Prime Minister to the fast-growing Asian country on November 9-10.An agreement between Russia's electricity monopoly, Unified Energy Systems, and the Chinese State Power Corporation (CSPC) on large-scale supplies of Russian electricity to China will be one of the key documents inked in the framework of the visit. In early 2005, Moscow agreed to more than double electricity exports to China, to 800 million kilowatt hours (kWh), by 2006. UES is also courting Chinese investment in the development and renovation of Russia's electricity system. According to a new agreement Russia's electricity exports to China could total 60 billion kWh per year, with up to 4.3 bln kWh annually during the first stage of the electricity supply project (2008-2010).

Exxaro plans to triple coal exports

November 3, 2006. Mining company Exxaro Resources yesterday indicated it would look to more than triple its coal exports and produce low-cost ferroalloys, a key input in the production of steel, especially ferromanganese and ferronickel. Exxaro will be formed by merging Eyesizwe Coal and the non-iron ore assets of Kumba Resources. Kumba shareholders yesterday overwhelmingly approved the unbundling of the company into Kumba Iron Ore and Exxaro.

Kumba Resources chief executive Con Fauconnier said the approval was a "big occasion for us" and was the fruition of work that started in March 2004. Exxaro will have coal, heavy minerals and base metal assets after its listing on the JSE on November 27. Eyesizwe chief executive Sipho Nkosi said the new company was looking to grow output from 45 million tons to 70 million tons of coal a year by 2012 through organic growth. This would take it past Ingwe Coal's 50 million tons to become South Africa's largest coal producer. At listing Exxaro will export about 2.3 million tons of coal a year and within four to five years coal exports may climb to 7 million tons.

Policy / Performance

Joint venture formed for 'clean' coal

November 7, 2006. ADA-ES Inc. of Littleton and NexGen Refined Coal LLC of Denver announced the formation of a 50-50 joint venture, to be called ADA-NexCoal LLC. As part of the deal, NexGen an affiliate of privately held NexGen Resources Corp. paid ADA-ES $900,000 for its interest in the joint venture. The two companies in June announced their plans to create a joint venture.  The joint venture will market ADA-ES' refined coal technology, which will produce "clean" coal that has fewer emissions of nitrogen oxides, sulfur dioxide and mercury when burned. ADA-NexCoal intends to ask the Internal Revenue Service to qualify it for tax credits under the American Jobs Creation Act of 2004. The tax credit in the law is pegged at about $5.60 per ton of refined coal for 10 years up to 2019. The joint venture expects it has a target market of about 60 million tons of refined coal per year. If the IRS does grant its approval, NexGen has the right to maintain its half of the joint venture by paying ADA-ES an additional $4 million, payable in eight quarterly payments of $500,000, starting in the fourth quarter of 2007. The agreement also calls for NexGen to pay half of the future costs of operating the joint venture in order to receive half of the profits from future sales of refined coal.

Pakistan, Iran to extend cooperation in water, power

November 6, 2006. Pakistan and Iran have agreed to extend cooperation in water and power sector and to establish a joint investment company to gain goals and objectives in this regard. Iran also offered cheap electricity, which could be expanded to India through Pakistan like gas pipeline agreement. The regional and global situation along with bilateral trade relations particularly investment opportunities in power sector came under discussion in the meeting.

The power sector was viable business as the growth in power had been witnessed as 10-12 per cent and informed that presently 16 Independent Power Producers (IPPs) are generating 6,500 MW electricity in private sector under the Power Purchase Agreement which is a win-win situation for both Pakistan and the companies.

Pakistan invited the Iranian government to come forward and participate in the mega hydro power projects through International Competitive Bidding (ICB) including Basha dam. It is also suggested that establishment of joint investment company to look into the exchange of expertise to pave way for investment opportunity in water and power sectors. It offered sizeable investment in hydro-power plants and expressed intention to finance power projects in Pakistan. Pakistan has already signed agreement to purchase 25 MW electricity from Mund (Iran) and recently signed another agreement of 125 MW from Iran.

Six Arab countries look to nuclear power

November 5, 2006. At least six Arab countries are developing domestic nuclear power programs to diversify energy sources. Saudi Arabia, Egypt, Morocco and Algeria have shown interest in developing nuclear power primarily for water desalination. The United Arab Emirates and Tunisia have also shown interest in nuclear power, but their plans are at an infant stage. The plans of Arab countries reflected," renewed interest in nuclear power". Egypt's nuclear program is the Arab world's most advanced. Russia is looking to take part in a tender to construct nuclear power stations in the country. MEED said Algeria's plans were the next most advanced after Egypt.

Cascade, PNM Resources to invest in electric sector

November 3, 2006. Bill Gates's personal investment vehicle, Cascade Investments LLC, will partner with utility company PNM Resources Inc. to invest in the electricity-generation and trading business. The joint venture will make Cascade and PNM 50-50 partners in a new company. The company, based in Albuquerque, New Mexico, will seek to make investments in wholesale and retail electricity sales, electricity generation and some energy trading. It will focus its efforts on electricity markets in the U.S. Southwest, Texas, and the West. PNM could contribute its existing nonregulated energy assets to the vehicle, which would allow the company to effectively split its regulated utility operations from the nonregulated business. Cascade would match the assets with equivalent cash contributions.

World Bank advises Nepal to export power to India

November 3, 2006. The World Bank warning that delay in constructing new hydro power projects would cost Nepal dearly, the Himalayan nation should boost its economy by exporting power to energy-hungry India. If Nepal makes delays in making decisions in constructing new hydro power projects it will be very costly for the country. The private sector can play a vital role in Nepal's power sector, it is high time the country mobilises necessary resources to export power to India, which can help Nepal boost its economy.

The World Bank is prepared to facilitate power transaction between Nepal and India if both the governments request. Nepal has the potential to generate 83,000 MW hydro power out of which 44,000 MW is economically feasible. However, the country is utilising about 600 MW hydro power, which is less than two per cent of its capacity.

The government would implement financial sector reforms and introduce investment-friendly rules and regulations and appropriate policies to attract foreign direct investment in hydropower sector. If governments of Nepal and India smooth the way for production and export of Nepal's energy to India, the markets will create their own dynamic, their own synergies, to make this a reality. Hydropower exports have already made an enormous difference in people's lives in nearby Bhutan and there is no reason why they cannot do the same here.

Wapda may raise tariff

November 3, 2006. Wapda Chairman has said that the authority will have to enhance power tariff if the current oil prices prevail. Wapda would have to raise the tariff within a few days if the current oil prices remained unchanged as it could not bear more losses. The Independent Power Producers purchased oil from the Pakistan State Oil directly and Wapda bought electricity from them at Rs7 to Rs9 per unit. Electricity was supplied to the people on subsidised rates. The policy adopted with regard to IPPs had not been changed over the past three years. Wapda’s transmission and distribution losses had been curtailed by seven per cent during the past year.

Bulgaria reduces power exports to Balkans

November 2, 2006. Bulgarian says export of electric power to neighboring countries will drop to almost nothing next year. By the end of the year Bulgaria will close two reactors of its Kozloduy nuclear power plant on the Danube River in western Bulgaria, as demanded by European Union standards. Bulgaria is scheduled to join the EU in January.  The remaining power production will be for the Bulgarian market and very little, if anything, will be left for export, which could trigger a power crisis in the Balkans. Bulgaria has been the biggest exporter of electricity in the Balkans. To make up for the loss of two nuclear reactors' production, Sofia struck a $1.4 billion deal with the U.S. energy giant AES, which early this year began construction of a coal-fueled power plant in central Bulgaria. That plant should begin producing power in 2009.

Australia to push for 'New Kyoto' in Asia

November 2, 2006. After repeatedly blocking domestic carbon trading, Australia would now push for Asia-wide emissions trading to combat global warming as part of a planned "new-Kyoto" pact. The turn-around by Australia, which refuses to sign the Kyoto Protocol to reduce greenhouse gases, comes as an opinion poll showed most Australians believe the government should sign Kyoto. Australia wanted to forge a "New Kyoto" out of a six-nation alliance of the world's biggest polluters - China, India, the United States, Australia, South Korea and Japan.

A British report on climate change this week warned of an environment-wrought global depression unless action was taken now to combat global warming. Using calculations in the British report, Australia exported A$61 billion ($52 billion) worth of climate change every year in the form of coal exports totaling 233 million tonnes, or nearly a third of the world total. A Newspoll done for environmental groups, including Greenpeace, showed 79 percent of Australians wanted their conservative government to sign Kyoto. Nine in 10 people wanted a shift from coal-fired power to renewable energy. Kyoto obliges about 40 nations to cut emissions by at least 5.2 percent below 1990 levels by 2008-12. Australia negotiated a rise in emissions, setting a Kyoto target of limiting emissions to 108 percent of 1990 levels. Australia, which has failed to ratify Kyoto, is already feeling the brunt of global warming with the worst drought in 100 years eating into economic growth.

New coal-bed methane wells approved near Torrington

November 2, 2006. A controversial proposal by EnCana Corp. to drill new coal-bed methane wells in Central Alberta has been approved, despite objections from area landowners worried about their water. More than 7,000 coal-bed methane wells have been drilled in Alberta, but this is the first time landowners have forced a public hearing by taking objections to the province's Energy and Utilities Board. EnCana wanted to drill 15 wells, construct pipelines and upgrade a compressor, but landowners near Torrington, about 100 kilometres northeast of Calgary, were concerned the project would affect their water supply. The Energy and Utilities Board has attached several conditions that EnCana must meet in order to go ahead with the project.

E.ON U.S. joins FutureGen clean coal project

November 1, 2006. E.ON U.S., parent of Louisville Gas and Electric Co. and Kentucky Utilities Co., has committed $25 million to join the FutureGen Alliance. FutureGen is a nonprofit consortium of global electric utilities and coal companies working with the U.S. Department of Energy to site and develop the world's first coal-fired, near "zero emissions" power plant. In July, the Alliance decided upon a short list of candidate sites, which the DOE will review prior to the selection of a final site by late summer 2007.

The 275 MW FutureGen plant will produce electricity for about 150,000 average U.S. homes. The plant will gasify the coal through a process that will convert the coal's carbon to synthesis gas comprised of mostly hydrogen and carbon monoxide. The synthesis gas will react with steam to produce additional hydrogen and a concentrated stream of carbon dioxide. The Alliance will use the hydrogen as a fuel in applications such as electricity generation in turbines or fuel cells, or hybrid combinations of these technologies. The plant will separate the captured carbon dioxide and permanently store it in deep saline formations, non-mineable coal seams, depleted oil and gas formations, or other geologic formations. The Alliance expects the plant to capture 90 percent of the total carbon dioxide produced initially. With advanced technologies, this type of plant may eventually be able to capture up to 100 percent of carbon dioxide emissions.

FERC OKs incentives to expand New England power grid

November 1, 2006. Federal energy regulators this week authorized an increase in the return on equity for the owners of the ISO New England transmission grid to encourage needed expansion of the system. In a release, the U.S. Federal Energy Regulatory Commission said ratepayers would benefit because the present network leads to congestion costs and reliability problems, including involuntary load shedding. In a report this week, Fitch Ratings calculated congestion boosted New England consumer costs by about $788 million from 2000 to 2005. The expansion of the transmission infrastructure should help minimize these costs. The Commission recognizes the need to strengthen the New England interstate transmission grid, to assure reliability and relieve congestion that results in higher prices. The Commission determined that a base-level return on equity of 10.2 percent was appropriate. The transmission owners could earn a higher return on equity of 0.50 percent if they turn over operational control of their transmission to the regional power grid operator ISO New England, 1 percent, if they build new transmission facilities and 0.74 percent reflecting updated bond data.

Renewable Energy Trends


$13 mn for NRE green power

November 7, 2006. A sum of Rs 60 crore ($13 mn) has been sanctioned by the Ministry of New and Renewable Energy (NRE), formerly known as Ministry of Non-Conventional Energy, for North East during the current financial year for supporting renewable energy projects in the region, including Sikkim.  The 11th plan targets generation of 12, 000 MW power from renewable energy sources, of this NE states are expected to contribute around 400 MW.  The NRE ministry has sanctioned projects for electrification of 1150 remote villages and hamlets through renewable energy like solar, small hydro and biomass. About 50 crore has already been released by the ministry for remote village electrification.  Another, 50,000 solar lights system have been sanctioned to these states with 90 per cent grant. Out of 2145 villages to be electrified, 920 villages have been selected for electrification through renewable energy by Assam Energy Development Agency - the nodal agency in the state to implement renewable energy projects sponsored by NRE ministry. 

Renewable energy SEZ may draw $4.9 bn funds

November 6, 2006. The government expected an investment of Rs 22,500 crore ($4.9 bn) over the next five-six years in a proposed special economic zone (SEZ) for manufacturing renewable energy equipment. Six states, including Tamil Nadu, Maharashtra, Andhra Pradesh, Karnataka and Madhya Pradesh, have expressed interest in setting up the SEZ. The government was yet to decide on the location of the SEZ. The poly silicon manufacturing for solar panels would itself see an investment of two billion dollars (about Rs 9,000 crore) in the SEZ. Moreover, manufacturers of wind turbines, hydro machines and bio-mass gasification plants will also set up shops in the proposed zone. India has the comparative advantage of cheap skilled labour and a good quality of scientific and technical manpower. The SEZ will result in renewable energy equipment becoming cheaper, which would bring down installation costs.

Govt to install solar heaters in 3.5 mn homes

November 2, 2006. The government is all set to give solar water heating business in the country a major boost, through installation of 10 million sq metre of solar collectors in the 11th Plan. It is also projecting a major scale-up from the current installation in 1.5 million sq metre. The proposed installation plan would involve solar heaters in about 3.5 million homes and installations expected in industry and in commercial establishments like hotels, hospitals, guest houses. Government intends to expand the renewable energy programmes through various financial and fiscal incentives and changes in building by-laws. According to plans, the programme would result in peak saving of about 5,000 MW, besides saving up to 7.5 billion units of electricity and abatement of 7.5 million tonne of carbon dioxide emissions every year. Out of the availability of solar energy up to 300 days a year in various parts of the country. Alongwith other renewable sources of energy like wind, hydro and biomeass, India has a total potential for generating about 200,000 MW energy from non-conventional sources. A total renewable power capacity of around 8100 MW, which contributes about 7 per cent to the power grid, has so far been set up. Another 12,000 MW is projected to be added by 2012 which would raise the increase the contribution to the power grid to 10 per cent.


SkyPower and SunEdison solar joint venture

November 6, 2006. SunEdison LLC, North America's leading solar energy service provider, and SkyPower Corp., a leading Canadian-based renewable energy developer, announces the completion of a joint venture agreement. SunEdison & SkyPower have joined forces to develop, build, own and operate up to 50MW of solar photovoltaic farms across Ontario. Construction of these solar photovoltaic farms in Canada will drive immediate new job growth while generating carbon free renewable energy. Common in the European market, only recently have solar photovoltaic farms begun to see broader adoption in North America. SunEdison LLC is the only company to simplify solar by providing turn-key solar energy services for utilities, government agencies, and commercial enterprises. Under the turn-key services model, SunEdison finances, installs, owns and operates photovoltaic power plants at the customer premise. SunEdison's turn-key services model has been adopted by leading commercial, government and utility customers such as Staples, the State of California and Xcel Energy.

Texas, private partners to invest $10 bn in wind energy

October 4, 2006. The state of Texas will partner with private-sector parties to invest more than $10 billion in new wind energy infrastructure. The wind energy initiative will diversify the state's energy production, clean up the air and help Texas surpass its renewable energy goals. Under the partnership, private companies will make the capital investments in wind energy generation and the Public Utility Commission will direct the construction of additional transmission lines to deliver the power.

For every 1,000 MW generated by new wind sources, Texas will reduce carbon dioxide emissions by 6 million tons over the next 20 years. The investment also will provide a boost to the economy. With this $10 billion announcement, the economic ripple will be more like a tidal wave as these companies pour millions of dollars into wages and salaries for Texas workers. The Texas Energy Council, which was developed in 2003 and charged with developing a long-term energy plan for the state, issued a report in December 2004 stating that 10 percent of the state's power needs come from renewable sources. The council recommended that the Public Utility Commission take steps to overcome transmission obstacles that limit the development of renewable energy sources.

Arizona sets 15 pct power from renewables by 2025

November 1, 2006. Arizona utility regulators have approved rules requiring regulated utilities to generate 15 percent of their total energy from renewable sources such as solar and wind by 2025. It will increase a renewable energy surcharge for customers of the state's regulated utilities, Arizona Public Service (APS) and Tucson Electric Power Co. The Salt River Project, second-largest utility in the state, is not regulated by the ACC because it came into being before Arizona statehood in 1912. Salt River has committed to meeting these renewable source goals.

The portion of retail power sold must come from renewable sources is 1.25 percent now and will step up gradually each year. The 2007 standard is 1.5 percent and that will rise to 2.5 percent for 2010, 5 percent by 2015, 10 percent for 2020 and 15 percent by 2025. Arizona does not have ample hydro, wind, or geothermal sources as do other states, including California, which has set a renewable portfolio requirement of 20 percent by 2010. The distributed energy requirement starts at 5 percent of the total portfolio in 2007 and grows to 30 percent of the total renewable mix after 2011.

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[1] Victor. K. Mallet (2001) “The Use of Wind Energy in India- Lessons Learned”, Term Paper, Sustainable Energy, pp. 4-5.

[2] Kumar. A (1999) “Indian Wind Energy Scenario”, Tata Energy Research Institute, New Delhi, pp. 1-2.

[3] Kumar. A (1999) “Indian Wind Energy Scenario”, Tata Energy Research Institute, New Delhi, p. 2.

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