MonitorsPublished on Dec 19, 2006
Energy News Monitor I Volume III, Issue 26
Power Projects and Economic Development of North Eastern India

Finally the Ministry of Power announced much-awaited plan for evacuation of power from northeast India to the rest of India particularly northern India and the western India. Although power grid presently have network connection to transmit power to the other parts of the country from the NER, but having low capacity it has only limited capability to evacuation of power. The new POWERGRID proposal is to evacuate power estimating around 50,000 MW by end of the 11th and the 12th Plan through corridors of the northeast and eastern India to the rest of India. With a new state of the art technology, having capacity of 800KV lines direct HVDC modes would be a first in its kinds in the world to transfer power to a distance place of 1800 km. Since the inception of the POWERGRID, it made the entire country in a well-knitted grid to supply power from the remotest place. With its growing capacity addition POWERGRID has tremendous growth in its financial credibility.

But the basic question is not how POWERGRID will evacuate power from the northeastern states and what technology and modes they will apply for that. The fundamental question is how much northeastern states will be benefited from much talked power generation and power trading through high-powered power evacuation to a distant market. The very basic objectives of developing these mega dam projects as determine by the Ministry of Power, Planning Commission and other agencies of the government of India are: 1) meeting the required demand of electricity by 2012, and 2) sustainable use of natural resources for the economic development of the poor region of the country like north east India. The Ministry of Power with the help of the Central Water Commission (CWC) and Central Electricity Authority (CEA) has prepared DPR of the total 168 hydro projects for North east India to be harnessed by end of the 11th and the 12th Five Year plan. Estimating total installed generation capacity at around 50,000 MW, the POWERGRID, which is one of the main organisations of Government of India has been setting up transmission lines for the evacuation s of the huge power. As these hydro power projects are to be harnessed either by the NHPC or the NEEPCO, which is a central government organisation, the benefits from selling the power to the power trading corporation will benefit to the production company only as it is happening now. As the state government does not have any stake in these power projects harnessed by these two power companies, in long run, without having any share in the production process, state government will not receive any revenue from much awaited power projects in the region.

At present system, state government is getting 12 per cent free power from presently operationalized central government run power projects and many times these two companies try to evade this condition. In recent development, the Arunachal government has signed MoU with two private power companies for harnessing power from Kemeng hydro power projects with 17 per cent stake in the production process.

Secondly, in the other segments of the power business, there are Power Finance Corporation (PFC), Power Trading Corporation (PTC), and POWERGRID. In case of these organisations, north eastern states don’t have any stake in their projects and thus, in long run, state governments of the northeastern states will not be beneficial from harnessing the huge power from its rivers. Therefore, it is the time to think and place appropriate demand for claming stake in these power projects at every stage of the finance, production, trading, and transmission of power. As the idea of the power projects in north eastern India is also the economic development of the region, therefore, the north eastern states need to standup collectively to put forward the demand for the greater developmental goal. The newly constituted North eastern Water and Power Resource Authority should initiate these demands with equitable share of the each north eastern state.

Secondly, claming stakes in each segment of the power projects, the north eastern states must set up North Eastern Water and Power Finance Corporation for funding these power projects, where Central Government, NEDFI, banks like SBI, LIC, IDBI, and ICICI could have appropriate share. With this type of organisation, the north eastern states could finance their own projects for NEEPCO, NHPC, state electricity board and the private companies. This could be leasing company for the future power and water related projects in the region. The dividend from the north eastern power finance corporation needs to be divided with appropriate share with their stakes holders. Having the institutions like NEEPCO (under the central government), North eastern Water and Power development authority (under the central and the state government); all the state electricity board (under each state government of the NER); Regional dispatch center (under central government); state electricity regulatory authority for each state (presently in Assam and Meghalaya only); the power sector of north eastern states needs to be integrated for the greater equitable participation for the economic development of the region. What the NER needs is collective will to claim aptly for the appropriate share in these power projects so that in long run, states in the region would not be a position to say that central government is exploiting the north eastern states and draining their wealth for the economic benefits of the rest of India. The civil society also needs to be aware about the natty gritty of the power projects and should demand appropriately so at long run, states of the region will get huge amount of revenue for selling power to outside the region.                                    (Views are personal) Author, Biswajeet Saikia, can be contacted at [email protected], [email protected].

Renewable Energy Potential of India: An Overview

Peter Meisen, President, GENI


In recent years, India has emerged as one of the leading destinations for investors from developed countries. This attraction is partially due to the lower cost of manpower and good quality production. The expansion of investments has brought benefits of employment, development, and growth in the quality of life, but only to the major cities. This sector only represents a small portion of the total population. The remaining population still lives in very poor conditions. India is now the eleventh largest economy in the world, fourth in terms of purchasing power. It is poised to make tremendous economic strides over the next ten years, with significant development already in the planning stages. This report gives an overview of the renewable energies market in India. The report looks at the current status of renewable markets in India, the energy needs of the country, forecasts of consumption and production, and also assess whether India can power its growth and its society with renewable resources.

I) General Information: What are the energy trends in India?

To better understand the current situation in India and the future of the renewable energies market, it is important to look at the trends in energy consumption, growth of the current grid, and the availability of transportation and equipment used there.

In line with additions to Installed capacity, total generation by public utilities increased rapidly, from 5106 GWh in 1950 to 264, 231 GWh in 1990/91, registering an annual growth rate of 10.4 per cent over this period. Until the 1980s, the growth rate in hydro and thermal generation was comparable, but during the 1980s, hydro generation increased at a rate of only 4.4 per cent compared to a growth rate of 11.6 per cent in thermal generation.

Since thermal generation is based on burning coal or oil, increases in CO2 emissions, which damage the environment and affect global warming, accompany this growth. As the graph below shows, it also increases the dependence on imports, which will continue into the future unless the policy changes.

a) Energy consumption and production up to 2005

Since the 1980’s, and still currently, India has encountered a negative balance in overall energy consumption and production. This has resulted in the need to purchase energy from outside the country to supply and fulfill the needs of the entire country.

 Source: Energy Information Agency.

b) The breakdown of energy sources for power production of India in 2005

India is a large consumer of coal, which makes up more than 57 per cent of its total consumption. However, more than 1/3 of energy consumed comes from renewable resources, predominantly from large hydropower.


India relies heavily on coal energy to produce electricity. A strong second is hydropower, followed by natural gas. The consumption of all renewable energies represents fully one third of the total consumption. Following is a table of the actual plants and installations for producing power based on to renewable energies.

Actual Installed Renewable Based Plants in India










Small Hydro (upto 3 MW)



Biomass Gasifier

X 10 6


Solar PV



Source: Confederation of Indian Industries (Sohrabji Godrej Green Business Centre).

(To be continued)

Courtesy: Global Energy Network Institute





ONGC to begin production from KG Basin in 2007-08

December 19, 2006. The state-run Oil and Natural Gas Corp will begin production from its recently discovered gas find in onland Krishna Godavari basin in 2007-08. The estimated in-place gas reserve of Turputallu find is 72.1 million cubic meters. ONGC will begin commercial production from the well in the first part of 2007-08. The estimated cost of the line connecting this well to GAIL’s pipeline grid is about Rs 92 lakhs. The government has awarded 50 exploration blocks to ONGC as operator under five rounds of New Exploration Licensing Policy (NELP). Out of these, five blocks have been relinquished by ONGC. Besides, ONGC has acquired one more block in deep water from Cairn Energy of UK, allocated under first round of NELP. Expenditure incurred by ONGC in NELP exploration blocks so far is about Rs 3,012.70 crore. The total Plan expenditure of ONGC in 2005-06 on survey, drilling, capital expenditure, R&D and integration projects was Rs 11,421.04 crore.

RIL, Niko strike oil in KG basin

December 19, 2006. Reliance Industries and & Canada-based Niko Resources, have discovered oil in the hydrocarbon rich Krishna-Godavari basin. The two had discovered a column of gas condensate of 170 m and 24 m of oil-bearing hydrocarbons. While RIL has 90 per cent stake in the block, Niko holds the rest. The company plans to start production from the second quarter of 2008. RIL first discovered oil in the area in June this year and had another gas find in September. The area, first discovered in 2002, might hold as much as 35 tcf of gas.  

ONGC pins hopes on UD-1 well at Sagar Samriddhi

December 19, 2006. Three years after ONGC launched its aggressive multi-million dollar quest for oil through its deepwater exploration campaign Sagar Samriddhi, the company seems to have finally struck pay dirt. Two of the drillships - Belford Dolphin and Discoverer Seven Seas - have struck gas in the Krishna Godavari (KG) and Mahanadi basins. The KG gas is estimated to be about 21-22 trillion cubic feet. The well is being dug almost at the fag end of a frustrating Rs 3,200-crore campaign in deep and ultra deep waters off the Indian coast. When it was launched in September 2003, Sagar Samriddhi was not only the most ambitious project in the history of Indian oil and gas industry, it was also the biggest deep-water campaign by a single operator anywhere in the world.

To be executed with three drill ships - Belford Dolphin, Discoverer Seven Seas and ONGC’s Sagar Vijay - the drilling was in water depths of 1,000 to 3,000-metre zone, taking the quest for oil deeper than ever before. Unfortunately for the company, there was poor success except for minor discoveries on the east-coast. In the past three years, the two foreign ships have drilled 33 wells of which 25 were dry. An expensive run considering that every well at those water depths costs about $20 million (about Rs 90 crore). The dry run began in the west coast where all eight wells did not yield hydrocarbons. The company was pilloried by everyone including the director general of hydrocarbons for the dry spell. Of the 25 wells on the east-coast, the company had small successes with about five wells yielding some oil and gas.  All hopes now ride on the well, UD-1, being drilled by Bedford Dolphin, whose contract ends in February 2007. The drillship costs ONGC about $150,000 per day. Well UD-1 is at a water depth of 2,865 metres and the company has increased the target depth to 6,500 metres.

Essar Oilfields to invest $400 mn to acquire rigs

December 18, 2006. Essar Oilfields Services Ltd will be investing $400 mn for acquisition of onshore and offshore oil drilling rigs. EOSL has been formed to focus on international and Indian onshore and offshore oil and gas drilling businesses. EOSL's investment plan includes acquisition of a diversified fleet of rigs, for inland and offshore drilling. Essar sees significant opportunities in this segment, as oil exploration and production activity around the world, including in India, has seen rig utilisation rates in excess of 98 per cent. This demand for drilling rigs is likely to sustain over the next three to five years.

OIL-IOC, GSPC bag oil blocks in Yemen

December 16, 2006. The state-owned Oil India Ltd-Indian Oil Corporation combine and Gujarat State Petroleum Corporation (GSPC) have won five onshore oil blocks in Yemen. Oil India and its government-appointed partner for overseas exploration, IOC, won Blocks 82 and 83 in the third round of auction. The two state-owned companies have 15 per cent stake each in the consortia led by Medco Energy with 45 per cent stake. Kuwait Energy Co has the remaining 25 per cent stake. A total of 14 blocks were on offer in the third round.   

Blocks 82 and 83 are located near an oil producing field operated by Canada’s Nexen in the south-eastern Hadhramount province of Yemen. Block 82 measures 1,853 square kilometers, while Block 83 is spread over an area of 364 sq km.  Gujarat government-run GSPC won three out of four blocks it had bid. GSPC, which is the operator with 45 per cent stake, and its partners Jubilant Enpro (30 per cent) and Alkor Petro (25 per cent) won blocks 19, 28 and 57. Block 19 and 28 lie in the producing Marib and Masila basins, while Block 57 lies on the border with Saudi Arabia. 

GSPC lost out Block 84 to Norway’s DNO. Reliance Industries had won two blocks, 34 and 37, in the second round of auction.  Hood Oil of Yemen is RIL’s local partner in the two blocks. Blocks 34 and 37, each measuring around 7,500-sq km and located on the border with Oman, were among the seven blocks offered by Yemen in its second licensing round. RIL, which also has exploration blocks in Oman, East Timor and Columbia, is likely to sign a Production Sharing Contract (PSC) for Blocks 34 and 37 next month.   

Reliance partners Hood Oil in producing Block 9, where the two companies hold 25 per cent each. Calvalley Petroleum of Canada is the operator with 50 per cent stake. The block currently produces 7,500 barrels of oil per day and the output will go up to 10,000 barrels this month. Calvalley plans to lay a 250-km pipeline to evacuate crude. The pipeline would constructed in four months. 

Niko may start drilling in Cauvery block in July

December 15, 2006. Niko Resources expects to commence drilling programme in Cauvery block in the South in July 2007.  Niko is currently conducting 3D seismic data acquisition programme in the block. The acquisition is slated to be complete in April or May 2007.  Niko holds 100 per cent interest in the block awarded in NELP-V. In MN-DWN- 2003/1 deepwater block - also awarded in NELP-V - in the Mahanadi basin, a 1,800-square-kilometre 3D seismic programme is expected to start in calendar 2007, followed by exploratory drilling in late 2007 or early 2008. Reliance holds 85 per cent operating interest in the block. Niko holds the residual 15 per cent stake. Meanwhile, the RIL-Niko combine is planning to approach the Directorate-General of Hydrocarbons (DGH) in next few months with a development plan for NEC-OSN-97/2 in Mahanadi basin. RIL holds 90 per cent operating interest in the deepwater block and has reportedly made six oil and gas discoveries here since 2004. Niko holds 10 per cent stake in the block.  Reliance has already commenced an eight-well drilling programme in the block.

ONGC may rope in Shell, Total as partners in Nigerian blocks

December 13, 2006. ONGC is in talks with Royal Dutch Shell Plc and French oil major Total S.A. to take them on board as equity partners in the Nigerian blocks, OPL 212 and 209. ONGC Mittal Energy Ltd (OMEL), a joint venture between ONGC and L.N. MITTAL GROUP, owns the two blocks. Both Shell and Total have large expertise in that region. One of the blocks, which OMEL will now operate on lease, is close to Bongo fields of Shell. This is a discovered field with reserves of one billion barrels. The other OPL 209 is close to the one operated by Exxon and Shell, having reserves of 800 million barrels. Besides, OMEL is in an advanced stage of signing a farm-out agreement in respect of an exploration block in Turkmenistan. OMEL has also recently bid for an offshore block in Trinidad & Tobago. In addition, OMEL is also looking for opportunities in Kazakhstan, Turkmenistan, Azerbaijan, and Indonesia.


IOC will launch new gas-based fuel in Assam

December 16, 2006. Indian Oil Corporation (IOC), Asia's largest petroleum trading company, will soon introduce a new eco-friendly gas-based transportation fuel in Assam, the first such venture in the northeast. The fuel named auto-liquefied petroleum gas (auto LPG) can be used in most petrol cars by attaching a specially devised kit and tank costing about Rs20, 000. The cost of the fuel per litre will be about Rs.29 and can be filled in four dispensing stations with two in Guwahati and one each in Jorhat and Tinsukia in Assam. Auto-LPG is currently being used in Bangalore, Cochin, Mumbai, Jaipur, and Ahmedabad and is gaining in popularity.

A motorist using auto-LPG is expected to save about 30 per cent compared to petrol. The new concept and the kit is being displayed for the public at the four-day Enterprise 2006 industrial fair, organised by the Confederation of Indian Industries in Guwahati. Apart from reducing pollution, the use of auto-LPG will also save lot of money in terms of comparatively cheaper price of the fuel. A vehicle fitted with the auto LPG kit can switch over to the petrol mode in case the gas-based fuel runs.

Oil India to pick up 26 pc stake in BPCL Bathinda

December 16, 2006. Upstream Oil Company Oil India (OIL) is set to enter the downstream refining and marketing segment in the country by picking up a 26 per cent equity stake in Hindustan Petroleum Corporation (HPCL)-promoted Rs 13,800-crore greenfield Bathinda refinery in Punjab. It is learnt that OIL may invest Rs 1,500 crore to close the deal. OIL confirmed that the company is eager to venture into downstream activities and its board has accorded in-principle approval to pick up 26 per cent equity stake in the project. The partnership of OIL with HPCL in the refining business is stated to be strategic as it suits both partners. The company has appointed Engineers India as project management consultant for the new refinery project. The financial closure for the project expected to be achieved by February 2007 and the project is scheduled to commissioned by 2010.

LN Mittal forays into oil refining

December 14, 2006. The LN Mittal-owned Mittal Investments is set to be the new joint venture partner of Hindustan Petroleum Corporation Ltd (HPCL) in the state-owned behemoth’s Rs 16,000-crore Bathinda refinery-cum-crude pipeline project. Mittal Investments and the oil PSU would hold 49% stake each in the joint venture company, while a financial institution was likely to pick up the remaining 2%. The two companies were likely to sign a joint venture agreement shortly.

The project entails setting up a 9-million tonne greenfield refinery at a cost of Rs 13,000 crore and laying a 1,100-km crude oil pipeline from Bathinda to Mundra port in Gujarat, besides a crude oil terminal and associated facilities in Mundra. The project has had a chequered history, with government clearance coming way back in November 1998. Since then, HPCL has held talks with four global oil majors: Saudi Aramco, British Petroleum, Exxon-Mobil and Total. It also discussed the project with Essar Oil, but called off talks due to conflicting interests.

IOC to sell Shivam`s gas stoves in north

December 13, 2006. Indian Oil Corporation (IOC) has signed a MoU with Shivam Industries of Himachal Pradesh (Parwanoo) for selling thermal-efficient green label gas stoves through Indane distributors in the north. With these stoves customers could save 15 per cent of LPG, as compared to ordinary gas stoves. This is according to figures given by the Petroleum Conservation and Research Association. They had designed a two-burner LPG stove model for domestic use, which has 68 per cent plus thermal efficiency. 

Bharat Petroleum pitches for automated petrol bunks

December 13, 2006. Public-sector Bharat Petroleum Corporation Limited (BPCL), which is currently implementing the fully automated petrol stations for the elimination of product adulteration and other malpractices at its retail outlets, is hoping to win over the confidence of both the dealers and customers by showcasing the advantages the new solutions offer. 

Though the full cost of automation, which is close to Rs 6 lakh for the basic version, is being borne by the company itself, it is trying to convince the dealers on its advantages in terms of better inventory management and enhanced customer confidence. BPCL is currently implementing the automation in those petrol stations having sales of over 200 kilolitres of fuel a month and focusing on retail outlets on highways. While close to 200 of the over 643 retail outlets in Andhra come under this category, the number that goes for automation in the next 6-8 month period would be between 1,800 and 2,000. The company has already launched two fully automated outlets in the state, one in Gooti in Kurnool district and the other in the suburbs of Hyderabad city. 

BPCL is implementing the high-end version of the fully automated fuel stations at the company-run outlets, 260 of them in the country, to monitor the transactions and quality of product on real-time basis.  The point of sale and back-office system will be integrated with a radio frequency identification (RFID) based tagging system. Each attendant will be provided with RFID tags to unlock the dispensing units for transactions and for other details to track the employee performance.  BPCL currently has a market share of 30 per cent in petrol and 27 per cent in diesel sales in the country.

Transportation / Trade

Petronet may formalise LNG pact with Australia by June

December 15, 2006. With the Gorgon gas project in Australia overcoming the environmental hurdle, Petronet LNG Ltd (PLL) has inched closer towards firming up its long-term supply of 2.5-million-tonne liquefied natural gas from that country. PLL is hopeful of completing all formalities for sourcing LNG from Gorgon project by June 2007 for its upcoming terminal at Kochi. Almost eight agreements are likely to be signed, which would include those on security, guarantee, besides the one on supply. The supply of gas would be expected by early 2011.

India currently has a contract to buy 7.5 mt of LNG a year from Qatar. However, the current supply from Qatar is only five mt. PLL has a 25-year contract to buy LNG from Ras Laffan Liquefied Natural Gas Co Ltd II. Through this contract, PLL currently imports five mt at its Dahej terminal and would start importing 2.5 mt more from 2009. The Gorgon project is operated by the Australian subsidiary of Chevron in a joint venture with Australian subsidiaries of ExxonMobil and Shell. The company is planning to increase Dahej terminal capacity to 10 million tonnes per annum (mtpa) by 2008-09. The 2.5-mtpa capacity Kochi LNG terminal, with provisions for expansion up to 5 mtpa, is to be commissioned in 2010. The demand for natural gas for 2007-08 in the country has been estimated at 179.27 million standard cubic metre per day (MSCMD), whereas the domestic production is estimated at 70.54 MSCMD. In 2005-06 PLL imported 4.81 mtpa of LNG and Hazira LNG Private Ltd imported 0.171 mtpa LNG.

Policy / Performance

GSPC group in talks for natural gas

December 19, 2006. The GSPC group is negotiating with ONGC operated Panna-Mukta-Tapti joint venture for securing more gas on short-term contract. The group, which apart from E&P activity maintains vast network of gas grid through its subsidiary Gujarat State Petronet Ltd (GSPL), currently takes roughly one million standard cubic metre of gas per day from PMT. The group flagship GSPC is now negotiating with PMT for an additional supply of 0.3 mmscmd natural gas at a price in the vicinity of $ 5.7 per million British Thermal Unit (mmBtu). The group was negotiating with PMT joint venture for additional supplies and was yet to finalise the price and other details. The group was offered 0.3 mmscmd at a price of $5.7 from fresh capacities at Tapti field for a period of little more than one year till 2008. It may be mentioned that PMT has recently finalised a contract with Gujarat Gas for supply of 0.7 mmscmd from Tapti field for a similar short-term period at a price of $5.7 per mmBtu, thereby creating a new benchmark in contracted natural gas prices.

Tripura seeks long-term policy for utilisation of gas reserves

December 18, 2006. The Tripura Government has sought a long-term Central policy for the effective utilisation of the State's substantial natural gas reserves (around 53 bcm in non-associate form and fit for use as fuel-feedstock). According to the Chief Minister, who described natural gas as an opportunity sector for investments in Tripura, the success rate for gas exploration in Tripura was much higher than in other parts of the country. The Tripura Government is viewing natural gas, bamboo and natural rubber as the three main opportunity sectors in the State.

RIL may tie up with Gazprom for Russia

December 18, 2006. Private sector energy major Reliance Industries (RIL) is considering expanding its oil business to the land of the Volga and Vodka. It is talking to Russian government to enter the country’s downstream oil sector by investing in the refinery and petrochemical industry. Talks were held between RIL and the Russian authorities on possible investments in Russia’s oil and gas sector. RIL may even rope in a Russian oil firm as its partner for the projects. Gazprom, the state-run Russian oil major, may well partner RIL’s downstream ventures in Russia. RIL, it is learnt, is expected to push for stakes in upstream oil and gas assets in lieu of its investments in the downstream sector.

Reliance is planning to service some of the European markets with its high-grade fuel from the under-construction RPL refinery in Jamnagar. A stake in Russia’s refinery industry will only help them service this market better. Russia has a total of 41 oil refineries with a total crude oil processing capacity of 5.44 million bbl/d. Many of the refineries are inefficient, ageing, and in need of modernisation. With Russian domestic demand at 2.6 million bbl/d in 2004, refining capacity far outstrips local needs for refined products. According to the draft plan for economic development during 2005-08, Russia will concentrate on the reconstruction and upgrading of refineries so that they can convert a higher level of crude. The draft focuses on increasing the production of high-quality light oil products, catalysts and raw material for the petrochemical industry.

India joins oil-buyers club

December 18, 2006. India has joined a new five-nation club of oil buyers aiming to challenge the vice grip of producing countries over crude prices and supplies. It has also formalised a long-awaited arrangement with China to explore and produce oil and gas in third countries. These deals have been struck at a time when the latest gas find by the ONGC at the Krishna-Godavari basin promises to put India in the select list of 10 gas-rich countries and give it a biggest bargaining position in the world oil markets. The deal with China would help India access some oil-rich but politically difficult areas in Africa, where the Chinese have built up enviable influence.

The two nations have worked jointly in a few projects in Syria and Columbia but this is the first time that the process has been formalised as a permanent feature of Sino-Indian relations. There are several good locations like Venezuela and Ecuador where the two countries can go for joint bidding or joint venture projects. The recent joint deal in Columbia resulted in massive savings for both countries because they acted in a co-ordinated fashion. India's inclusion in the oil buyers' club smacks of some deft diplomacy because India consumes a mere 3 per cent of the world's oil resources. The other members of the club consume much more with the United States leading the way at 25 per cent, followed by Japan 11per cent and China 8 per cent. The only other low consumer is South Korea at 3 per cent.

Reliance Industries eyes Kurd oilfields

December 16, 2006. Reliance Industries (RIL), the country’s largest private oil company, is seeking oil and gas fields in Kurdistan.  While it is in talks with the Kurdistan Regional Government for tie-ups with the region’s national oil companies, it is also considering buying oil fields on its own.  Reliance is also in talks with an Indian company to jointly explore potential oil fields in Kurdistan. A deal could be finalised in six months.The country’s largest company in terms of market capitalisation is eyeing 3-4 oil fields in Kurdistan, an autonomous, federally recognised political entity located in northern Iraq. The oil sector forms a major part of the region’s economy.  RIL was also in talks with Oil and Natural Gas Corporation (ONGC) for joint exploration and production in an oil block in southern Iraq. 

India, 4 other energy consumers seek stable oil price

December 16, 2006. Energy Ministers from five major energy consuming nations, including India, commenced their first-ever meeting, aiming to forge unity among themselves so as to ensure stable oil prices, vital for their energy security and continued growth. The one-day meeting is expected to issue a Joint Statement, urging the key oil producing countries to step up their investment and expand oil supply capacities to ensure adequate supplies for all. The meeting is also expected to issue a call to the international community to work together to send a clear signal to the oil market so as to enhance market transparency and curb excessive speculation to maintain stability. Apart from India, the other four participants are China, the United States, Japan and South Korea. China, the United States, Japan, South Korea and India consume nearly 45.5 per cent of the world's 3.77 billion tonnes of oil. But hikes in the oil price are constraining their economic development.

IndianOil enters pact with Sinopec

December 15, 2006. Indian Oil Corporation Ltd has inked a memorandum of understanding with Sinopec, a major integrated National Oil Company (NOC) of China, for hydrocarbon cooperation. The MoU will facilitate enhanced cooperation in refinery and petrochemicals sector, thereby giving a fillip to IndianOil, which has entered the petrochemical business. The other areas of cooperation in the MoU include international trade, exploration and production activities in third countries, collaboration in engineering and technical services, exchange of knowledge/technology in operations, refinery optimisation and training.

No immediate cut cheers Indian oil cos

December 15, 2006. Oil companies may take a sigh of relief as the Opec has decided against immediate cut on oil production. Domestic oil marketing companies were fearing massive under-recoveries due to the possible oil production cut by Opec. Margins of OMCs have already been hit by recent government decision to reduce prices of petrol and diesel by Rs 2/lt and Rs 1/lt respectively. The postponement of a further reduction in oil production until peak demand is passes would help oil importing nations. Importing countries, including India were apprehending that a cut now would drive oil prices higher and hurt their economies. 

Centre turns down Andhra plea on NELP

December 13, 2006. The petroleum ministry has dismissed the Andhra Pradesh government's proposal to allocate oil and gas blocks, under the New Exploration Licensing Policy (NELP), to the state. The ministry has, instead, reserved 50% of the NELP-VI blocks for exclusive allocation to the state public undertaking- APMDC Ltd.

In another development, BG Exploration & Production India Ltd (BGEPIL) has made a fresh appeal to the Centre to favourably look into the Farm-in into three deep-water offshore blocks of ONGC-KG-OS-DW, EG-OS-DW-Extn and KG-OS-DW-III by BG. The company hopes that the petroleum ministry takes a favourable decision.

The Andhra Pradesh government had made its plea after the petroleum ministry received bids for 52 blocks for NELP-VI, launched in February. The closing date for bids was September 15. The ministry has simply turned down AP government's request at a time when the Centre is likely to announce the award shortly. Therefore, at this stage, it will not be possible to consider the request. The petroleum ministry has, however, indicated that the APMDC could negotiate the terms with the central public sector companies like ONGC to farm-in the various blocks.

As far as BG's fresh plea to the ministry is concerned, the company said it has spent substantial resources on this issue and based on their considerable experience and expertise in developing offshore gas discoveries, it was confident that BG's partnership with ONGC for these blocks would result in benefit to all relevant stakeholders.

BG has submitted that the work programme, which it has developed jointly with ONGC, after an exhaustive study of the blocks, was adequate and optimal. ONGC has drilled 13 exploratory wells in these blocks and spent about Rs 1400 crores. The work programme needs to be considered in conjuction with programme implemented by ONGC and cannot be compared with work programme offered for unexplored blocks under NELP rounds.

ONGC in JV talks with BP, British Gas for KG basin

December 13, 2006. In an attempt to hold on to its exploration blocks in the Krishna-Godavari basin, Oil and Natural Gas Corporation’s in talks with British Gas and British Petroleum for joint exploration in four offshore blocks in the region. The British upstream majors would be picking up stakes in the pre-NELP blocks owned by ONGC. However, it is still not clear which company will be offered stake in which blocks.  If the upstream majors step in as partners, they will also share the risk and expenditure related to exploration. This assumes importance, as the costs involved in drilling operations and developing deep-sea fields are much higher than shallow water or onland blocks.  ONGC had earlier wanted to outsource exploration work on the blocks to a third party. 

However, the Directorate General of Hydrocarbons (DGH) was opposed to the move as block awardees are not allowed to nominate another company to run the blocks. The DGH had asked ONGC to completely relinquish the block to the government. If larger companies cannot strike oil, there are smaller companies which have good track records. The blocks should be relinquished so some other company can be nominated.  However, ONGC is not willing to return the blocks. It wants to rope in a company in partnership with whom it could continue its exploratory drilling work, and also gain access to technology. It already has a wider technology sharing agreement with British Gas. The agreement is likely to be extended to the K-G basin blocks.  Similarly, BP has assets in some of blocks in and around the international maritime borders near Pakistan. It is expected to use its technical and geological knowledge base of these basins for exploratory work in the K-G Basin.  ONGC and BG, along with Reliance Industries, are also joint stakeholders in the Panna-Mukta and Tapti gas fields in the west coast. 



LNJ Bhilwara eyes 1,500 MW target for 2012

December 19, 2006.  LNJ Bhilwara Group, which currently operates power projects with generation capacity of 150 MW, has embarked upon a plan to increase capacity to 1,500 MW, entailing an investment of over Rs 7,500 crore by 2012. The company is currently holding talks with various private equity firms by diluting 6-7% to raise funds for its proposed 80-MW project in Punjab. The group would seek funds from private equity firms for various other projects as per the project requirement. They may, however, consider the IPO option only after 2008.

The group has made an application with the Central Electricity Regulatory Commission for seeking power trading licence. This apart, it has also approached the coal ministry for allocation of captive coal blocks in Jharkhand and Madhya Pradesh to meet the coal requirement of its existing captive coal projects. The group would begin construction of the 192 MW Allain Duhangan hydro project in Arunachal Pradesh by end of 2008. The group has filed expressions of interest with the Assam government for the development of a 150 MW hydro project and two coal-based projects of 150 MW each.

CESC inks EPC pact with BHEL for 250 MW plant

December 18, 2006. CESC has entered into Rs 854-crore turnkey EPC contract with BHEL for building a 250 MW capacity unit at the power utility's existing thermal power station at Budge Budge. The unit will be set up at an estimated cost of Rs 1,100 crore within 36 months from December 2006. The EPC package covers supply and installation of major equipment and auxiliary systems for the proposed unit. The company has placed separate orders with other contractors for the remaining project items, such as switchyard and a 200-m chimney - equivalent to the height of a 70-storey building.

CESC has plans to invest about Rs 16,000 crore to set up three new thermal power plants with a combined capacity of 4,000 MW. These plants will be set up at Haldia in West Bengal (2,000 MW), Dumka in Jharkhand (1,000 MW) and Dhenkanal in Orissa (1,000 MW). The Haldia project, which is progressing satisfactorily, would require about 2,000 acres. The Haldia and the Dumka projects to be ready for commissioning within the 11th Plan, while a part of the Dhenkanal project would be completed during the same period.

Manipur to set up power projects

December 17, 2006. The Union Minister of Power, laid down the foundation stones for Loktak Downstream Hydroelectric Project (66 MW), a joint venture of the National Hydroelectric Power Corporation and the Government of Manipur at Longzang, and Tipaimukh Hydroelectric Project (1500 MW) being developed by the North Eastern Electric Power Corporation at Churachandpur. The projects will help trigger economic development in the State through the creation of infrastructure and boost industrialization in Manipur.

Reliance Energy plant work completed

December 17, 2006. Reliance engineering, procurement and construction (EPC) arm has completed 63.5 per cent work on the 600-MW greenfield thermal power plant in Haryana in just 11 months. Construction work on plant coming up in Yamuna Nagar began in January this year. The project would cost Rs 2,400 crore, the first unit of which scheduled to be completed by November 2007 and the second unit by February 2008.

Kaiga units to generate power

December 15, 2006. Units III and IV of the Kaiga Nuclear Power Plant will soon gain criticality and generate 220 MW commercial power each in 2007. The Union government had sanctioned units III and IV-of the pressurised heavy water reactors adjacent to the first two operative units in May 2001.  While unit III will start generating power in mid-January unit IV will be operational by September 2007. Units III and IV were set up at a cost of Rs 3,282 crore including basic cost to of Rs 2,727 crore.  With the commissioning of units III and IV, the Nuclear Power Corporation will feed an additional 10.56 million units of energy per day to the southern grid.  The unit I and II were functioning efficiently producing 92 per cent of their capacity continuously for the past three years.  

REL to pump in $11 bn by ’12

December 13, 2006. Anil Ambani-owned Reliance Energy will invest Rs 50,000 crore ($11 bn) over the next five to seven years for several power generation projects. The group, which currently has only 500 MW Dahanu plant operational, is planning to add up to 10,000 MW by 2010-12.  The group has lined up close to a dozen projects, which will take the company’s installed capacity to around 18,000 MW. It also has plans of entering the nuclear power sector and has been in talks with several global majors for partnerships.  The projects are expected to see action in the coming months include two 1,000 MW plants in Jharkhand and Tamil Nadu, a 4,000 MW plant in Orissa, for which the memorandum of understanding is yet to be inked, and 2,000 MW of hydel projects in Arunachal Pradesh and Uttaranchal. The company is also putting up two merchant plants of 1,000 MW capacity each - one in Tamil Nadu which will be based on imported coal and a captive mine based project in Jharkhand.

Transmission / Distribution / Trade

Lanco outbids Tata, REL in bid for Sasan Ultra

December 18, 2006. Lanco Infratech has emerged as the lowest bidder for the 4,000 MW Sasan ultra mega power project, outsmarting its nearest rivals Reliance Energy and Tata Power as well as seven other contenders. The Lanco-Globoleq combine quoted a bid of Rs 1.196 per unit for the coal-fired project that will require an investment of Rs 16,000-20,000 crore. Reliance Energy had quoted a tariff of Rs 1.29 and Tata Power Rs 1.41 per unit, while state-run NTPC Ltd bid much higher. Power Finance Corporation, the nodal agency to conduct bidding for these projects, had received 10 bids for the Sasan project and six for the imported coal-based Mundra project. The Sasan project is likely to achieve financial closure within six months and the first unit of the Sasan project would start generation by the end of 11th plan. 

Lanka govt looks at power line from India

December 15, 2006. Sri Lanka’s Cabinet today authorised the energy ministry to explore the possibility of setting up a mega transmission power line to India. The project would link Madurai and Sri Lanka's Anuradhapura and was aimed at supplying up to 1,000 MW of power to Sri Lanka. The project is estimated to cost up to $430 million. Mooted in the 1970s, the concept was revived following a recent study by Power Grid Corporation of India. Once approved by both the governments, construction is expected to take between 36 to 40 months.

Policy / Performance

Tata Power may tie-up funds for Mundra project

December 19, 2006. Tata Power Company is likely to tie-up funds for the 4000 MW Mundra Ultra Mega Power Project by August 2007, and generation is expected to start by 2011. The company is in talks for importing coal for power project from various countries. The project requires 12 million tonne of coal. Tata power had as the lowest bidder for the Mundra Project with a tariff of Rs 2.26 per unit. The project will cost about 18,000-20,000 crore. It will be implemented in a debt-equity ratio of 70:30. The company is likely to raise 5000-7000 crore from overseas market, including through External Commercial Borrowings (ECB). 

Cabinet approves amendment to make power theft cognizable offence

December 19, 2006. Power theft will soon be a cognizable offence throughout the country, an amendment to the Electricity Act 2003, which was approved by the Cabinet. With this amendment, civil disputes in the power sector will be dealt through special courts and charges for unauthorised use of power will have to fix within 30 days. This amendment, a key aspect of power sector reforms, is expected to substantially improve recoveries of power distribution firms. Average power theft level in the country is 30-35%. Put simply, almost 35% of the power generated in the country is not paid for, burning huge holes in the pockets of power companies. This in turn is holding up fresh investment in the power sector, contributing to the growing shortage of power in the country.

As of now, power theft is a non-cognizable offence. Under the law, the difference between a cognizable and a non-cognizable offence is in terms of the severity of the crime and the power given to the police to act against it. In the case of a cognizable offence, the police can arrest a deemed offender without a warrant, and can’t register a case without permission from a magistrate. Murder, robbery, theft, rioting and counterfeiting are examples of a cognizable offence. Bail is more difficult for cognizable offences than for non-cognizable ones.

The amendment will make it easier for power companies to book consumers who tap power illegally. Distribution companies, which have not been able to do much to control theft so far, will be in a position to get police action in a jiffy. At present, the electricity Act does not recognise this as a cognizable offence. But with this amendment, consumers guilty of stealing power and not paying will be liable for heavy penalties and imprisonment. It is estimated that power thefts in the country account for total losses of about Rs 28,000 crore. Delhi stands out as one of the worst cases of power thefts. As much as 45% of power generated is stolen in the Capital. And even after three years of privatisation, almost 20% of the power supplied is consumed through illegal means. The thefts are not particular to a specific category of consumers. 

Centre plans easier fund flow to power sector

December 17, 2006. There’s good news for the power sector as the prevailing funds crunch may ease off in the future. The Centre is working on floating a viability gap fund (VGF) for hydro-power projects and promote venture capital funds (VCFs) for the power sector as a whole. The Centre’s initiative is crucial at a time when it has projected an investment requirement of a whopping Rs 2,66,000 crore for adding 66,463 MW to the country’s power-generation capacity during the 11th Plan period. Besides, the Centre’s ambitious plan to develop hydel projects with a generation capacity of 50,000 MW will entail an investment of Rs 2.50-3 lakh crore. These instruments have been considered at length at the level of Planning Commission and it is likely that the Centre will soon take a final call. VCFs’ equity participation in new projects can be up to 10% of project costs. The Centre plans to encourage forming of consortia and joint ventures among developers, promoters, end-users, contractors and mine developers for this purpose.  For power, the VGF, which is currently in place for infrastructure projects with a high capital cost and long gestation period, aims at supporting the financial requirement for developers to fill up the gap between the initial cost and absorb the initial-period-of-operation costs. Initially, power generation projects and transmission and distribution schemes in remote areas in the Northeast, Jammu & Kashmir and other difficult terrains can be considered for VGF support.

India, Japan to enhance cooperation in energy sector

December 16, 2006. India and Japan agreed to enhance cooperation in the energy sector, as part of which Japanese companies would participate in the development of power sector and participate in ultra mega power projects. The two sides are determined to tackle global energy security issues jointly and direct that the dialogue between their governments be strengthened. Recognising the critical importance of securing the energy needs of both countries, the both shared the desire to enhance cooperation in the energy sector. In the power sector, India has proposed participation of Japanese companies in the 4,000 MW coastal Ultra Mega Power Project at Chayyur in Tamil Nadu and 3,000 MW Lohit Hydroelectric Project in Arunachal Pradesh. Under the energy security initiative, the areas covered would include oil and natural gas, coal, power, renewable energy sources, energy efficiency and other relevant sectors. The existing forum between New Energy and Industrial Development Organisation (NEDO) of Japan and The Energy Resources Institute (TERI) of India would provide inputs to the energy dialogue. The two sides will expand cooperation in energy efficiency through exchange of experts, capacity building and technical cooperation.

Power utilities to knock at MERC door again

December 16, 2006. The Maharashtra Electricity Regulatory Commission (MERC) has asked Tata Power Company (TPC), Reliance Energy (REL) and Maharashtra State Electricity Distribution Company (MSEDC) to revise their respective applications to the commission regarding their plans to secure more distribution licences in Mumbai and rest of the state. The MERC said the companies failed to submit their investment and network rollout plans for the next five years.

TPC had asked for distribution licences in various circles such as Bhandup, Vashi, Kalyan, Dombivli, Ulhasnagar, Shahad, Khopoli, Lonavala, Nasik 1 and 2 (urban) divisions and Pune (urban) zone. REL’s interest lies in the areas covered by Brihanmumbai Electric Supply and Transport Undertaking (BEST), broadly from Colaba to Mahim, including Sion. They had filed application for licences in Nashik 1 and 2 divisions, Aurangabad (urban) circle, Nagpur (urban) zone, Pune (urban) zone, and Vashi and Bhandup circles as well.

These distribution companies had submitted their applications in 2003, soon after the Electricity Act was enacted. They had contended in their applications before the MERC that the Section 14 of the Electricity Act, 2003, allowed the grant of licence to 2 or more persons for distribution of electricity through their own distribution system within the same area subject to the applicant complying with certain eligibility requirement as prescribed by the central government.

Affin lead arranger for India power plant project

December 16, 2006. Affin Investment Bank signed an agreement to be financial adviser and lead arranger for the construction of a US$800 mn thermal power plant in Andhra Pradesh, India. The Andhra Pradesh government has awarded Malaysian company, Asian Gateway Construction Ltd (AGC), a concession to build the 1,600MW power plant. The power plant would be constructed on an 800-acre site for which the state government would provide all the necessary basic infrastructure. The deal would be based on a project finance arrangement via a special purpose vehicle incorporated in India.

Himachal clears three hydel projects

December 15, 2006. The Himachal Pradesh government has decided to hand over two hydel projects to Dutch-based Brakel Corporation and one to country-based DS Constructions. Brakel Corporation got the 480-MW Jhangi-Thopan and the 480-MW Thopan Powari project, both on the Sutlej river, while the 260-MW Kuther project on the Ravi river went to DS Constructions.  After global bids were invited, it was found that Brakel Corporation offered to pay up front Rs 36 lakh per MW and DS Constructions was ready to pay Rs 52 lakh per MW. 

The Brakel deal is expected to fetch Rs 346 crore and DS Constructions Rs 135 crore to the Himachal government. Other companies which bid for these projects include Reliance Energy, Jaiprakash Associates, Larsen & Toubro, Essar Group, Torrent Power, Jindal Thermal Power, Gammon India, Nuziveedu Seeds, Punj Lloyd and Ickale, a Turkish firm.  The Himachal government had invited bids for thirteen other medium size hydel projects for which many domestic and foreign players have already bid. 




China Oilfield to build rigs

December 19, 2006. China Oilfield Services, a unit of the nation's third-largest oil producer, has agreed with Goimar SA de CV to build four drilling rigs in the Gulf of Mexico. China Oilfield will be responsible for the "investment and construction of the rigs." China Oilfield, whose main customer is CNOOC, the nation's top offshore producer, plans to expand its overseas operations to 17 percent of total sales this year. The company plans to raise as much as 2 billion yuan (HK$1.99 billion) by selling bonds to pay for tankers and drilling rigs. Under the terms of the contract, two rigs will be leased together with the operating staff of China Oilfield. The service charge will be charged on a day-rate basis. Construction of the four rigs is expected to completed in the second-quarter of 2007.

Suncor seeks up to 270,000 bpd at oilsands in '07

December 18, 2006. Suncor Energy Inc. is targeting average daily production from its oilsands operations of between 260,000 and 270,000 barrels per day in 2007. Suncor also expects natural-gas production of between 215 million and 220 million cubic feet equivalent per day. It expects cash operating costs for the oilsands operation to be C$21.50 to C$22.50 per barrel for the year.

Colombia to explore for oil on Indian ground

December 17, 2006. Colombia has authorized state petroleum company Ecopetrol to explore for oil on Indian land in the northeastern part of the country. In 1997, a Colombian court blocked Occidental Petroleum Corp. from exploring in the area, which borders the provinces of Boyaca, Arauca and Norte de Santander. Local U'was Indians call oil "the blood of mother earth. In the past, they have threatened mass suicide over exploration in the Sirili and Catleya blocks. Colombia, Latin America's sixth-biggest crude oil producer, is in a race against time to increase output or risk becoming a net oil importer five years from now.

BP wins Oman gas fields concession

December 17, 2006. British Petroleum has won a concession to develop two large natural gas fields in central Oman. The government will sign the concession agreement with BP soon. Several international firms have bid to develop tight gas reserves in the Khazzan and Makarem fields, which cover 2,500 kms (1,553 miles) and are near existing gas fields of majority state-owned Petroleum Development Oman (PDO). The gas initially in place in the two fields was estimated at more than 10 tcf, located at depths of up to 4,650 metres. Earlier this year, British gas and oil firm BG Group signed an exploration and production sharing agreement with Oman for Block 60, which contains the Abu Butabul gas and condensate discovery. Oman, an independent oil producer, has said it plans to triple its natural gas output to 70-80 million cubic metres per day in the next five years. The sultanate plans to spend $10 billion over that period to boost oil and gas output. Oman is investing more than $12 billion in projects in the industrial city of Sohar, including an aromatics complex, an aluminium smelter and a polypropylene plant.

BP, CNOOC to invest in South China Sea gas

December 16, 2006. British energy giant BP and China National Offshore Oil Corp (CNOOC), have invested 100 million dollars in a gas drilling deal in the South China Sea. The Yacheng 13-1 gas field off China's Hainan Island, co-developed by CNOOC and BP, pipes natural gas to Hong Kong's Black Point Power Station. CNOOC and BP will work on five natural gas wells and are also in further talks to provide about 250 million cubic meters (8.8 billion cubic feet) per day to Hong Kong Black Point Power Station until 2015. Black Point is 40 percent owned by CLP Holdings, a major power producer in the former British colony, and U.S. Exxon Mobil Corp owns the other 60 percent.

Talisman to spend $56 mn in Trinidad & Tobago in 2007

December 13, 2006. Canada's Talisman Energy plans to spend roughly C$65 million (US$56 million) in Trinidad & Tobago as part of its 2007, C$4.8-billion capital spending program. Talisman plans to drill at least two onshore and four offshore wells in the Caribbean country. In Trinidad & Tobago, Talisman holds interests in offshore blocks 2(c) and 3(a) and onshore block Eastern. The company also has operations in Colombia and Peru, where it will focus on seismic acquisition in 2007.

Indonesia awards 18 new oil and gas contracts

December 13, 2006. Indonesia has awarded 18 new oil and gas contracts to eight consortia and 10 individual contractors. The contractors include the CNOOC-PT Gregori Gas Perkasa consortium, Star Energy Holdings Ltd., the ConocoPhilips-Statoil ASA consortium, Pearl Oil, the Japex-Premier Oil-Kufpec consortium; and the Transworld Exploration Ltd. The ministry said that the contractors plan to invest a combined US$235.79 million on exploration activity. They must pay a total of US$31.45 million in signature bonuses, for the rights to develop their allocated exploration areas within 30 days of signing their contracts. The government offered 21 blocks through the direct offer system. It drew 23 bidding documents but only 18 met the requirements. Under direct offer arrangements, the interested parties propose the blocks they want to bid for, and are automatically awarded the site if no other investor expresses interest.

Total signs PSC for Diaba license offshore Gabon

December 13, 2006. Through 58%-owned subsidiary Total Gabon, Total signed an exploration and production-sharing contract for the offshore Diaba license in Gabon. Covering an area of 9,075 square kilometers, the license is located around 50 kilometers offshore southern Gabon in water depths ranging from 100 to 2,500 meters. The license partners are Total Gabon with an 85% interest and the Gabonese Republic with a direct interest of 15%. The exploration program will be divided into three phases. The first phase, lasting three-and-a-half-years, consists of a commitment to shoot 2,000 kilometers of 2D seismic. The second phase, also lasting three-and-a-half years, comprises a commitment to shoot 700 square kilometers of 3D seismic, while the third phase, lasting three years, includes an obligation well. This latest acquisition demonstrates Total's confidence in continued operations in Gabon, in particular through the acquisition of new deep offshore acreage to explore new plays in previously untapped horizons. Through subsidiary Total Gabon, the Group is the country's top-ranked oil operator, with total operated crude oil production of around 37% of Gabon's total output. Total's equity production averaged 98,000 barrels of oil equivalent per day in 2005.

CNOOC, Devon sign production pact for China blocks

December 12, 2006. China National Offshore Oil Corp. (CNOOC) and Devon Energy Corp. signed two production-sharing agreements for deepwater blocks. The agreements cover block 64/18 in the Qiong Dong Nan Basin in the Western South China Sea and block 53/30 in the Pearl River Mouth Basin. Devon committed to conduct two-dimensional seismic surveys and wildcat drilling during an eight-year exploration period of the two blocks. All exploration costs will be borne by Devon, and CNOOC has the right to take an ownership stake of up to 51 percent in the event of a discovery. Devon and CNOOC had signed a production sharing contract for another deepwater block in 2005.

Mittal buys half of LUKOIL's Kazakh venture

December 12, 2006. Russia's top oil producer LUKOIL said that Mittal Investments had bought half of its Caspian Investment Resources subsidiary, paying $980 million and assuming around $160 million in debt. After the completion of the deal, which is expected in early 2007, Caspian Investments Resources Ltd. will become a joint venture of LUKOIL Overseas and Mittal Investments. Mittal Investments is part of the Mittal Group controlled by Indian steel tycoon Lakshmi Mittal. Caspian Investment Resources is LUKOIL's wholly owned subsidiary for international upstream projects. It was the vehicle LUKOIL used to buy Canada's Nelson Resources last year. LUKOIL paid $2 billion for 100 percent of Nelson in the face of opposition from many small investors, who said the Russian major was paying far less than the real value. The deal, which had the blessing of the Kazakh government, was the biggest foreign acquisition by a Russian firm. LUKOIL wants to expand further in Kazakhstan, which has massive hydrocarbon reserves and is set to become an important global oil player as it aims to triple output to 3 million barrels a day by 2015. It would invest $550 million to $700 million within five years to boost Nelson's output, which stood at around 30,000 barrels per day at the time of the acquisition. Nelson has proven and probable reserves of around 270 million barrels, but its total reserves in place could be potentially as high as 2 billion barrels.

Cano announces new Barnett shale discovery

December 12, 2006. Cano Petroleum, Inc. announced a new field discovery in its Desdemona Field located in Eastland County, Texas. The company has successfully completed its first vertical Barnett Shale well (#E-8) with an Absolute Open Flow (AOF) rate of approximately 820 mcfpd, at a depth of approximately 3,450 feet from a 125 foot thick producing interval. The #E-8 was fracture stimulated on November 17th and flow tested for 10 days resulting in a stabilized flow rate of approximately 400 mcfpd and 100   barrels of water per day. Current gas sales from this well are approximately 350 mcfpd. Water production appears to be coming from the Marble Falls formation which is situated directly above the Barnett Shale. The water will be re-injected into the Duke Sand formation where the company is planning to initiate a waterflood in 2007.


Lukoil to buy 376 service stations

December 18, 2006. Russian oil company Lukoil will buy 376 ConocoPhillips service stations in six countries in Europe. The agreement covers 156 stations in Belgium, 49 in Finland, 44 in Czech Republic, 30 in Hungary, 83 in Poland, and 14 in the Slovak Republic.

Samsung wins refinery order from Trinidad

December 17, 2006. South Korean builder Samsung Engineering Co. has won a US$180 million order to build an oil refinery from Petrotrin, a state-run oil company in Trinidad and Tobago. The refinery capable of churning out 28,000 barrels of oil a day scheduled to be completed on a turnkey basis in November 2008.

Poland to build liquid gas terminal in Swinoujscie port

December 16, 2006. Poland to build a liquid gas terminal in the Baltic Sea port of Swinoujscie to diversify the nation's sources of energy. The construction of the gas port is to begin in 2011 and the cost is estimated at some €350 million ($462 million). Swinoujscie, near Poland's border with Germany, was chosen because land for construction was easily available there and the region is significantly dependent on gas energy.

Transportation / Trade

Bulgaria-Russia Gazprom gas deal signed

December 18, 2006. Bulgaria and Russian energy giant Gazprom signed an agreement to enlarge gas deliveries through 2030. The agreement is to guarantee a tripling of natural gas deliveries until the end of 2030. Bulgaria's current gas agreement with Gazprom expires in 2010. But the Bulgarian government accepted Gazprom's demand for an early review of the agreement, as it feared the Russian gas giant could have stopped shipping gas through Bulgaria altogether.

Under the newly signed agreement, gas prices in Bulgaria will rise at the rate of inflation and thus will spare the country of surprise hikes in gas prices. The agreement modifies the existing gas-for-transit deal that enabled Bulgaria to purchase gas at a reduced price in exchange for Gazprom's transfer through Bulgarian pipelines leading to Greece, Macedonia and Turkey.

Boardwalk to build two pipeline extensions

December 15, 2006. Boardwalk Pipeline Partners, LP has committed to building two extensions from existing pipelines to transport gas for producers in Arkansas. The Fayetteville Lateral - approximately 167 miles of 36-inch pipeline with an initial design capacity of 800,000 MMBtu per day and a maximum capacity of 1.1 bcf per day - will stretch from Conway County, Arkansas eastwards through the Bald Knob area to an interconnect with Boardwalk's Texas Gas pipeline in Coahoma County, Mississippi. The Greenville Lateral, approximately 98 miles of pipeline with an initial design capacity of 750,000 MMBtu per day, will stretch from Texas Gas's mainline near Greenville, Mississippi, east to the Kosciusko, Mississippi, area. Owensboro, Kentucky-based Boardwalk expects the Fayetteville Lateral to cost approximately $360 million to build and the Greenville Lateral to be approximately $230 million.

Kinder Morgan & Energy Transfer to build US gas line

December 13, 2006. Kinder Morgan Energy Partners LP and Energy Transfer Partners LP will jointly build a $1.25 billion natural gas pipeline in the southern U.S., enabling Midcontinent and Texas' Barnett Shale gas to reach new market areas. The near 500-mile Midcontinent Express Pipeline, with an initial capacity of 1.4 billion cubic feet per day, will originate near Bennington, Oklahoma, and be routed through Perryville, Louisiana, terminating at an interconnect in Butler, Alabama. The line is slated to begin service by February 2009, pending regulatory approval, with prearranged binding commitments from multiple shippers for 800,000 dekatherms per day.

Venezuela, Brazil to build oil tankers

December 13, 2006. Venezuela's state oil company has signed a deal with Brazilian industrial conglomerates Eisa and Maua Jurong to build ten oil tankers in Venezuela. The joint venture will produce at least eight Panamax tankers, the largest type of vessel capable of navigating the locks of the Panama Canal. PDVSA plans to increase its total fleet to 42 ships by 2012.

NWS and Tokyo gas sign LNG deal

December 12, 2006. The North West Shelf (NWS) participants and Tokyo Gas Co., Ltd. of Japan have signed a heads of agreement for the ongoing supply of liquefied natural gas from Australia's largest resources project. In a deal commencing in April 2009, the North West Shelf participants will supply around 0.53 million tonnes a year of additional LNG for eight years to Tokyo Gas on a delivered Japan basis. Tokyo Gas is Japan's largest gas utility company its second largest consumer of LNG.

Tokyo Gas services the Tokyo region that has a population of approximately 44 mn people and accounts for about 39 percent of Japan's GDP. Tokyo Gas is a long-standing customer of the North West Shelf having signed an original contract in 1985 that ends in March 2009. In addition, the NWS participants and Tokyo Gas have an existing contract which started in 2003.

Policy / Performance

Statoil & Norsk Hydro merge to create oil world leader

December 18, 2006. Norway will create a gas export colossus with the merger of Statoil and Norsk Hydro, which will take a commanding position in the Northern European gas market and become the largest offshore operation in the world. They would combine their oil and gas businesses in a $30 billion (£15.4 billion) deal, creating a single entity with the financial and operational power to compete internationally. The merged business, whose controlling shareholder will be the Norwegian state, will enhance Norway’s market clout in the European gas sector. It will incorporate Norsk Hydro’s expanding gas operations into Statoil, boosting its dominant position as marketer of the Norwegian state’s gas holdings. The new company will have combined production of 1.9 million barrels per day in 2007 and proven oil and gas reserves of 6.3 billion barrels of oil equivalents, and will become the world's largest offshore operator.

The Norwegian Government would increase its interest in the new company from 62.5 to 67 per cent. It holds 71 per cent of Statoil and 44 per cent of Norsk Hydro. Norway ships 83 bcm of gas to Europe annually, an expanding export business of which the largest share is represented by Petoro. The company holds the Norwegian state’s financial interest in the country’s oil and gas reserves. Gas analysts estimated that the new company would account for 83 per cent of the gas exported from the Norwegian continental shelf, ranking second in European gas to the market leader, Russia’s Gazprom. A further two dozen private enterprises, including Shell, Total and ExxonMobil, also operate in the Norwegian sector, but as minority players.

The Nordic energy giant will have a powerful position in the UK market when the Langeled pipeline from Norway to Easington is fully linked to the Ormen Lange gasfield late next year. Together, Statoil and Norsk Hydro will account for two thirds of 20 billion cubic meters the pipe will deliver annually to Britain. The new company will employ 31,000 people and will produce 1.9 million barrels of oil and gas in 2007 from 6.3 billion barrels of reserves. Beyond the Norwegian continental shelf, the group will be active in West Africa, notably Angola, the Caspian Sea, the Gulf of Mexico and North Africa. Meanwhile, the Norwegian state has blocked Norsk Hydro’s attempts to expand through merger — notably its flirtation with Britain’s Centrica, a deal that would have required the Norwegian Government’s blessing.

Ranhill unit gets oil and gas sharing deal in Indonesia

December 16, 2006. Ranhill Jambi Inc Pte Lrd, a unit of Ranhill Bhd, has been awarded an oil and gas exploration production-sharing contract (PSC) for the Batu Gajah Block in South Sumatra, Indonesia. The project consists of West, East, Betara and Sogo areas, where seven prospects and leads had been identified during the study conducted by Direktorat Jenderal Minyak Dan Gas Bumi and Ranhill’s subsidiary Ranhill Energy Sdn Bhd. The estimated total capital and investment outlay for the venture is US$30 mn for three years.

East Timor’s oil & gas JV with Kuwait

December 15, 2006. East Timor has established a joint venture with Kuwait to distribute gas and oil and build fuel storage facilities across the tiny country. The agreement will create the East Timor Trading Company (ETTC) to be 100-percent Kuwaiti owned. Under a shareholders agreement, profit from oil and gas sales will be split 70-30 between ETTC and the government of East Timor respectively. Offshore oil and gas reserves are seen as key to the financial future of the impoverished nation of less than a million people, which broke violently from Indonesia in 1999 after around two decades of brutal occupation.A distribution network with fuel storage facilities will be set up under the Timor Fuel Trading Company.

IEA keeps world oil demand forecasts unchanged

December 14, 2006. The International Energy Agency (IEA) kept its world oil demand forecasts unchanged for 2006 and 2007, a day before OPEC's output meeting in Nigeria, the cartel's November output cuts could tighten the oil market this winter. The energy watchdog estimated OPEC output, excluding Iraq, fell by 610,000 bpd in November to a total of 27.1 million bpd, against a proposed November cut of 1.2   million bpd agreed at the cartel's last meeting. The disagreements reflect uncertainty over the demand outlook for the next four months, worries that inventories are too high and a lack of consensus about where oil prices are headed.

The IEA, the cartel's November cuts, as they stand now, have the potential to tighten the oil market this winter even without further output reductions. The agency also believes the cuts offer little prospect "of a recovery in stock cover above the current 54 days," adding this is "cold comfort for a risk prone global economy already facing another winter of high oil prices."

Global oil product demand is forecast at 84.5 million bpd in 2006 and at 85.9 million bpd in 2007. The forecasts imply demand growth of 1.1 percent this year and 1.7 percent next year, and are unchanged from the last report. Minor downward adjustments to demand in OECD countries were offset by upward revisions in non-OECD countries, leaving forecasts unchanged for this year and next. However, that it revised down its 2006 demand estimates for China to 5.6 percent and warned its 2007 estimates face downside risk given the uncertainties surrounding the US economy.

Turning to supply, its non-OPEC supply estimates by 40,000 bpd for this year and by 115,000 bpd next year. It now sees non-OPEC supply growth at 650,000 bpd in 2006 and 1.7 mn bpd in 2007. As a result, demand for OPEC crude or "call on OPEC" has been revised revised up by 0.1 million bpd in 2007 to 28.4 million bpd "based on lower expectations for non-OPEC supply in the first three quarters of the year."

Libya, Norway review oil, gas ties

December 14, 2006. Libya and Norway have met to review co-operation between the two countries in oil and gas prospecting and production. Norway highlighted the importance of joint investment and desire to enhance ties with Libya as well as explore opportunities for Norwegian companies in oil technology transfer and domestication in Libya.

Uzbekistan doubles natural gas price

December 14, 2006. Uzbekistan has nearly doubled the price of natural gas it sells to Kyrgyzstan from US$55 (euro41) to US$100 (euro76) per 1,000 cubic meters. The new price was agreed upon at government talks in the Uzbek capital Tashkent. The two neighboring countries also agreed that in 2007 Uzbekistan will provide Kyrgyzstan with 850 million cubic meters (30 billion cubic feet) of natural gas. Kyrgyzstan, which relies entirely on imported gas, also buys it from neighboring Kazakhstan. Uzbekistan, the third-largest natural gas producer in the former Soviet Union, has repeatedly suspended energy supplies to impoverished Kyrgyzstan and another Central Asian neighbor, Tajikistan, following political differences and over alleged debts. Kyrgyzstan, which relies entirely on imported gas, also buys from neighboring Kazakhstan.

Russia approves increase of Sakhalin-1 budget

December 14, 2006. The government has approved a $6.5 billion increase in the overall budget of the Sakhalin-1 oil and gas project in Russia's Far East, to $19.3 billion. The government also approved a spending level of $1.193 billion in 2007, as proposed by the project operator. The project, operated by Exxon Neftegas Limited, a subsidiary of U.S. oil major Exxon, on the Sakhalin Island's northeastern shelf under a production sharing agreement (PSA), is expected to bring in around $52.2 billion to the Russian budget by 2054, when it is scheduled to end.

The consortium is developing the Arkutun-Dagi, Odoptu, and Chaivo deposits with recoverable reserves estimated at 2.3 billion barrels of oil and 485 bcm. The Sakhalin-1 budget has been adjusted by $6.5 billion to include spending on the Chaivo deposits' first stage. The deposits are so far yielding 60,000 barrels per day, but output will be increased to 250,000 barrels in January 2007 after the commissioning of new onshore facilities; output in 2007 will be 11.5-12 million metric tons (about 8.8 million barrels).

Sakhalin-1 is expected to produce about 258 million metric tons (1.89 billion barrels) of oil and 356 billion cubic meters of natural gas over its lifespan. Crude production was launched in October 2005. Supplies to the energy-hungry Asia-Pacific region began after a new onshore terminal in De-Kastri in the Khabarovsk Territory, the largest in Russia's Far East, was launched in October 2006. The multibillion-dollar Sakhalin II, whose operator is controlled by Royal Dutch Shell, has been accused of inflicting heavy environmental damage on Sakhalin Island, including deforestation, toxic waste dumping and soil erosion.

Turkey and Israel agree on implementing energy corridor

December 14, 2006. Turkey and Israel agreed on implementing the "energy corridor" project which will carry Baku oil to Israel via Ceyhan. The project also foresees the construction of pipelines to transport water and natural gas and an electricity power line between the two countries. They expressed their consensus on the immediate start of the project and they agreed on initiating private companies' preliminary feasibility works for preparation of the project. Feasibility works of the project are expected to last about six months.

The project foresees the transfer of water, natural gas and crude oil through pipelines and electricity through power lines to Israel. Oil will be transported to India, China, Japan and other Far East countries from Israel with oil tankers.  Turkey and Israel will later sign an agreement regarding the project.

Plains to spend $500 mn on expansion in 2007

December 13, 2006. Plains All American Pipeline LP expected to spend about $500 million on expansion in 2007 a 60 percent increase from 2006. The expansion program includes plans to build a 2.6-million-barrel crude oil storage and terminalling facility at Patoka, Illinois. It expects the terminal to become operational in the second half of 2008 and cost about $77 million. Plains also had received commitments from a group of institutional and private investors to buy about $300 million of equity. The company expects to complete the equity issuance by mid-December.

Gazprom to pay for Sakhalin after production starts

December 13, 2006. Russia's gas monopoly Gazprom will likely pay for a stake in the Shell-led Sakhalin-2 project only after the start of commercial production. The agency cited unnamed sources familiar with talks between the two firms. The Russian firm wanted to buy 50 percent in the $22 billion project, which is due to start deliveries of liquefied gas to clients in Japan, South Korea and the United States in mid-2008.

Iran signs $300 mn contract on Azadegan

December 13, 2006. Iran has taken the development of the onshore Azadegan oil field one step further by signing a $300 million drilling contract to demonstrate that it can do the job on its own. The contract was signed between Petroiran Development Co. and the National Iranian Drilling Co., both of which are affiliated to the state-owned National Iranian Oil Co. Under the contract, the NIDC will have to drill 37 oil wells on the field over a 40-month period beginning around the middle of 2007. The Azadegan oil field is situated in the southwestern Iranian province of Khuzestan, near the border with Iraq. The field, which has estimated reserves of 26 billions barrels of oil, consists of two parts, and the NIDC will drill its wells in the southern part. The $300 million contract will cover the cost of drilling the 37 wells and related services, excluding the cost of capital goods.

Exxon sees global energy demand up 1.6 pc a year

December 12, 2006. Exxon Mobil Corp. expects global energy demand to increase 1.6 percent a year through 2030, spurred by population and economic growth, especially in developing countries. Exxon, the world's largest publicly traded oil company, expects worldwide energy demand to reach about 325 million barrels of oil equivalent per year in 2030, about 60 percent higher than 2000 levels. Energy demand is expected to grow at a rate of 2.4 percent a year in non-Organisation for Economic Cooperation and Development countries.

The global energy mix in 25 years will look very similar to what it is today - oil, gas and coal will remain predominant. The company expects fossil fuels to account for roughly 80 percent of energy demand in 2030. Demand for liquid fuels - including crude oil, oil sands and biofuels - is expected to grow at an average of 1.4 percent per year to about 115 million barrels of oil equivalent per day from about 85 million barrels of oil equivalent currently. Gas demand is expected to rise about 1.7 percent per year through 2030 on growth from the power generation industry. The company expects coal demand to grow about 1.6 percent per year. The company expects carbon dioxide emissions to rise about 1.6 percent per year through 2030, with most of the growth coming from non-OECD countries.

Azerbaijan to stop importing Russian gas

December 12, 2006. Azerbaijan will stop importing Russian gas beginning January, after Moscow asked for more than double its previous price. The move would result in a deficit of 4 bn to 4.5 bcm. Earlier Russia said it would slash the amount of gas it sends the former Soviet republic next year to 1.5 bcm, and would charge more than twice as much for it US$230 (euro173) per 1,000 cubic meters. While Russia's energy monopoly Gazprom asserts that Azerbaijan has enough in its own reserves to cover domestic needs. The cut has thrown further attention on Gazprom's own ability to satisfy rising domestic and overseas demand.



BNFL unit in $8 bn nuclear deal with China

December 18, 2006. Westinghouse Electric has signed an agreement worth an estimated $8 billion (£4.1 billion) to sell four nuclear power plants to China, only three months after the engineering firm was sold to Toshiba by British Nuclear Fuels. Toshiba finalised the $5.4 billion acquisition of Westinghouse, the US nuclear reactor unit of British Nuclear Fuels, the British government subsidiary, in October after agreeing the deal in February. The Japanese firm’s win of the tender with China, edging out French and Russian rivals after a two-year process, is likely to raise questions as to whether the British Government achieved value for money from the sale. The cash deal was nearly three times the initial expected asking price for Westinghouse, but came just as the nuclear energy industry is enjoying resurgence.

The contract will lead to the construction of four reactors, divided between Sanmen, in Zhejiang province, and Yangjiang, in Guangdong, and is part of the Chinese Government’s drive to increase its nuclear energy production. Toshiba is already a big player in Japan’s nuclear power industry, having installed about a third of the nation’s nuclear generators. The signing of the deal with China shows quick success for its strategy of using Westinghouse to help it to expand outside the saturated Japanese market into China and the US. Toshiba by 2015 it wants to triple its revenue from the nuclear power business.

China picks Westinghouse for 4 nuclear plants

December 17, 2006. Westinghouse Electric Co., China has selected it to build four nuclear power plants, the first of more than two dozen the world's most populous country hopes to build over the next 15 years. Chinese and U.S. Energy Secretary signed a tentative agreement on the multibillion-dollar contract, which had been more than a decade in the making, in Beijing. The company expects to use suppliers in 20 states, including several in this region through ties that date back more than a generation, when Westinghouse was a huge industrial conglomerate. The company built the nation's first nuclear plant, in Shippingport in 1957.The agreement ends more than two years of intense negotiations that saw top government officials from the United States and France get involved as China narrowed its choice to Westinghouse and France's state-owned Areva Group.

China wants to double to 4 percent its power from nuclear energy by 2020 to cut pollution from coal-powered plants and ease its dependence on oil imports, a goal that would require it to build 25 nuclear plants. That represents a huge chunk of new business for a company that has seen new plant orders virtually disappear until recently, when it was selected to build a dozen new domestic nuclear plants if regulators give the go-ahead. The China contract would mark the first international orders for Westinghouse's latest technology, the AP1000, a safer, quicker-to-build pressurized water reactor that can generate about 1,100 MW of electricity about the same as existing nuclear plants with 35 percent fewer pumps, 50 percent fewer valves, 70 percent less wiring and 80 percent less piping. Westinghouse hopes the four reactors two each in Sanmen in Zhejiang province and at Yangjiang in Guangdong province would be up and running by 2013. While a formal dollar figure was not put on the order, observers have said the AP1000s typically would be ordered in twos at a cost $2.2 billion to $2.7 billion a pair. That would value the China contract at $4.4 billion to $5.4 billion.

Power generation to touch 45,000 MW by yearend in Iran

December 16, 2006. Electricity production will reach 45,000 MW by the end of the current Iranian year. This is an increase by 3,000 MW which is marked as a new record. Of the said 3,000 MW, Fattah elaborated, 1,800 MW will be generated by hydroelectric and combined cycle power plants, while the remaining goes to gas-fueled ones.

EPCOR to invest $245 mn in new Alberta power generation

December 16, 2006. The Alberta Energy and Utilities Board released a decision approving EPCOR's proposal to construct three natural gas fired peaking power units at the site of the Clover Bar Generating Station in northeast Edmonton. EPCOR plans to install and operate one General Electric LM 6000 and two LMS 100 turbines at the site between 2007 and 2010. The gross generating capacity of units will be approximately 240 MW. The project cost is forecast to be $245 million. Approval from Alberta Environment is required for the project to proceed; should EPCOR's application be approved in the first quarter of 2007, construction of the first unit is expected to begin in late March 2007.

China Power to construct hydro dam

December 14, 2006. China Power Investment, one of the top five Chinese electricity generators, has received government approval to build a 7.39 billion yuan, ($945 mn), hydropower station in southern China. The utility wants to build the power station in at Changzhou in the eastern part of Guangxi Province. The plant is to have an installed capacity of 630 MW. China Power Investment plans to more than double its hydropower generation capacity to 17,000 MW from 8,000 MW in 2005.

On completion in 2009, the hydropower project is expected to supply 2.1 billion kilowatt-hours of electricity annually. China generated 236.3 billion kilowatt-hours of electricity in November. The company plans to spend 5.7 billion yuan, ($726 mn), over the next five years to revamp existing generating units to curb wastage. The company also plans to conserve 190 million cubic meters a year of water and cut sulfur dioxide emissions by 380,000 metric tons annually. China, the world's biggest energy user after the United States, plans to spend 1.5 trillion yuan in the 15 years through 2020 to increase the use of renewable resources and reduce pollution. The nation wants to cut its reliance on oil imports by promoting nuclear, solar and hydropower.

Transmission / Distribution / Trade

Pepco seeks power distribution rate hike in D.C.

December 12, 2006. Pepco Holdings Inc.'s asked utility regulators in the District of Columbia to authorize a distribution rate increase. If approved by the D.C. Public Service Commission this would be the first delivery rate increase in more than a decade. The change, if approved, would add about 7.79 percent to monthly residential electric bills starting in September 2007. The typical bill for a residential customer using 750 kilowatt-hours a month would increase $5.97, from $76.64 to $82.61.

The proposed increase, which totals $50.5 million, reflects the increasing costs since the mid-1990s to maintain the poles, wires and critical high-tech equipment of the electric distribution system. At the proposed rate levels, its distribution rates still would be below the 1995 levels in inflation-adjusted terms. Distribution rates are separate from electric supply rates. Supply rates adjust annually to reflect the cost of power that Pepco buys on behalf of its customers who do not contract with an alternative supplier. The higher supply costs caused customers bills to rise earlier this year due primarily to higher fuel costs. Pepco delivers electricity to more than 745,000 customers in Maryland and the District of Columbia.

Policy / Performance

U.S signs nuclear deal with India

December 18, 2006. President Bush signed a civilian nuclear deal with India, allowing fuel and know-how to be shipped to the world's largest democracy even though it has not submitted to full international inspections. The bill will help keep America safe by paving the way for India to join the global effort to stop the spread of nuclear weapons.

The bill carves out an exemption in U.S. law to allow civilian nuclear trade with India in exchange for Indian safeguards and inspections at its 14 civilian nuclear plants. Eight military plants, however, would remain off-limits. This is an important achievement for the whole world. After 30 years outside the system, India will now operate its civilian nuclear energy program under internationally accepted guidelines and the world is going to be safer as a result.

Iran offers to share nuclear tech with Gulf nations

December 17, 2006. Iran was ready to share its nuclear know-how with other countries in the region. Alarmed by Iran's nuclear ambitions and Israel's presumed nuclear arms stockpile, Saudi Arabia and fellow Gulf Arab states recently announced plans to set up their own nuclear energy programme for peaceful purposes. Iran, which faces possible UN Security Council sanctions for failing to heed demands it halt nuclear fuel work, says it has no intention of making atomic bombs and has in the past offered to share its technology with other countries. The GCC, which groups Saudi Arabia, Qatar, Bahrain, Oman, Kuwait and the UAE, announced its wish to produce nuclear energy. Iran is ready to hide its uranium enrichment and continue with the sensitive nuclear work if threatened with military attack.

KEPCO to set up venture to build power plants in China

December 17, 2006. South Korea's state power monopoly will set up a joint venture firm in China to build power plants and develop coal mines in the country. A contract singed by Korea Electric Power Corp. with Shanxi International Electricity Group Co., the largest electricity firm in the northwestern Chinese province of Shanxi, and its investor Deutsche Bank, calls for the establishment of a joint venture firm worth 10 billion yuan (US$1.28 billion).

Aboitiz Power seeks more hydro plants in Philippine

December 16, 2006. Aboitiz Power Corp., which recently won the bid for the Magat hydroelectric power plant, now trains its sight on the Binga and Ambuklao hydro facilities. Aboitiz Power disclosed to the Philippine Stock Exchange that it may bid for other power generation assets to be auctioned off by the government, including the 100 MW Binga and 75-MW Ambuklao plants in Benguet. The company added that it is at present developing a new 72-MW hydropower capacity in Davao to meet the growing demand for power in the province.

California company eyes new nuclear power project

December 15, 2006. Fresno Nuclear Energy Group LLC is studying construction of a nuclear power plant in California's Central Valley despite a state moratorium on new nuclear plants. The company is considering forming a public-private partnership to develop a twin-unit nuclear plant in Fresno with each unit generating 1,600 MW of power. The project could cost $4 billion to $6 billion and might get federal loans. California has banned construction of new nuclear plants until the federal government opens a site to store waste nuclear fuel. Fresno Nuclear has signed a letter of intent with Constellation Energy's UniStar Nuclear Development LLC unit to study the proposal. UniStar Development is a joint venture between Constellation and Areva Inc. The plant could be built at Fresno's waste water treatment plant.

China to pour $127 bn into developing oil alternative

December 14, 2006. China will invest over one trillion yuan (US$127 bn) in developing an alternative coal-based energy source to ease the country's dependence on oil imports. The project aims to produce 30 million tons of liquefied coal and 20 million tons of dimethyl ether (DME) by 2020. Coal-to-olefin (CTO) output is expected to hit 8 million tons and coal methanol to reach 66 million tons. The money will also be spent on building seven industrial bases nationwide to produce coal-based energy source on a massive scale, including the biggest alternative fuel production base in the lower reaches of the Yellow River. Xinjiang is projected to produce 10 million tons of liquefied coal, and the eastern region of Inner Mongolia will become the major methanol supplier, with an annual capacity of 10 million tons. A pipeline, at a cost of five billion yuan, will be built to transport 10 million tons of methanol a year from Inner Mogolia to the northeastern Liaoning province.

India says its carbon emissions not harming world

December 14, 2006. India, considered to be one of the world's top polluters, said it was not doing any harm to the world's atmosphere despite increasing emissions of greenhouse gases. Experts say unchecked greenhouse gas emissions could see global temperatures rise by 2-3 degrees Celsius in the next 50 years and could result in devastating climate change. While India is not required under the Kyoto Protocol to cut emission levels at this stage, experts say its emissions are rising due to its rapid economic development and could become a significant contributor to global warming.

EU warns four countries over missing CO2 plans

December 13, 2006. The European Commission issued final warnings to Austria, Denmark, Hungary and Italy for failing to submit plans that allocate how much carbon dioxide (CO2) their industries may emit in 2008-2012. The Commission sent "reasoned opinions" to the four countries, the final legal step before taking them to the European Court of Justice. The plans are the cornerstone of the European Union's emissions trading scheme. Companies receive permits to emit CO2 - the main gas blamed for global warming - and trade them on a market. EU states set limits on how much CO2 power plants or oil refineries may emit, and the companies buy or sell the allowances based on whether they overshoot or undershoot their caps. The plans for the next trading period from 2008-2012 were due to the Commission on June 30. Aside from the four nations that have yet to submit, France withdrew its plan at the last minute last month in the face of likely rejection by the EU. The Commission said it was also taking action against seven member states "for failing to provide complete reports on their progress in limiting or cutting greenhouse gas emissions. The seven were France, Germany, Poland, Slovenia, Estonia, Luxembourg and Spain. The Commission also said it was taking Finland, Sweden and Portugal to the European Court of Justice for failing to ensure proper treatment of urban waste water in a significant number of towns and cities.

Renewable Energy Trends


Energy award for Sulabh founder

December 18, 2006.  Founder of Sulabh International Social Service Organisation Bindeshwar Pathak has been selected for the prestigious Energy Globe Award 2006 for his contribution in making "environment that is worthy to live", according to an announcement made by the Brussels-based organisation. Dr. Pathak will be presented this award in the Hemicycle of the European Parliament in Brussels on January 29, 2007. Dr. Pathak, who pioneered the voluntary sanitation movement, has been chosen for the rare honour for the biogas plants linked to Sulabh toilets he had designed over three decades ago and which are now becoming a byword for sanitation in developing countries all over the world. Besides producing biogas, it also releases clean water.

IFFCO wins energy conservation awards

December 15, 2006. Indian Farmers Fertiliser Co-operative Limited (IFFCO), globally acclaimed marketer and manufacturer of fertilisers in co-operative sector, has won three prestigious National Energy Conservation Awards—2006 from ministry of power for its excellent energy conservation efforts. In the fertiliser sector, Iffco’s Kalol Unit in Gujarat has bagged the first prize and Phulpur Unit II and Aonla Unit I in Uttar Pradesh have bagged the two-second awards.

Kerala to tap wind energy

December 14, 2006. With experts and organisations advocating the tapping of potential renewable sources, Kerala too is looking at the wind energy potential waiting to be harnessed.  The Kerala State Electricity Board (KSEB) is planning to initiate work on a few select wind energy projects this year itself. The wind energy projects under consideration would be those with a total installed capacity of at least 50 MW.  Certain locations like Kanjikode, Attappady and Ramakkalmedu in the northern region of the state had been identified as appropriate locations that could be tapped for the generation of wind energy. 

New products from Ammini Solar

December 13, 2006. The Thiruvananthapuram-based Ammini Solar Pvt Ltd has launched two new products; a solar lantern and a solar-powered uninterrupted power supply system. The State Government placed a lot of emphasis on the development of non-conventional energy sources and will promote this sector. The competition would help India's renewable energy industry develop and mature.


Agribiofuels, LLC signs biodiesel marketing agreement for Texas Plant

December 18, 2006. Agribiofuels, LLC signed agreements with ConAgra Trade Group, Inc. to provide feedstock oils for the Agribiofuels biodiesel plant currently under construction in Dayton, Texas. In addition, ConAgra Trade Group will provide biodiesel and glycerin marketing and outbound logistics services for the facility. Agribiofuels, LLC was formed in 2005 for the purposes of producing biodiesel fuel from vegetable and animal fats and oils. The company has access to proprietary microwave technology which will enable it to use lower cost and quality feedstock to produce its biodiesel. Agribiofuels selected Dayton, Texas as the plant site based on its location in the heart of the south-east Texas agricultural belt and its easy access by rail and road to Houston and the rest of the Gulf region.

Agribiofuels began biodiesel production at its Dayton, Texas technology center in November 2006 and plans to complete its 42 million gallon per year facility in late 2007. The plant will be a state-of-the-art plant designed by a world-class engineering company with extensive experience in biodiesel design and production and will be capable of utilizing vegetable oils and recycled fats and oils for production. Phase 1 of the plant is currently in operation and producing at a 6 mn gallon per year rate. This is scheduled to increase to 12 mn gallons per year by the 2nd quarter 2007.

World's largest wind farm in UK

December 18, 2006. THE world’s largest wind farm is to be built off the coast of south east England. The London Array windfarm, 12 miles off Kent and Essex, was given the green light by the Department of Trade and Industry. It will consist of 341 turbines and occupy an area of 90 square miles between Margate and Clacton. London Array, a consortium of Shell WindEnergy Ltd, E.On UK Renewables and Core Ltd, is behind the £1.5billion, 1,000 MW project. It claims the windfarm will avoid emissions of up to 1.9 million tonnes of carbon dioxide every year and could make up to 10 per cent of the UK Government’s 2010 renewables targets.

A second windfarm, off the coast of Kent, was also given the go-ahead. The Thanet windfarm will be 7 miles from North Foreland on the Kent coast and will contain 100 turbines, occupying 13.5 square miles. The £500million project being developed by Warwick Energy is expected to complete by 2008. It will supply electricity to around 240,000 homes.

Pact to produce bio-mass power

December 17, 2006.The West Bengal State Electricity Board (WBSEB) has signed a power purchase agreement (PPA) with Amrit Bio Energy and Industries Limited, a Kolkata based company for purchasing about 10 MW of electricity, which will be produced at the company’s Bankura plant. Apart from Bankura, similar projects are being developed in Gosaba, Sagar and Pathar Pratima in South 24-Parganas with a collective capacity of 5 MW. The WBSEB will pay the company Rs 3.35 per unit, which is about Re 1 more than what it pays for conventional power.

Enel to invest €4.1 bn in renewable energy

December 14, 2006. Enel, the largest Italian electricity producer, announced the biggest commitment of any European utility to renewable energies, saying it would invest €4.1 billion over five years in emissions abatement technologies. The company already invested $4.3 billion, to develop new renewable- energy plants. Another €800 million will go one of the leading renewable-energy producers in the world, will spend €3.3 billion, or toward improving the efficiency of existing renewable-energy power plants and to developing new technology for zero-emission plants.

Power plants running on renewable energy sources release less carbon dioxide and other greenhouse gases into the atmosphere than plants that run on oil, carbon or natural gas. Enel has raised its investment in renewable energy because Italy — like several other European countries, including Spain — offers incentives for the production of green energy through the use of so-called green certificates that can be sold or traded to governments, companies or individuals. The certificates help the electricity producer offset the higher costs of creating energy from renewable resources.

The investments will allow Enel to produce an extra 1,700 MW of electricity, while saving 4 million metric tons of carbon dioxide emissions a year — about the same amount emitted by traffic in Rome in three and a half months.

South Korea builds world's largest garbage-fuelled power plant

December 14, 2006. South Korea has opened the world's largest garbage-fuelled power plant and expects to reduce its imports of heavy oil by 500,000 barrels a year as a result. The 50 MW plant, designed to provide power to more than 180,000 households began operating. The plant will save the country the import of 500,000 barrels of heavy oil and will reduce greenhouse gas emissions by 1.37 mn tons per year. A private firm, Eco Energy, invested 77 billion won (83 million dollars) in building the power plant in return for operating it for 11 years before handing the commercial rights over to the government.

Vestas wins 63 MW order in California

December 12, 2006. Vestas, the world's biggest wind turbine maker, had received an order for 21 of its 3.0 MW wind turbines from Sacramento Municipal Utility District (SMUD) in California. Shipment of the first turbines - for the second phase of the Solano wind project in Rio Vista, California - will begin in the fourth quarter of next year.

Biofuel to power HECO plant

December 12, 2006. HAWAIIAN Electric Co.'s proposed 110 MW power plant at Campbell Industrial Park would be run entirely on renewable fuels such as ethanol and biodiesel under an agreement with the state's consumer advocate. The commitment to power the plant completely on biofuels was finalized and submitted in writing to the Public Utilities Commission, at the opening of a weeklong series of public hearings about HECO's application to build the $137 million plant.

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