Small Hydro Policy in Uttaranchal
SHP: a major renewable energy source in Uttaranchal
There is currently a shift on investment patterns in renewable energy away from traditional government and donor sources to greater reliance on private firms. It is now more important to think about markets for renewable energy rather than simply about the technologies themselves. The old technology-oriented paradigm focusing on technology demonstrations and economic viability is being replaced by a new focus on market assessment, policy and institutional issues, and demonstration of sustainable business models.
Development of good policy framework is a key issue for the success of renewable energy national policies for rural access to electricity. The focus should be on the following.
i) Institutional, legal, and financial frames P Planning of target areas
ii) Capacity-building for users and for the local private sector
iii) Communication activities of the benefits of renewable energy as a sustainable tool for social and economic development
iv) Single-window clearance
The history of SHP development in China is taken as an example of a number of economic and policy dimensions that have encouraged the rapid expansion of SHP technology that could be emulated in other countries. The Indian government has given numerous preferential policies and measures to encourage the development of renewable energy. These include soft loans and grants, the promotion of private firms to invest in projects, and policies to protect supply areas and private property. The development of good policy framework is a key issue for the success of renewable energy.
1) Optimizing the use of public funds
i) Promoting competitive bidding in order to minimize subsidies
ii) Combining subsidy with loan ownership model (CSLO)
iii) Creating a renewable energy promotion fund
2) Enhancing private sector financing
i) Using market-based institutional financing
ii) Using the RESCO approach to financing
iii) Using renewable energy feedin tariff
iv) Using the renewable portfolios standard
v) Using CDM and other clean climate initiatives
3) Leveraging consumer financing
v) Promoting micro-credit and self-help- group-based financing
vi) Promoting green power purchasing
There are normally six phases in the engineering work required to develop a hydro project. However, for small hydro, the engineering work is often reduced to three phases in order to reduce costs. Generally, a preliminary investigation is undertaken that combines the work involved in the first two phases described below.
This first phase of work frequently covers numerous sites and includes map studies; delineation of the drainage basins; preliminary estimates of flow and floods; and a one-day visit to each site (by a design engineer and geologist or geo-technical engineer); preliminary layout; cost estimates (based on formulae or computer data); a final ranking of sites based on power potential; and an index of cost.
Work on the selected site or sites would include site mapping and geological investigations (with drilling confined to areas where foundation uncertainty would have a major effect on costs); a reconnaissance for suitable borrow areas (for example, for sand and gravel); a preliminary layout based on materials known to be available; preliminary selection of the main project characteristics (installed capacity, type of development, etc.); a cost estimate based on major quantities; the identification of possible environmental impacts; and production of a single-volume report on each site.
Feasibility study (or DPR preparation)
Work would continue on the selected site with a major foundation investigation programme; delineation and testing of all borrow areas; estimation of diversion, design, and probable maximum floods; determination of power potential for a range of dam heights and installed capacities for project optimization; determination of the project design earthquake and the maximum credible earthquake; design of all structures in sufficient detail to obtain quantities for all items contributing more than about 10% to the cost of individual structures; determination of the dewatering sequence and project schedule; optimization of the project layout, water levels, and components; production of a detailed cost estimate; and finally, an economic and financial evaluation of the project including an assessment of the impact on the existing electrical grid along with a multi-volume comprehensive feasibility report.
This work would include studies and final design of the transmission system; integration of the transmission system; integration of the project into the power network to determine precise operating mode; production of tender drawings and specifications; analysis of bids and detailed design of the project; production of detailed construction drawings and review of manufacturer’s equipment drawings. However, the scope of this phase would not include site supervision and project management, since this work would form part of the project execution costs.
The process of arranging financing for small hydro projects is often difficult. The developer has to complete two steps to realize the development plans. The first is to obtain a contract with a utility or organization that will purchase the produced electricity. With this contract in place the next step is to negotiate a bank loan or other source of financing. However, many banks lack knowledge on small hydro projects and have no experience with this type of loan. In recent years some banks have acquired the necessary experience and now routinely provide loans for small hydro projects.
Ownership and maintenance
There are some key factors for success and these include the following.
i) Realistic assessment of project costs and benefits (good assessment methodologies are available)
ii) Solid partnership with good management skills
iii) Experience within partnership
iv) Personal and corporate financial strength
v) Knowledgeable financial institution (documentation available for reference that addresses risk assessment)
vi) Design with special attention to operation and maintenance requirements
vii) Pro-active maintenance plan to minimize expense and downtime
The clearance for government or private land requirement is given by the state nodal officer. The forest department has prescribed a proforma for the application wherever the Forest Conservation Act 1980 is applicable as per the latest decision by the Supreme Court. Even while acquiring a private land, felling of trees should be done after seeking permission from the forest department. In Uttaranchal (in case of government land, forest/revenue) the procedure as per the land requirement is given in Table 1.
|
Land requirement (in hectares) |
Clearance authority |
|
Up to 1 |
By the State Nodal Officer, Forest Department, Government of Uttaranchal. |
|
> 1 but < 10 |
By the Zonal Office, Lucknow, Ministry of Environment and Forests, GoI |
|
> 10 |
By the Head Office, New Delhi, Ministry of Environment and Forests, GoI. |
As per the latest guidelines issued by the Ministry of Environment and Forests no environmental clearance is required for SHP projects up to 25-MW capacity.
The Uttaranchal Electricity Regulatory Commission has issued guidelines and regulations for determination of tariff for SHP projects up to 1 MW and from 1 MW to 25 MW separately. The guidelines are not very attractive for SHP investment and need to be revised. The best suitable approach would be adopted.
(To be continued)
Courtesy: Akshay Urja Newsletter (Volume 2, Issue 6) from Ministry of New and Renewable Energy
Nuclear Energy and a Sustainable Future
(Pierre Carlier Former President, World Association of Nuclear Operators)
Nuclear energy is genetically sustainable. It means this; I mean that energy generated by nuclear reactors is a replica of how the universe works. In each part of universe, energy comes from a nucleus. In our case on the earth, from the sun, and for the rest of the universe, the stars. When we burn coal, gas or oil, we use the energy coming from the electron layers of the atom, not from the nucleus. These energy sources are available due to a pre-historical phenomenon, the decomposition of previously luxuriant vegetation. It happens only once. In contrast, energy from the nucleus of the atom is abundant and sustainable. Most of the energy in the universe lies hidden in the nucleus of the atom.
As we copied this universal energy system, we began with the fission of uranium because it was far easier to implement than fusion. In several countries, fast breeder reactors are, or will be, developed, because fast breeders allow us to extract more energy from fuel in a fission process and also allows us to burn the radioactive waste. In a few decades, it is likely that fusion will be industrialised. We will then be even closer to what is going on in the sun and the stars, and this generation will be totally clean. From this perspective, we can truly say that the nuclear industry uses the same resource as the universe – the nucleus. As such, the nuclear industry can be considered as genetically sustainable.
Nuclear energy also has the advantage of being environmentally sustainable. Usually we hear that nuclear energy has no greenhouse effect and is good for the environment. This is true, but we should not stop there. The relationship between the nuclear industry and the environment covers at least three areas and we have to be excellent in each of them. Firstly, we must consider people and their safety. To date, we have achieved good results. With more than 10,000 reactor years of operation, we have experienced only two major accidents:
¨ Three Mile Island (TMI) – which had no external consequences, and
¨ Chernobyl – which was due to the specific context in the USSR at that time
In the future, any accident must be confined to the plant itself without the need to evacuate nearby residents. This is the way to make nuclear energy acceptable in the long run for people living near the plants. The second area in which there is a relationship between the nuclear industry and the environment is waste. The waste issue is a major one for public opinion and is used against us by nuclear opponents. So we have to deal with it quickly. The amount of radioactive waste is very small compared to the wastes produced by other human activities and that is a big advantage to us. Since the final disposal of high-level waste is safe in the long run, we can make nuclear energy more understandable and easier to accept by resolving the siting issues and building suitable facilities. Some of us are also reprocessing spent fuel and recycling plutonium. Both of these are excellent solutions.
The last area of the environment I will mention is the atmosphere and gas releases. The nuclear industry is a CO2-free activity and does not contribute to the greenhouse effect. This is very important for the quality of life on our planet in the coming centuries. From an environmental point of view, we see that, in the long run, nuclear generation maintains the safety of:
¨ People
¨ The ground and
¨ The atmosphere
Therefore, we can conclude that nuclear energy is environmentally sustainable.
We need managerial sustainability. There are two uncertainties that can make any investment in new nuclear reactors and our industry non-sustainable:
¨ Political changes in domestic energy programmes, as we can see in Germany, Belgium, Sweden and Switzerland
¨ A totally deregulated market, which needs a long period of amortisation and is not compatible with investment
Those two uncertainties are important for our future and further analysis needs to be done. I propose to examine only the following question:
How do we manage an industry that is genetically and environmentally sustainable?
The answer is that managerial sustainability is not guaranteed. To prove this, all we have to do is to look at the problems that have occurred at high-performing plants:
• Davis-Besse • Brunsbüttel • Sizewell B • Philippsburg • Cattenom • Paks, and • The falsification of inspection records in Japan.
There have also been other problems that were less severe, but that had the same issues at their root. The main temptations in this industry come from trying to excessively maximise generation or from keeping your eyes only on the short-term plan. In fact, each example I just mentioned is more or less the result of a mix of three temptations:
¨ Generating at all cost
¨ Pushing the limits, or
¨ Ignoring the long-term plan
The consequences squarely impact upon the sustainability of our industry. Beyond dismissing executives and enduring economic losses, the major damage created by weak performing plants is the loss of public confidence. The public that has appreciated the good nuclear results and attributed that to the nuclear leaders suddenly discovers that it was only a façade and that serious weaknesses were hidden behind those records. It is the same as us seeing falsifications by one company in the financial arena, which casts doubt on everyone’s results. That makes the future fragile, not sustainable.
Why do we find some managers taking these risks? Maybe some want to participate in a World Championship. Benchmarking is an excellent way to continuously improve, but a blind race for top ranking is a big mistake. Maybe others rely too heavily on former success. We must continuously investigate to find potential weaknesses. For example, in the organisation, in human performance and in the decision-making process. It is defence in depth. Safety is a dynamic process without rest. And complacency is the worst enemy of world-class safety.
Maybe some others are not enough aware of their people. It is commonplace to say that people are the most important assets in the industry, but it is true in a risky business like ours, where it is even more important. To succeed, we need the commitment and involvement of everyone, and well must avoid three deadly sins:
¨ Not listening to our people
¨ Not having time for our people, and
¨ Forcing our people into isolation.
Depending upon your behaviour and depending upon your credibility, people will be committed to the right targets and will adopt the right attitudes. They will share your vision and they will follow your direction. Make sure that the direction is one grounded in conservative decision-making. The future of the nuclear industry can be brilliant. This industry, genetically and environmentally sustainable, needs to be run by managers who look at the long term, collectively with their staff. It holds many winning cards and needs excellent leaders to guarantee its sustainability. With those winning cards of sustainability, it is up to us, the nuclear managers, to keep the nuclear option open and acceptable to the people, who have placed their confidence in us.
(This article is adapted from the speech given by Pierre Carlier, WANO President, at the WANO Biennial General Meeting held in Berlin, Germany on October 12-14, 2003).
Courtesy: An International Journal of Nuclear Power, Vol. 18, No. 23, 2004
Renewable Energy Clubs in Various States
|
State/Union Territory |
No. of renewable energy clubs |
|
Andhra Pradesh |
40 |
|
Chandigarh |
4 |
|
Chhatisgarh |
6 |
|
Haryana |
9 |
|
Himachal Pradesh |
2 |
|
Jammu & Kashmir |
3 |
|
Karnataka |
55 |
|
Madhya Pradesh |
17 |
|
Maharashtra |
60 |
|
Orrisa |
13 |
|
Pondicherry |
5 |
|
Punjab |
15 |
|
Rajasthan |
10 |
|
Tamil Nadu |
123 |
|
Uttar Pradesh |
64 |
|
West Bengal |
24 |
|
Total |
450 |
Source: Akshya Urja Newsletter
NEWS BRIEF
NATIONAL
OIL & GAS
Upstream
ONGC, Petrobras kick off swap deal talks
February 13, 2007. Oil and Natural Gas Corporation (ONGC), the country’s largest upstream company, has entered into talks with Brazil’s Petrobras for offering each other stake in their oil and gas blocks. ONGC is likely to offer Petrobras stake in a block in deepwater Krishna-Godavari basin in which it recently discovered gas. In return Petrobras is expected to offer ONGC stake of an equal value in blocks in the Campos basin off Brazil’s coast. ONGC Videsh, ONGC’s overseas investment arm, already owns a 15 per cent stake in an offshore block in Brazil.
The global energy giants stayed away from the sixth round of auction of oil and gas blocks under the New Exploration and Licencing Policy. They now seem to be interested in putting their money into proven discoveries in Asia’s second largest energy consuming country. ONGC recently discovered a 30 metre gas-bearing zone in the K-G basin at a depth of 5,300 metres in the Bay of Bengal. It is currently drilling another 1,000 metres to ascertain the extent of its gas find.
ONGC, ENI to trade stake in blocks
February 13, 2007. Oil and Natural Gas Corporation (ONGC) is set to enter into a swap deal with Italy’s ENI. Under the deal, ENI will offer ONGC 35 per cent stake in a deepwater oil block in Congo, while ONGC will offer the Italian company a similar stake in its offshore block in the Mahanadi basin 35 km off the coast of Orissa. The stake in the Congo block will be picked up by ONGC’s overseas investment arm, ONGC Videsh (OVL). The production from deepwater blocks was a technological challenge and the company was in talks with ENI and Brazil’s Petrobras for exploitation of the reserves. ONGC and ENI had entered into an agreement for deepwater exploration in India and abroad in September 2005, which provided for exchange of equity interests in select licences. The two companies have also jointly won exploration blocks under the New Exploration and Licencing Policy (NELP). The companies had secured two exploration blocks – one in Rajasthan and the other in the Andaman deepwater – during the fifth round of auction under NELP.
Mahanadi basin reserve estimate in 6 months
February 12, 2007. The Oil and Natural Gas Corporation, which recently announced the discovery of natural gas off Orissa coast in the Mahanadi basin, will take about six months to assess the quantity of the reserve. Normally, the job would have taken 2 to 3 months, but due to shortage of rigs it may take 5 to 6 months to drill the requisite number of appraisal wells in the Mahanadi basin.
February 11, 2007. Oil and Natural Gas Corporation (ONGC) and Russia's Gazprom agreed to jointly explore oil and gas fields in India, Russia and third countries. While Gazprom has invited ONGC to participate in eight projects in Russia including oil and gas projects in Eastern Siberia and Far East, ONGC has extended invitation to Gazprom for participation in integrated petrochemicals, liquefied natural gas (LNG) and power projects in India. A protocol document was signed between the two entities envisaging co-operation in hydrocarbon sector including midstream and downstream projects in India and Russia, and LNG supplies and compressed natural gas (CNG) projects in India. The parties also exchanged views on joint possibilities in the third countries, including Qatar, Myanmar, Libya, Vietnam, Cuba and the CIS.
The two companies have agreed to expand mutual co-operation in hydrocarbon and power sector. The parties would sign an agreement on technical and scientific co-operation, exchange of specialists, and staff training shortly. It was also agreed to hold the next meeting of the joint working group in Russia in July 2007. It was also agreed to extend the MoU between ONGC and Gazprom for another two years. The MoU between Gazprom and ONGC was signed on February 21, 2005. The two countries had also agreed to jointly explore the options for participation in refining and retail marketing projects in India, including integration of other companies in India. ONGC and Rosneft already have a partnership in Sakhalin-I project in Russia.
NELP-VII likely to see largest auction of oil, gas blocks
February 10, 2007. After awarding oil and gas blocks under NELP-VI, the government is now turning its focus to the seventh round of the New Exploration and Licensing Policy (NELP-VII). The next round, scheduled to occur by mid-April, is likely to be the largest auction of oil and gas exploration blocks. Besides, the government is considering carving out blocks in states that were not present in NELP-VI. Around 70-80 blocks are likely to be put on the block, the NELP-VII roadmap would be decided in a month’s time. The DGH is the upstream regulator. The North-East will be a major focus area. Blocks in Arunachal Pradesh, Nagaland and Tripura could be offered in NELP-VII. In the sixth round, only Assam and Mizoram were on the exploration map. The proposed gas pipeline from Myanmar through the North-East could leverage the allocation of blocks in the region. India is working to secure gas from Myanmar via a $3 billion pipeline through the North-East. Possible discoveries from blocks in the North-East could use the pipeline for gas evacuation.
`Natural gas output to double by 2009’: MoPNG
February 10, 2007. The Union Minister for Petroleum & Natural Gas, has informed the Parliamentary Consultative Committee (PCC) attached to Ministry that with exploration and development efforts made under NELP, natural gas production in the country is likely to be doubled from about 95 million cubic metre per day to over 190 million cubic metre per day by March 2009. In addition, Coal Bed Methane (CBM) is expected to be produced in India in 2007-08, thus, the country will join the select club of countries that commercially produce CBM, he informed the Committee at a meeting in Bhubaneswar. CBM gas production is envisaged as 3.78 billion cubic metres, or about 10 million cubic metres per day. The Government has signed contracts for 26 blocks covering an area of 13,600 sq. km. The total committed investment in these blocks is of the order of Rs 675 crore. As on April 1, 2006, the operating companies in CBM blocks have already invested Rs 170 crore. Under NELP, 37 oil and gas discoveries have already been made in Cambay onland, North East Coast and Krishna-Godavari deepwater areas, for which, development plans by the operators — Cairn, Reliance Industries and Niko are in progress. In five rounds of bidding under NELP, Production Sharing Contracts (PSCs) for 110 exploration blocks have been signed in addition to 28 exploration blocks signed prior to NELP.
GSPC may go solo for developing K-G basin block
February 10, 2007. Gujarat State Petroleum Corporation (GSPC) may go solo for first phase development of the Deendayal (KG-OSN-2001/3) block in Krishna-Godavari basin. The company expects to submit the development plan before the Directorate-General of Hydrocarbons (DGH) next month. GSPC has recently submitted a two-well appraisal drilling plan before the DGH and has set a target to produce 9-10 million metric standard cubic metre of gas per day by early 2009. The negotiations were on with prospective foreign strategic partners in Deendayal block, any such development was unlikely at this juncture. Parallel discussions were also on with global oilfield services companies for developing the project on contractual basis. GSPC has, so far, drilled five wells. Oil and gas was discovered in two and testing result of the fifth well is awaited. Drilling of sixth and seventh wells are now on with the help of two deepwater drill ships Perro Negro 3 and Atwood Beacon. With the third rig expected to join the campaign in July, the pace of drilling will increase in the second half of 2007.
ONGC suspends drilling campaign in Mahanadi basin
February 9, 2007. ONGC has temporarily suspended its drilling campaign in Mahanadi basin and is redeploying the deepwater drilling rig Discoverer Seven Seas (DSS) to KG basin block (KG-DWN-98/2), where the company has struck a major gas find. DSS will join Belford Dolphin to step-up the drilling campaign in KG basin. The drilling campaign will be resumed in Mahanadi basin later during the year. ONGC has already struck gas at MN-OSN-2000/2 offshore block in Mahanadi. Meanwhile, the company had hit a dry well at NEC-DWN-2002/2 deepwater NELP-IV block. Located closer to the Mahanadi basin block, the NEC block was awarded to ONGC in NELP-IV. Acquired exploration technologies worth less than Rs 4,000 crore in 2006-07, ONGC is expecting a jump in technology budget to Rs 5,000 crore in 2007-08. While offshore exploration was a major beneficiary of the last few years infusion programme, ONGC is now identifying technologies to boost onshore oil hunt. The company has already introduced pilot multi-transient electromagnetic (MTEM) surveys in onshore blocks in Gujarat and Andhra Pradesh, and is also exploring emerging options like `virtual drilling'.
Govt awards 52 oil and gas blocks under NELP-VI
February 8, 2007. Government approved award of 52 oil and gas blocks, including 24 to Oil and Natural Gas Corp (ONGC) and its partners and seven to Reliance Industries Ltd and said the seventh round of auction of exploration acreage would be held in mid-April. While 52 blocks had received 165 bids, three blocks have not received any bid. ONGC is the operator in 24 blocks - 12 deep sea, two shallow water offshore and 10 onland - while is a minority partner with Cairn Energy of UK in one shallow offshore block. Reliance Industries got seven prime deep-sea blocks, while Santos of Australia bagged two deep-sea blocks. State-run Oil India Ltd and its partners got six onland blocks, while Gujarat State Petroleum Corp (GSPC) bagged three. Focus and Petrogas got one shallow offshore block each, while Naftogaz got three onland blocks (one in partnership with Anil Ambani's Reliance Natural Resources Ltd). Essar Oil bagged two onland blocks while Prize Petroleum and Geoglobal were awarded one onland block each. The Government was expecting an investment of 6-billion dollars in the five-year exploration phase lasting 2012.
`Mangalore can become top petro investment region’: Subir Raha
February 11, 2007. Mangalore can become one of the best petroleum, chemicals and petrochemicals investment regions in the country, depending on how everyone concerned takes the project forward. Mangalore has the advantages of a major port, which is strategically located on the west coast of the country. The presence of a port here will help the petroleum sector in Mangalore for sourcing crude from the Gulf region.
Paradip emerging as petroleum hub of Asia: Murali Deora
February 10, 2007. Petroleum and natural gas minister said Paradip in Orissa is emerging as one of the biggest petroleum and natural gas hubs in Asia. An area of 50,000 sq km in the north-eastern coast of Orissa has huge potential reserves of oil and natural gas. ONGC is expected to start raising oil in the Paradip region in the next 5-6 months. The Indian Oil Corporation's petroleum complex at Paradip is on schedule. The project will be commissioned by 2011 and the company has invested Rs 1,100 crore.
There are 55 oil blocks in the state. Under the New Exploration Licence Policy (NELP), 165 bids have been invited for exploration in the sixth block. Gas production, which is 95 million cubic meters now, will be 190 million cubic metres by 2009. The 23 coal bed methane (CBM) blocks had been awarded through an international bidding process. For 26 blocks, covering an area of 13,600 sq km, the government has already signed agreements with developers. The prices of LPG, kerosene and diesel will not be hiked since it concerns the common man. Although international prices of crude have gone up, India has not raised it keeping in mind the interest of the public.
Transportation / Trade
Govt may sell Dabhol LNG terminal to RIL, GSPC
February 11, 2007. Government is considering selling Dabhol power plant's liquified natural gas import terminal to firms like Reliance Industries or Gujarat State Petroleum Corp who can keep fuel cost of the power plant low by pooling costlier imported LNG with their cheaper domestic gas. The Empowered Group of Ministers last month considered hiving off the LNG terminal but no decision has been taken as yet. Ratnagiri Gas and Power Project Ltd, the new owner of Dabhol, has not been able to tie-up long term LNG supplies as cost of power from LNG costing $10-10.5 per million British thermal unit would be Rs 4.40 per unit.
Considering the present global LNG market, it is expected that the new long term supplies would be at a higher price than what RGPPL can absorb. The LNG terminal can be operated profitably by an organisation which has both low cost gas as well as new LNG import contract so that they can be blended. The government has brought down the cost of electricity to Rs 2.83 per unit after pooling the $10-10.5 per mBtu price of 1.5 million tons short-term LNG for Dabhol with Petronet's existing imports from Qatar to get a delivered price of $5.84 per mBtu. In the long term, gas from Krishna Godavari fields of Reliance and GSPC will cost $4.40 per mBtu. This can be pooled with imported LNG to give Dabhol affordable fuel. Reliance has already expressed interest in taking over the LNG terminal of Dabhol while GSPC has intentions to build two import terminal on the west coast. Petronet's Qatar imports are being used to subsidise Dabhol fuel cost as Petronet will be sourcing 24 cargoes of LNG to meet Dabhol plant's short term fuel needs.
Currently, five million tonnes per annum of LNG being sourced by Petronet LNG from Qatar is sold to end consumers at around $4.6 per mBtu. After pooling the two prices, the delivered cost of gas to Dabhol would be $5.73 per mBtu (without customs duty on imported LNG) and $5.84 per mBtu (with customs duty). The variable cost of electricity generation will be Rs 1.83 per unit and Rs 1.87 per unit respectively. Added to this would be Re 1 per unit fixed cost. The 5 million tonnes import facility adjacent to the 2,184 MW Dabhol power plant will be operational by 2009 after construction of breakwater. The power plant would need 2.1 million tonnes of LNG and the rest will be sold to industries locally. Petronet has been given the responsibility of procuring 1.5 million tonnes per annum of LNG on spot basis for 'short term' supplies. Up to September 2009, LNG will be re-gasified by PLL at its Dahej plant in Gujarat and gas would be transported through a new pipeline connecting Ratnagiri to Dahej. RGPPL, equally promoted by National Thermal Power Corp (NTPC) and GAIL (India) Ltd, will source long term LNG supplies. The pool pricing would mean that Petronet LNG's existing customers will have to pay over $1.2 per mBtu more from June/July this year.
India may sign $145 bn gas import deal with Iran
February 7, 2007. India is likely to sign by June a 145 billion dollar deal to import natural gas from Iran through the proposed Iran-Pakistan-India pipeline after Tehran lowered the sale price by 30 percent. Tehran, as a last ditch attempt to salvage the project that would give the U.S. sanction hit country about 9.5-billion dollars in revenue annually, has changed the price formula from 10 percent of the ruling Brent crude oil price plus 1.2-dollars per million British thermal unit (mBtu) fixed cost to 6.3 percent of the Japanese crude cocktail (JCC) plus 1.15 dollars per mBtu.
At 60 dollars per barrel crude price, the cost of gas at Iran-Pakistan border translates into 4.93 dollars per mBtu according to the new price formula proposed by Iran at the official level talks at Tehran on January 24-25. As per the previous formulae, proposed in August 2006, gas price came to 7.2-dollars per mBtu at 60 dollars per barrel crude oil price. Besides, India would pay 1.5 dollars per mBtu for piping gas through Pakistan and transit fee to Islamabad. India will pay 5.768 billion dollar annually to buy 90 million standard cubic meters per day of gas.
Policy / Performance
Ministry issues $1.14 bn oil bonds
February 12, 2007. The Finance Ministry has issued special `oil bonds' amounting to Rs 5,000 crore ($1.14 bn) to three oil marketing companies (OMCs). These are the fourth tranche of special bonds and are being issued to OMCs as compensation for selling LPG and kerosene in the domestic market below their cost prices during the current financial year. The special bonds, with maturity in the year 2024, would carry an interest of 8.2 per cent per annum. The investment in these bonds by the banks would not be reckoned as an eligible investment in Government securities for their statutory requirements. While Indian Oil Corporation Ltd, including IBP has received bonds worth Rs 2,953.02 crore, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd has received bonds worth Rs 1,040.03 crore and Rs 1006.95 crore, respectively.
IOC seeks details on Cairn's crude pricing
February 11, 2007. The pricing issue of Rajasthan crude could become a critical issue between the potential buyer, Indian Oil Corporation Ltd (IOC), and the seller, Cairn India. At a recent meeting, the State-owned company has stated that any commitment from it on the quantity of crude to be purchased from Cairn would depend on the economic viability of the deal. IOC is analysing the Rajasthan crude and condensate at its research and development centre. Cairn wanted a commitment on the quantity of produce each refinery of the State-owned company would require. In turn, IOC has informed Cairn that the quantity would depend on the price at which the produce would be offered. On the issue of discounts, the company would look for appropriate discounts to make processing of the waxy crude economically viable. Processing the Rajasthan crude that has a very high pour point and viscosity with 70-75 per cent heavy ends can only be economically viable if heavy discounts were extended. Cairn expects to begin producing from Rajasthan by 2009. Currently, imported crude can be stored for 15 days, while indigenously produced crude can stay for five-seven days. If the Rajasthan crude also has to be stored, it should be able to stay for 15-20 days, the same as North Gujarat crude of ONGC, which has similar traits.
TCG game if IOC remains as portfolio investor in HPL
February 9, 2007. In an effort to work out an amicable solution with the West Bengal government, The Chatterjee Group (TCG) indicated that it was ready to co-habit with Indian Oil Corporation (IOC) if it remained as a portfolio investor in Haldia Petrochemicals Limited (HPL). The Company Law Board (CLB) order had upheld the allotment of 150 million shares to IOC, TCG was willing to work together with IOC if it remained only as a portfolio investor in HPL. IOC, however, had earlier stated that it was not keen on having portfolio investments in HPL only, but would strive towards gaining management control in the company. The CLB order would ultimately vest management control with TCG, it would not be problem if IOC was content with 7.5 per cent stakeholding in the petrochemicals company. The CLB order had directed West Bengal government to offload 520 million shares to TCG, the floor price of which was Rs 28.80 per share. TCG was ready to hold talks with the West Bengal government along these lines.
RIL gets approval for oil production in K-G basin
February 8, 2007. The Directorate General of Hydrocarbons has approved the commercial production of oil from a deep-water block in the Krishna-Godavari basin run by Reliance Industries Ltd. Commercial production from the block is seen at 30,000-50,000 barrels per day. RIL had in June last said that it discovered crude oil in the Krishna-Godavari exploration area off India's east coast. It had discovered oil in D6 block last year while drilling the MA-1 exploration well, which also led to significant rise in gas reserves in the block.
February 8, 2007. With New Pricing Scheme (NPS) Stage-III, approved by the Central Government, aims to promote usage of natural gas for production of urea by offering a slew of incentives, urea manufacturers in Gujarat believe that the move may prompt those urea producers, which have non-gas based urea units, to convert their plants. Not only that, they are also of the view that the use of natural gas would prove beneficial to non-gas urea units, willing to switch over gas-based urea units, in the long run. However, those manufacturers, which already having gas- based urea plants, say that the availability of gas still remains a crucial issue.
Urea producing companies in Gujarat believe that this move will help those units, which are currently non-gas based, in the long run and it will also encourage players to convert their plants. Gujarat Narmada Valley Fertilsers Company Ltd (GNFC) is one such company, which has decided to convert its non-gas based urea production plant. Government wants to reduce oil subsidy from Rs 30,000 crore. There is a compulsion to convert non-gas urea units to gas-based units.
POWER
Generation
NPCIL to invest $23 bn for capacity expansion
February 13, 2007. State-owned Nuclear Power Corporation of India (NPCIL) intends to set up 16,900 MW of extra nuclear capacity at an investment of Rs 1,01,400 crore ($23.03 billion) during the 11th Plan (2007-2012). NPCIL has sought the government approval for its ambitious capacity addition programme. The proposal includes setting up eight nuclear reactors of 700 MW capacity. Two of these have been proposed at NPCIL’s existing site in Gujarat’s Kakrapar, while another two may come up in Rajasthan. The location for the other four reactors is yet to be decided. NPCIL has started pre-project activities for two additional fast-breeder reactors at Kalpakkam. These are part of the expansion proposal submitted to the government. NPCIL has already initiated the process of setting up one fast-breeder reactor, scheduled to go critical by March 2011. Additionally, the company, as part of the proposal, plans to set up 300 MW advanced heavy water reactors. Finally, the proposal includes plans to set up 10 large capacity reactors of 1,000 MW each. These are likely to be built with imported technology, and four each will be set up at Tamil Nadu and Maharashtra. The location of the remaining two are yet to be decided. The remaining two will come up at any of the four new sites that the Site Selection Committee is considering. These include sites in West Bengal, Gujarat, Orissa and Andhra Pradesh.
Maha to add 17,000 MW by ’12
February 12, 2007. Maharashtra has firmed up plans to generate and supply a 17, 000 MW of additional power in next three to five years. An estimated addition of 17,000 MW of power supply is on the cards in the state. This will start coming in from 2009 and the entire addition will come into place by 2012. While most of the additional capacity will come from projects within the state, Maharashtra will get its share from other projects outside the state, like 2,000 MW from Sasan and Mundra Ultra Mega Power Projects. During the period, the central sector would come up with 2,800 MW plant, while the state sector would add 4,400 MW of power through generation within the state.The state currently generates 6,000-7,000 MW of power against the installed capacity of 9,600 MW. Within the state sector, two 250 MW plants are coming up at Parli and Paras, a 500 MW plant in Khapherkheda and a 1,000 MW one at Bhusawal. All these projects were expected to be operational by 2009-10. The state also plans to build up three projects on super critical technology of 800 MW each two in Karadi near Nagpur and the third at Chandrapur. Meanwhile, the state has already floated tenders under Case-I bidding for a 1,600 MW plant. A fresh tender for two other 800 MW plants under Case-II bidding will be floated in 15 days.
NTPC wants to make power equipment
February 12, 2007. The National Thermal Power Corporation (NTPC) is keen to venture into power equipment/spares manufacturing and servicing power equipment. With the Commonwealth Games scheduled in 2010 in Delhi, existing power equipment manufacturers are supplying equipment to large capacity new projects. This has affected their capacity to cater to the rising demand for spares and supply of equipment for existing thermal power plants. With this in view, the NTPC management is looking at the possibility of floating a subsidiary that will undertake manufacture of spare parts, equipment and components for the power plants. It is also looking at the possibility of undertaking maintenance and repair jobs through this subsidiary. The Commonwealth Games scheduled at Delhi has resulted in future demand for power to shoot up, in addition to the normal increase in future demand. To cater to this demand, a large number of power generators are adding to their present capacity — resulting in all power equipment manufacturers’/suppliers’ reaching full capacity.
It is learnt that few of the existing power equipment suppliers are not being able to keep their commitment of time with respect to maintenance and servicing required. NTPC has already initiated a pilot project at its existing thermal power station at Rihand in Uttar Pradesh. Here, the power generator has set up a maintenance workshop for its existing power units. Another similar project is likely to come up in some other locations. The decision to set up the subsidiary will hinge on the success of these pilot projects. In a parallel development, NTPC is working on the possibility of hiving off its coal mining operations into a separate company. It has acquired seven coal blocks in the past few months and firmed up plans to mine about 60 million tonnes of coal. Mining is a department within the company. As the size of the operation grows, NTPC may spin it off into a subsidiary to focus on mining operations. At this stage, NTPC is undecided on whether to transfer its mining operations to a subsidiary or retain it as a department within the company. Issues like, sales tax, revenue outgo on coal bought by NTPC from the subsidiary vis-à-vis the economies of scale and management issues are being assessed to arrive at a decision.
Transmission / Distribution / Trade
Maha govt to buy expensive power
February 12, 2007. The Maharashtra government is all set to buy expensive power from neighbouring states to overcome the present crisis even as the power sector regulator has called a public hearing on February 15 on the excessive loadshedding in the state. Though the state government was willing to buy additional power to bridge a huge divide of 5,700 MW between demand and supply, a section of the government was against procuring expensive power. Andhra Pradesh has offered its surplus power to Maharashtra at Rs 8.30 per unit.
Meanwhile, the Maharashtra Electricity Regulatory Commission (MERC) issued notices to all concerned for a public hearing on February 15 to discuss the power utilities proposal for additional load shedding. The Maharashtra Electricity Distribution Company Limited (MSEDCL) has approached the MERC for approving the increase in the duration of load shedding across the state. It has proposed to increase the load shedding by one hour in urban and industrial zones and by two hours in agriculture dominated and other regions. In addition, MSEDCL has introduced an additional stagger-ing day for industrial users. The regulator has called for suggestions and objections which will be heard on February 15.
SPV for buying coal mines planned
February 9, 2007. Rashtriya Ispat Nigam Ltd (RINL), Steel Authority of India Ltd, National Thermal Power Corporation, National Mineral Development Corporation and Coal India Ltd have embarked on a plan to create a special purpose vehicle (SPV) for acquiring coal mines abroad. These mines would be in Indonesia, Australia, Russia, and some of the coal surplus countries in the region willing to invite foreign investments and partners. The proposal to create the SPV has been formalised and a note prepared for approval would be placed before the Cabinet shortly. This is part of the Government and industry effort to tap new sources of natural reserves and sustain large projects in the country. The SPV would have an initial corpus of Rs 5,000 crore and would later be scaled up to about Rs 25,000 crore. Mentioning about RINL's efforts to ensure that adequate supplies are maintained, the company is working with Orissa Mining Development Corporation to procure both coal and iron ore.
Lanco not to bid for Indonesian mine
February 8, 2007. The Hyderabad-based Lanco group is pulling out of the race for the Indonesian coal mine company Bumi Resources. Bumi, Indonesia’s biggest coal mine operator has put up 30 per cent in the company for sale with a reserve price of $1 billion. Lanco Infratech, the infrastructure arm of the Hyderabad-based Lanco group had initially expressed interest in acquiring the stake. Others in the race are Tata Power, Reliance Energy and Japan’s Sumitomo.
The Lanco group is now considering taking up stakes in other coal mine operators in Indonesia as well as in coal mines in South Africa, Nigeria and Australia. Bumi Resources has reserves of 52 million tonne of coal, enough to generate 1,000 mw power for 12-13 years. Lanco, which was awarded the coal pit-head UMPP at Sasan in Madhya Pradesh, is also planning to put in its expression of interest for the third UMPP at Krishnapatnam in Andhra Pradesh. The company has also been awarded the 1000 mw Teesta and Anpara 3 power projects in Uttar Pradesh. Tata Power has announced plans for a series of imported coal-based power plants on west coast of India totalling to around 6000 mw, including the 4000 mw ultra mega power project (UMPP) at Mundra in Gujarat. Tata Power has also been looking at mines in South Africa and Australia. Acquiring coal mines would help the companies in assuring fuel supplies. Moreover, Indonesian coal has lower ash content and higher calorific value than Indian coal, resulting in higher power generation with less fuel.
Power crisis may plague Mumbai as well: MERC
February 11, 2007. Mumbai can not remain insulated for long from power crisis in Maharashtra which is going from bad to worse. Maharashtra government should go for Pune model of distributed power generation and franchise approach towards distribution as a medium term measure to overcome power shortage in the state. In Pune local industry had captive capacity of nearly 90 MW, after working out a model which will allow industry to recover the cost to generate power from captive capacity, power is supplied in Pune through these captive power plants, which is taking off the load on main grid. Similar system can be put in place in cities like Thane, Navi Mumbai, Nashik, and Aurangabad, Nagpur. etc. where there is high percentage of recoveries and low percentages of transmission & distribution losses (T&D). Where there is captive capacity is not available in adequate numbers, can go for generation through DG1 sets and second hand DG sets are available in large number in China. And those can be imported and commissioned in 10 to 12 months. And as they are secondhand sets and could be run on furnace oil, they will bring down cost of generation of power further. The state also should go for franchise model of distribution in these cities as it will ensure smoother distribution mechanism and will ensure these cities get adequate power.
Power-starved Maha to pay AP Rs 8.30 per unit
February 9, 2007. The power-starved Maharashtra government, which is struggling to meet an ever-increasing power demand in the state, is forced to purchase costly power at Rs 8.30 per unit from independent power projects situated in Andhra Pradesh. The state government has already approached Andhra Pradesh chief minister for the same, whereby Vemagiri (370 mw) and GVK (220 mw) power projects, with total generation capacity of 530 mw, which are either running below capacity or lying idle for for want of fuel, would generate power by using costly fuel naphtha and sell it to Maharashtra. The state-promoted Maharashtra State Electricity Distribution Company (MahaVitaran) would enter into power purchase agreement for the next three months with Vemagiri and GVK power producers. The MahaVitaran is expected to bear an additional burden of Rs 300-500 crore per month. The state government and MahaVitaran would approach the Maharashtra Electricity Regulatory Commission to seek its approval for the proposed power purchase.
State government sources feared that MahaVitaran may face a financial crunch and a situation may arise where it would find it difficult to pay salaries to its employees. Sources also reminded the power purchase from the now defunct Dabhol Power Company at the per unit tariff of Rs 8 by the erstwhile Maharashtra State Electricity Board. MSEB had paid a record Rs 35 per unit in June 2000 after naphtha prices globally had skyrocketted. Ironically, MSEB had repudiated its power purchase agreement with the Dhabol Power Company for its failure to honour provisions of the agreement and also for its inability to pay Rs 8 per unit. If naphtha price, which is $15 per million British thermal unit at present, rises further, the MahaVitaran’s outgo would increase as the tariff hike was quite imminent.
Coal blocks allotment for gasification to be notified
February 9, 2007. The Government will shortly notify allotment of coal blocks for underground gasification to boost the availability of gas in the country, now that NELP-VI bids have been announced. Present rules do not permit underground gasification as a permissible end use for allotment of coal blocks. Notification to change the rule is currently being processed by the Ministry of Coal and is likely to be notified by the end of the current financial year. This would amend the Coal Mines (Nationalisation) Act of 1973. Currently, three companies have expressed eagerness to undertake coal gasification, namely a joint venture between ONGC and Coal India in the public sector and Reliance and Essar in the private sector. "The Prime Minister's Office (PMO) too has indicated that an early start is desirable to explore this new frontier of energy and the Ministry is working to bring out a notification declaring underground gasification as an eligible end use for allotment of coal blocks.
The technical considerations include consistency of the quality of gas produced, gas supply logistics and the quality of coal that is to be made available for gasification. The Ministry is of the view that since this type of projects are highly capital intensive, let it be left to the promoter companies to sort out all necessary issues involving capital and technology. According to the plans, after the notification is in place, Coal Mining and Planning Development Institute Ltd, which has all the requisite data regarding availability of coal in the country, will identify the blocks that can be allotted for gasification after which the parties would be called for necessary action. Though the current rules do not permit underground gasification, the proposal received from ONGC-CIL joint venture, which has suggested a Rs 100-crore pilot project, has been cleared under the `Government Company Dispensation Rule'. Reliance in a letter to the Coal Ministry has stated that the company is prepared to invest large amount of risk capital for undertaking a pilot project while Essar has said that it wants to make use of this gas for its proposed steel plant in Orissa by using non-coking coal supplies from Talcher and using technology from Lurgi AG.
Foreign funds sought for Tehri plant
February 9, 2007. In three weeks, the Tehri Hydro Development Corporation (THDC) would be issuing global notice for inviting international competitive bids for its 1,000 MW Pump Storage Plant (PSP). The total cost of the project is Rs 1,650 crore while the engineering, procurement and construction (EPC) contract package will be worth Rs 1,300 crore-Rs 1,400 crore. The government is planning to award the contract by October and commissioning of the plant by June 2011.
This is the first time that the concept of PSP of this size is being adopted in the Central sector to meet the increasing demand. PSP is based on the concept of recycling of water between two reservoirs. The surplus off-peak energy available in the grid is utilised to pump the water from the lower reservoir to the upper reservoir for generation during peak hours.
In case of Tehri PSP, the Tehri Dam reservoir shall function as the upper reservoir and Koteshwar reservoir as the lower reservoir, which is 22 km from Tehri. The surplus energy during the off peak hours is being used here to generate power for peaking demand. It will contribute to meet the peak demand along with providing a balancing load to the base load thermal power plants during off-peak hours. This would result in reduction of severe operating conditions of thermal units and improving their efficiency, durability and reliability. Annual generation from the project would be 1,377 million units. For pumping operation of reversible units during off-peak hours, the energy requirement will be of the order of 1,712 million units.
Jindal Steel to gassify coal
February 9, 2007. Jindal Steel and Power Limited (JSPL), which is setting up a six million tonne steel plant at Angul, has decided to utilise coal gasification technology for its project. Coal gas or synthetic gas generated from the coal gasification process is an ideal substitute for natural gas in sponge iron manufacturing. This technology for steel making has a substantial growth potential as it eliminates the need for metallurgical coal, reduces the production cost, minimises the problem associated with transportation logistics and supports sustainable development.
The strategy of the company is to utilise the country's vast reserve of non-cocking coal, which is having ash percentages up to 40 to 45 percent. While the coking coal reserve is only 30 billion tonne, non-cocking coal reserve stands at 174 billion tonne in India. Using the non-cocking coal abundantly available in Orissa, there can be a good conservation of scarce non-cocking coal and lesser import for steel making process. The coal gasification technology is a clean and environment friendly method which allows all carbon content and volatile matter present in coal to gasify to produce a synthetic gas, the ash content of the coal is converted to small granules that can be used to back fill coalmines and road construction.
Besides, this technology removes the Sulphur contents from non-coking coal in the gasification system. The synthetic gas injection into the blast furnace reduces the flux requirement and ferro-manganese addition. JSPL has sourced this technology from a joint venture company between Germany and South Africa. The technology is a proven one as it is used for commercial operation in South Africa for last 20 years. Coal gasification technology provides not only the coal gas but a host of chemicals which gets a potential to generate a lot more secondary industries for the sustainable growth of economy at large in India.
Govt nod for divestment of 3 power PSUs
February 9, 2007. The government approved disinvestment of a small portion of its shareholding in three public sector companies. The proceeds (around Rs 1,500 crore) will be put in the National Investment Fund. The government also allowed Bharat Earth Movers Ltd to go ahead with a public issue of 7.23 per cent of its equity to fund its modernisation and expansion plan. After the issue, the government’s equity will come down to 54 per cent, with the rest being held by institutions and the public. For the stake sales, cleared by the Cabinet Committee on Economic Affairs, the government will ride “piggy-back” on the proposed public issues of the Rural Electrification Corporation Ltd, the Power Grid Corporation of India Ltd (PGCIL) and the National Hydro-electric Power Corporation Ltd (NHPC). The government will offload 10, 5, and 5 per cent stakes, respectively, in these companies. The government also proposes a fresh equity issue of 10 per cent each of the pre-issue capital of these three companies.
The public issues are estimated to fetch Rs 2,881 crore (Rs 420 crore from Rural Electrification Corporation, Rs 971 crore from PGCIL and Rs 1,490 crore from NHPC). The pattern of this disinvestment is identical to the one adopted in the case of thermal power giant NTPC. After the issue, the government’s shareholding in PGCIL and NHPC will come down to 86.36 per cent each while its holding in Rural Electrification Corporation will come down to 81.22 per cent. The decision to divest stakes in the three companies comes after the United Progressive Alliance government had, last June, gone for 10 per cent disinvestment in National Aluminum Company Ltd and Neyveli Lignite Corporation. The government has also decided to offload its remaining 10.26 per cent equity in car maker Maruti Udyog Ltd, a move expected to raise around Rs 2,000 crore.
INTERNATIONAL
OIL & GAS
Upstream
Thailand, Oman seek natural gas, oil in Myanmar
February 13, 2007. Thailand and Oman will cooperate in exploring for natural gas and oil fields in third countries, with Myanmar being the first target. The plan is a follow-up step following PTT Exploration and Production's (PTTEP) commencement in producing natural gas and condensate from Oman's Shams field last week. PTTEP is the first Thai company to produce petroleum in the oil-rich Middle East country. After the successful cooperation, Thailand has held discussions with Oman Minister of Oil and Gas. Both parties agreed that the time is right to explore natural gas and oil fields in third countries that could be in the Middle East or anywhere else. They plan to start the exploration in Myanmar soon. The project reflects the significant progress of cooperation between Thailand and Oman in addition to their existing trade and investment relationships. The future oil prices in Thailand will be lowered when condensate produced by PTTEP is delivered to Thailand and the country's burden of petroleum imports is thereby reduced.
Indonesia to drill 200 oil exploration wells by 2009
February 12, 2007. The Indonesian government has set a target for the country to drill 200 oil exploration wells from 2007 to 2009 in a bid to increase its crude oil production by 30 percent to 1.3 million barrels a day in two years. A report issued by the Upstream Oil and Gas Regulatory Body (BP Migas) said the 200 wells are expected to increase the country's oil reserves by 3.8 billion barrels and gas reserve by 17 trillion cubic feet. Most of the wells are offshore. The country still has many untapped potential oil reserves, such as in the seas off Buton and Halmahera. The government will also encourage optimization of production from old oil and gas fields using enhanced oil recovery technology. There are 150 idle wells, including 100 wells owned by state-oil and gas company Pertamina. The idle old wells could turn out up to 300,000 barrels of crude oil a day if they are effectively developed.
Petrobras takes stake in deepwater block offshore Pakistan
February 12, 2007. Petrobras has signed an agreement with Oil and Gas Development Company Limited (OGDCL) to explore offshore block "G", in Pakistan. The block is located in the Indus offshore basin and remains largely unexplored, with a mere 11 wells having been drilled there. Covering an area of nearly 7,400 square kilometers, with water depths of up to 2,000 meters, the block is located some 200 Km from Karachi, the biggest Pakistani city. Petrobras will hold a 50% participation, while the remaining 50% will be controlled by OGDCL, the Pakistani national oil company. Petrobras has committed to undertake geological and geophysical studies that will allow a full model to be developed for the area's oil system. The company has the option to leave the agreement before drilling any wells. Petrobras' arrival in Pakistan was motivated by the exploratory potential of the Indus offshore basin.
Lukoil makes discovery on block ‘A’ in Saudi Arabia
February 12, 2007. LUKSAR has made a hydrocarbon discovery on the Tukhman structure in Contract area Block A in the Kingdom of Saudi Arabia. LUKOIL Saudi Arabia Energy Ltd. (LUKSAR) was established on March 1, 2004 with equity participation of LUKOIL Overseas (80%) and its National partner, Saudi Aramco (20%). The office of LUKSAR is based in Al-Khobar (Eastern Province of Saudi Arabia). The term of Agreement between the Government of Saudi Arabia and LUKSAR for exploration periods and production period shall not exceed 40 years from the effective date March 7, 2004.
The Contract area is located in the northern part of Rub Al-Khali, south of Al-Ghawar, which is a major oil field not only in Saudi Arabia but also on a global level. Total area of the Block A is approximately 30,000 square kilometers. LUKSAR was officially admitted to begin its operations on this area in March 2004 following outcomes of international tender. Purpose of the exploration works in Contract area, is to find non-associated gas and field condensate and – if commercial discovery take place – LUKSAR shall undertake development and production operations.
Starting from the signing date and until drilling stage LUKSAR reprocessed more than 8,000 kilometers of vintage seismic data, conducted 755 square km 3D seismic, 1,700 km 2D seismic and 3,340 square km 3D-Sparse seismic acquisition works, and subsequently all obtained data were properly processed and successfully interpreted. The first exploration well was spudded in January 2006, and it was drilled on a domed area of Tukhman structure, located in the central portion of the Contract area. TVD of this well is about 5,000 m. At the present time LUKSAR begins detailed appraisal of the discovery to further evaluate the composition and potential of the said discovery which is expected in 2008.
Russian-Saudi JV finds hydrocarbon in Saudi
February 12, 2007. LUKoil, Russia's largest oil company, its joint venture with Saudi Arabia, LUKoil Saudi Arabia Energy Ltd. (Luksar), had found hydrocarbon accumulations at a gas deposit in the Mideast kingdom. The hydrocarbon reserves were discovered following the results of deep exploration drilling on the Tukhman structure, Contract area Block A. In January 2004, LUKoil won the tender to develop the 30,000-square-kilometer (18,000-square-mile) Block A natural gas field in the Rub Al-Khali desert. LUKoil signed a 40-year contract with the Government of Saudi Arabia to explore and develop the natural gas deposit. The Contract area is located in the northern part of Rub Al-Khali, south of Al-Ghawar, which is a major oil field not only in Saudi Arabia but also on a global level. LUKoil Overseas holds an 80% stake in Luksar, with 20% belonging to Saudi major Aramco.
Woodside, KNOC to explore offshore Korea
February 9, 2007. Australia's Woodside Energy Ltd struck a deal with Korea National Oil Corp. (KNOC) to explore for oil and gas in the East Sea between the Korean Peninsula and Japan. It will conduct joint surveys in block zones 8 and 6-1. Block 8 is east of Yeongdeok, North Gyeongsang Province, while Block 6-1 lies offshore from the large industrial city of Pohang. The so-called concession area, where the exploration will be carried out for a minimum of two years, covers all of Block 8 and northern parts of Block 6.1. The area is part of the Ulleung Basin region in the East Sea and has depths of 1,000-2,000 meters. Woodside is Australia's largest publicly traded oil and gas exploration and production company, and it had a market capitalization of US$20 billion as of late last year. The company has extensive experience in exploring for oil and gas in deep waters. The contract calls for a joint 50-50 stake between KNOC and Woodside. Woodside could decide to begin drilling for oil and gas during the two-year minimum exploration period. The company has the right to extend its exploration for a total of four years. It said the contract is noteworthy because it is the first time in 15 years that a major foreign energy explorer has decided to seek oil and gas around the Korean Peninsula. The last effort to search for energy resources was in 1992 by a U.S. company.
Azerbaijan SOCAR, French Total to develop Caspian oil field
February 9, 2007. The State Oil Company of Azerbaijan (SOCAR) and France's Total have signed a memorandum of understanding to develop the Absheron oil fields in the Caspian. It said the two companies are to harmonize and sign a production-sharing agreement within a year. Total's interest in the project to develop the Absheron deposits shows that geological structures that were once considered commercially non-viable have rich hydrocarbon reserves.
Marathon announces two new deepwater discoveries in Angola
February 8, 2007. Marathon Oil Corporation announced that its subsidiary, Marathon International Petroleum Angola Block 32 Limited, has participated in two new deepwater discoveries on Block 32 offshore Angola, operated by TOTAL Exploration and Production Angola (Block 32 Ltd). To date, Marathon has announced seven discoveries on Block 32. The Manjericao-1 discovery well is located approximately 165 kilometers (94 miles) off the Angolan coast in 1,977 meters (6,487 feet) of water. The well was drilled to a total depth of 3,984 meters (13,072 feet) and encountered high quality oil bearing reservoirs. Based on a mini-drill stem test, this well was deemed capable of producing greater than 5,000 barrels of oil per day (bopd). Manjericao is located 37 kilometers (23 miles) northwest of the previously announced Gengibre discovery. The Caril-1 discovery well is located 16 kilometers (10 miles) west of the previously announced Gindungo discovery in 1,673 meters (5,489 feet) of water. The well was drilled to a total depth of 4,168 meters (13,675 feet). One of the reservoirs in the well was tested and flowed at a rate of 6,300 bopd of light oil. The concessionaire of Block 32 is Sonangol, Angola's state-owned oil company. Marathon and TOTAL Exploration (the operator of the block) each hold a 30 percent interest in Block 32, while Sonangol P&P holds a 20 percent interest, Esso Exploration and Production Angola (Block 32) has a 15 percent interest and Petrogal has a five percent interest in the block.
Shell/Exxon cos produces first Wadden Sea gas
February 8, 2007. A Dutch company, owned by Shell and ExxonMobil, has started commercial gas production this week from a field in the environmentally sensitive Wadden Sea (Waddenzee). It is estimate that the total production out of the three locations where will be drilling would reach 20 billion cubic metres (bcm) by 2030 or 2035. That the production from the other two fields at the wetlands nature reserve would start at the end of this year and the beginning of next year, respectively. In 2004, the Dutch government lifted a moratorium on gas production in the Wadden Sea as part of measures to tackle the gradual depletion of the key Groningen gas field and encourage production from small fields. NAM, which operates Groningen, owns the lion's share of the Wadden Sea reserves. The government decided in 2004 to invest 500 million euros ($649.2 million) in the Wadden Sea to preserve the environment and fisheries in the nature reserve over the next 20 years.
BVI, Singapore companies to explore in Myanmar
February 8, 2007. Another British Virgin Island-based company and another Singapore-based firm will conduct oil and natural gas exploration in Myanmar's western offshore areas. Under the production sharing contracts signed with the state-run Myanmar Oil and Gas Enterprise (MOGE) under the Ministry of Energy in Nay Pyi Taw, the Rimbunan Petrogas Ltd, based in British Virgin Islands, and the IGE Pte Ltd of Singapore will carry out the undertakings at block A off the Rakhine coast.
Last month, another British Virgin Island-based oil company - the MRPL E and P Pte Ltd--reached a production sharing contract with the MOGE to explore and produce oil and gas at Block A-6 off the same Rakhine coast. There have been a number of foreign oil companies exploring gas in the Rakhine offshore area in recent years. These companies include a consortium, led by South Korea's Daewoo International Corporation with 60-percent stake. Other companies go to South Korea Gas Corporation, ONGC Videsh Ltd of India and Gas Authority of India Ltd (GAIL).
The consortium has found gas deposits at Block A-1 and Block A-3 off the Rakhine coast in January 2004 and April 2005, respectively. The Shwe field holds a gas reserve of 4 to 6 TCF or 113.2 to 170 BCM, while the Shwephyu 5 TCF and the Mya 2 TCF with a combined proven reserve of 5.7 to 10 TCF being estimated by experts. Myanmar has abundant natural gas resources in the offshore areas. With three main large offshore oil and gas fields and 19 onshore ones, Myanmar has proven recoverable reserve of 18.012 TCF or 510 billion cubic-meters (BCM) out of 89.722 TCF or 2.54 trillion cubic-meters (TCM)'s estimated reserve of offshore and onshore gas.
February 7, 2007. BP Trinidad and Tobago plans to drill 10 wells over a decade when it resumes oil and gas exploration in the Caribbean twin island state in 2008 after a one-year break. BPTT, majority owned by British oil major BP Plc., abandoned drilling last August at the Ibis Deep well, the deepest well ever drilled in the country, after failing to find new sources of hydrocarbon. BP Trinidad and Tobago operated the Ibis Deep Well on behalf of EOG Resources and state-owned Petrotrin and the National Gas Company. The $80 million well was drilled to a depth of 19,068 feet (5,812 metres).
Bapco to increase gas production by 500 mcf
February 8, 2007. The natural gas production capacity of the Bahrain field will be increased by 500 million cubic feet per day by Bahrain Petrochemical Company (BAPCO), as part of its future plans to meet Kingdom’s electric power needs, for which BD200 million has been allocated, to include the drilling of 10 gas wells. Bapco also plans to drill a number of horizontal wells and to increase the annual number from 24 to 48, with the aim of adding 700 wells in the next 15 years, as part of its ambitious future programmes. LSDP Project is one of the most complex projects undertaken by Bapco for many years. The justification and the economics of the project reflect its vital importance in enabling the sustained operation of the refinery, and the future profitability of Bapco as an international export refiner. The start-up of the LSDP Hydrocracker Complex is planned for March, followed by the renovation of No. 2 Hydrodesulphurisation Unit in June - important milestones in Bapco’s Strategic Investment Programme.
The LSDP project, at an estimated cost of $695 million, is a key element of the Strategic Investment Programme, and the main aim of the project is to reduce the current high-sulphur content of the Bapco diesel pool. This will enable Bapco to ensure increased sales in those international diesel markets where vehicle exhaust emissions are strictly regulated as part of national environmental protection.
Lukoil makes oil find in Colombia's condor block
February 7, 2007. LUKOIL Overseas has discovered oil reserves in the amount of more than 100 million barrels at Medina structure of the Condor exploration block in Colombia. This the first discovery made by Russian petroleum experts in the Western hemisphere. This field is being prepared for commercial operations. However the project has already started generating commercial benefit: about 4 thousand barrels of high-quality Colombian oil of Vasconia blend produced in the course of Condor-1 well testing were sold to North American consumers.
The Condor project is implemented by LUKOIL Overseas (70%) together with Ecopetrol National Oil Company (30%). The Agreement on Condor block was signed on April 7, 2002. The contract covers exploration operations at the block over a period of six years and field development over 22 years in case of a commercial discovery. Project operator - LUKOIL Overseas Colombia Ltd. The Block area is 3089 sq. km. It is located in the western part of the Llanos oil basin and is one of the largest exploration blocks in Colombia.
The drilling of deep exploratory well Condor-1 with elevation of the well site at 1128 m above the sea level started in June 2005. The depth of vertical well drilled in the dome of Medina structure was 4.5 thousand meters. In February 2007 the Executive Board of LUKOIL accepted the report of LUKOIL Overseas on the results of international exploration projects in 2001-2006 and approved the strategic directions for development of international exploration activities for the period from 2007 to 2016. International exploration development strategy of LUKOIL for 2007-2016 implies the creation of portfolio consisting of 17 exploration projects and increment of C1 hydrocarbon reserves in the amount of 1.9 billion boe.
China's largest oil field Daqing to rely more on gas
February 7, 2007. China's largest but fast-depleting oil field Daqing is increasingly relying on natural gas to maintain production levels. The field, located in north China's Heilongjiang province, is pinning its hopes on newly discovered deep gas reserves that may be made accessible with new technologies. The oil field operators hope to make natural gas account for 9.5 percent of its output in 2010, and 22.5 percent in 2020.
By late 2005, proven gas reserves at Daqing hit 400 billion cubic meters (14 trillion cubic feet), but if reserves deeper underground are included, the figure could be four times as large. Daqing, which achieved near-mythical status in the early years of communist rule as an example of the Maoist can-do spirit, has been struggling with fears that it might be gradually exhausting its oil reserves. Apart from keeping Daqing in business, the increased reliance on gas also fits into China's overall energy strategies. Natural gas is a priority for the Chinese government, bemoaning the fact that it accounts for just three percent of fossil fuel consumption in China, compared with 20 percent globally.
Exxon signs agreement to explore offshore Libya
February 7, 2007. Exxon Mobil Corp signed an exploration and production sharing agreement with Libya's national oil company to start exploring in the Sirte Basin offshore Libya. The agreement includes four blocks located about 100 miles off the Libyan coast and comprises 2.5 million acres in water depths from 4,000 feet to over 6,500 feet. It said the four blocks were awarded to the company in December.
Downstream
Gas refinery to build in Iran’s Mehran city: MP
February 12, 2007. Iran’s Majlis deputy said that a gas refinery project is to launched at Mehran border city in the western province of Ilam. The construction work on the gas refinery will begin at the earliest in view of the region's enormous oil and gas potential and consultations that have already been held with officials of the Iranian Oil Ministry. The construction of the refinery will pave the way for gas resources of Ananran region to benefit other provinces. The parliamentarian predicted that the refinery, after it begins operations, will effectively contribute to the region's economic development and open many job opportunities for locals. Ilam province has gas resources estimated at 14 trillion cubic meters.
Transportation / Trade
Russian, Japanese companies sign deal on LNG deliveries
February 9, 2007. Osaka Gas has signed a preliminary agreement with Sakhalin Energy, the operator of a vast oil and gas project off Russia's Pacific Coast, on long-term deliveries of liquefied natural gas. According to the agreement, signed in Moscow, the operator of Sakhalin II will supply 200,000 metric tons of LNG annually for 23 years, beginning in April of 2008. LNG will be delivered to Japan's fourth-largest LNG buyer, from a plant which is in the final stages of construction in the south of Sakhalin Island and which will have a capacity of 9.6 million tons a year. The project's two fields have estimated reserves of 150 million metric tons (1.1 billion barrels) of oil and 500 billion cubic meters of natural gas.
Bulgaria, Greece, Russia agree text on long-stalled pipeline deal
February 8, 2007. Bulgaria, Greece, and Russia endorsed the text of an agreement to build a long-stalled pipeline to channel Russian oil from the Caspian Sea to the Aegean. The 280-kilometre (174-mile) Burgas-Alexandroupolis pipeline, which will bypass Turkey's already jammed Bosphorus Straits, is expected to cost about 900 million dollars (709 million euros). It will transport about 35 million tons of Russian oil per year with an option to later increase the capacity to 50 million tons. Negotiations between the three countries over the deal had been going on for 14 years. Russia initially doubted the profitability of the project, which calls for oil was to be transported by tanker from the port of Novorossiysk on the Caspian Sea to the Bulgarian Black Sea port of Burgas and then by an overland pipeline to Alexandroupolis in northeastern Greece. Talks were also delayed by haggling over each country's share in the new pipeline, with Russia insisting that its companies be given a majority stake. Bulgaria and Greece finally agreed to give the consortium of Russian companies Transneft, Rosneft and Gazprom-Neft a 51-percent stake in the project and to evenly split the remaining 49 percent. The ownership of the Burgas oil terminal was another highly-disputed issue between Sofia and Moscow but it remained unclear whether it had been resolved and how. Soaring oil prices and the inauguration in July of the Baku-Tbilisi-Ceyhan pipeline, linking the Caspian Sea to the Mediterranean while bypassing Russia, prompted Bulgaria, Greece and Russia to relaunch the deal in September. The agreement now has to be approved by the three governments and is expected to be finalized "most probably in Athens in the second half of February. Meanwhile, Bulgaria, Macedonia and Albania signed an agreement last week in Skopje to build another trans-Balkan oil pipeline from Burgas to the Albanian Adriatic port of Vlore via Macedonia. The 894.5-kilometre pipeline, planned by the U.S.-registered Albanian Macedonian Bulgarian Oil Corporation (AMBO), is estimated to cost 1.2 billion dollars (926 million euros).
Technip-Subsea 7 JV wins Tui area contract
February 7, 2007. The Technip-Subsea 7 Joint Venture has been awarded a contract by New Zealand Overseas Petroleum Limited for the Tui Area development, located approximately 30 miles off the Taranaki coastline, New Zealand, in a water depth of 125 meters. The joint venture contract, valued around US $30 million, includes the project management, engineering, transportation, installation and pre-commissioning of approximately. The joint venture teams based in Singapore and Perth and Technip’s operations and engineering center in Houston will execute the contract. The flexible flowlines and risers will be fabricated by Flexi France, one of Technip's flexible pipe plants located in Le Trait (France), under a separate supply contract.
Policy / Performance
TransCanada gets OK to convert gas facilities
February 12, 2007. TransCanada Corp. said that the National Energy Board has approved the conversion of part of its Canadian Mainline natural gas transmission facilities into its crude oil Keystone pipeline project. The facilities are a key component of the Keystone pipeline, which will transport oil from Alberta to refining centres in the U.S. Midwest. The proposed Keystone project is a 2,965-kilometre (1,842-mile) pipeline with a nominal capacity to transport about 435,000 barrels per day of crude oil from Hardisty, Alberta to U.S. Midwest markets at Wood River and Patoka, Illinois. The Canadian portion of the project involves the conversion of about 860 kilometres (530 miles) of existing TransCanada Canadian Mainline pipeline facilities from natural gas to crude oil transmission and the building of approximately 370 kilometres of new oil pipeline, terminal facilities at Hardisty, Alberta, and pump stations. The U.S. portion of the project includes about 1,730 kilometres of new pipeline construction. Construction of the Keystone pipeline is expected to begin in early 2008, with commercial operations scheduled to start in the fourth quarter of 2009.
Producing oil, gas more costly in US: Report
February 12, 2007. The cost of producing oil and gas has risen about 53 percent the past two years, and the trend is expected to continue this year. Those same costs have climbed 67 percent since 2000, but most of the increase has come since the end of 2004, according to an analysis by Cambridge Energy Research Associates and its parent, IHS Inc., which together have created what they call the Upstream Capital Costs Index.
The index tracks nine key cost areas for offshore and land-based projects such as construction, equipment and personnel. If current trends continue, 2007 is shaping up to be a year of further increases. With high oil prices driving new development projects, capacity constraints continue to support increases in the cost of equipment and services. The companies such as Halliburton Co. and Schlumberger Ltd., which provide oilfield services, equipment and personnel to oil companies, have said they expect strong demand for their products this year. At the same time, oil companies have acknowledged increasing exploration, production and other costs.
The report says 100 new rigs could be built in the next four years, but the new supply probably won't ease demand until mid-to-late 2009. In particular, oil and other energy related companies are trying to fill thousands of engineering positions, brought on in part by the upsurge in offshore exploration and a wave of retirements from baby boomers. Still, despite the volatility in oil and gas markets, most companies involved in oil exploration and production say they plan to boost capital spending on E&P in 2007.
Russia, Qatar to mull natural gas cartel
February 12, 2007. Leaders of natural gas-rich Russia and Qatar would explore the creation of a natural gas cartel to represent the interests of producer countries to influence the global market. They wanted more cooperation among competing gas producers in their dealings with natural gas-consuming countries. European Union leaders have said they would stand against any effort by Russia to create such a cartel, fearing gas prices and Russia's political clout could rise dramatically as a result. Europe gets 44 percent of its natural gas imports from Russia. Russia would send a team of experts to a natural gas conference being held in Doha in April, where they would discuss details of building a cartel resembling the Organization of Petroleum Exporting Countries. Qatar is an OPEC member but Russia is not. Russia and Qatar are two of the world's largest producers of natural gas, and tiny Qatar sits atop the world's single largest gas field.
Sri Lanka asks India, China to pay $100 mn each for oil deal
February 8, 2007. Sri Lanka has asked the governments of India and China to place deposits of $100 million each for securing blocks to explore oil off the island's northwestern shores. It has also asked them to make a 10-million-dollar payment as security for securing the oil blocks without a competitive bidding process. The deposit of $100 million is in addition to the $10 million security fee. On behalf of India, state-run Oil and Natural Gas Corp (ONGC) has been awarded a block in the island's northwestern Mannar basin. Sri Lanka last year paid 10.5 million dollars and bought the seismic surveys conducted by Norway's TGS Nopec. Sri Lanka might be able to produce oil within the next three years if exploration efforts are successful. The government has already advertised its exploration plans to foreign firms at various international for and set up the petroleum resource development ministry in 2005 to facilitate exploration efforts.
Rosneft, Sinopec discuss joint projects
February 7, 2007. Russia's state-controlled oil producer Rosneft and China's second-largest oil company Sinopec intend to continue talks with Russian, Chinese and Mongolian railway carriers on oil transportation tariffs to energy-hungry China via Mongolia. Rosneft and state-controlled Sinopec (China Petroleum & Chemical Corporation), which is Asia's largest oil refiner, signed a framework agreement on strategic cooperation in November 2006. They have already held the first session of the joint coordination committee and discussed cooperation to survey and develop oil and natural gas fields, oil refining and Sinopec's proposal to set up a joint venture in northern China. The companies are already developing a number of joint projects, including Russian crude producer Udmurtneft, based in European Russia to the west of the Urals. In November 2006, Rosneft signed a deal with Sinopec to acquire a 51% stake in Udmurtneft. Sinopec won a tender to buy a 96.7% stake in Udmurtneft from Russian-British TNK-BP for a reported $3.5 billion in June 2006, with a prior condition that it was to sell 51% of its stake to Rosneft.
Power
SA to build second nuclear power plant
February 12, 2007. SA will build a second conventional nuclear power station in a bid to boost lagging energy supplies. SA currently operates the only nuclear power station on the continent at Koeberg, about 50-km outside Cape Town. The country is facing a serious energy crisis, which has seen intermittent blackouts as the national grid struggles to cope with increasing demand. Energy utility Eskom has predicted that the country could face power shortages as it prepares to host the 2010 Soccer World Cup. Besides Koeberg, which is a conventional nuclear plant, government has committed billions of rand to developing experimental nuclear technology in the form of the Pebble Bed Modular Reactor, which counts America’s Westinghouse as one of its development partners.
Daewoo gets $180 mn power plant order
February 12, 2007. Daewoo International Corp., Keangnam Enterprises Ltd. and Hyundai Engineering Co. have jointly received an order to build a $180 million power plant at a nickel mine in Madagascar, Africa. The group won the order after a Korean group led by Daewoo International and Korea Resources Corp. that has a 27.5 percent stake in the Ambatovy nickel project decided in October to spend as much as $1.1 billion over five years to develop a nickel mine there. The cogeneration power plant will supply 80 MW of electricity and 235 tons of steam an hour to a nickel refining plant at the mine when completed in September 2009. The nickel mine may produce as much as 60,000 tons of nickel a year when development is completed by 2010.
Huge coal-fired power plant planned in Nevada
February 10, 2007. The long process of deciding whether to build a massive 2,500 MW coal-fired power plant in eastern Nevada is underway with the discussion of plans for the $3.8 billion facility. The Ely Energy Center and its 250-mile transmission line would be fed by low-sulfur coal from Wyoming. The power plant scheduled to come online in 2012, work could begin as early as 2010. The total of natural gas-powered plants and purchased power in 2008 is 70 percent of both companies' energy mix. With the more energy-efficient Ely plant, retirement of older coal plants by 2012, when the plant is scheduled to come on line, purchased power and gas-fired plants will be 34 percent of the energy portfolio. In 2016-2018 the plant will have an adjunct coal gasification facility, greatly increasing the plants efficiency. The plant's first phase will produce 1,500 MW and the second phase 1,000 MW.
Alliant to build 300 MW coal-unit in Wisconsin
February 7, 2007. Alliant Energy Corp.'s Wisconsin Power and Light unit asked state regulators to approve its plan to build a 300 MW unit coal-fired plant. To meet growing electric demand, WP&L proposes building a new coal unit at the Nelson Dewey site in Cassville, Wisconsin, as a first choice, or at the Columbia Energy Center near Portage as an alternate. The new generator, expected to be operating in 2012 and to cost more than $700 million, would utilize circulating-fluidized bed technology, which reduces the amount of sulfur dioxide and nitrogen oxides emitted.
Transmission / Distribution / Trade
AES buys two power plants in Mexico
February 12, 2007. U.S. power company AES Corp. purchased two power plants in Mexico for $190 million, including equity and subordinated debt. The deal also involves $421 million in project debt. The two 230 MW petroleum coke-fired plants supply power to two major Mexican industrial companies under 20-year agreements. AES purchased the plants from units of Exelon Corp and Alstom.
Hides Gas, PNG Power sign deal
February 12, 2007. PAPUA New Guinea Power Ltd and land owner company, Hides Joint Venture Limited signed an agreement for a major rural electrification project to supply electricity to most of the districts in the Southern Highlands Province. The project was expected to cost between K75 million to K80 million and will cover all the districts - Komo Magarima, Tari Pori, Koroba Lake Kopiago, Mendi, Imbonggu, Nipa Kutubu, Kagua Erave and Pangia Ialibu. The signing is the biggest rural electrification project ever undertaken by PNG Power Limited in the country. Under the agreement which was witnessed by the landowners from the Hides and Gobe Gas project areas, the Hides Joint venture Limited will be responsible for releasing funds for the generation power plant while PNG Power will be responsible for the delivery of transmission and distribution of infrastructure under its rural electrification program. Both parties will incorporate a special purpose company under the Companies Act as the vehicle to sell electricity to PNG Power and to use the proceeds to offset costs of operating the gas or diesel generation and the capital cost of the generation. The PNG Power Ltd’s contribution for the first phase of the project will come through the National Government’s Rural Electrification allocation in the 2007 budget.
Great Plains Energy to buy Aquila for $1.7 bn
February 7, 2007. Great Plains Energy Inc. will pay $1.7 billion in cash and stock for Midwestern utility Aquila Inc. to expand further into the region. As part of the deal, Aquila would first sell some of its electric and gas utilities to South Dakota's Black Hills Corp. for $940 million and use some of the proceeds to reduce debt. Great Plains Energy, parent of Kansas City Power & Light, said it would pay $4.54, 40 percent in cash and 60 percent in stock for each Aquila share.
Policy / Performance
Gulf states to move ahead with N-energy plans
February 12, 2007. The six Gulf Arab states are moving ahead with plans to explore development of their first nuclear energy plants, with representatives planning to seek help from the UN's nuclear watchdog later this month. The GCC announced its intention to study a peaceful nuclear programme in December, but has revealed few details about its plans. The GCC's nuclear bid comes as Arab leaders of the Persian Gulf have expressed unease with Iran's contentious nuclear programme and Washington's hardline response that many here fear could lead to war. Iran has long vowed its nuclear programme is for producing energy, but American officials accuse Tehran of seeking weapons. Now Gulf leaders appear to be readying to create their own nuclear sector, perhaps in response to Iran's progress in the field. Analysts say the advance of civilian nuclear technology could spill over into military areas in the volatile region. No Arab country currently has a nuclear energy capability but several engage in nuclear research. Egypt decided in 2006 to restart its long-stalled nuclear energy programme. Israel is the only Middle Eastern country with nuclear weapons and a civilian nuclear energy programme. The huge energy needs of the fast-growing Gulf countries warranted development of nuclear energy. In particular, Gulf countries expend vast amounts of oil and gas in desalination, turning sea water into drinking water. The GCC countries - Saudi Arabia, Kuwait, United Arab Emirates, Qatar, Bahrain and Oman are signatories of the Nuclear Non-proliferation Treaty that prohibits development of atomic weapons. Each nation would need the all-clear from the IAEA to develop a nuclear industry and uphold obligations under the treaty.
Malawi to spend $17mn to revamp power plants
February 12, 2007. The state-owned Electricity Supply Corporation of Malawi (Escom) would spend $17 million (R121 million) on rehabilitating its Tedzani 1 and 2 hydropower plants. The plants, which ceased operating in 2001, would be rehabilitated to reduce a power shortage. The plants would generate 40 MW of power, sufficient to light the commercial capital, Blantyre. Escom was seeking bids to rehabilitate its 24MW Nkula generator. Escom and Hidroelectrica de Cahora Bassa in neighbouring Mozambique are using an $84 million World Bank and African Development Bank loan to link the two countries' electricity grids.
FPL wants another Fla. nuclear plant by 2018
February 10, 2007. Florida Power & Light Co. within the next two years the utility will inform federal regulators that it wants to build another nuclear plant in Florida and hopes to have it constructed in about a decade. FPL was looking at building a "gasified" coal-fired power plant on the same site as one of its other power plants, but only after it builds a "clean-coal" plant in Glades County.
FPL has two nuclear reactors in St. Lucie County and two reactors at its Turkey Point plant in Miami-Dade County, where it has thousands of additional acres available for growth. FPL said last year that it was considering building an additional nuclear plant. The utility hopes to file a combined construction-and-operating license with the Nuclear Regulatory Commission either next year or in 2009.
It will cost FPL $100 million just to complete all of the work necessary to file the licensing application with the NRC, prompting at least one panel member to say that regulatory costs are too high and should be changed. FPL is in the process of obtaining regulatory permits to build an ultra-supercritical pulverized coal plant in Glades County. The plant would have twin 980 MW units, the first of which would start up in 2012.
$23.9 bn extra needed to decommission 55 nuclear reactors
February 9, 2007. Costs to decommission Japan's 55 nuclear reactors are expected to rise to about 2.9 trillion yen ($23.9 billion) from the initial estimate of 2.6 trillion yen ($21.4 billion). The increasing costs could be reflected in higher utility bills. The expected 300-billion-yen increase stems from the additional costs needed to reduce the negative impact on the environment. The decommissioning of Japan's commercial reactors is expected to go into full swing from 2010 to 2020. Decommissioning a single nuclear reactor is now estimated at 55 billion yen, mainly to deal with the huge amount of concrete debris and other radioactive waste left behind.
In total, an estimated 5 billion yen to 10 billion yen more will be needed to decommission a single nuclear reactor. Companies that operate nuclear plants have already earmarked a total of about 1.1 trillion yen of the initial estimate of 2.6 trillion yen needed to decommission the plants.
$5.4bn power plan approved by Pak
February 8, 2007. The Pak government approved a plan to set up 11 power projects to cope with expected energy shortage of about 2000MW in coming years. A mix of hydel-, coal- and gas-based projects, the $5.4 billion power projects would generate about 4,200 MW of electricity in three to seven years.A meeting of the Private Power and Infrastructure Board (PPIB) decided to issue letters of interest to AES Corporation of the United States and Mitsui Corporation of Japan to conduct feasibility studies and then set up two power projects of 1000-1200MW each to be based on imported coal. The coal-based projects would take about five years to start production with an estimated cost of $2.5 billion. The sponsors would be required to complete their feasibility studies in about one year and then complete construction of projects in about four years.
The board directed Wapda to instal a 100MW power plant in Khuzdar on a fast-track basis to improve the power supply situation in Balochistan, particularly in the Khuzdar area. The meeting also approved a decision of the prime minister to set up another 450MW power plant based on low quality gas from the Uch field in Balochistan, instead of Sindh. These two projects are estimated to cost about $550 million. The board approved issuance of letters of interest to various local and foreign firms to set up seven hydropower projects in the NWFP and Azad Kashmir with a total investment of about $2.4 billion. These projects would generate about 1620MW of power.
These include 197MW Kalam-Asrit Hydropower Project, and 209MW Asrit-Kedam Hydropower Project (both to be located in Swat) and 548MW Kaigah Hydropower Project (district Kohistan) NWFP. The hydro projects to be located in Azad Kashmir include 240MW Karot Hydropower Project, Kotli, 65MW Sehra ŠHydropower Project, District Poonch, 222MW Azad Pattan Hydropower Project at Sudhnoti, and 139MW Chakothi Hattian Hydropower Project at Muzzaffarabad.
Gazprom, SUEK to combine electric power, coal assets in JV
February 8, 2007. Gazprom and the Siberian Coal Energy Company (SUEK) they have signed a letter of intent to form a joint venture to combine their electricity and coal assets. Under the document, the parties intend to set up a joint venture on the basis of their available electric power and coal assets. A precise list of assets to be contributed to the joint company, and the procedure of compensation for possible differences in their value, will be defined in the process of preparing the deal. The deal is planned to be coordinated and finalized in the first half of 2007, with Gazprom receiving 50% plus one share and SUEK 50% minus one share in the JV.
The partners intend to work out a detailed strategy for the new company, aimed at establishing it as one of the leaders of Russia's electric power sector, and putting it in leading positions in the world's energy and coal-producing industry. The projected establishment of a JV with SUEK is another step towards Gazprom's establishment as a global multi-profile energy company. The activities of the new venture will also become an important factor for the development and modernization of Russia's coal industry.
Renewable Energy Trends
National
AP to set up micro hydel projects in tribal areas
February 11, 2007. The Andhra Pradesh Government has decided to establish 16 micro hydel projects, each of 1 MW or more, in the identified tribal areas for meeting the energy needs of tribals. These include solar energy (interior village electrification projects), Biomass (in which Andhra Pradesh is the leader in India), Biofuels (tree-borne non-edible oils), energy from waste and the micro hydel projects. CDM has been identified as one of the instruments to achieve the goal of the Kyoto Protocol, that the industrialised nations need to reduce their combined greenhouse gas emissions by at least 5.2 per cent as compared to 1990 levels by the period 2008-2012.
Suzlon to acquire German firm REpower for $1.3bn
February 10, 2007. India’s largest wind power firm Suzlon Energy is in talks to acquire Germany’s REpower. Suzlon has made a public bid of e126 per share for REpower, outbidding Paris-based nuclear major Areva. Suzlon’s bid estimates the deal size at about $1.3 billion. The company has made a counter bid to Areva’s bid of e105 per share. The bidding process is likely to continue for 4-6 weeks. Suzlon, if successful in the bidding, plans to fund the acquisition through a mix of debt and internal accruals. Paris-based Areva, the No 1 maker of nuclear reactors, offered e105 per share on February 5 for 70% of the German company. Shares of REpower surged as much as e26.48, or 23%, to e140. Speculation is strong that Areva may sweeten its bid. Suzlon’s bid is being made in partnership with Martifer, a unit of Portugal-based Mota-Engil SGPS, which owns a quarter of REpower.
REpower, Germany’s third-largest maker of wind-power equipment after Vestas Wind Systems and Enercon, reported a 9-month profit of e1 million compared with a year-earlier loss of e8.3 million, riding increasing demand for wind power. Suzlon is partnering with Martifer. The latter has a joint venture with REpower in Portugal. Suzlon and Martifer have signed a legally binding agreement, which sets out the terms for this offer. The offer will be made through BidCo, in which Suzlon holds 75% and Martifer 25% of the capital. Suzlon will finance the offer and Martifer will support it.
Suzlon said it will seek the support of the REpower management along with Martifer for the offer and claimed that it has a strong interest in working with REpower’s existing management in the future. Suzlon’s bid follows Tata Steel’s recent $12-billion agreement to buy UK’s Corus Group as Indian companies unleash a takeover spree on foreign rivals. Suzlon Energy, market leader in Asia and the world’s fifth largest wind turbine manufacturer by annual installations, is currently on a mega expansion drive in the international market. In March 2006, it bought Belgium-based Hansen for $565 million. The acquisition of Hansen through holding firm EVE, which was an all-cash transaction, was close on the heels of another $60 million investment in a wind turbine-manufacturing unit in China.
Gati to set up 99 MW hydel unit in Sikkim
February 7, 2007. Gati Ltd, the express cargo company, has become the first private sector firm to enter Sikkim's power sector with a pact to set up a 99 MW hydroelectricity project via group company Gati Infrastructure Ltd. Under the pact with Sikkim Power Development Corp, the project will come up at Chuzachen near Rongli in east Sikkim, 60km from Gangtok, on a build-operate- own- and transfer (BOOT) basis. Gati Infrastructure expects the project to be ready by mid-2009 at a cost of Rs 625 crore. Three micro projects of 160 MW would be set up in the second phase. The 28 mini and micro hydro project had been offered to public and private undertakings. These taken together are expected to generate over 6000mw by 2015 and fetch the state around Rs 2,000 crore a year from power sales to other states. The project would sell its power at Rs 2.20 a unit via a 132kvA transmission line to be built by the state.
Global
Japan's gas and oil firms turn to fuel cells
February 12, 2007. Japanese gas and oil companies are stepping up their development of fuel cell technology amid increased competition. According to Japan's Asahi Shimbun, companies including Tokyo Gas and Nippon Oil are concentrating more on their fuel cell development programmes as electricity becomes the main source of power in Japanese homes. Tokyo Gas, for example, has developed a co-generation system that powers a fuel cell on hydrogen extracted from gas. The company says that the system could cut household electricity bills by as much as 50 per cent.
Constellation to supply green energy to Evanston Illinois City
February 8, 2007. Constellation Energy Group Inc.'s Constellation NewEnergy subsidiary entered into a green electricity purchase agreement with the city of Evanston, Illinois. As part of the agreement, Constellation NewEnergy will secure about 5.5 million kilowatt-hours of Renewable Energy Credits (RECs) to offset 20 percent of the city's electricity usage. The RECs will help the city replace carbon emissions produced during the combustion of fossil fuels with clean, renewable wind generation. Carbon dioxide is a greenhouse gas linked to global warming. One REC has the impact of eliminating the emissions associated with one megawatt-hour of electricity produced by a fossil fuel generator. One megawatt can power about 800 average homes in Illinois.
|
Dear Reader, You may have received complimentary copies of the ORF Energy News Monitor. Our objective in bringing out the newsletter is to provide a platform for focused debate on India’s energy future. You could be a partner in this effort by becoming a subscriber. You could also contribute recommendations for India’s energy future in the form of brief insightful articles. We look forward to receiving your patronage and support. ORF Centre for Resources Management |
|
ORF ENERGY NEWS MONITOR Subscription Form Please fill in BLOCK LETTERS |
|
Subscription rate slabs for Commercial entries, Research Institutes, Academics and Individuals will be provided o request. The subscription can be made for soft copy or for hard copy or for both. Selected ORF publications as well as advertising space in one issue of the ORF Energy News Monitor are offered as introductory free gifts for Commercial Sector only. |
|
Yes! I/we would like to receive copies of the weekly ORF Energy News Monitor for a period of ______year(s). I/we shall be entitled to one hard copy along with the option of soft copies to a list of e-mail addresses provided by me/us for the period of subscription. I/we also note that I/we shall get select ORF publications brought out during the period of subscription free. Name……………………………Address…………….………………………Telephone……………………Fax………………….E-mail………………… Please find enclosed cheque/Bank Draft No.........................dated …………………drawn at New Delhi for Rs.........……….favouring ‘Observer Research Foundation’ Please fill in this form and mail it with your remittance to ORF Centre for Resources Management OBSERVER RESEARCH FOUNDATION 20 Rouse Avenue New Delhi - 110 002 Phone +91.11.4352 0020 extn 2120 (Janardan Mistry) Fax: +91.11.4352 0003 E-mail: [email protected] |
Registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485
Published on behalf of Observer Research Foundation, 20 Rouse Avenue, New Delhi–110 002 and printed at Times Press, 910 Jatwara Street, Daryaganj, New Delhi–110 002.
Disclaimer: Information in this newsletter is for educational purposes only and has been compiled, adapted and edited from reliable sources. ORF does not accept any liability for errors therein. News material belongs to respective owners and is provided here for wider dissemination only. Sources will be provided on request.
Publisher: Baljit Kapoor Editor: Lydia Powell
Production team: Akhilesh Sati, Janardan Mistry & Sabita Agrawal.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
PREV
