Energy News Monitor I Volume VIII, Issue 24

The Week in Review Coal Power Delusion: What Should Be Done…?

Power Delusion: What Should Be Done…?

Ashish Gupta, Observer Research Foundation

he problem of power crises is looming over Indian power consumers. But there is some good news for some states like Assam, Meghalaya, Nagaland, Mizoram and Tripura where Oil & Natural Gas Corporation’s gas based thermal power project will start power generation by April next year other states have severe problems. Chhatisgarh the mineral rich state is to stay power cut free state for the next twenty years in spite of providing cheap energy to the consumers. It is planning to add 3000 MW capacity every year. But not every state has the same story: Arunachal Pradesh’s hydro electric power plant in Ranganadi is facing acute shortage of water which has badly affected power supply in the central sector of the state. Power utilities are also trying their best to reduce power supply gap. NTPC which has scrapped their tender of importing 4 million tons of coal because of certain technical specification have again floated the same for 14 of its power project. In another move, CIL is also looking for suitable partner for its proposed 1600 MW plant in Orissa. CIL entrusted PFC with this work. In spite of so many initiatives taken by utilities India is still heading for huge power deficits because of regulatory and fuel supply issues and in some cases developers have consciously slowed down the progress on the ground of uncertainties surrounding the sector. Due to this the consumers especially in the industrial sector may have to face huge losses. Consumers who are even not sure of getting assured supply of power in the coming years will have to burn their pockets due to an order by tribunal which states that there will be hike of 20% in electric tariff every year. But power producers are of the view that this move will help in reviving power sector which is burdened with huge losses. Since the problem is acute blaming the government for all this is not justifiable. Indian power consumers must start paying for what they consume rather than demand subsidies and this is the only solution to the power crisis.

Oil & Gas

Democracies, Dictatorships and Oil Prices

Lydia Powell, Observer Research Foundation

nce again India is anticipating a crude oil ‘supply disruption’. Sanctions on Iran imposed by the United States and its allies is believed to carry not just a price risk but also a volume risk as far as India is concerned as some of India’s refineries are critically dependent on Iranian crude. MRPL, a unit of state explorer Oil and Natural Gas Corp, is the largest buyer of Iranian crude at 142,000 barrels per day (bpd). Essar imports 110,000 bpd, state-owned Hindustan Petroleum Corp Ltd 65,000 bpd and Indian Oil Corp 50,000 bpd. India is Iran’s second largest customer after China accounting for over 12 percent of Indian crude imports. Does all this mean that India would be better off not being dependent on Iranian crude? Not really. India can always get the oil it wants during a crisis but the problem is simply the price it has to pay. The rise of the market has changed the manifestations of a crisis. In the pre-market era, volumes led crisis. Now price constitutes the crisis. When sanctions are imposed on Iran by the United States and its allies the price of oil would rise sharply and the market would make no distinction between barrels that were part of an uninterrupted flow and barrels that were bought to cover for a shortfall. Even if all of India’s oil barrels were bought from countries that are not subject to disruptions, once the short term scramble for barrels is over India would be in no better position than a country which had all its barrels from countries subject to disruption. Securing supply lines is no longer a dominant issue as it was in the seventies and before. That change has also made it difficult to tell what a crisis actually represents. When OPEC meets to set production ceilings, it alters volumes in the oil supply chain which technically constitutes a crisis. The Gulf War also disrupted oil supply chains and affected prices but impact of the Gulf War on price was short lived compared to the impact of the OPEC production ceilings. A dramatic increase in volume of consumption by a large country like China on account of economic growth or an increase in consumption in North America and Western Europe on account of severe weather conditions can also have an impact on price. Technically demand pressures and OPEC meetings could have a greater impact on price than dramatic events like the Gulf War. Sanctions on Iran may have a more lasting impact on oil supply chains than the Gulf War but the effect of the sanctions may not be any different from that of an OPEC production ceiling decision or that driven by demand pressures. In this light, should the Government of India be more concerned about events such as sanctions on Iran because they represent a clear disruption than it is about changes in market fundamentals or OPEC production decisions which may have an equal if not larger impact on prices? If no, should India’s responses be centered on fluctuations caused by other developments given that these are far more common than war or politics?

Renewable Energy

Renewable Energy Demand and Dominance

Sonali Mittra, Observer Research Foundation

ast week, China and Japan signed a bilateral agreement for energy conservation and environmental protection. This comes as no surprise given China’s strategic goal to increase its energy production to meet its growing demand and utilizing Japan’s technological advancements makes perfect sense. However, what is interesting is that countries like Scotland are showing deep interest in developing cooperative relationship with China to strengthen new energy technologies as well. So, on one hand, where China has successfully captured the solar energy market, despite the brewing trade conflict with USA, China is already looking beyond their strong domestic industry to expand their wind energy market in United States and across Europe. Certain trade ‘protectionism’ is being maintained by China to reduce their critical dependency on the external markets. Cooperation with Scotland and Japan comes as a clear indication of the strategic planning of China to develop its research and development potential, energy efficiency and export capacity. Also, what was attention-grabbing this week was the revelation by cleantech data provider which specified that more cleantech venture capital was invested in China in the latest quarter than any other country except the U.S. This is an appealing trend to observe given China’s history of trailing as one of the least active jurisdictions for cleantech investment since the category’s inception in 2002. Such swift developments and progress made by China definitely calls attention from the emerging economies to keep up their pace. India for instance, is missing in debate of global cleantech manufacturing market. Although recently, Ministry of New and Renewable Energy has been proactive in taking strong measures to boost up our manufacturing capacity for export. MNRE has circulated a proposal according to which turbines made by companies that sell more than 15 megawatts of machines in India without establishing an “adequate manufacturing facility” may be uprooted at their owners’ cost and will face “heavy” penalties. This if enforced, would change the face of the Indian wind energy market.

Note: Inertia of Petroleum Product Prices: Cost and Consequences (Part III) will be continued in next issue.

Security of Global Oil Flows: Risk Assessment for India (part II)

Lydia Powell, Observer Research Foundation

Continued from Volume VIII, Issue No. 22…

State led Disruptions to Oil Flow

t is widely argued that maritime power is necessary to secure the flow of imported energy (particularly oil) which could potentially be interrupted by State led actors for geo-political reasons. This perspective is derived from traditional geo-political and mercantilist or cold-war frameworks. After the First and Second World Wars, ensuring the supply of oil through ownership and control were seen as critical factors that determined national security. A series of oil supply disruptions in the 60s and 70s reinforced this perception: during the Suez crisis in 1957, oil tankers were prevented from using the Suez Canal through which 1.2 million barrels of crude was carried each day. A major pipeline carrying half a million barrels of crude from Iraq through Syria was also sabotaged and exports of Middle Eastern oil to Britain and France were blocked.[1]

In 1967, the sweeping victory of Israel over Egypt and Syria led several Arab States to impose an embargo on the United States and its allies. The Arab embargo of 1973 when the Organization of Arab Petroleum Exporting Countries (OAPEC) imposed an oil export boycott of countries viewed as being sympathetic to Israel reduced Arab oil production by 4.3 million barrels per day between September and November 1973 representing a 7.8 percent fall in world production.[2] Oil prices increased by nearly 300 percent on the spot market. Following the Iranian revolution and Iran’s conflict with Iraq in 1979, world oil supply dropped by 7.2 percent.[3] In the immediate aftermath of the Iranian shut down, spot market prices spiralled up to $ 23 per barrel which in today’s prices would be over $ 100 per barrel. The series of oil supply disruptions that threatened nations between 1950 and 1980 framed energy security primarily as an ‘oil supply’ or as an ‘oil import’ problem. This perception continues to dominate the interpretation of energy security in many countries including India, despite the fact that the factors that drive the oil market today are very different from the factors that drove the market three decades ago.

Oil supply disruptions have proved to be failures as instruments of economic and military policy. State led supply disruptions or embargoes are economically inefficient as supply disruptions do more harm to producers than they do to consumers.[4] While oil embargoes cannot single out specific nations as targets (because oil is a globally traded and easily transportable commodity), trade sanctions for most other goods (which do not have global market) can be imposed on specific oil producing nations that industrialised nations want to punish for purely political reasons. Target countries can easily circumvent the embargo by swapping customers and suppliers, buyers or by diversion of shipments and trans-shipments. The possibility of trade sanctions by oil importers (industrialised countries) against nations that impose oil embargoes substantially increase the long term economic cost of embargoes for producing nations.

Arab nations lost millions of dollars in oil revenue during the supply disruption of the 1970s and export of Arab oil did not physically stop for more than few hours following the aggression.[5] Economic recession and inflation that followed the sustained oil price increases substantially eroded the value of oil producing country wealth. In the 1970s, inflation shaved off over 40 percent of the real value of OPEC assets and despite the huge transfer of wealth from the industrialised world to OPEC nations between 1974 and 1978, OPEC’s terms of trade with industrialised world worsened. In this period, the official price index of marker crude rose during this period from 100 to 116.6 while the price index for manufactured goods imported by OPEC (in USD and weighted by the share of each industrial nation in OPEC imports) rose from 100 to 150.[6]

OPEC producers are aware that a significant production cut would increase oil prices by a higher proportion than a supply disruption can and thus protect revenues of oil producers.[7] However an oil production cut is not a sustainable strategy for economically rational oil producers as it will only offer short term gain. In the long run, oil revenues will decline because importing countries will use all available means, from energy efficiency to fuel substitution to reduce demand. Furthermore, oil producers have fewer degrees of freedom to maneuver than consuming countries because they have little else of value to trade apart from hydrocarbons they possess.

Oil market behavior since the rise of OPEC fails to indicate that the feelings of producing countries towards consuming countries affect their production decisions.[8] No producing country however hostile to consuming countries has deliberately avoided higher income by reducing production. Historically, embargoes have also proved to be military failures. Countries under the 1970s oil embargo continued to supply Israel with arms and military equipment and Israel did not return land it conquered in 1967.[9]

Oil embargoes do not really succeed in stopping the physical flow of oil. Even during the embargo of the 1970s, the actual physical interruptions in oil flow was minimal. The price of oil increased on perceptions of impending shortfalls in supply and panic buying by consuming countries at the spot market played a significant role in increasing the prices.

In fact, the upward revision in the posted prices of OPEC in 1973 followed the cue from the relatively small spot market.[10] Again in 1979, the embargo was not entirely responsible for supply shortages or for the price volatility. Major oil companies invoked the force-majeure clause to cut back supplies in their long term contracts and this was responsible for significant price increases in the spot market.[11] While hikes in spot market prices had little impact on consumer prices or supplies given the relative size of the spot market at that time, the staggering price levels encouraged OPEC price hawks to claim a right to extra revenues that spot market speculators were appropriating.[12]

FIGURE 2: MAJOR OIL SUPPLY LOSSES

Source: International Energy Agency

The 1973 embargo lasted for about five months and in this period the United States and its allies bought oil from non-Arab producers and the customers who were displaced by the entry of United States and its allies bought oil from Arab nations.[13] In other words, United States and its allies managed to circumvent the effect of the embargo with some ‘juggling’ between suppliers and customers. It was no more possible for OPEC to keep its oil out of the USA than it was possible for the USA to keep its embargoed grain out of Soviet silos as simple re-routing through the international system circumvented the embargoes. [14]

The real significance of supply disruptions by Persian Gulf oil producers in the 1960s and 70s lay in their symbolism.[15] Supply disruptions were used by the Arab governments to ‘defuse domestic problems, contain civic disorder, absorb public anger over the surprise defeat by Israel, show solidarity to Arab causes and deprive extremists of an excuse to damage oil installations’.[16]

Even if we assume that there is a significant possibility of a State led oil embargo in the future, there is little that the maritime power of single consuming country can do to alter its economic implications. The price of crude oil will increase in the global market well in advance of the oil embargo and the only factor that would increase energy (or oil) security during such as eventuality would be the capacity to pay the reigning price of oil.

to be continued…

Views are those of the author

Courtesy: Paper presented at SLOC Conference

Data Insight

Retail Selling Price of Petrol (in ` /Litre) - Various Cities - April to November, 2011

City	1-Apr-11	1-May-11	1-Jun-11	1-July-11	16-Nov-11	% increase w.r.t July
Ahmedabad	62.29	62.29	67.52	67.86	70.82	4.4
Aizwal	56.25	56.25	64.69	62.44	65.22	4.5
Ambala	58.54	58.54	63.56	63.88	66.63	4.3
Bangalore	65.64	65.64	71.09	71.37	74.36	4.2
Bhopal	62.79	62.79	68.19	68.48	71.44	4.3
Bhubaneshwar	58.34	58.34	63.28	63.58	66.29	4.3
Chandigarh	59.08	59.08	64.16	64.48	67.27	4.3
Chennai	61.94	61.94	67.21	67.49	70.38	4.3
Dehradun	60.62	60.62	65.81	66.09	68.18	3.2
Delhi	58.38	58.38	63.36	63.69	66.42	4.3
Gangtok	57.77	57.77	62.55	62.83	66.54	5.9
Guwahati	61.48	61.48	66.77	67.05	69.95	4.3
Hyderabad	65.17	65.17	70.68	70.94	73.94	4.2
Jaipur	62.14	62.14	67.45	67.73	70.66	4.3
Jalandhar	64.98	64.98	70.44	70.79	74.04	4.6
Jammu	61.46	61.46	66.44	66.70	69.44	4.1
Kohima	57.97	57.97	62.99	63.27	66.11	4.5
Kolkata	62.52	62.52	67.70	68.00	70.84	4.2
Lucknow	62.16	62.16	67.41	67.70	70.65	4.4
Mumbai	63.10	63.10	68.32	68.61	71.47	4.2
Panjim	59.25	59.25	64.31	63.56	66.29	4.3
Patna	60.62	60.62	65.78	66.07	68.90	4.3
Puducherry	56.63	56.63	61.50	61.82	64.50	4.3
Port Blair	50.54	50.54	56.26	56.54	58.54	3.5
Pune	63.18	63.18	68.50	68.81	72.13	4.8
Raipur	59.91	59.91	65.09	65.39	68.24	4.4
Ranchi	58.49	58.49	63.47	63.76	66.50	4.3
Shillong	57.77	57.77	62.77	63.05	67.52	7.1
Shimla	61.07	61.07	66.26	66.52	69.52	4.5
Srinagar	63.13	63.13	68.11	68.37	71.25	4.2
Trivandrum	61.76	61.76	65.90	66.19	68.06	2.8

Note: Bold figures denotes the minimum and maximum for this table.

Source: Petroleum Planning & Analysis Cell & other sources

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

Reliance Industries closes 4 wells in KG-D6 gas field

November 29, 2011. Reliance Industries has shut four wells in its flagship KG-D6 gas fields off the east coast due to high water ingress leading to output dipping to 41 million cubic meters per day. The Dhirubhai-1 and 3 (D1&D3) gas fields and the MA oilfield in the KG-DWN-98/3, or KG-D6, block in the Bay of Bengal produced 41.06 mmcmd of gas. Of the 18 wells drilled, completed and put on production on D1&D3, four wells -- A2, B1, B2 and B13 -- had to be shut or closed due to high water cut/sanding issues.

Reliance Industries for arbitration on Oil Ministry’s D6 spend cap

November 29, 2011. Reliance Industries has initiated arbitration proceedings against the government to ensure it is able to fully recover costs of developing the KG-D6 block as uncertainty over the matter was hindering further development of the gas-rich block. Reliance took the step after being exasperated by a series of obstacles and criticism it has faced from various authorities involved in the block that has India's largest gas field. The company said its decision to initiate arbitration was triggered by reports that the government will not allow it to recover the entire cost of developing the field because output was much lower than anticipated. Reliance is concerned about the economics of the field as its shareholders expect good returns from the risk capital deployed in the block.

Bharat Petroleum, Videocon strike more gas off the shore of Mozambique

November 28, 2011. A natural gas exploration project off the shore of Mozambique has revealed additional reserves, according to Bharat Petroleum Corporation (BPCL), which holds a stake in the venture along with Videocon. The new discovery would add to the estimated reserve range of 30 to 50-plus trillion cubic feet of natural gas in place and this would be beneficial to the large-scale liquified natural gas (LNG) project which is under development.

NGRI finds gas hydrate reserves along east coast of India

November 23, 2011. Huge reserves of gas hydrates have been identified along the east coast of India by scientists from the National Geophysical Research Institute (NGRI). The initial estimation of the reserves are said to be at least 1,500 times the country's current fossil fuel reserves - coal, oil and natural gas put together. The hydrate reserves are found in Krishna-Godavari basin, Mahanadi basin and Andaman region.

Downstream

Hindustan Petroleum delays Vizag units shutdown to next year

November 28, 2011. India's Hindustan Petroleum Corp has delayed plans to shut units at its 166,000 barrels per day (bpd) Vizag refinery in southern India for maintenance to next year. HPCL had plans to shut a 60,000 bpd crude unit, a visbreaker unit and a fluid catalytic cracker at its Vizag plant for 45 days for regular maintenance from November. A crude unit at HPCL's 130,000 bpd Mumbai refinery is scheduled to be shut for at least 15 days in the January-March quarter.

Former Sunoco refinery to be reassembled in India

November 28, 2011. A 62-year-old petroleum refinery near New Jersey in the US, which was shut down in 2009 because of high levels of pollution, is all set to reopen as new in Visakhapatnam. The Andhra Pradesh government signed a MoU with an Indian company - Amerind Petroleum Pvt Ltd promoted by not- so- familiar industrialist Syed Badruddin - to reassemble the refinery at a cost of ` 11,196 crore. According to the MoU, Amerind, in the first phase, would set up the refinery on a turn- key basis in collaboration with American Industrial Corporation, its technical collaborator in the US, by relocating an existing refinery at a cost of about ` 2,525 crore, and with an initial refining capacity to process 7.50 million tonnes of crude oil per annum. It will produce the entire range of petroleum products. In the second phase, the refinery will be expanded to have a total refining capacity of 15 million tonnes per annum, along with a petro- chemical complex at an additional estimated cost of ` 8,611 crore.

The Amerind refinery project would get a special incentive package under the state's industrial policy. At the time of signing the MoU, Badruddin had described himself as a successful technocrat entrepreneur with 36 years of experience in manufacturing industries in Andhra Pradesh.

Rupee drop sends refiner yields to year high

November 25, 2011. Borrowing costs for India’s biggest state refiners have surged to the most in more than a year as the rupee’s plunge to a record low and a cut in local gasoline prices widen their losses. The yield on Hindustan Petroleum Corp.’s rupee bonds due 2013 rose 29 basis points to 9.63 percent. That on Indian Oil Corp.’s 2015 dollar debt jumped 57 basis points to 4.38 percent. The rate on the 2017 debt of China Petroleum & Chemical Corp. fell 49 basis points to 3.42 percent. Indian refiners cut gasoline prices for the first time in three years on Nov. 16 as inflation sparked protests in a country where more than 75 percent of people live on less than $2 a day. The rupee’s 14.3 percent tumble this year, the biggest in the region, and oil’s 13 percent gain in London have raised import costs for the world’s fourth-largest oil consumer.

Indian Oil, BP to evaluate joint plant in India

November 23, 2011. BP and Indian Oil Corp (IOC) have signed an initial agreement to consider setting up a 1-million-tonne-per-year acetic acid plant and related gassification facilities in western India.

The plant in Gujarat state will employ BP's Cativa XL technology and use petroleum coke feedstock from Indian Oil. The project is targeted to commence in 2015, and a joint feasibility study is under way. BP acquired a 30 percent stake in 23 oil and gas blocks owned by India's Reliance Industries, in a $7.2 billion deal.

Petrol price hike in India higher than in Pakistan, Lanka, Nepal

November 23, 2011. Petrol in India is not just costlier than in the neighbouring countries Pakistan and Nepal, but its price has also seen higher increase. Even after the reduction of ` 2.22 per litre in rates, petrol at ` 66.42 a litre in Delhi is costlier than ` 48.64 a litre in Pakistan. Whereas in Sri Lanka it is ` 61.38 per litre and ` 65.26 per litre in landlocked Nepal. Incidentally, Nepal does not have a refinery and imports all its requirement from India. Petrol in India is costlier than in its neighbouring countries and in the US, primarily because of high taxes. Petrol in Delhi costs ` 66.42 per litre as against ` 44.88 a litre price in the US.

Transportation / Trade

India's October fuel sales up 3.8 per cent

November 25, 2011. India's local oil product sales in October rose an annual 3.8 per cent to 12.05 million tonnes. The country's diesel consumption last month rose an annual 7.9 per cent while gasoline sales were up 5.4 per cent.

Indraprastha gas keen to buy BG's Mahanagar Gas Ltd stake

November 24, 2011. BG Plc is keen to sell its 49.75% stake in Mumbai based gas retailer Mahanagar Gas Ltd (MGL), giving energy companies to expand their presence in the Indian gas market, where Gail India, the Adani Group and the joint venture between Reliance Industries and global major BP are eyeing rapid growth. Delhi based city-gas distributor Indraprastha Gas, which is jointly promoted by Gail and Bharat Petroleum Corporation, is keen to pick up BG's stake in MGL. Gail is also a contender for BG's 65% stake in Gujarat Gas Co Ltd.

Policy / Performance

States reject centre demand to cut LNG taxes

November 29, 2011. The states have rejected the centre's demand to lower taxes on natural gas and liquified natural gas, dashing the hopes of gas-based fertiliser and power plants of securing low-cost fuel. PM Manmohan Singh had made a case for giving these commodities a declared goods status that could have brought down VAT to 5% in most states.

Government seeks Parliament nod for ` 300 bn payout to oil companies

November 25, 2011. The government sought approval of Parliament to pay ` 30,000 crore in fuel subsidy to state-run oil firms for the first half of current fiscal. Finance Minister Pranab Mukherjee presented in Parliament second supplementary demands for grants of ` 56,848.46 crore, more than half of which was for compensating state-owned oil firms for selling diesel, domestic LPG and kerosene at government-controlled prices. Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum (BPCL) had lost ` 64,900 crore in revenues on selling diesel, domestic LPG and kerosene below cost in April-September period. Of this, the government will make good less than half of it through cash subsidy after Parliament approves the supplementary demands for grants. Upstream oil firms like ONGC have already paid ` 21,633 crore to make up for one-third of the revenue loss. The remaining ` 13,267 crore would have to be absorbed by the three fuel retailers. The government had not given any subsidy to the fuel retailers. It had only made a promise of ` 30,000 crore payout for the first half. The delay in the release of the subsidy led to the three retailers posting huge net losses.

Keep fuel subsidy limited to target class: Ex PNGRB Chief

November 25, 2011. Benefits of the fuel subsidy should remain limited to a target class, as higher class has a tendency to use subsidised cheaper fuel more, former chairman of Petroleum & Natural Gas Regulatory Board (PNGRB), L Mansingh, said. In India, 30 per cent of the total population does not have access to commercial energy, while 33 per cent even don't use energy, which is against the principle of equitable distribution of energy, Mansingh said. Terming the government's fuel pricing policy and selling of subsidised fuel as "not proper", he said, "Nowadays, sale of diesel vehicles is on the rise, despite the fact that they are costlier than petrol vehicles. This is because of the tendency of higher class to use cheaper fuel. Therefore, we should have a system, so that, benefits of the subsidy remains limited to a target class, Mansingh said. He said that energy security was critical for India, if it wanted to realise its dreams and hence it should take integrated view of the energy scenario in the country and promote use of all kind of energy resources.

No plans to reduce taxes on petroleum goods: FinMin

November 25, 2011. The government said that it is concerned about frequent hike in prices of petroleum products but does not plan to reduce taxes on oil goods. The government in the recent past has increased prices of petroleum goods including petrol, diesel, LPG and kerosene several times in view of the rising prices of crude oil in the international market. Taxes account for nearly 45 per cent of the retail price of petrol.

India's oil refining capacity to rise over 60 per cent by 2016

November 24, 2011. India's oil refining capacity will rise by over 60 per cent to 310.86 million tonnes by 2016-17 after new refineries in Orissa and Punjab are commissioned. India currently has surplus oil refining capacity, with fuel demand pegged at 141.785 million tonnes in 2010-11. The fuel demand is projected to rise by 4-5 per cent per annum in the 12th Five-Year Plan period (2012-17).

Petroleum Ministry may block domestic gas supply for merchant power plants

November 24, 2011. The Petroleum Ministry has proposed that domestically produced natural gas should not be supplied to power plants that do not sell electricity to state-run power utilities at regulated rates. Domestic natural gas is available at one-third the price of imported LNG. Against the demand of 230 million cubic metres per day, domestic production amounts to 142 mmcmd, including about 42 mmcmd from Reliance Industries' eastern offshore KG-D6 fields. KG-D6 gas and other domestically produced gas is priced at $4.20 per million British thermal units, while imported gas in its liquid form (called liquefied natural gas, or LNG) costs upward of $13-14 per mmBtu.

Government rejects Reliance Industries' six D-6 claims

November 23, 2011. The government has refused to recognise six discoveries of Reliance Industries in its D-6 block saying the claims were not backed by prescribed tests, dealing a blow to the company's plan to boost sagging production by developing new fields in the block. The directorate general of hydrocarbons' (DGH) decision is based on a clause in the production sharing contract, which requires the operator of the block to conduct costly, conventional tests to check the actual flow of gas, while the company opted for a modern technique using a "modular dynamic tester" which is much faster and significantly cheaper.

Government initiates steps to assess shale gas prospectively: Oil Ministry

November 23, 2011. The government has initiated steps for the assessment of shale gas prospectively in selected on land basins and the country has access to required technology. Shale gas exploration and exploitation requires drilling of horizontal wells and multi-stage hydraulic fracturing. These technologies are also used in conventional oil and gas exploration. After success of shale gas exploration in the US, several countries including India have initiated steps for exploring shale gas potential of their sedimentary basins.

POWER

Generation

Adani Power to augment capacity to 5,500 MW by March next year

November 28, 2011. Adani Power said it expects to increase its capacity to 5,500 MW from present 3,300 MW by March next year. Earlier, the power producer had said that it expects to have operational capacity of about 6,000 MW this fiscal, out of the planned 16,500 MW capacity under development.

Electricity generation loss of 5.3 billion units in April-October, 2011

November 28, 2011. Power producers witnessed a generation loss of 5.3 billion units in the April-October period due to coal supply shortfalls. Coal-based power generation in the country registered a growth of 7.7 per cent during the same period last year.

The government is taking various steps to solve the problem. The government is also conducting coordinated operation and maintenance of hydro, thermal and nuclear and gas-based power stations to optimally utilise the existing generation capacity.

MoEF defers nod to Hinduja coal power project in AP

November 26, 2011. Hinduja National Power Corporation (HNPC), which has revived its 1,040 MW coal-fired power project near Visakhapatnam in Andhra Pradesh after a gap of more than a decade, has suffered a setback with the Ministry of Environment and Forests (MoEF) deciding to defer the coastal regulation zone (CRZ) approvals to the project following alleged violations by the company. This makes Hindujas the third independent power producer in Andhra Pradesh to hit snags after the ministry acting against the power projects of Nagarjuna Construction Company (NCC) and East Coast Energy, owing to violent agitations by the local farmers and fishermen.

Transmission / Distribution / Trade

GVK plans to sell 20 per cent in Singapore arm to fund Australian projects

November 28, 2011. The GVK Group, which runs airports, roads and power plants in India, is on course to offload a minority stake in its Singapore subsidiary to raise funds for its Australian projects. The group plans to deploy the proceeds from the 20% stake sale in GVK Coal Developers for meeting its equity commitments to develop coal mines, a railway line and a seaport in Australia where GVK Coal acquired majority stake from the Hancock group in September for $1.26 billion. The Australian acquisition was also aimed at securing long-term coal supplies for GVK's power projects in India.

NTPC may join coal logistics JV of CIL, SCI

November 28, 2011. Power major NTPC is likely to join the coal logistics joint venture proposed by Coal India (CIL) and Shipping Corporation of India (SCI). Coal India and SCI are banking on NTPC, a major buyer of imported coal. A firm commitment will help the coal major to finalise import contracts with suppliers. NTPC aims to import 16 million tonnes of coal during the current year to meet its feedstock requirement.

KEC International sees 20 per cent uptick in revenue

November 27, 2011. Buoyed by the growth prospectus in the power sector in domestic as well as international markets, infrastructure EPC major KEC International said it is eyeing 20 per cent annual growth in revenue.

KEC, the flagship company of the RPG Group, which operates in five verticals, including power transmission, power cables, telecom, railways and water, has businesses in 40 countries and an order book of over ` 8,400 crore.

Transmission is the core business of the company with nearly 70 per cent revenue contribution. While 60 per cent of its orders come from the international market, 40 per cent is contributed by the domestic market.

Discoms sever supply deals as tariffs soar

November 25, 2011. High power tariff is forcing distribution companies to surrender secure supply contracts, a domino effect triggered by the rising cost of imported coal and high fixed costs of power projects.

Delhi has surrendered power supply contracts for the next four to five months with six projects of state-run National Thermal power Corporation (NTPC) citing high tariff. Tariff from NTPC's Jhajjar project in Haryana touched a high of ` 13.3 a unit in May and ` 12.4 a unit in September.

While Delhi power distributor BSES blames tariff rise for the surrender of contracts, an NTPC said it is the utility's inability to purchase and trim down losses that has forced it to do so. Tariff for NTPC projects is determined on a cost-plus margin basis, which helps the company pass on the burden of fuel price increase to consumers, a facility not available to private companies that have won projects under competitive bidding.

NTPC is set to import 16 million tonne of coal, which will account for the 10% imported coal it blends with the domestic input. Blending imported coal, which currently costs about $120 a tonne in the international market, raises power tariff by 30-40 paise a unit.

Policy / Performance

Power sector has potential to create 600,000 jobs in 2012-17

November 29, 2011. The country's fast growing power sector has the potential to create as many as six hundred thousand jobs during the 12th Five-Year Plan period (2012-17). The power sector, vital for good economic growth, is projected to see a capacity addition of about 1,00,000 MW during 2012-17 period. India has embarked on massive capacity addition plans in the power sector, which is expected to require about $300-400 billion investment during the 12th Five-Year Plan. Presently, the country has an installed power generation capacity of over 1,60,000 MW.

EGoM meet on UMPP bidding norms in Orissa

November 26, 2011. The EGoM is likely to meet on December 5 and approve certain changes in the bidding norms for the upcoming UMPP in Orissa and Chhattisgarh.

The new bidding norms are likely to accommodate fuel availability risk, price risk due to change in prices of the fuel in coal-exporting countries, etc.

Private power companies seek changes in bidding guidelines for projects

November 25, 2011. Private power producers have approached the government for changes in the extant bidding guidelines for electricity generation projects to insulate themselves from financial risks. The power companies have requested the ministry to tweak certain bidding guidelines. A committee has been set up in the Ministry of Power to examine the proposals received from stakeholders.

The installed power generation capacity in the country stood at 1,82,690 MW as of October 31, 2011. Thermal power projects with a combined capacity of 78,545 MW and 15,707 MW of hydro power projects are under construction in the country and are likely to be commissioned during the 11th (2007-12) and 12th Five-Year Plan (2012-17).

In order to attract foreign investment in the power sector, up to 100 per cent FDI is permitted in power generation (except atomic plants), transmission, distribution and power trading projects.

2 Reliance Infrastructure-backed discoms given notice by DERC

November 25, 2011. Cracking the whip, Delhi's power regulator DERC served notices on two Reliance Infrastructure-backed discoms asking why their licenses should not be suspended for failing to pay huge dues to generation and transmission companies, which may plunge Delhi into darkness.

The notices were issued to BRPL and BYPL following a communication from Delhi government which asked the regulator to take urgent steps to ensure uninterrupted power supply in Delhi as the two discoms owe around ` 3,000 crore to a number of generation and transmission companies.

DERC said a number of regulatory notices have been issued by various generation and transmission companies stating that power supply to the two discoms will be curtailed unless large outstanding dues are cleared by them. The combined consumer base of BYPL and BRPL is around 27 lakh and the two companies distribute power in nearly 70 per cent of total areas in the city.

PFC sets up monitoring cell to keep watch on loan-book

November 25, 2011. Power Finance Corp (PFC) has set up a project monitoring cell to keep an eye on the stressed loan portfolio. Monitoring of the projects would be in a broader sense to see the debt servicing capacity of borrowers.

Currently, financial institutions are worried about the advances extended to electricity boards of Tamil Nadu, UP, Rajasthan, Bihar, Haryana, Madhya Pradesh and Punjab, which according to rating agency Crisil, are the most vulnerable.

Power demand in Haryana to rise 50 per cent by 2015

November 23, 2011. The state government's main wing for power procurement, Haryana Power Purchase Centre (HPPC), has revealed the figures pertaining to peak power demand in Haryana over the next few years.

A growing urban and industrial power demand, especially in cities like Gurgaon, would be the main contributing factor in this hike. Current peak demand in the state, registered by the HPPC, is 7385 MW, which by the year 2015, might shoot up to 10,699 MW. The biggest leap in peak demand might be seen by next year, with a possible hike of over 1,800 MW.

According to the HPPC, the peak demand for the state for 2012-2013 would be around 9267 MW. Although the state government's power infrastructure is being upgraded, many are left wondering whether the supply figures would be sufficient.

Haryana generates around 3230.5 MW in its own thermal power plants, and depends on other states in the country for the rest of its energy requirements.

India plans 10 new nuclear projects by 2017

November 23, 2011. Ten new nuclear power projects are planned during the 12th Five Year Plan (2012-17) period. However, no new nuclear power projects will be launched in the remaining period of 11th Five Year Plan ending March 2012. Besides, seven nuclear power reactors with a capacity of 5,300 MW are under construction. The announcement comes even as government faces opposition from civil society and NGOs over the Kudankulam nuclear plant in Tamil Nadu. India presently has 19 nuclear power plants, which generate 4,560 MW of electricty.

INTERNATIONAL

OIL & GAS

Upstream

Mozambique gas bounty elevated to 30-50+ tcf

November 29, 2011. Deepwater wells off Mozambique have encountered an estimated 30 tcf to more than 50 tcf of natural gas in place, said Anadarko Petroleum Corp. Anadarko, said its Barquentine-3 appraisal well encountered more than 662 net ft of gas pay in two high-quality Oligocene-aged fan systems, greatly expanding the estimated recoverable resource range to 15 tcf to 30+ tcf.

Downstream

Ghana gas plant to be ready by Dec 2012

November 28, 2011. Construction work is expected to commence on the country's first gas infrastructure, including a gas processing plant. This will represent a major boost to government's plan of accelerated infrastructure development in 2012.

The Company signed a Project Implementation Agreement with a Chinese firm, Sinopec International Petroleum Service Corporation, for the development of the early phase gas infrastructure in the Western Region. Ghana should have a functioning gas processing plant and infrastructure, linking the FPSO to the processing plant and to Aboadze and Prestea, through Esiama by December 2012.

Circular debt delays Pakistan refinery project

November 24, 2011. As the work on multibillion dollars Khalifa Coastal Oil Refinery (KCR) project slows down due to circular debt, Prime Minister Yousaf Raza Gilani will take up matter of delay before Abu Dhabi government, a move to expedite work on proposed refinery located in Baluchistan province. Khalifa Refinery, located in Balochistan will be the largest oil refinery of the country with 250,000 barrels per day oil refining capacity and will cost $6 billion. The project is a joint venture between Pak Arab Refinery Limited (Parco) and International Petroleum Investment Company (IPIC).

Transportation / Trade

Russian govt approves financing for Transneft oil pipeline

November 25, 2011. The Russian government has made a decision on financing the construction of the Zapolyarye-Purpe oil pipeline with OJSC Transneft funds. Transneft set up a 100% subsidiary, OJSC Zapolyarye, to build the oil pipeline. The company will issue supplementary shares in favor of TNK-BP, Gazprom Neft and Lukoil. The 500-kilometer Zapolyarye-Purpe pipeline, with capacity to ship up to 45 million tonnes of crude oil a year, will transport oil from fields in the Yamal-Nenets Autonomous District and northern Krasnoyarsk territory. Around 1,200 km of supply lines will need to be constructed for the project. Zapolyarye-Purpe will connect fields on the Yamal Peninsula to the Eastern Siberia-Pacific Ocean pipeline.

TAP, Albania start talks on gas pipeline project

November 24, 2011. Albania and Trans Adriatic Pipeline AG (TAP) started to negotiate the building of a pipeline to transport gas from the Azeri fields to Italy via Greece and Albania. Through the pipeline, TAP will transport natural gas from the Caspian region via Greece and Albania and across the Adriatic Sea to southern Italy and further into Western Europe.

The project was aimed at enhancing security of supply as well as diversification of gas supplies for the European markets, TAP said. The project is designed to expand transportation capacity from 10 to 20 bcm per year. TAP also envisages physical reverse flow of up to 80 percent and the option to develop natural gas storage facilities in Albania to further ensure security of supply, the company said.

Gas transportation will begin near the Greek-Turkish border at Komotini, cross Albania and the Adriatic Sea, and connect with the Italian natural gas distribution system near San Foca in Italy.

Kenya, Tanzania to build natural gas pipeline

November 23, 2011. Plans to construct a natural gas pipeline between Tanzania and Kenya are underway to help ease the supply of cooking gas in the country. East Africa Community revealed that the feasibility study on the project has been completed recently and construction of the 550 KM pipeline linking Dar-es-Salaam-Tanga and Mombasa will start soon.

Policy / Performance

Chevron to brief U.S. officials on Brazil oil spill

November 28, 2011. Chevron Corp will brief U.S. offshore drilling regulators on its recent oil spill off the coast of Brazil. Chevron was drilling in deep waters off the coast of Rio de Janeiro when it spilled about 2,400 barrels of oil into the ocean. The company has blamed the spill on wrongly estimated pressure and rock strength in the oil reservoir it was targeting.

Iraq signs final $17.2 billion shell gas deal

November 28, 2011. Iraq signed the final $17.2 billion deal with Royal Dutch Shell PLC and Mitsubishi Corp. to capture and process flared gas from southern Iraqi oil fields. The joint venture, which includes Iraqi state South Gas Co., is expected to help Iraq make use of more than 700 million cubic feet a day of gas that is being burned and help generate much-needed electric power.

Bangladesh planning commission Okays gas pipeline project

November 28, 2011. The Planning Commission (PC) has given its consent to a 90-kilometre-long gas pipeline project aimed at supplying Liquefied Natural gas (LNG) from the proposed terminal at southern Maheshkhali to the national grid.

The state-owned Gas Transmission Company Ltd. (GTCL) has sought approval of Tk 10.25 billion project to install the pipeline, which will have a capacity for transmission of 500-million cubic feet of gas (mcf) per day.

Exxon Kurdistan foray tests Iraq's centralist resolve

November 24, 2011. Exxon Mobil's venture into Iraqi Kurdistan challenges Prime Minister Nuri al-Maliki's resolve against growing regional separatism and tests the investment strategy of the oil majors in Iraq.

Exxon is the first major oil company to test the waters by signing for six blocs with the Kurdistan Regional Government (KRG) in north Iraq, which is locked in a feud with the Arab-dominated central government over territory and oil rights.

New gas infrastructure projects focus on French, Belgian, Dutch markets

November 24, 2011. Five new projects have been identified in the gas infrastructure investment plan 2011-2020 by transmission system operators (TSOs) in northwest Europe.

The new projects focus on enhancing flows in the French, Belgian and Dutch markets. The investment plan aims to provide information on the different projects that are currently planned for the region. It will also provide a basis for assessing to what extent the investment projects answer regional market needs.

Saudi Arabia says four killed in unrest in oil-rich east

November 24, 2011. Four people were killed and nine wounded in clashes between Shiite Muslims and Saudi Arabian security forces in the oil-rich Eastern Province. Two people were killed during an exchange of gunfire at the funeral of two others who died in the al-Qatif region. Saudi Arabia, the world’s largest oil exporter, and other Gulf countries sent troops to Bahrain in March to quell the unrest. A Bahrain commission investigating the crackdown released a report saying that the government used “excessive force” against protesters and that five people died as a result of torture.

BP gags in-house lawyer on oil spill lawsuits

November 23, 2011. Oil giant BP has succeeded in preventing the public airing of comments from a senior in-house lawyer about lawsuits stemming from the Gulf of Mexico oil spill, as part of a legal claim of discrimination.

Seas off Arctic island may hold oil bonanza: Norway

November 23, 2011. The waters off a tiny Norwegian Arctic island may hold vast amounts of oil and gas, the Nordic country's authorities said, as they prepare to open the zone for exploration by oil firms.

China’s oil demand to surpass IEA forecasts

November 23, 2011. China’s oil consumption by 2015 will be “significantly” higher than International Energy Agency forecasts, surging 35 percent from this year, as economic expansion spurs fuel demand. The world’s biggest energy user may need 13.6 million barrels a day of fuel, versus an IEA estimate of 10.5 million, based on growth in China’s energy demand versus income levels in the past decade.

POWER

Generation

Ameren in discussions to sell Illinois power plant to FutureGen

November 28, 2011. Ameren Corp. is in talks to sell parts of its Meredosia power plant to a group of coal-mining companies and utilities seeking to build a $1.65 billion project to capture and store carbon-dioxide emissions. The FutureGen Industrial Alliance Inc. is in talks to buy “portions” of the Illinois power plant, which will be altered to allow for the capture of carbon emissions. Ameren, based in St. Louis, will not continue with the project after this year.

Zambia seeks to upgrade Kariba North Bank power plant

November 26, 2011. Zambia, Africa’s largest copper producer by output seeks to upgrade its energy infrastructure to ensure it meets the increasing demand for electricity chiefly from the mines.

Presently, the Zambian government has realized the essence of upgrading its power capacity and seeks to secure adequate fundings from the cooperating partners and through public private partnership to ensure the power demand is sustained as the country seek to grow its economy by an average eight percent per annum.

Jordan, China agree to $1.25 bn shale-fired power plant

November 23, 2011. Companies from China, Jordan and the UAE signed a $1.25 billion agreement to build a shale oil-fired 900-megawatt power plant in Jordan. Jordan has about 40 billion metric tons of shale oil reserves and plans to increase the share of energy it generates from these deposits to 14 per cent of the country’s total requirements.

Mizuho, Mitsubishi UFJ to finance $1.6 billion Oman power plant project

November 23, 2011. Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. are among five Japanese lenders hired to arrange a loan for Marubeni Corp.'s $1.6 billion power plant project in Oman. A financial package would allow Marubeni to proceed with its first power project in Oman as it expands electricity generation capabilities abroad. The project, owned by Marubeni, Chubu Electric Power Co. and two other partners, entails construction of a natural gas-fired power plant in Sur along the Gulf of Oman, with capacity totaling 2,000 megawatts. Commercial operation is slated to begin in April 2013.

Transmission / Distribution / Trade

Vattenfall sells part of Hamburg energy network grid to city

November 29, 2011. Vattenfall AB said it will cooperate with Hamburg on power distribution and district heating by selling part of the utility’s grids to the northern German city for 463.1 million euros ($618 million). Hamburg plans to acquire 25.1 percent of the company’s district heating and power grids in the city, which together are valued at about 1.9 billion euros.

Policy / Performance

Brazil to offer three-tiered power pricing to boost efficiency

November 24, 2011. Brazil will introduce an optional program under which customers will pay more for electricity when demand is high and less when it’s low as part of an effort to become more energy efficient.

The three-tiered White Rate program will reduce prices for some customers and overhauls the single-tariff system that’s been in place since the 1980s. Offering different rates at different times will give homes, businesses and light industries an incentive to decrease power consumption, cutting the risk of overloading Brazil’s grid and reducing the need for new power plants.

Hanford nuclear waste’s safety may not be assured by U.S., Markey says

November 23, 2011. The U.S. Energy Department may not have adequately responded to safety questions and allegations of retaliation against whistle-blowers at a nuclear-waste treatment plant in Washington state, Representative Edward Markey said.

Renewable Energy / Climate Change Trends

National

Government planning to launch nation mission on biomass

November 29, 2011. Aiming to give a boost to renewable energy, government said it is planning to launch a national mission on biomass on the lines of the programme to promote solar energy in the country. The project will be on the lines of Jawaharlal Nehru National Solar Mission (JNNSM) under which government is planning to produce more than 20,000 MW of power from solar energy resources by the year 2020.

Suzlon, Orb Energy shortlisted for Zayed Future Energy Prize for sustainable innovators award

November 29, 2011. Suzlon Energy and Indian SME Orb Energy are among 14 companies shortlisted for this year's Zayed Future Energy Prize for top sustainable energy innovators. Suzlon has been shortlisted for the award in the large corporations category, while Orb Energy is in contention for the award in the SME and NGO category.

Suzlon Energy devises two-pronged growth strategy

November 28, 2011. Suzlon Energy plans to focus on emerging markets, while German subsidiary REpower Systems will cater to developed economies as a part of a new strategy that aims to boost profits by increasing market share and cutting costs.

L&T mulling foray into wind-based power

November 28, 2011. Larsen and Toubro (L&T) is planning a foray into wind-based power projects. L&T Finance Holdings is of the view that the renewable energy sector has huge potential globally and there will be opportunities for companies to enter this area.

Coromandel wind signs contract with Suzlon for Rajasthan project

November 28, 2011. Coromandel Wind Energy Ltd. signed a contract valued at ` 4.7 billion with Suzlon Energy Ltd. for a 75.6 megawatt wind power project in the northern Indian state of Rajasthan.

Reliance, Tata face energy caps in $3 billion efficiency market

November 25, 2011. India has set targets for companies including Reliance Industries Ltd. (RIL) and Tata Steel Ltd. (TATA) on energy consumption reductions in preparation for a $3 billion-a-year market for trading efficiency credits. Companies have been notified of their targets and audits of their energy consumption have started, said Bureau of Energy Efficiency. The program aims to lower fossil fuel use in the world’s third-largest energy consumer by forcing eight industries to reduce their power needs. Companies that save more power than required earn credits which they can trade on power exchanges to others seeking to meet their targets. Other companies with facilities falling under the program include NTPC Ltd. (NATP), Hindalco Industries Ltd. (HNDL), Essar Steel Ltd., JSW Steel Ltd. (JSTL) and Reliance Power Ltd. (RPWR), according to a list from the bureau. By using energy more efficiently and reducing losses, India may avoid building 10,000 megawatts of new power capacity, saving 1 trillion rupees ($19 billion), according to the power ministry. That’s the equivalent of about 9 new nuclear reactors. Over three years, the energy-efficiency program should reduce power consumption across the eight industries by about 5 percent, according to Bureau of Energy Efficiency. India became the world’s third-largest energy consumer after topping Russia in 2009, the International Energy Agency said in its annual outlook this month.

Renewable energy ministry seeks 10-fold increase in fund outlay

November 24, 2011. The renewable energy ministry has sought a 10-fold increase in fund outlay for the next five years. The ministry estimates requirement of ` 40,000 crore to ramp up its capacity to 30,000 MW by 2017. An outlay of ` 4,000 crore was earmarked for development of renewable energy in the 11th plan period of 2007-12. India's present renewable energy capacity is over 20,000 MW of which wind farms alone generate 14,000 MW while the rest is shared between biomass, small hydro and urban-industrial waste. Solar energy capacity currently stands at 35 MW.

Global

China solar companies ask SolarWorld to withdraw complaint

November 29, 2011. A Chinese solar trade group asked the U.S. unit of SolarWorld AG to withdraw its petition that the Obama administration impose duties on China imports. Chinese solar makers do not want a trade war and are fighting against SolarWorld, not the U.S.

Toyota aims to take on EVs with plug-in Prius hybrid

November 29, 2011. Toyota Motor Corp said it would start taking orders for its first plug-in hybrid car, the Prius PHV, in Japan, touting it as the world's most practical green car and aiming to steal thunder from pure battery-powered vehicles.

Panasonic to supply batteries for Toyota Prius hybrid

November 29, 2011. Panasonic Corp said it would supply lithium ion batteries for Toyota Motor Corp's Prius plug-in hybrid vehicle, whose Japan launch was announced the same day. The announcement marks the first time for Panasonic to supply its lithium-ion batteries for a mass production plug-in-hybrid vehicle. Panasonic bought out subsidiary Sanyo, a big player in rechargeable batteries, in a bid to shift focus from consumer electronics to energy and environmental technology. Toyota, the pioneer of gasoline-electric hybrid cars, said it aims to sell 35,000 to 40,000 of the Prius PHV cars annually in Japan, where deliveries will begin January 30.

China solar executives aim to avoid trade war with U.S.

November 29, 2011. Heads of China's solar industry said they strongly oppose an investigation by the U.S. into Chinese-made solar panels and asserted that competitive advantages alone explain their success on the global market. However, in a statement from the China Chamber of Commerce for the Import and Export of Machinery and Electronic Products, which represents the solar industry, they added that the firms did not intend to start a trade war with the U.S. industry.

REC to temporary halt some capacity at Heroeya plant

November 29, 2011. Renewable Energy Corp. (REC), a Norwegian maker of solar components, will start shutting manufacturing capacity because of slumping demand.. Market prices for modules, wafers and polysilicon have dropped about 10 percent, 30 percent and 35 percent respectively since Oct. 1, REC said. Inventories are increasing for all its products and unless solar demand improves, REC will make further adjustments to production levels.

Japan aims to start bilateral carbon offset program in 2013

November 29, 2011. Japan aims to start a program to work with companies to reduce greenhouse gas emissions in developing countries in 2013, according to a new set of action plans to be introduced at the climate talks in Durban. The government has been preparing the bilateral offset credit mechanism program to cut emissions by establishing energy management systems and forest protection projects with Japanese companies such as Toshiba Corp. and Marubeni Corp. in developing countries. This is the first time that Japan has said when it wants to start the program. Japan opposes an extension to the greenhouse gas restrictions when the Kyoto Protocol treaty expires next year. China and India say setting new limits under the treaty is essential to keep the talks alive.

U.S. targets American Indian lands for renewable-energy projects

November 29, 2011. The U.S. Interior Department plans to require the U.S. Bureau of Indian Affairs to approve leases for renewable-energy projects on land held by American Indians unless the bureau can show why the proposals should be rejected. Under the proposed rules, the bureau would have to approve proposed projects unless it finds a “compelling reason” not to do so. The bureau would have 60 days to evaluate industrial development and renewable-energy plants, and 30 days to consider residential leases. The rules are intended to accelerate the approval of leases for solar projects, wind farms, commercial development and residential use on 56 million acres of American Indian lands, about the size of the state of Utah. They don’t cover leases for oil, natural gas, mining or other sub-surface development projects.

Deutsche cuts 2011 EU CO₂ price view by a third

November 29, 2011. Deutsche Bank slashed its year-end price forecast for European Union carbon permits to 6 euros a tonne from 9 euros due to a worsening economic outlook and an oversupply of permits in the period 2013 to 2020. The bank expects EU Allowances (EUAs) to trade in a range of 5 to 7 euros in the first half of 2012 as the impact of recession is felt and the first 200 million EUAs are sold to raise money for renewable energy technologies from a special reserve called the NER300. The EU emissions trading scheme (ETS) caps carbon dioxide (CO₂) emissions from around 11,000 power generators and industrial plants in 30 European nations, covering around half of the region's carbon footprint.

BMW, Toyota to work on electric car batteries

November 29, 2011. German carmaker BMW and Japanese rival Toyota Motor are planning to cooperate on research into lithium-ion batteries for electric cars. It was also reported over the weekend that the two were in talks for a partnership on 'green' vehicles, with BMW set to provide the Japanese firm with diesel engines.

EPA said to give power companies options to delay pollution rule

November 29, 2011. The Environmental Protection Agency would let power plants apply for more time to comply with new pollution standards under a rule sent to the White House for review. The EPA stopped short of granting an across-the-board delay in implementing the rules, as sought by companies such as American Electric Power Co. (AEP) and Southern Co. (SO). Instead, it’s designed to offer guarantees that the EPA rule won’t endanger electric reliability by forcing companies to shut plants that burn coal.

The rule, estimated by the EPA to cost $11 billion in 2015, is one of the most expensive proposed by President Barack Obama’s administration. It is set to be issued next month and take effect in 2015. The EPA says cutting emissions of mercury, arsenic and other hazardous materials at coal-fired plants would save lives and create 9,000 more jobs than would be lost, as companies invest billions of dollars to install pollution-scrubbing systems or build cleaner natural-gas plants. The White House budget office is reviewing the EPA’s proposal, and staff members are meeting with utilities, power producers, union leaders and environmentalists to discuss the regulation and the schedule for compliance.

This year set to be 10th warmest on record, UN says as climate talks start

November 29, 2011. This year will probably be the 10th warmest on record, and the hottest featuring the La Nina phenomenon that brings cooler waters to the surface of the Pacific Ocean, the World Meteorological Organization (WMO) said. The global average temperature through October was about 0.41 of a degree Celsius (0.74 of a degree Fahrenheit) above the average of 14 degrees from 1961 to 1990, the WMO said in a statement released at the United Nations climate talks in Durban, South Africa. That means the 13 warmest years on record have been in the last 15 years, the organization said. Arctic sea ice shrank to its second-lowest extent and lowest volume on record in 2011, according to the WMO. Emissions are still rising. The WMO said that the concentration in the atmosphere of the three main man-made greenhouse gases blamed for global warming, carbon dioxide, methane and nitrous oxide, rose to records in 2010.

China Solar makers say U.S. petition will hurt consumers

November 29, 2011. A group of Chinese solar makers said a U.S. petition to impose duties on imports from China would hurt consumers. The U.S. solar industry benefits from Chinese solar exports and said a probe by the U.S. Department of Commerce will hurt the environment. The U.S. unit of Bonn-based SolarWorld AG and six other companies asked the Obama administration to impose duties on Chinese imports they say are being dumped with low-cost credit from state-run banks. A U.S. International Trade Commission panel will vote on whether there’s a case to continue with a probe.

Bayer CropScience targets non-GMO wheat traits

November 29, 2011. Bayer's CropScience unit plans to develop new heat- and drought-resistant wheat traits over the next decade without the use of genetic modification. But Europe, the world's top wheat producer, must overcome its fear of agricultural innovation such as genetically modified (GM) crops or risk undermining its own food security. The German company has announced a series of deals and partnerships to increase its access to wheat seed traits, or "germplasm," as part of its program to develop improved varieties of the world's biggest cereal crop by planted area.

French court annuls ban on growing Monsanto GMO maize

November 28, 2011. France's highest court overturned France's ban on growing a strain of genetically modified maize (corn) developed by U.S. biotech firm Monsanto, saying it was not sufficiently justified. The decision follows a ruling by the European Court of Justice (ECJ) in early September saying France had based its decision to impose a moratorium on the growing of Monsanto's insect-resistant MON810 maize on the wrong EU legislation. Suspension or banning measures ought to be taken at European Union level unless a member state can demonstrate a potentially serious risk to human or animal health or the environment, the courts said.

Can carbon for the price of a pizza save the planet?

November 28, 2011. Climate negotiators meeting in South Africa face fresh worries over saving the planet from global warming now that a ton of carbon trades at the price of a pizza. A European steel plant producing a ton of steel pays as little as $12 for the resulting carbon emissions, spelling trouble for Europe's carbon emissions trading scheme, the world's largest.

U.S. negotiator says goal of $30 billion in climate aid within reach

November 28, 2011. Rich countries are set to deliver $30 billion in short-term climate change-financing and remain committed to find $100 billion a year by 2020. The U.S.’s “fast-start” funds for fiscal 2011 totaled $3.1 billion, up from $2 billion a year earlier. The U.S., the largest historical greenhouse-gas emitter, has promised to pay its “fair share” of $30 billion from 2010 to 2012. The money helps boost U.S. credibility on environmental issues at a time when many nations are skeptical about its commitment to fight global warming. Of the $3.1 billion, $1.8 billion was appropriated by Congress and $1.3 billion is allocated by development finance and export credit agencies.

EU’s Hedegaard says CO₂ patterns blur rich-poor nations division

November 28, 2011. The European Union urged developing nations at a global climate summit to step up their pledges to reduce carbon-dioxide emissions and contribute to an EU plan to agree a global deal that could enter into force by 2020.

Efforts to cut pollution by the 27-nation bloc and other countries that support the extension of emission-reduction targets under the Kyoto Protocol beyond 2012 aren’t enough to keep the increase in global temperature below 2 degrees Celsius, EU Climate Commissioner Connie Hedegaard said as negotiators from 190 countries started talks in Durban, South Africa.

Kent says Canada won’t make second commitment to Kyoto emissions accord

November 28, 2011. Canadian Environment Minister Peter Kent said his country won’t commit to new targets under the Kyoto Protocol for combating climate change.

Kent said Canada’s signing of the original Kyoto agreement in 1998 was a “blunder.” While Canada ratified the agreement in 2002, the government has said it will not meet the commitments it made under Kyoto to reduce emissions between 2008 and 2012.

Last chance to save Kyoto deal at climate talks

November 27, 2011. Countries will make a last ditch effort to save a dying Kyoto Protocol at global climate talks starting aimed at cutting the greenhouse gas emissions blamed by scientists for rising sea levels, intense storms and crop failures. Kyoto, which was adopted in 1997 and entered into force in 2005, commits most developed states to binding emissions targets. The talks are the last chance to set another round of targets before the first commitment period ends in 2012.

EU says Kyoto extension requires roadmap to new climate deal

November 27, 2011. The European Union said any agreement to extend the Kyoto Protocol’s limits on greenhouse gases requires all other polluters to promise when they’ll sign up to a legally-binding treaty curbing fossil fuel emissions. The 27-nation bloc said it accounts for about 11 percent of global emissions and that it can’t act alone on emissions blamed for damaging the climate. Kyoto’s curbs expire next year. Japan, Russia and Canada have said they won’t sign up to further commitments under the pact.

Japan's Kansai Electric to build 2 solar plants

November 27, 2011. Japanese utility Kansai Electric Power Co said it has decided to build two solar power plants in Fukui prefecture in western Japan, with total capacity of 1 megawatt, by March 2015. The plants, each with capacity of 500 kilowatts, are projected to generate a total 1 million kilowatt-hours of electricity a year, equivalent to reducing 300 tonnes annually of carbon dioxide emissions. Japan is overhauling its energy policy after the Fukushima crisis shattered the public's confidence in atomic safety.

Mercedes-Benz cuts CO₂car emissions

November 26, 2011. Mercedes-Benz has achieved a step forward in reducing the levels of carbon dioxide emitted by its cars, as it seeks to catch up to 'greener' rivals such as BMW and Audi and meet EU requirements. Mercedes, part of the Daimler group, has been introducing engines that use less fuel, seven-change gearboxes, automatic motor stop-start systems and improved aerodynamics to cut fuel consumption.

Saudis seek to ensure Climate Talks Won’t Hurt OPEC oil income

November 25, 2011. Saudi Arabia, OPEC’s largest crude producer, will seek to ensure climate talks in Durban, South Africa, won’t unfairly limit the exporter group’s income.

Saudi Arabia and its OPEC partners are being asked to bear too much of the burden of cutting greenhouse-gas emissions because their economies depend on oil and natural-gas revenue.

Toyota, BMW to partner on green technology

November 25, 2011. Toyota Motor Corp is in talks with BMW AG for a partnership in environmental vehicles. Under the proposed agreement, the German automaker will provide diesel engines, most likely 2-liter versions for midsize cars, for Toyota's passenger vehicles sold in Europe, where its sales fell 9 percent in 2010.

Australia seeks climate accord by 2015 after passing carbon tax

November 25, 2011. Australia, the world’s largest exporter of coal, is seeking to have a global climate change agreement in place by 2015 after this month passing legislation to charge polluters for their carbon emissions. Climate change talks in Durban, South Africa, will be “one stepping stone along the path” to establishing a global plan. Australia will impose a carbon price on the country’s 500 largest polluters starting in July 2012. The Australian legislation will require about 500 companies to pay A$23 ($22.30) a metric ton for their emissions. The plan will raise A$10 billion a year by 2015, when the government-set price gives way to a cap-and-trade system.

Renewable power trumps fossils for first time

November 25, 2011. Renewable energy is surpassing fossil fuels for the first time in new power-plant investments, shaking off setbacks from the financial crisis and an impasse at the United Nations global warming talks.

Electricity from the wind, sun, waves and biomass attracted $187 billion compared with $157 billion for natural gas, oil and coal. Accelerating installations of solar and wind power led to lower equipment prices, making clean energy more competitive with coal.

EU opens investigation into U.S. bioethanol subsidies

November 25, 2011. The European Commission launched an investigation over complaints that U.S. bioethanol exporters are using unfair state subsidies to sell their fuel to Europe at illegally low prices.

The investigation follows a formal complaint by EU bioethanol industry association ePURE in October, which alleged that tax credits in the United States allow its exporters to cut their EU selling price by about 40 percent.

If the EU authorities find evidence of unfair trade practices, it could result in import tariffs on millions of liters (gallons) of bioethanol imports from August 2012.

Denmark aims for 100 per cent renewable energy in 2050

November 25, 2011. Danish government proposals called for sourcing just over half of its electricity from wind turbines by 2020 and all of its energy from renewable sources in 2050. The government also invited the parties in parliament to negotiations on the proposal to shape energy policy to 2020. Denmark will take over the presidency of the European Union for six months from January 1 and aims to promote ambitious climate and energy goals for Europe.

Now China to probe U.S. renewable energy support

November 25, 2011. China announced an investigation into government policy and subsidy support for renewable energy, weeks after the United States decided to probe sales of Chinese-made solar panels.

The announcement by the Commerce Ministry also comes after China's solar industry association said that Chinese solar companies may ask Beijing to launch an anti-dumping and subsidy probe into imports of U.S. polysilicon, the raw material used to make solar cells.

Chile seeks to boost renewable energy sources

November 24, 2011. Chile will seek to boost renewable energy sources by more than 2,000 megawatts to reduce dependence on fossil fuels. Chile aims to source 20 percent of its energy needs from renewable sources including hydroelectric dams.

EPA accepts environmental petition on fracking chemicals

November 24, 2011. The Environmental Protection Agency said it will weigh rules requiring disclosure of the chemicals used in hydraulic-fracturing fluids.

Companies such as Halliburton Co. and Schlumberger Ltd., which supply oil and natural-gas producers, should be required to reveal substances used in the mining technology known as fracking.

China, U.S. sign agreement to expand clean energy cooperation

November 24, 2011. China and the U.S. signed a memorandum to expand cooperation on clean energy. The U.S. Trade and Development Agency will provide capital to clean and efficient energy project in China.

Carbon at record lows, confidence at rock-bottom

November 24, 2011. European Union carbon permits and U.N.-backed credits collapsed to record lows, extending sharp price slide as fears of a slowing economy sapped demand in the markets that are heavily supplied with emissions units.

Carbon crash spurs price bottom debate

November 24, 2011. European and international carbon prices plunged to record lows, prompting a debate about how low prices could go. Carbon prices have lost half their value since June, knocked down by flagging demand for emissions permits and credits as the euro zone's crisis deepens.

The European Union's carbon market, which was valued at $120 billion, is also oversupplied with hundreds of millions of permits. It caps the emissions of some 11,000 power generators and industrial plants in 30 European countries.

Mitsubishi unveils electric van, to supply to Suzuki

November 24, 2011. Mitsubishi Motors Corp, the world's first automaker to mass-produce purely electric cars, launched a battery-run light commercial van as it aims to keep the lead in expanding the use of niche zero-emissions vehicles.

The Japanese automaker has sold about 17,000 electric vehicles (EVs) globally so far, including those supplied under PSA Peugeot Citroen's brands, since the launch of the tiny i-MiEV in mid-2009. Mitsubishi Motors said it also plans to supply the new electric Minicab-MiEV van to Suzuki Motor Corp from February 2012 in a move that it said would help lower costs through economies of scale.

Japan lures Toshiba to help curb carbon

November 24, 2011. Japan is planning a series of bilateral technology-transfer agreements to offset its greenhouse gases, another step away from the international treaty signed in 1997 to limit emissions worldwide. The government is developing a “bilateral offset mechanism” to cut carbon dioxide output by establishing energy management systems, forest protection and high efficiency coal- fired power projects in developing countries with Japanese companies such as Toshiba Corp. and Marubeni Corp.

Vestas will build nacelles at Maersk’s former ship yard lindoe

November 24, 2011. Vestas Wind Systems A/S said it will lease 15,000 square meters at Lindoe Industrial Park in Denmark, the former ship yard of A.P. Moeller-Maersk A/S, to assembly a “limited” number of turbine nacelles for its new offshore wind turbine, the V164-7.0 MW.

U.K. boosts funding for ‘green deal’ by 200 million pounds

November 24, 2011. The U.K. government said that 200 million pounds ($310 million) in “Green Deal” funds will be made available to encourage energy-saving improvements in homes and shield consumers from higher costs.

JPMorgan World Bank Veteran leaves, saying CO₂ ‘died’

November 23, 2011. Odin Knudsen, the JPMorgan Chase & Co. (JPM) managing director for environmental markets, resigned as the largest U.S. lender scaled back its climate-related practice. Knudsen, 68, left the New York-based lender by mutual agreement after it became apparent the U.S. was not going to join a global system to trade carbon emissions, undermining the bank’s business plans.

South African minister says climate summit should focus on future treaty

November 23, 2011. A climate summit starting in South Africa won’t produce a legally binding international agreement and should instead seek to lay the groundwork for a future treaty, Environment Minister Edna Molewa said.

EU CO₂ underperfomance strains traders' faith

November 23, 2011. European Union carbon prices fell to a new 33-month low, suggesting a loss of confidence and faith in the world's biggest cap-and-trade scheme as it continued to underperform energy and commodities markets, analysts said. Prices of benchmark EU Allowances have halved since the start of June, as a combination of a slowing economy and an oversupply of carbon permits erodes demand.

Emissions cuts off course to halt global warming: UNEP

November 23, 2011. Greenhouse gas emissions in 2020 could rise more than forecast to between 6 billion and 11 billion tons above what is needed to limit global warming to 2 degrees Celsius, a United Nations Environment Program (UNEP) report showed. The gap between countries' emissions cut pledges and what is needed to remain under what scientists say is the limit to avoid devastating effects of global warming has widened since its 2010 estimate of 5-9 billion tons as new data emerged, UNEP said.

AfDB pledges $498 mn to Moroccan renewables plan

November 23, 2011. The African Development Bank (AfDB) said it was close to approving 373 million euros ($498 million) in financing for renewable energy in Morocco, which has embarked on one of the world's most ambitious solar energy developments.

Renewable energy becoming cost competitive: IEA

November 23, 2011. Renewable energy technology is becoming increasingly cost competitive and growth rates are in line to meet levels required of a sustainable energy future, the International Energy Agency (IEA) said in a report. The report also said subsidies in green energy technologies that were not yet competitive are justified in order to give an incentive to investing into technologies with clear environmental and energy security benefits.

U.K. energy laws may raise company bills 20 per cent in 2020

November 23, 2011. U.K. energy policies may raise power and gas bills for the heaviest corporate consumers by as much as 20 percent by 2020 as the government promotes measures to curb polluting emissions. Efforts to boost renewable power and put a price on carbon will increase energy bills for the biggest users. Depending on a company’s energy mix, annual charges are projected to rise to as much as 20.9 million pounds ($32.4 million) from 17.5 million pounds.

Brazil wind farms to surpass other energies in bid

November 23, 2011. Wind farms may receive the majority of contracts to sell electricity in Brazil’s next government- organized auction due to a lack of projects using other energy sources. Brazilian power distributors may sign contracts to buy from developers as much as 2,000 megawatts of new capacity during the so-called A-5 auction scheduled for Dec. 20.

Going green, big business hires auditors for proof

November 23, 2011. After Office Depot was picketed over its environmental practices in 2003, the big-box retailer made big changes. It cut off a paper supplier accused of illegal logging. It started tracking its carbon emissions. And, like more and more corporations, it began releasing independent audits of its environmental progress. Eight years later, the company has more recycled products, a smaller carbon footprint and has won praise from conservation groups. Annual environmental audits reinforce all this. Green audits - which for medium-sized companies can easily cost more than $100,000 - are helping a growing number of corporations assert their environmental responsibility in the face of scrutiny from the government, as well as consumers.

Double greenhouse gas goals to rein in global warming: UN

November 23, 2011. Global pledges to cut greenhouse gases need to double by 2020 to contain global warming to 2 degrees Celsius (3.6 degrees Fahrenheit), the United Nations Environment Program said in a report. Current targets at most would slash 6 gigatons (6 billion tons) of carbon dioxide from the predicted 56 gigatons of emissions in 2020 under a “business as usual” scenario. A drop to 44 gigatons, or 6 more, is needed to meet the 2-degree goal, the UN said. The “emissions gap” emphasizes the shortcomings of current action to rein in global warming before envoys from more than 190 countries meet in Durban, South Africa, for two weeks of climate negotiations. The UN also outlined measures in construction, agriculture, power and transportation that could help close the deficit.

[1] Bohi, Douglas R. 1989. ‘Energy Price Shocks and Macroeconomic Performance’, Washington D.C.: Resources for the Future

[2] Hamilton, James. 1999. ‘What is an oil shock?’ University of California

[3] Hamilton, James. 1999. ‘What is an oil shock?’ University of California

[4] Adelman, M.A. 1993. ‘The Economics of Petroleum Supply’. MIT Press.

[5] From a statement by J Moore, US Assistant Secretary of Interior cited in New York Times, June 11, 1967

[6] OPEC

[7] Mabro, R. 2002. The Oil Weapon. The Oxford Institute for Energy Studies. London

[8] Adelman, M.A. 1995. ‘The Genie Out of the Bottle: World Oil Since 1970’ Cambridge. MIT Press

[9] Alhaji, A.F. 2004. The Failure of the Oil Weapon: Consumer Nationalism Vs producer Symbolism in ‘Bridges’ Spring/Summer 2004.

[10] Seymore, I. 2003. ‘OPEC Alternative Strategies & Oil Price Stability’, 8^th International IIES Conference, Tehran, Iran.

[11] Phillips, J.A. 1979. ‘The Iranian Oil Crisis’, The Heritage Foundation

[12] Phillips, J.A. 1979. ‘The Iranian Oil Crisis’, The Heritage Foundation

[13] Taylo, J & Doren, P. 2007. ‘The Energy Security Obsession’ in the ‘The Energy Game’ published by the Eurasian Review of Geopolitics

[14] Bohi, D and Russell, M. 1978. ‘Limiting Oil Imports: An Economic History & Analysis’. The Johns Hopkins University Press, Baltimore.

[15] Adelman, M. A. 1980. Hearing before the Subcommittee on Energy Regulation, U.S. Senate, 96th Congress, 1st Session on ‘Limiting Oil Imports’. (Washington: Government Printing Office, 1980),

[16] Daoudi, M.S. & Dajani M.S. 1984. ‘The 1967 Oil Embargo revisited’, Journal of Palestine Studies’

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