Energy News Monitor I Volume VIII, Issue 25

COAL Import of Coal is Justifiable

Ashish Gupta, Observer Research Foundation

he Indian industrial sector has slowed down but the challenge of reviving it may be difficult as the availability of power is becoming a bigger challenge. Many states have been facing 5 - 6 hours power cuts in a day and the situation is worsening despite measures taken by government to spruce up coal supplies. There was power generation loss of 5.3 billion units in the April – October due to coal supply shortage. CIL current production target has been revised to 440 MT instead of 452 MT.

This clearly shows that CIL will not be able to meet its production target in the year should not come as a surprise, as investors were anticipating that to happen. Even coal ministry also indicating import of coal as a viable option for the power production and are looking to reduce import duty on coal. This will help for sure, but given that domestic coal which is sold at government controlled prices, the import option will still pump up the power costs and companies have to pay more for power.

However, the situation is far beyond one of simply importing coal and making good the shortages. One of the reasons is the fragile health of the power utilities. Rising cost of imported coal along with high power tariff forcing many companies to surrender their supply contracts. In capital itself, many companies have surrendered their supply contracts along with six projects of NTPC. To meets its feedstock requirement NTPC is looking to import 16 MT may join coal logistics joint venture between CIL & Shipping Corporation on India.

On the other hand companies are crawling in making their dues to generation and transmission companies and are under continued pressure of license suspension. Delhi Electricity Regulatory Board had given notices to BYPL & BRPL asking them why their license should not be suspended on account of large outstanding dues to generation & transmission companies. This will be a setback for Delhi and may likely put capital into dark as BYPL & BRPL are serving around 70% of the capital area. The financial distress has reached a point where financial institutions are unwilling to lend more money to the power sector in fear of loosing money.

Considering the situation power producers have also approached the government seeking some changes in the bidding norms that will prevent them from financial risk. There is a positive sign from the government and may likely to approve some changes in the bidding norms which can accommodate fuel supply risk and price risk from coal exporting countries for their upcoming UMPP in Orissa & Chhatisgarh.

Government has also permitted up to 100 % FDI in the power projects to attract more foreign investments in India. This move will definitely help in boosting Indian power sector and also provide relief to the power producers. Considering the situation consumers should have to be ready for the increased tariff which is very much justifiable in the current situation.

OIL & GAS

The Price of Natural Gas in India: Symptom of Systematic Challenges

Lydia Powell, Observer Research Foundation

he Government’s refusal to consider the request to increase the price of gas produced from new discoveries in the KG D 6 block from Reliance Industries Limited is not surprising. The price of energy in India cannot move as one would like it to as it is closely connected to the systematic economic and social challenges that India faces. The inability to price natural gas to signal fundamentals of demand and supply reflects in part the inability of food, fertilizer and electricity prices to signal the same fundamentals. This in turn reflects partly the inability of many in India to secure food, fertilizer and energy that they need, partly the unwillingness of others to pay for the food, fertilizer and energy that they consume and partly the system of rent collection that has grown out of the inertia in energy prices.

Coal, oil and natural gas industries were all born vulnerable to market instability and thus were subject to regulation world wide. While interventions in the coal industry were originally demanded by coal workers and that in the oil industry demanded by the oil industry, interventions in the natural gas sector were always demanded by consumers of natural gas given its status as a natural monopoly at the point of sale. India is not an exception to this rule. Since production of natural gas began almost three decades ago, the industry has been subject to continuous compensatory regulation skewed in favour of consumers. As a result, a host of unproductive distortions in resource allocation have been created within and outside the sector. The ‘permanent receivership’ status of entities in the fertilizer and power sector is a product of these interventions. Such distortions do exist in most areas of economic activity and though they are undesirable on efficiency grounds they may be justified as a means of attaining other legitimate social goals of policy. In the case of natural gas it is hard to find legitimate policy goals. Regulation in this sector has consisted merely of incremental decisions influenced heavily by existing patterns of gas consumption and by the false assumption that all social wrongs in the society can be set right by controlling the price of energy.

Price control is equivalent to rent control and the effect will be no different from urban rental housing - shortages. It will simulate demand without helping supply. Exploration for oil & gas does not follow a utility function in the sense that an increase in investment does not necessarily mean an increase in supply as it is in other industries. Exploration for gas is a game of change and probability that requires a large appetite for risk. Hydrocarbons beneath the ground are depleting resources and therefore the marginal cost of bringing additional supplies into the market almost always exceeds the average costs. Any approach that does not take into account the marginal cost of bringing in additional supply will stifle risk taking and discovery. Under a controlled price regime, the gap between revenues and replacement costs will widen over time and this will eventually become a disincentive for producers to commit new reserves to purchase contracts for fear of getting locked into an ‘old’ price. Even if regulated prices are set at a high level and allowed a wide margin for flexibility, it cannot approximate marginal prices nor can it provide investments in marginal areas where higher risks are involved.

Those industries which have preferential access to natural gas such as the fertilizer industry are using natural gas in a manner that is economically inefficient because the price signals they will receive are misleading. Those industries without access to gas but willing to pay higher prices such as merchant power plants use other fuels instead thereby distorting the market for power. In the short run, those with access will benefit but in the long run all consumers will suffer because of the reluctance of prospective suppliers to bring gas to the market and because the bargaining process created by regulation will almost certainly result in higher prices for new gas rather than what would have been required under competitive conditions.

Allocation and price control are worse than intervention in the form of subsidies. Subsidies disappear from public minds and require no ongoing political process. Controlling prices and access on the other hand must be done again and again and thus more visible and more accessible to political interests. In such a regime, business entities will be placed in an uncomfortable position of fighting for a position of preference with the Government rather than competing with each other to bring additional supplies at the lowest possible prices. In the long run, this will reduce the country’s very capacity to attain the very goals on behalf of which the system is established, to assure plentiful supplies of energy at the lowest possible cost over the longest possible time.

RENEWABLE ENERGY

Premature Euphoria for JNNSM Batch II

Sonali Mittra, Observer Research Foundation

he unanticipated bidding at the Batch-2 Phase I JNNSM round has been able to provoke a non-historical new feeling about the solar power sector in India. A cut-throat competition was observed for maximum project size of 20 MW, with the lowest tariff bid quoted at ` 7.49/kWh by Solar Direct, a French company. Astonishingly, the average price set to sell photovoltaic electricity was about 30% lower than the global average for solar projects. Green Infra despite being the highest bidder at ` 9.39/kWh, bagged some projects. This range of bidding has shown a sharp decline of about 27.5% from the batch 1 bidding process. Other developers such Welspun - quoted three projects at ` 7.97, ` 8.05 and ` 8.14/kWh; SunEdison at ` 9.28/kWh; Mahindra Bids at ` 9.34/kWh; Sai Sudhir at Rs.8.22/kWh; VS Lignite at ` 8.54/kWh; and Sunborne Energy at ` 8.99/kWh were successfully granted projects.

However, there might be a startling disconnect among the batch 1 project performances, funding flows, bureaucratic imperatives and technical back-boxing. The most plausible reasons for such low costs are the falling solar module prices. Of course, without a doubt, China’s solar manufacturing has found its way to the Indian markets. The global demand and supply of solar panels hugely affected by the loss in the European market are now aggressively pounding on the new markets, like India. Another underlined reason could be the secured financial back-up from the International donors at a competitive rate under the clean energy development fund. To what degree to these factors account for such drastic fall in the costs of the projects is unknown at the moment.

The ideological conceit through this bidding is imperative but it might be too immature to celebrate solar power as a close competitor to conventional energy especially in terms of achieving grid parity. Various reports predicting solar power to reach parity by 2019 might be over-ambitious given that the performance and evaluation results of the first phase are not even known yet. A pre-mature designing of phase II might not be the best practice to achieve the targets highlighted by JNNSM.

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

Lydia Powell, Observer Research Foundation

Continued from Volume VIII, Issue No. 24…

The Case of Chock Points: India and Hormuz Strait

ndia depends heavily on a few oil producers in the Persian Gulf from whom the oil flows through politically volatile narrow sea lanes. OPEC countries dominated by Persian Gulf producers account for over 70 percent of the world’s proved conventional oil reserves and 33.4 mpbd or 40 percent of the output.[1] This means that a large share of the oil that flows into Asia is not only produced by a relatively small number of oil producers in the Persian Gulf but also passes through few narrow straights on the Indian Ocean. Globally over 55 mbpd or 64 percent of the world’s total oil flows through narrow straits commonly labelled ‘chock points’. The top three ‘chock points’ account for 46 percent of the total supply.[2] The most important among these is the Strait of Hormuz which is also critical when it comes to oil supplies to India as roughly 70 percent of its oil imports have to flow through the Strait of Hormuz.

Hormuz is the narrow bend of water separating Oman and Iran and it connects the biggest Gulf oil producers, such as Saudi Arabia, with the Gulf of Oman and the Arabian Sea. Oil tankers carry between 16.5 and 17 million barrels of crude through the narrow channel daily.[3] 90 percent of oil exported from Middle East Gulf producers, equal to about 40 percent of all seaborne oil or 20 percent of total oil traded worldwide flows through the Hormuz.[4] The bulk of this oil travels to Asia, the United States and Western Europe. About three-quarters of Japan's oil imports and about 50 percent of China's pass through this strait.[5] An additional 2 million barrels of oil products, including fuel oil, are exported through the passage daily, as well as liquefied natural gas (LNG).[6] The world's largest LNG exporter, Qatar, ships a total of 31 million metric tones annually through the strait to Asia and Europe; India is among Qatar’s LNG customers.[7] Iran itself exports around 2.4 million barrels daily, most of it via the Strait of Hormuz.[8]

Oil tankers passing through the Hormuz were disrupted during the eight year war between Iraq and Iran, particularly during the tanker war phase which started in 1983.[9] Iraq and Iran accepted a 1984 UN sponsored moratorium on the shelling of civilian targets, and Tehran later proposed an extension of the moratorium to include Gulf shipping, a proposal the Iraqis rejected unless it were to included their own Gulf ports.[10] As Kuwaiti vessels made up a large portion of the targets in these retaliatory raids, Kuwait announced it would seek international protection for its ships.[11] The Soviet Union responded first, agreeing to charter several Soviet tankers to Kuwait in early 1987. Washington, which had been approached first by Kuwait and which had postponed its decision, eventually followed Moscow's lead.[12] In March 1987, the United States offered to reflag 11 Kuwaiti tankers and provide U.S. Navy protection. Kuwait accepted. The United States organized a fleet of frigates, destroyers, and minesweepers in the region to protect shipping.[13] In July 1987, the U.S. Navy initiated Operation ‘Earnest Will’, to provide naval escorts to tankers passing through the Persian Gulf.[14] This temporary disruption of oil flows was not intended to disrupt the flow of oil as the war was being fought over more profound issues between Iran and Iraq.

Historically, Iran has no record of initiating blockades aimed at consuming countries through OPEC or outside it, despite all its anti-west rhetoric.[15] Studies have established that the oil output decisions of Iran are by no means less predictable than the production decisions of Canada or Norway.[16] Iran has built strong trade relationships with Gulf Cooperative Council (GCC) countries across the Strait of Hormuz following global trade sanctions imposed by industrialized countries. This has increased the cost of a blockade for Iran as GCC countries would seek to protect the Strait of Hormuz from being blockaded by Iran. Saudi Arabia along with Kuwait paid for 55 percent of the cost for Operation Desert Storm and it is likely that they will invest in protecting the Strait of Hormuz if necessary.[17]

Iran’s oil sector remains important for its economy even though the share of the oil sector in nominal GDP has declined from 30-40 percent in the 1970s to 10-20 percent currently due to destruction of production facilities during the war and OPEC output ceilings.[18] Oil revenue accounts for the majority of Iran’s export earnings and over 40-60 percent of Government revenue.[19] In 2007 Iran received $ 80 billion in oil revenue accounting for 60 percent of its budget.[20] A lack of sufficient refining capacity also makes Iran a net importer of refined petroleum products which have to flow through the Hormuz.[21]

Despite these very evident deterrents to an Iranian State led blockade of the Hormuz, one cannot rule out the possibility of Iran’s traditional restraint evaporating in the event of a nuclear strike on Iran by the United States or Israel or a humiliating defeat by one of its neighbours in a conventional conflict. Iran would have no choice but to attempt a closure of the Hormuz at least to placate its people. An extended closure of the Hormuz would in theory remove almost 25 percent of world oil supply from the market which is more than twice what was experienced during the 1970s oil crises.

The possibility of Iranian closure of the Hormuz tops the list of global energy security nightmares and needless to say, it has generated countless analysis world-wide. Most of the analyses on such an eventuality look at military capabilities of Iran to carry out a blockade and possible responses from the United States. The broad conclusion is that the threat is real especially if irrationality takes over the current regime but US military superiority will deter or quickly end such a disruption. One exception is a study that argues that Iranian capability to mine ships in the Hormuz is under-estimated while US maritime capability is overestimated and that a possible conflict between Iran and the United States over the Hormuz could be prolonged and damaging.[22] Yet another is a study that argues that the impending threat from Iran to the Hormuz strait is but an information campaign to prepare the operating environment and to shape US coalition and world response.[23] Apart from deterring a possible US attack, the information campaign is also seen to be an instrument to sway US and to a lesser extent global public opinion away from a military strike and as a means to demonstrate to the Iranian public, that their leaders are able to stand up to global powers. The information campaign is also seen to be shaping the oil market in ways that are favourable to Iran. A tight global oil market with little or no excess capacity is sensitive to developments at the margin particularly those originating in the Persian Gulf. This increases the ‘risk premium’ for oil which has been estimated at anything from $ 2 to $ 27 per barrel.[24] This translates into a substantial transfer of wealth from oil importers to oil exporters such as Iran.

FIGURE 3: KEY OIL CHOCK POINTS

Source: Energy Information Administration

to be continued…

Views are those of the author

Courtesy: Paper presented at SLOC Conference

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

DATA INSIGHT

Petroleum Sector Highlights: Revenue to the Government/Subsidies/Under Recoveries

Contribution to Central and State Exchequer by petroleum sector

(in ` Crore)

Particulars	2006-07	2007-08	2008-09	2009-10	2010-11
Customs Duty	10043	12626	6299	4563	24136
Cess On Crude Oil	6899	6924	6758	6559	6810
Excise Duty	51922	54761	54117	62480	68040
Royalty on crude oil and natural gas	2794	3064	3146	3859	3652
Corporate Tax (Income/Fringe Benefit/Wealth Tax)	12153	16319	12031	17935	17146
Dividend to Central Govt.	7963	7646	4504	8066	9807
Tax On Dividend	1362	1850	1077	1864	2354
Profit Petroleum	3462	4152	4710	5471	3610
Others (Includes Service Tax)	666	944	870	982	942
Contribution To Central Exchequer	97264	108286	93513	111779	136497
Sales Tax/VAT	53949	56445	63349	64999	78689
Royalty on crude oil and natural gas	3568	4184	2451	3349	4636
Dividend To State Govt.	22	28	20	17	21
Octroi, Duties (Incl. Electricity Duty)	1891	1683	1941	1888	2163
Entry Tax / Others	525	1105	525	1829	3488
Contribution To State Exchequer	59955	63445	68285	72081	88997
Total Contribution To Exchequer	157219	171731	161798	183860	225494
Note:
All figures are based on data provided by the oil companies.

Source: Petroleum Planning & Analysis Cell

Subsidies by the Central Government

(in ` Crore)

Item	2005-06	2006-07	2007-08	2008-09*	2009-10 (RE)
Total Central Govt. Subsidy	47522	57125	70926	129708	131025
Food	23077	24014	31328	43751	56002
Fertilisers	18460	26222	32490	76603	52980
Pol Products	2683	2699	2820	2852	14954
Other	3042	3630	3428	6127	6239
Pol Subsidy as % of Total Subsidy	5.65	4.72	3.98	2.2	11.41

* Provisional RE: Revised Estimates

Source: Basic Petroleum Statistics, 2009-10

Year wise subsidy on PDS Kerosene & Domestic LPG under Subsidy Scheme 2002

(in ` Crore)

Year	2002-03	2003-04	2004-05	2005-06	2006-07	2007-08	2008-09	2009-10	2010-11
PDS Kerosene	2098.0	2657.0	1147.0	1057.0	970.0	978.0	974.0	955.6	930.6
Domestic LPG	2398.0	3635.0	1783.0	1605.0	1554.0	1663.0	1714.0	1814.4	1973.6
Total	4496.0	6292.0	2930.0	2662.0	2524.0	2641.0	2688.0	2770.0	2904.3

Source: Petroleum Planning & Analysis Cell

Under Recoveries to Oil Companies on Sale of Sensitive Petroleum Products

(in ` Crore)

Sensitive Petroleum Products	2005-06	2006-07	2007-08	2008-09	2009-10	2010-11
Petrol	2723	2027	7332	5181	5151	2227
Diesel	12647	18776	35166	52286	9279	34706
Domestic LPG	10246	10701	15523	17600	14257	21772
PDS Kerosene	14384	17883	19102	28225	17364	19484
Total	40000	49387	77123	103292	46051	78190

Source: Petroleum Planning & Analysis Cell

Subsidy by Govt. & Under Recovery by Oil Companies on PDS SKO & Domestic LPG

(in ` Crore)

Years	PDS SKO			Domestic LPG			Total Subsidy
Years	Fiscal Subsidy by Govt.	by Oil Companies	Total	Fiscal Subsidy by Govt.	by Oil Companies	Total	Total Subsidy
2005-06	1057	14384	15441	1605	10246	11851	27292
2006-07	970	17883	18853	1554	10701	12255	31108
2007-08	978	19102	20080	1663	15523	17186	37266
2008-09	974	28225	29199	1714	17600	19314	48513
2009-10	956	17364	18320	1814	14257	16071	34391
Total	10837	112256	123093	16166	85575	101741	224834

Source: Basic Petroleum Statistics, 2009-10

Under Recovery Reported by Oil Companies During April – Sept 2011

(in ` Crore)

Item	Under Recovery
Diesel	37719
PDS Kerosene	13361
Domestic LPG	13820
Total	64900

Source: Petroleum Planning & Analysis Cell

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

ONGC gives NOC for sale of Cairn India to Vedanta

December 6, 2011. ONGC has given a no-objection certificate to British oil firm Cairn Energy's sale of a majority stake in its Indian unit to Vedanta Resources, paving the way for conclusion of the $8.71 billion deal in the next few days. ONGC, which partners Cairn India in its crown jewel oilfields in Rajasthan and seven other properties in India, has waived its preemption rights over the deal and given a no-objection certificate. ONGC had in September agreed to waive its preemption rights if Cairn India gave a written undertaking to share royalty and pay its share of oil cess on crude oil produced from the Rajasthan fields. ONGC, being the licencee of the Rajasthan block, pays 20 per cent royalty on not just its share of production, but also on the 70 per cent share of Cairn India. It wanted this payment to be treated like other project costs and taxes and recouped from revenues earned from oil sales, a demand opposed by Cairn India.

RIL loses plea for hike in price of gas

December 6, 2011. Reliance Industries has asked for a 50% rise in the price of natural gas produced from new discoveries at its KG-D6 block, but the government has ruled out an immediate price revision and asked the company to reassess the economics of the block. The disagreement will further delay investments needed to increase output from the block, which has fallen by a third to about 42 million standard cubic metres a day (mmscmd).

The satellite fields and another discovery in the block have the potential to produce 24 mmscmd. At the meeting of the block's management committee, Reliance had proposed a price of $6 per unit to make its satellite discoveries viable. But government said the empowered group of ministers (EGoM) had fixed a price of $4.2 per unit up to 2014, making it difficult to accept a new rate, particularly when bureaucrats are scared that any action to help a company would be viewed with suspicion.

ONGC to invest in western offshore

December 2, 2011. ONGC has approved an investment of ` 2,060 crore in the B-127 oil and gas field in the western offshore. B-127 cluster comprises three marginal fields namely B-127, B-157 and B-59. The cluster is located east of Mumbai High with significant hydrocarbon accumulations in multi-layered reservoirs within Bassein and Panna formations. B-55 field discovered in 1978 is further north-east of Mumbai High and B-127. This field has been on production since November 1999, and currently producing about 2.05 million standard cubic meter per day from 9 wells. However, Heera and Mahim formation of B-55 are yet to be developed. The exploratory well B-55-5 in this new area has produced gas from Mukta formation on testing; thus leading to the requirement of its further development. Production from the cluster is scheduled to commence from May, 2014. The B-127 cluster development envisages cumulative production of 1.836 million tonne oil and 2.093 billion cubic meter gas over 10 years and the additional development of B-55 envisages production of 0.155 million tonne oil and 2.583 bcm gas over 13 years.

RIL turns to PM, FM for KG D6 block approvals

December 2, 2011. Reliance Industries (RIL) has told the government that already declining production at its trophy asset, the D6 block in offshore Andhra Pradesh, could plummet drastically if its investment plans are not approved forthwith. RIL officials led by Chairman Mukesh Ambani have met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee over the past few weeks and told them the fate of India's largest hydrocarbon find since the Bombay High discovery of the mid-70s was in peril. RIL had earlier pressed for the approvals to be in place by November 15. The block, which is located in the offshore Krishna Godavari basin, is only accessible for 5-6 months in a year because the area is vulnerable to cyclones.

Downstream

‘RIL followed competitive bidding process for KG-D6’ December 1, 2011. Rebuking criticism over the sale of condensate from its KG-D6 fields to the company's refinery in Jamnagar, Reliance Industries has said it followed a competitive bidding process in which state-owned HPCL was outbid. Replying to the DGH's concerns over the sale of gas condensate from KG-D6 to the Jamnagar refinery, the company wrote saying the sale was done following a transparent competitive bidding system, as envisaged under the Production Sharing Contract. In response to a tender for June, 2011, to May, 2012, sale, the company's Jamnagar refinery in an April 18 bid quoted a price of Brent crude oil price minus $ 20 per barrel. Hindustan Petroleum Corp Ltd (HPCL) submitted its bid quoting a price of Brent minus $25 per barrel.

Petrol gets cheaper by 78 paise

December 1, 2011. Petrol is cheaper by 78 paise per litre in Delhi, belying market speculation of a major price reduction due to a sharp fall of $7 a barrel in international petrol rates. Indian Oil Corp, the biggest fuel retailer in the country said the rupee depreciation had offset gains of falling international petrol prices. The three state oil companies had reduced petrol prices by ` 2.22 a litre last fortnight after the international petrol rates dropped by $5.74 a barrel at an exchange rate of ` 49.32 for $1. Indian Oil, Bharat Petroleum and Hindustan Petroleum said petrol prices would now fluctuate every fortnight. Earlier, state oil firms used to review petrol rates every fortnight but did not raise or reduce its prices in every two weeks under political considerations.

Hindustan Dorr-Oliver gets order from ONGC

November 30, 2011. Hindustan Dorr-Oliver Ltd said that it has got an order worth ` 1.7 billion from ONGC Petro Additions Ltd, to set up a effluent collection and treatment system for ONGC Petro's petrochemical project in Dahej, Gujarat. The firm said the project is expected to be completed in 24 months.

Transportation / Trade

KSIDC has joined hands with GAIL for a JV

December 6, 2011. Kerala State Industrial Development Corporation Ltd (KSIDC) has joined hands with Gail Gas Ltd to set up a joint venture company to implement Supplementary Gas Infrastructure in the State. The JV company formed is Kerala Gail Gas Limited (KGGL). The company approved the business plan prepared for the JV Project. This includes promoting city gas distribution projects, laying of spur line to provide last mile connectivity to bulk/large consumers of natural gas, setting up of CNG stations for KSRTC depots, CNG Stations for boat services, marketing of gas related equipments, setting up of captive gas-based power plants, etc. Kerala Gail Gas Ltd will also set up a Gas Training Institute at Angamaly, near Kochi. For this project, the land will be provided by KSIDC. The Gas Training Institute will be a Skill Development Centre for technicians and others in the natural gas business and will conduct short-term courses for skill development. The company is planning to promote a gas based power plant for the steel cluster at Palakkad, jointly with the Steel Manufacturers, Association. Kerala Gail Gas Ltd will establish CNG Stations for KSRTC buses. The CNG Stations will be established in Kochi first since natural gas will be available here within one year time.

India reviews progress on oil pipeline project with Nepal

December 6, 2011. India and Nepal reviewed the progress on the proposed ` 100 crore pipeline project for supply of petroleum products from Raxaul in Bihar to Amlekhgunj in the neighbouring country. The issue came up for discussion between India's Commerce Secretary Rahul Khullar and his Nepalese counterpart Purushottam Ojha here. The project cost was estimated at ` 84 crore when proposed in 2009. However, it would cost ` 100 crore now. While the project is important for the bilateral trade, it is not yet clear as to how the resources for the same are going to be raised. If implemented, the project is expected to reduce fuel transportation cost by 40 per cent. It will also help the land-locked Himalayan country which often faces fuel shortages. Nepal sought increased level of investments from Indian companies. The issues relating to transit trade also figured in the talks. New Delhi has been complaining that the third country shipments enter Indian markets through Nepal which enjoys preferential trade with India. The bilateral trade between the countries stood at $2.7 billion in 2010-11.

Adani Group likely to go solo in Mundra project

December 5, 2011. Adani Group is planning to go solo on the liquefied natural gas terminal at Mundra port on the west coast as its joint venture partner, Gujarat State Petroleum Corporation, has failed to decide its equity holding in the project. Adani and GSPC had planned to set up the 5 million tonnes per annum (mtpa) LNG terminal at an investment of ` 4,000 crore. The two had signed the shareholders' agreement for equal partnership in the project. But state government-owned GSPC has not firmed up its holding in the project so far. They say bureaucrats are also hesitant to close the deal with a private player because of lack of political will in the government. The joint venture project was expected to cater natural gas to Gujarat, which accounts for one-third of the total demand in India. Gujarat is witnessing steep hikes in the price of natural gas because of lack of cheaper domestic gas and increasing dependence on expensive LNG imported through Petronet and Shell.

MRPL sells 36,000 tonnes jet fuel to Mercuria at weaker levels

December 2, 2011. Mangalore Refinery and Petrochemicals Ltd has sold 36,000 tonnes of jet fuel for January to Mercuria at weaker levels. The refiner sold the jet fuel cargo for loading over Jan. 9-11 to Mercuria at a discount of between $1.55 and $1.65 a barrel to benchmark Singapore quotes. MRPL last sold a similar-sized cargo for loading in late December to Trafigura at a discount of $1.50 a barrel.

Policy / Performance

GAIL secures $100 mn loan from Bank of Tokyo-Mitsubishi UFJ

December 6, 2011. GAIL India Ltd said it has secured a $100 million loan from Bank of Tokyo-Mitsubishi UFJ to part-finance its pipeline expansion plans. The term of the loan is five years. The loan agreement signed now is the first in the series of three tie-ups that GAIL plans to enter into for a total of $300 million in external commercial borrowings. The debt would help GAIL fund ongoing expansion plans and new projects of around $9 billion. GAIL is presently implementing projects to lay 5,500 km of pipelines at an estimated cost of ` 25,000 crore ($5 billion). When completed, the capacity of GAIL's pipelines would increase to over 300 million standard cubic metres per day from 175 mmscmd at present. The company is also doubling the capacity of its petrochemicals plant at Pata, in Uttar Pradesh, from 446,000 tonnes per annum at present to 900,000 tonnes per annum by 2014. GAIL, the nation's largest gas transmission and marketing company, had a debt-equity ratio of 0.17 and Debt Service Coverage Ratio (DSCR) of 9:1 as of September 30, 2011. It currently has a natural gas pipeline network spanning 8,700 km and accounts for 3/4th of gas transmission capacity in the country. GAIL recently acquired its first shale gas asset in the USA. Its wholly owned US subsidiary, GAIL Global (USA), has taken 20 per cent interest in Houston-based Carrizo Oil & Gas Inc's Eagle Ford Shale acreage. GAIL has also set up a wholly-owned subsidiary company, GAIL Global (Singapore) Pte Ltd, in Singapore for sourcing and trading of liquefied natural gas.

Oman keen to invest in India

December 6, 2011. Buoyed by the success of Bina refinery, Oman is keen on investing more in India particularly in the petrochemical sector and is exploring opportunities with Bharat Petroleum Corp Ltd (BPCL). BPCL invited Oman to participate in the company's ` 5,000-6,000 crore petrochemical project at Kochi in Kerala. Oman Oil Co partnered BPCL in the 6 million tons a year Bina Refinery in Madhya Pradesh which was commissioned earlier this year. BPCL's petrochemical project would use feedstock from the company's Kochi refinery and the project is likely to be completed in the next five years.

India plans to invest in foreign LNG plants

December 5, 2011. India plans to invest in liquefied natural gas (LNG) plants in producing countries to help meet growing demand in its own rapidly expanding economy. It is also expanding its LNG gasification capacity and scouting for long-term sourcing of LNG. India buys 7.5 million tonnes a year of LNG from Qatar in long term deals and has also signed long term supply contracts with Australia's Gorgon venture. India needs gas to help power electricity generation, produce fertilisers, for cooking, to run vehicles and for industry. But its imports are curbed by a lack of pipeline infrastructure and LNG import terminals. India's current gas demand at 166 million cubic metres a day (mmscmd) is projected to rise to 443 mmscmd by 2017.

India to award exploration blocks by March

December 5, 2011. India expects to award the oil and gas exploration blocks it auctioned earlier this year to successful bidders by March 2012. India had received bids for 33 of 34 exploration blocks auctioned in its ninth bidding round in March. The government was to evaluate the bids and award the blocks within three months, and the entire process, including the signing of contracts, was expected to complete within four months. The auctions covered eight deep-water blocks, seven shallow-water blocks off both the eastern and western coasts, and 19 land blocks in Gujarat, Rajasthan, Tripura and Assam states. India wants to fully explore its sedimentary basins by 2015, from about 65% explored so far, as it seeks to ramp up output to meet growing energy demand. India seeks to raise crude oil imports from Africa and ship more fuel products there as it is fast expanding its refining capacity. India imports about four-fifths of its crude oil needs. It imported 704,800 barrels of crude oil a day from Africa in the financial year ended March 31, 2011, or about 22% of its total imports. The country is expanding its refinery capacity by 23% to 4.76 million barrels a day by 2013. That would increase crude oil requirement by 800,000 barrels a day, leading to higher demand for imports. The expanded capacity would also help India increase its refined oil product exports to 70 million metric tons a year by 2014, from about 50 million tons last financial year. India exported oil products worth about $40 billion in 2010-11 and that higher shipments would make the country one of the world's major exporters of petroleum products. While India imports some oil products, it is a net exporter of refined oil products.

RIL, oil ministry clash over pricing of CBM

December 5, 2011. The oil ministry has turned the heat on Reliance Industries with a stern directive that tightens controls on pricing and marketing of a new source of gas, which the company says is a financially damaging contractual violation. The dispute has worsened the relationship between India's biggest private oil company and the petroleum ministry, already at a low after Reliance slapped an arbitration notice on the government fearing that authorities may financially penalise it for the fall in output from India's biggest gas field, KG-D6. The company and industry experts believe that deep-sea reservoirs often behave unpredictably and it is unfair for the government to impose penalties that are not part of the contract with the State. The latest row is over coal bed methane (CBM), a new source of energy popular in countries such as the US and Canada.

Oil Ministry refutes charges of policy paralysis

December 5, 2011. The oil ministry described itself as investor friendly and rejected the widely held impression of a policy paralysis, saying that its scrupulous and thorough approach may have caused some delays. The ministry's declaration follows a barrage of criticism for the way it handled key deals and projects of private companies, both Indian and foreign. It faces allegations of violating contracts with private companies and taking a long time to approve key transactions such as the Cairn-Vedanta deal that was cleared after more than a year, and $7.2 billion BP-Reliance deal, which took many months.

India refining capacity to rise 22 per cent: OilMin

December 5, 2011. India's oil refining capacity will rise by over 22 per cent to 238 million tonnes by 2013 after new refineries in Orissa and Punjab are commissioned, Minister of State for Petroleum and Natural Gas R P N Singh said. 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 (2012-17). Indian Oil Corp (IOC) is building a 15 million tonnes per annum refinery at Paradip, in Orissa, while Hindustan Petroleum Corp Ltd (HPCL) is constructing a 9 million tonnes per annum unit at Bhatinda, in Punjab. In addition, Bharat Petroleum Corp (BPCL) proposes to raise the capacity of its recently commissioned refinery at Bina, in Madhya Pradesh, to 9 million tonnes per annum from 6 million tonnes per annum at present. Current demand for gas stands at 166 million standard cubic metres per day and is projected to go up to 443 mmscmd by 2017.

Cairn-Vedanta deal gets Home Ministry approval

December 5, 2011. The Home Ministry has given its approval to London-listed miner Vedanta Resources' buying majority stake in Cairn India for $8.7 billion. The Home Ministry, while giving the security no-objection certificate (NOC), highlighted eight areas of concern, including 64 legal proceedings against Vedanta and its subsidiaries in various courts. The security clearance was one of the conditions that the government had set for Vedanta group buying 40% stake in Cairn India from UK's Cairn Energy Plc. Cairn Energy and Vedanta have already agreed to the other condition of Cairn India paying cess and royalty on crude oil produced from its mainstay Rajasthan oilfields. Cairn India does not pay royalty and cess on its 70% share in the Rajasthan block as per the contract, but its current majority owner, Cairn Energy, and new owner Vedanta forced it to accept the government condition of making royalty cost recoverable and paying ` 2,500 per tonne cess. Also, the government had a conditioned approval to the deal on ONGC, which has 30% stake in Rajasthan block and pays royalty on behalf of Cairn India, giving its NOC. Oil and Natural Gas Corp (ONGC) has agreed to give NOC if Cairn India accepts to make royalty cost recoverable and pay cess.

Government wants fresh estimate of RIL's KG-D 6 reserves

December 3, 2011. The oil ministry has asked Reliance Industries (RIL) to prepare a fresh estimate of gas reserves in satellite fields of the KG-D 6 block and submit a cost assessment for developing the new discoveries, further delaying the $1.5-billion plan to raise gas output by 10 million cubic metres a day.

ONGC investing nearly ` 250 bn for development of 11 projects

December 1, 2011. ONGC is investing nearly ` 25,000 crore in bringing to production nearly a dozen marginal oil and gas fields by 2014. The 14 projects entailed an investment of ` 27,305.05 crore. Of these three, ` 506.22 crore development of D-1 field, ` 219.77 crore SB-11 development and ` 1,688.38 crore investment in development of Vasai East in western offshore, have been completed. Another 11 projects entailing an investment of ` 24,890.38 crore are under various stages of investment. The biggest among the projects is B-193 Cluster development at the cost of ` 5,633.44 crore which would yield 5.57 million tonnes of oil and 5.12 billion cubic metres of gas in 15 years. The project is scheduled to be completed by June, 2012. Besides, another ` 3,241.03 crore is being spent on Cluster-7 development by March 2013 to produced 9.73 million tonnes of oil and 4.52 billion cubic metres of gas over a period of 16 years. ONGC is also investing ` 3,195.16 crore in producing 6.13 million cubic metres of condensate and 15.14 bcm of gas from C-Series field by 2022-23. Another, 2,218.01 crore is being investment in integrated development of G-1 and GS-15 fields in for producing 0.982 million tons of oil and 5.92 bcm of gas over 15 years period beginning May, 2012. It is also investing ` 2,920.82 crore in producing 2.46 million tonnes of oil and 6.56 bcm of gas from B-22 Cluster, ` 2,523 crore in WO-15 Cluster development for 2.83 million tonnes of oil and 8.58 bcm of gas and 2,163.65 crore in additional development of D-1 field. ONGC would also invest Rs 1,456.96 crore in B-46 Cluster development to product 1.68 million cubic metres of condensate and 5.273 bcm of gas in 12 years beginning May 2012.

Oil companies hike jet fuel price by 3.7 pc

November 30, 2011. State-owned oil companies hiked jet fuel price by a steep 3.7 per cent, the third increase in rates in a month. The price of aviation turbine fuel (ATF), or jet fuel, at Delhi was raised by ` 2,312 per kilolitre (kl), or 3.7 per cent, to ` 64,622 per kl. The increase comes on back of a 2 per cent (` 1,195 per kl) hike effected from November 16. Prior to that rates had been raised by a massive 3.8 per cent or ` 2,845 per kl from November 1. But for a one-off marginal reduction in mid-October, ATF prices have been on the climb since September as falling rupee made imports costlier.

POWER

Generation

Assocham for setting up of nuclear power plants in UP

November 30, 2011. Associated Chambers of Commerce and Industry of India (Assocham) suggested setting up of nuclear power plants in Uttar Pradesh to tide over power shortage, which is the bane of industry in the state. Assocham said since assembly polls were slated to be held next year, the new regime in the state could take the initiative for preparing the groundwork for the proposed nuclear power plants.

Power and fertiliser firms may pay ` 34 bn extra for gas on weak rupee

November 30, 2011. Power and fertiliser firms may have to pay up to ` 3,400 crore extra on natural gas they buy from domestic producers as the government has priced the fuel in US dollars, which has appreciated sharply against the Indian rupee.

With rupee falling below 52 against the dollar, power and fertiliser companies are paying about ` 10 crore a day to Reliance Industries and Oil and Natural Gas Corp (ONGC) on the 90 million cubic meters per day of natural gas they buy for producing electricity and urea.

Transmission / Distribution / Trade

Essar Group may bid for coal assets of Australia's New Hope

December 6, 2011. Mumbai-based Essar Group may bid for Australia's New Hope Coal and join a growing list of global bidders interested in securing fuel for their power plants. The Ruias-controlled Essar Group, which has interests ranging from energy and steel to shipping and telecom, will compete with the Aditya Birla Group and other global majors for the Australian resources company estimated to be worth more than $5 billion. New Hope Coal has reserves of more than 1 billion tonnes in thermal coal deposits, adequate to feed a mid-sized thermal power plant for more than 20 years.

NTPC warns BSES of supply cut if dues not paid

December 3, 2011. NTPC has warned that power supply to two distribution companies in Delhi, BSES Rajdhani and BSES Yamuna, would be stopped if they do not clear dues of over ` 195 crore. The state-run firm, which supplies 2,070 MW electricity to the BSES companies, has served notices urging them to renew the Letter of Credit (LC) or that supply could be suspended. As per the notices to BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL), the two have outstanding dues worth ` 195.48 crore.

The notices dated December 1 said that unless the dues are cleared, electricity supply to BRPL and BYPL would be suspended from "00:00 hours of 8.12.2011". BRPL has dues to the tune of ` 120.77 crore while that of BYPL is ` 74.71 crore.

As per Power Purchase Agreements, maintenance of LC for an adequate amount is a pre-requisite for availing electricity from NTPC. Else, NTPC shall serve a notice of 90 days on BRPL/BYPL to remedy the default during which period power supply shall remain suspended. BRPL and BYPL account for over 70 per cent of the electricity supply in Delhi. The notice to BRPL said that Letter of Credit for ` 203.31 crore, valid till November 30, has been encashed due to defaults in payments. In the case of BYPL, the notice said the LC for ` 133.54 crore, valid till November 30, has been encashed in view of payment default. NTPC had met BRPL and BYPL "several times on this issue" but they are yet to renew their existing LCs, the notices pointed out.

ABB win ` 1.7 bn order from Powergrid Corporation

December 1, 2011. ABB, leading power and automation technology group has won an order worth about ` 175 crore from Powergrid Corporation of India to supply equipment for the Champa transmission substation in the central Indian state of Chhattisgarh. The Champa substation will be a pooling station receiving power at 765 and 400 kilovolt (kV) and is part of Powergrid's plan to build a stronger national grid in India. ABB's will be involved in engineering, design, supply, installation and commissioning of the 765 kV and 400 kV switchyards, including the civil works. Key products to be supplied include circuit breakers, current transformers, capacitive voltage transformers, surge arrestors and protection, control and relay panels. The utility owns and operates about 86,190 km of transmission lines and 138 substations with transformation capacity of about 95,125 MVA (mega-volt-ampere). It is responsible for the transmission of over half the total power generated in the country.

Policy / Performance

Govt to seek AG's opinion on UMPP

December 6, 2011. The government decided to seek the opinion of the attorney general of India on ultra mega power projects (UMPP) including the Sasan project, and issue of using excess coal supply for electricity generation in other plants. The UMPPs, large power plants which would reduce the country's power deficit, have been seen setbacks recently as the price of imported coal has risen and the Comptroller and Auditor General of India ( CAG) has questioned the government's move to allow the use of excess coal at a UMPP for another power project.

3 Indian companies in race for CIL's Mozambique exploration project

December 1, 2011. Three Indian companies are in the race for a Coal India contract that called bids for exploration of its 200-odd squarekm block in Mozambique. The world largest coal miner, which opened the price bids of Mining Associates, Indu-CBS Joint Venture and Kartikeyan Pvt Ltd, won the block two years ago. It is now expected to award the contract within 45 days. Coal India Africana Limitada (CIAL), a wholly-owned subsidiary of CIL, won a fiveyear licence for exploration and development of two coal blocks in Mozambique in August 2009. In February, it invited exploration bids for A1 and A2 mining blocks in the northwestern province of Tete. During May, three parties submitted their financial bids. The final selection was to be completed by July. However, there were some issues with respect to the currency in which the bank guarantees were submitted by the bidders. This forced CIL to scrap the bids and call for fresh ones. Nevertheless, Coal India hopes to start the first phase of production by 2013-14. With an initial estimated reserve of 1 billion tonnes, the coal will be imported to cater to domestic demand from customers in Western India. It is an exploratory block with an area of about 205 square km and preliminary estimates suggest that it could have a reserve of about 1 billion tonnes.

Coal Ministry panel may review cancellation of NTPC blocks

December 1, 2011. A Coal Ministry panel is expected to meet to review the decision to cancel mining licences for coal blocks allocated to various firms, including NTPC. The Coal Ministry panel had in May cancelled the allocation of 14 coal blocks and one lignite block to companies, including NTPC and DVC, over their failure to develop them within the stipulated time frame.

INTERNATIONAL

OIL & GAS

Upstream

KNOC may spend up to $4 bn next year to buy oil assets

December 6, 2011. Korea National Oil Corp. (KNOC) said it may spend as much as $4 billion next year on buying overseas oil assets to expand production. The energy developer, known as KNOC, is currently discussing the budget with the government. South Korean energy companies have bid for at least $4.3 billion of overseas assets. KNOC plans to invest as much as $4 billion in overseas oilfields. The South Korean company will seek stakes in oil projects in the Middle East, Central Asia and Russia.

End of easy Mideast oil means work for Exxon, BP

December 6, 2011. The Middle East will need more help from international investors to keep the title of world’s biggest oil and gas producer because its remaining deposits are harder to get at. Exxon Mobil Corp., Royal Dutch Shell Plc and other international oil producers will combine with state-owned companies to spend $40 billion in 2013 on developing resources in the Middle East, up 18 percent on last year’s tally. Fields that require technology, such as steaming to extract heavy oil in Kuwait or stripping sulphur out of Abu Dhabi’s natural gas, will attract much of that spending. Demand for energy will grow faster in the Middle East over the next two decades than any region other than Asia, according to the International Energy Agency. Rising consumption of crude oil and natural gas at home will put pressure on Saudi Arabia, the U.A.E. and other governments to keep production high enough to maintain export revenue that finances government spending.

Statoil to fast track Visund North development

December 5, 2011. The Visund North investment decision means that the fast-track developments around the Visund field in the North Sea are a step nearer completion. It was decided in autumn 2010 to fast track the development of Visund North with production start-up scheduled for autumn 2013. The partners have now reached an investment decision worth NOK 3.1 billion. Recoverable reserves are expected to be 29 million barrels of oil equivalents, and to consist mainly of oil. A standard seabed template with two wells is envisaged. It will be produced by FMC and will be installed during the summer of 2012.

Anadarko touts gas pay at GOM well

December 1, 2011. Anadarko said an exploration well in the Gulf of Mexico (GOM) deepwater found higher-than-expected amounts of natural gas. Anadarko said the company's Cheyenne East well saw 50 feet of high-quality natural pay, higher than the company's has estimates. The well is expected to start production next year. Anadarko is one of the top oil and gas producers in the Gulf.

Downstream

Western Okays sale of shut Virginia refinery

December 5, 2011. Western Refining has agreed to sell its mothballed Virginia oil refinery and a section of a New Mexico crude-oil pipeline for $220 million to a Houston company, and take a $400 million-plus loss on the deal. Western will retain its East Coast wholesale business and continue to market fuel in the Mid-Atlantic region. Western shut down the Virginia refinery in September 2010 because it was losing money and future prospects looked bleak. Western got the refinery in its $1.4 billion acquisition of Giant Industries in 2007. Western put the refinery up for sale in late 2008, but found no buyers. It continued to look for buyers after the refinery closed. Western operates refineries in El Paso and Gallup, N.M.

Transportation / Trade

Demand for oil drilling ships soars

December 5, 2011. South Korean shipbuilding stocks may jump as much as 80 percent in four months as they catch up with gains in oil prices. The Korea KRX Shipbuilding Index, which tracks Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and eight other shipbuilding stocks, may rebound as rising oil prices spur demand for drill ships and liquefied natural gas tankers.

Petromin complains about Gunvor LNG agreement

November 30, 2011. Petromin PNG Holdings Ltd has criticised Interoil for not including Petromin in the heads of agreement for LNG supply with Gunvor Singapore from the Gulf LNG Project. Petromin stated that InterOil had not informed or consulted Petromin on the commercial terms of any of the agreements that it had executed to date, including the off-take arrangement recently signed with Gunvor Singapore. Petromin wanted to be involved with the state in any review of the project agreement. Petromin believed it was critical that a world class operator with a proven track record of LNG development was engaged in successfully delivering the Gulf LNG project.

Policy / Performance

BP has road map case for Macondo fine in Citgo oil-spill case

December 6, 2011. A Citgo Petroleum Corp. oil-spill case gives a template for the way BP Plc’s liability and penalty will be decided in the government’s Clean Water Act lawsuit over the worst U.S. offshore spill. U.S. District Judge ruled that Citgo must pay $6 million, or $111 per barrel of oil spilled at its Lake Charles refinery in 2006. That’s about 10 percent of the maximum $1,100 under the Clean Water Act. The amount can rise to $4,300 for gross negligence. In the BP case, U.S. District Judge will oversee a trial on fault and on whether there was gross negligence, which BP denies. BP set aside $3.5 billion for Clean Water Act fines for the Macondo spill, assuming $1,100 a barrel and its own estimate of 3.2 million barrels, according to an annual report extract posted.

‘Chevron needs to ‘come into line’ with Brazilian laws’

December 6, 2011. Chevron Corp. needs to “come into line” with Brazil’s laws, and the country is studying if the San Ramon, California-based producer will be able to compete for new exploration licenses after causing an oil spill. Chevron, the second-largest U.S. oil producer after Exxon Mobil Corp., needs to comply with the country’s laws and coordinate activities with the country’s oil regulator. Brazil plans to offer exploration areas by the end of 2012 in the so-called pre-salt region in deep waters of the Atlantic Ocean. Brazil has made the largest oil discoveries in the Americas in more than three decades in the area, where oil deposits of up to four miles below the ocean floor are trapped under a layer of salt. Chevron has come under increased scrutiny in Brazil after it leaked 2,400 barrels of oil last month from an oil field in deep waters of the Campos Basin. Chevron underestimated the amount of pressure at an oil deposit it was exploring, and crude leaked from the reservoir for about eight days.

Colombia needs LNG import policy by 2015

December 5, 2011. LNG import facilities in Colombia need to be developed within the next four years. The possibility of gas imports has long been advocated in Colombia as an important backup to the country's hydro-dependant power matrix. Colombia's power and gas regulator is currently designing regulation for the development of future import facilities. Canadian oil firm Pacific Rubiales announced plans to develop the country's first LNG export plant, in order to ship excess output from its La Creciente field to markets in the Caribbean where it could fetch better prices. Exports have only recently been enabled by the Colombian government, under pressure from companies which operate in the country. Under the new regulations, gas exports will be permitted as long as potential production capacity exceeds total current demand. The country has a gas reserve horizon of at least eight years.

Qatar Petroleum, Shell sign accord for petrochemicals complex

December 4, 2011. Qatar Petroleum and Royal Dutch Shell Plc signed a heads of agreement to develop a petrochemicals plant in the Gulf country for an estimated cost of $6.4 billion. Qatar Petroleum will have an 80 percent stake in the project and Shell the remainder, the companies said. They plan to sign a final joint-venture agreement by the end of next year or early in 2013. The project would be completed in 2017.

Iran faces oil curbs as U.S. targets central bank while EU adds sanctions

December 3, 2011. The U.S. Senate took aim at the Iranian central bank in an effort to choke off oil exports, while the European Union stopped short of targeting crude as it tightened sanctions intended to curb Iran’s nuclear program. The Senate bill, passed unanimously, would give the president the power starting July 1 to bar foreign financial institutions that do business with Iran’s central bank from having correspondent bank accounts in the U.S. If enacted, it could be much harder for foreign companies to pay for oil imports from Iran, the world’s third-largest crude exporter. The Obama administration opposes the legislation.

ONGC Videsh faces Syria shutdown after EU blacklist

December 3, 2011. ONGC Videsh, the overseas investment arm of state-run Oil and Natural Gas Corporation, faces the prospect of a near-shutdown of crude production from its field in Syria after the European Union blacklisted that country's oil companies to isolate President Bashar al-Assad's government. ONGC Videsh is a 33% partner in the Al Furat Petroleum Company, a joint venture that pumps oil from the Al-Furat project and has state-owned General Petroleum Company, which has been blacklisted along with Syria Trading Oil. Along with Shell, ONGC Videsh has China National Petroleum Company and Syrian Petroleum Company as partners. The project has had to reduce production from 82,000 bpd (barrels per day) to 70,500 bpd since September due to problems in finding enough number of ships to carry the crude. The Syrian government had asked all operators in the country to cut production after the initial sanctions since evacuation of crude became difficult as most of the tankers were registered either in Europe or the US.

Philippines govt willing to pay for natural gas pipeline

December 2, 2011. The government is prepared to shoulder the full cost of the Batangas- Manila natural gas pipeline, now estimated to cost about $150 million, if it does not find qualified investors. The Japan International Cooperation Agency had submitted preliminary findings of its study that will provide inputs for the country's Natural Gas Masterplan. Final results, which will be presented in January next year, will be validated for about six months by a technical committee the department will form for this purpose. Auction for the project contract is tentatively planned for the first quarter of 2013. The study showed the 105-kilometer pipeline will cost $150 million, down from the previous estimate of $1.2 billion, if planned related facilities were not included. The department originally planned to build the Batangas-Manila pipeline with a liquefied natural gas terminal that will draw from the Malampaya project and feed a 600-megawatt power plant. An unsolicited private proposal to build the pipeline for $1.2 billion was rejected by the Philippine National Oil Co. in September 2010.

Goldman says commodities may rally in 2012 as Brent surges

December 1, 2011. Goldman Sachs Group Inc. (GS) forecast that commodities may rally 15 percent in the next 12 months, sticking with an “overweight” recommendation on raw materials and predicting Brent crude may surge to highest level since 2008. Commodities may gain as the global economy avoids recession next year and in 2013. Brent, the benchmark used to price two-thirds of global oil supplies, may jump to $127.50 a barrel at the end of next year and $135 in 2013.

Iran financial sanctions set to shrink circle of foreign buyers of crude

November 30, 2011. Iran faces new hurdles to getting paid for its oil as the U.S. tightens financial sanctions to deter buyers from the world’s third-largest crude exporter. The U.S. approved extra curbs on Iran’s banking system and oil industry, hoping to thwart the country’s nuclear program, and the European Union may follow. Current sanctions have led Indian importers to route payments for Iranian crude through a Turkish bank. These refiners, concerned Turkey may stop cooperating amid the latest U.S. rules, are asking banks in Russia to arrange alternatives.

POWER

Generation

Construction started for 200 MW coal power plant in Sarangani

December 6, 2011. It's all systems go for the controversial Alcantara led coal power plant project in a world class diving spot in nearby Maasim in Sarangani, with groundbreaking rites held recently. The entire project will generate about 200 MW of safe, reliable and affordable energy to the people of Socsargen (South Cotabato, Sarangani and General Santos City) and the rest of Mindanao and will provide employment to at least 500 workers during the construction period. Around 150 workers will be hired when the plant goes on stream, with preference for local residents.

EDF to spend €1.8 bn to build coal power plant in Poland

December 6, 2011. French energy giant Electricite de France (EDF) will invest €1.8 billion to build a 900-megawatt coal-fired power plant in Rybnik, southern Poland. By 2020, the company wants to have brought its total installed power generation capacity in Central Europe to 200 gigawatts, 25 percent of which will be derived from fossil fuels. The project in Poland entails replacing the four oldest power plants at a power station in Rybnik with a single, more effective one. EDF will use “supercritical” technology which will reduce carbon dioxide emissions significantly in comparison to a standard coal-fired plant. The technology supplier will be French engineering group Alstom. Electricite de France has been present in the Polish market for 12 years.

BD, China set to sign MoU to build power plant in Chittagong

December 5, 2011. Bangladesh and China are set to sign a memorandum of understanding (MoU) to build a 1,320 megawatts coal-fired power plant in Chittagong under a joint venture. The power plant under joint venture will be built by the BPDB and China Hudian Hong Kong Company.

The Chinese firm have already met with the power ministry and BPDB to build the joint venture firm to implement the power plant project. Both the firms will decide on share of stakes of respective firms, timeframe and costs to implement the power plant under the joint venture. The power plant will run initially on imported coal. It will consume local coal to generate electricity in future subject to its availability. The power plant will be built under a government plan to generate around 50 per cent of the overall electricity output from coal by 2030. The government has prepared a road map to generate around 20,000 MW of electricity from coal-based power plants by 2030.

Czech KP RIA wins Olympic power plant

December 5, 2011. The Kudepsta plant as envisioned by TGK-2, which has since withdrawn from the projectBrno-based engineering firm Královopolská RIA has signed a provisional agreement to build a 366 MW gas-turbine power plant near the Russian Black Sea resort of Sochi. The deal is to be formally finalized during the official visit to the Czech Republic by Russian President Dmitry Medvedev from Dec. 5–7. Královopolská RIA’s (KP RIA) head, Ctirad Nečas will sign the contract worth €385 million (almost Kč 10 billion) with Sergei Chernin, president of the Russian state-owned corporation Gazenergostroy. The power plant is required to supply power and heat to sports complexes and other buildings in Sochi, which will host the 2014 Winter Olympic Games and must be completed and connected to the grid by the beginning of 2013 at the latest. The contract to build a new power plant in the Kudepsta district of Sochi was awarded to TGK-2 based in Yaroslavl. However, following opposition from local residents, the site of the planned plant was moved to a higher elevation and TGK-2 announced they would not be able to build the heat and power facility in time. KP RIA specializes in the delivery of systems for nuclear power plants, water treatment facilities and petro-chemical plants.

Saudi Arabia's Qurayyah power plant project gathers pace

December 3, 2011. A consortium, led by ACWA Power (a 100 percent Saudi-owned company), recently issued notice to proceed with the construction of the largest independent power generation project in the world, Qurayyah Independent Power Project (IPP). The project, to be developed on a BOO (build, own, operate) basis, will be located at Qurayyah, on the eastern coast of Saudi Arabia adjacent to existing SEC facilities. The project, the third of its type, and the largest IPP being developed by SEC, represents another major development in the Saudi power sector to help meet the rapidly increasing power demand in Saudi Arabia. It will deliver 3,927 MW of electricity to SEC under a 20-year power purchase agreement (PPA) commencing on June 30, 2014.

Zambia to have another power plant

December 3, 2011. Zambia may probably have another power plant soon intended to meet the energy needs in the Southern African rich copper mining country following indications that a new 50 MW plant is underway in Ndola, north of the state. With the government encouraging Private Public Partnership in which it seeks the private sector to take a leading role in the economic revitalization of the country, a new company, Ndola Energy Company Limited, plans to construct 50 MW heavy fuel power plant at a cost of $50 million.

Serbia’s EPS launches its first hydro plant in twenty years

December 1, 2011. Elektroprivreda Srbije, Serbia’s state-owned power monopoly, started production at Prvonek, its first new hydroplant in more than 20 years. With 910 kilowatts of installed capacity, Prvonek cost 1.55 million euros ($2.1 million) to build with expected annual output of 2.5 million kilowatt hours to 3 million kilowatt hours, the Belgrade-based company, also known as EPS, said. France-based Andino Hydropower Engineering and local ATB Sever AD (ATBS), part of ATB Austria Antriebstechnik (ATB) supplied turbines and related equipment. Financed solely by EPS, Prvonek on the Banjska River in southern Serbia, is the first in a series of new hydroplants the company is developing to increase production from renewable sources. Hydro facilities account for a third of EPS’s total installed capacity of 8.36 gigawatts.

Transmission / Distribution / Trade

Entergy exits power transmission in $1.78 bn deal

December 5, 2011. Entergy Corp struck a $1.78 billion deal with ITC Holdings Corp to exit its power transmission business, which was increasingly getting bogged down by stricter regulatory requirements and expensive infrastructure upgrades. After several aborted efforts to create its own independent grid group over the past few years, Entergy is currently seeking to integrate its transmission operations into the Midwest Independent System Operator, a regional transmission network that ITC operates in. This comes at the insistence of regulators following a decade of complaints from independent power producers and Entergy's October 2010 disclosure that the U.S. Department of Justice had launched an investigation of its competitive practices, including its transmission system practices.

Policy / Performance

Cameroon gets loan from development bank, OPEC Fund

December 5, 2011. The Development Bank of Central African States and the OPEC Fund for International Development will lend Cameroon 25 billion CFA francs ($51 million) for a hydroelectric project and a road, the government said. Of the amount, 20 billion francs will be allocated to the Lom Pangar Hydroelectric Project in the east of the country and 5 billion francs will be used to build a section of road between Sangmelima and Djoum in the south.

Greenpeace infiltrates French nuclear reactor to highlight security lapses

December 5, 2011. Greenpeace activists broke into a nuclear reactor southeast of Paris to highlight what the environmental group said was a lack of security at France’s atomic plants. EDF, the operator of France’s 58 reactors, said the intruders entered the site before dawn after cutting through a fence that runs around the perimeter. Greenpeace and EDF have been in conflict for years over France’s power production, more than three-quarters of which is nuclear. Atomic safety has received more scrutiny in the aftermath of Japan’s Fukushima atomic disaster, with opposition parties in France calling for some reactors to be shut down.

Kenyan KenGen raises $920 mn for geothermal plant

November 30, 2011. Kenya Electricity Generating Company (KenGen), the country's main power producer, has raised $920 million in loans for a 280 megawatt (MW) geothermal project. The power plant would be jointly funded by KenGen, the Kenyan government, the World Bank, Germany's KfW, the European Investment Bank, the Japan International Corporation Agency and the French Development Agency (AFD). KenGen has said the Olkaria IV geothermal plant, an extension of the Olkaria I and II plants that already produce a total 115 MW, is expected to be operational in 2014 and will cost about $1 billion. Kenya is the first African country to drill geothermal power, tapping vast steam energy in the country's Rift Valley. The east African country -- the biggest economy in the region -- has the potential to produce 7,000 MW of geothermal power and is targeting production of at least 5,000 MW by 2030.

Renewable Energy / Climate Change Trends

National

ADB funds for Reliance Power solar plant

December 5, 2011. Asian Development Bank (ADB) said it is part-funding a project with Reliance Power to build what it said would be India's largest solar photovoltaic power plant. The plant marks Reliance Power's first foray into solar energy and is part of its strategy to expand its renewable energy portfolio. ADB is providing a long-term loan of up to $48 million to finance the 40 megawatt solar power project located in Jaisalmer district in the western state of Rajasthan. Reliance group firm Reliance Infrastructure will buy the electricity under a long term power purchase agreement. The power will be distributed to households in Mumbai, the country's financial capital. The project, expected to cost about $147 million, is scheduled to be completed by the second quarter of 2012. The Export Import Bank of the United States is also providing funding for the project. ADB said it aims to help develop, finance and commission 3,000 MW of solar power generation capacity in its developing member countries by mid 2013.

India’s solar-power bid prices sink to record

December 3, 2011. India drew record-low prices for solar power in an auction of permits to build about $700 million of plants as a supply glut in the industry drives down equipment costs. Solairedirect SA, France’s second-largest solar power producer, bid to sell electricity from a photovoltaic plant at 7.49 rupees (15 U.S. cents) a kilowatt-hour to the government. The biggest contracts were won by Indian developers, including Welspun Group, Kiran Energy Solar Power Pvt., Azure Power, and the solar unit of Mahindra & Mahindra Ltd. (MM). The winners are required to buy solar cells domestically. India’s three largest traded makers of the cells used in solar panels are Indosolar Ltd. (ISLR), Moser Baer India Ltd. (MBI) and Websol Energy Systems Ltd. (WESL) Overseas manufacturers such as First Solar Inc. (FSLR) and Sharp Corp. may also benefit because their thin-film technology is exempt from the local sourcing rules. The auction was the second under India’s national Solar Mission program that’s positioning the country to become one of the world’s fastest-growing solar markets by installing 20,000 megawatts, equivalent to about 18 nuclear plants, of sun-powered capacity by 2022. The latest round awarded 350 megawatts of capacity that will require roughly $700 million of investment. Winners will have seven months to arrange financing and 13 months to complete the plants, according to government guidelines on the website of NTPC Vidyut Vyapar Nigam Ltd., the state-run power trader overseeing the process.

Khosla-backed Sunborne bids for Indian solar power project

December 3, 2011. Sunborne Energy LLC, a solar-project developer backed by billionaire Vinod Khosla, is among companies bidding to build solar power plants in India’s Karnataka state. The southern state held an auction to award contracts for 80 megawatts of solar projects that will benefit from an assured buyer and preferential rates. Solar-thermal plants use sunlight to heat liquids that produce steam for generators, while photovoltaic plants use panels to turn sunlight directly into power. Two solar-thermal bids for 20 megawatts of capacity were received from Sunborne and Atria Power. The rest of the bids were for photovoltaic projects.

Farooq Abdullah concerned over opposition to bio-fuels

November 30, 2011. Renewable energy ministry headed by Farooq Abdullah expressed concern over oil lobbies challenging the idea of ethanol blending and increased use of bio-fuels. The bio-fuel companies, however, assert that the need of the hour is a government framework, which can boost the biofuel market. The National Bio-energy mission, that will be launched during the next five-year plan, aims to provide policy and regulatory support to help large-scale capital investments in bio mass-fired power stations and also promote increased use of bio-fuels. The surplus bio mass in the country is estimated to be 150 million tonnes.

Global

Carbon credits turning ‘junk’ as ban shuts door

December 6, 2011. Investors are rushing to sell emission credits before they become almost worthless in 2013, pushing prices to a record low. A United Nations program that encourages reductions in greenhouse gases awarded almost twice as many credits this year as in 2010 for projects that destroy industrial gases known as hydrofluorocarbon-23 and nitrous oxide. With Europe set to stop recognizing some credits in little more than a year, investors are “racing to beat” the ban.

Brazil signals it can’t commit to binding emissions target

December 6, 2011. Brazil signaled it’s not prepared to sign up to a road map leading to a legally-binding carbon emissions target at United Nations talks in South Africa. Latin America’s second biggest greenhouse gas emitter after Mexico is open to devising a timeline for a future climate change deal without prejudging what legal form the pact might take. The debate over the EU’s proposal is one of the main sticking points at the talks in Durban. Developing nations led by Brazil and China want the current treaty limiting emissions, the Kyoto Protocol, to be extended beyond 2012. The EU says it won’t renew Kyoto unless all nations say when they’d take on mandatory carbon targets.

UN says climate pact ‘beyond our reach’ as India rejects pollution targets

December 6, 2011. United Nations Secretary General Ban Ki-Moon said a global warming treaty may be “beyond our reach” as India and China rejected pressure for developing nations to adopt mandatory pollution targets. India, speaking with the Basic negotiating group of countries that also includes South Africa, Brazil and China, said industrial nations should move first in cutting fossil fuel emissions. The comments marked a hardening of positions that reduces the scope for an agreement in time for the meeting’s conclusion. After nine days of meetings, envoys from more than 190 nations remain divided about how to extend limits on greenhouse gas emissions once the Kyoto Protocol expires next year. The 1997 treaty capped emissions for industrial nations. It included no targets for developing nations including China and India, which since then have become two of the three biggest polluters. China, India and Brazil are pushing industrial nations to extend Kyoto, saying any climate pact must recognize the historical responsibility of the nations that caused the problem to act first. The U.S., Canada, Japan and Russia say they want a treaty that requires cuts from all parties. The European Union says it will extend Kyoto if all nations agree to adopt a legally-binding treaty by 2015. As ministers and heads of state joined to work on conclusions for the talks, the developing countries stepped up resistance to taking on limits for fossil fuel emissions. The biggest stumbling block was the question whether developing nations would be treated the same as industrial ones or whether they would remain outside a system of cuts. Brazil has “no problem” with devising a timeline to a deal, so long as it doesn’t prejudge whether that eventual arrangement sets legally binding targets for all nations.

Hedegaard says EU needs more detail from China on climate pact

December 6, 2011. European Union Climate Commissioner Connie Hedegaard said she needs more information about China’s plan to limit greenhouse gas emissions, the first sign of discord at United Nations climate talks. China said it’s willing to make a post-2020 legally binding commitment to reducing fossil fuel emissions under certain conditions, including the extension of pollution limits for developed countries under the Kyoto Protocol. Hedegaard’s comment suggests China hasn’t yet satisfied EU conditions for extending the pact, one of the most contentious items under discussion. The EU says it will sign up for more emissions limits under Kyoto only if all nations agree to a “road map” fixing the date for the next legally binding climate treaty. China, which had no requirements under Kyoto, discussed making a commitment in exchange for mandatory cuts from industrial countries under Kyoto beyond 2012.

Global carbon emissions rose by record volume last year

December 6, 2011. The volume of greenhouse gases pumped into the world’s atmosphere increased by an unprecedented amount last year, scientists said in research published as countries meet to discuss how to limit climate change. Emissions rose the equivalent of 510 million metric tons of carbon to 9.14 billion tons in 2010, the most in records dating to 1959, according to data compiled by the Global Carbon Project, which includes scientists from Europe, the U.S. and India. That’s a 5.9 percent leap, the largest since 2003, when they jumped 6 percent. Last year’s global emissions were 33.5 billion tons when converted to carbon dioxide.

Turkiye Sinai signs World Bank loan for renewable energy

December 5, 2011. Turkiye Sinai Kalkinma Bankasi AS (TSKB), a Turkish investment finance bank, got a loan of $200 million from the World Bank for renewable energy projects. The loan, split into $100 million and 69.3 million euros, is guaranteed by the Turkish Treasury.

Australia, New Zealand could link carbon trade schemes in 2015

December 5, 2011. Australia and New Zealand said they could link their carbon trading schemes as soon as 2015, immediately after Australia's government moved from a fixed carbon tax to the world's second-largest market scheme to cut pollution. After talks in Durban, South Africa, on the sidelines of global talks on a successor to the Kyoto climate pact, Australia's Minister for Climate Change said both countries were aiming to link their two schemes as soon as possible. Australia's parliament passed laws setting up the world's most comprehensive carbon price scheme outside Europe, forcing 500 companies to pay a A$23 per ton carbon tax from next July, moving to a market-based trading scheme in 2015. Close neighbor New Zealand began emissions trading in July last year, targeting first foresty, electricity, industry and transport to deliver cuts in greenhouse gas emissions of between 10 and 20 percent by 2020 on 1990 levels.

China, EU seek to avoid Kyoto treaty blame

December 5, 2011. China and the European Union will set out alternative proposals for extending limits on greenhouse gases, seeking to avoid the blame for undermining the only international pact limiting them. Envoys from Beijing and Brussels joined in setting conditions for further curbs on fossil fuel emissions after the restrictions in the Kyoto Protocol expire next year. They step up pressure on envoys from 194 nations to back their view of how to carry on the fight against global warming.

China sets conditions for binding climate deal

December 4, 2011. China set out its conditions for adopting a binding post-2020 greenhouse-gas commitment as part of a global deal, demanding an extension of current pledges by industrialized countries under the Kyoto Protocol beyond 2012. Developing nations should be allowed to stick to voluntary targets to limit pollution until a legally-binding treaty that could take effect after 2020. China’s consent for the shift to mandatory goals also hinges on climate aid from richer countries and a review of actions taken by 2015.

China rejects U.S. trade panel’s ruling that solar imports harm industry

December 4, 2011. China rejected a preliminary ruling by a U.S. trade panel that imports of Chinese solar panels are harming the domestic industry, saying the decision shows the country’s “inclination to trade protectionism.” The U.S. International Trade Commission took the first step toward imposing added tariffs on Chinese solar imports, voting unanimously in Washington on a petition by Bonn- based SolarWorld AG (SWV) that called for antidumping and countervailing duties. The commission will now hold a full investigation. The Chinese government uses cash grants, raw-materials discounts, preferential loans, tax incentives and currency manipulation to boost exports of solar cells, according to SolarWorld’s complaint to the ITC and the U.S. Commerce Department. SolarWorld, a maker of solar modules, is seeking duties to offset the practices.

Zuma says clean energy plans require aid from industrial nations

December 3, 2011. South African President Jacob Zuma said industrial nations must step up aid programs to support clean energy projects and achieve reductions in greenhouse gas emissions. Zuma said one of the biggest points for debate in the talks is on finance. Industrial nations have pledged to work on creating a fund channeling as much as $100 billion a year in climate aid to developing nations by 2020. Concerns about the structure of that fund raised by the U.S., Venezuela and Saudi Arabia set back efforts to win agreement on the measure. The measures being discussed at the UN talks include strengthening a market for carbon emissions. Zuma said there would be incentives for business, possibly in the form of labeling systems that show consumers what products are best for the environment. Zuma brushed aside concerns the economic slump in the U.S. and Europe may derail an agreement, noting that it’s the poorest countries that are expected to feel the most impact from climate change.

UN to review carbon offset program threatened by Kyoto’s end

December 2, 2011. The United Nations began work to preserve a key pillar of the carbon market as Brazil and China said the program had no future unless rich countries accept new goals for cutting greenhouse gases. The UN Framework Convention on Climate Change said it would conduct a yearlong evaluation on how to improve the Clean Development Mechanism. The CDM program lets companies and nations earn credits to offset fossil-fuel emissions in exchange for sponsoring renewable- energy projects.

South Africa urges envoys not to ‘water down’ climate agreement

December 2, 2011. South Africa’s environment minister urged countries at United Nations climate talks not to weaken any new agreements with language so vague that it’s meaningless in the effort to fight global warming. More than 190 countries are gathered in Durban, South Africa, to decide the fate of the existing Kyoto Protocol and determine whether to start talks for a new, legally binding climate treaty that includes all countries. The U.S. has rejected the European Union’s push for a mandate to negotiate an agreement by 2015, arguing that major developing countries such as China still aren’t willing to do their fair share under a new accord.

Canada may escape $6.7 bn bill by exiting Kyoto protocol

December 2, 2011. Canada, the country furthest from meeting its commitment to cut carbon emissions under the Kyoto Protocol, may save as much as $6.7 billion by exiting the global climate change agreement and not paying for offset credits. The country’s greenhouse-gas emissions are almost a third higher than 1990 levels, and it has a 6 percent CO2 reduction target for the end of 2012. If it couldn’t meet its goal, Canada would have to buy carbon credits, under the rules of the legally binding treaty.

Trade panel Okays China solar panel unfair trade probe

December 2, 2011. A U.S. trade panel approved an investigation into charges of unfair Chinese trade practices in the solar energy sector, setting the stage for possible steep U.S. duties. The U.S. International Trade Commission voted 6-0 that there was a reasonable indication that SolarWorld Industries America and other U.S. producers have been harmed or are threatened with injury by the imports. The vote allows the Commerce Department to continue an investigation that could lead to both countervailing and anti-dumping duties on solar cells and panels from China. Countervailing duties are imposed to offset government subsidies, while anti-dumping duties are used to negate unfair pricing practices. SolarWorld and its coalition partners have alleged Chinese producers are undercutting U.S. prices by as much as 250 percent.

Sparx plans to launch renewable energy fund

December 2, 2011. Japanese asset manager Sparx Group aims to set up a fund that invests in infrastructure for renewable energy by next year, anticipating strong demand as the country shifts away from nuclear power following the Fukushima disaster. Japan is overhauling its energy policy after the Fukushima nuclear plant accident, triggered by the earthquake and tsunami in March, shattered the public's confidence in atomic safety. To accelerate the growth of renewable energy sources, parliament has approved a law, which takes effect in July 2012, requiring utilities to buy electricity from such sources and pass on the cost to customers.

IEA says solar may provide one-third of global energy by 2060

December 1, 2011. Solar technologies such as photovoltaic panels, water heaters and power stations built with mirrors could provide a third of the world’s energy by 2060 if politicians commit to limiting climate change, the International Energy Agency said. Energy from the sun could play a key role in de-carbonizing the global economy alongside improvements in efficiency and imposing costs on greenhouse-gas emitters, the agency said in a report. Economic activity will shift toward the sunnier zones around the equator by 2050, making solar energy a viable power source for most of the global economy, the report said. Those regions will be home to almost 80 percent of the human race by the middle of the century, compared with about 70 percent, and their energy needs will be higher as living standards in countries such as Brazil and India approach those of the U.S. and Europe. To realize the potential of solar power, officials should move away from a strategy of subsidizing individual technologies such as solar panels or solar-thermal generators toward measures such as a carbon price that encourages a broader view of the energy transition.

U.K.’s cheapest way to 2050 carbon goal would limit new nuclear

December 1, 2011. The cheapest way for the U.K. to meet its goal of cutting emissions by 80 percent from 1990 levels over the next four decades would triple nuclear power generation, according to the government’s carbon plan. It would cost the least to have 33 gigawatts of nuclear power, 45 gigawatts of renewables and 28 gigawatts of fossil fuels with carbon capture and storage technology fitted. The country has about 10 gigawatts of installed nuclear capacity.

Enel Green Power adds 66 MW of capacity

December 1, 2011. Enel Green Power SpA (EGPW) began operating two wind farms with 62 megawatts of capacity in western Spain and added 4 megawatts to a facility in Portugal.

Asian palm-based biofuel may struggle in U.S.

December 1, 2011. Indonesian palm-based biodiesel shipments seeking a foothold in the United States will face stiff competition from feedstocks such as corn oil and waste oils, which will become cheaper as more supplies hit the market. Indonesian processors must also first get a clear pathway from the Environmental Protection Agency (EPA) over concerns of higher emissions arising from converting the edible oil.

Toyota, BMW join hands on green technology

December 1, 2011. Toyota Motor Corp and BMW AG agreed to join hands on a broad range of environmental technologies, forging a partnership between two engineering stalwarts in the increasingly competitive auto industry. Under the agreement, the two will work together on lithium-ion battery research that is seen as key to electric cars, while the German premium brand will also supply 1.6 and 2.0 liter diesel engines to Toyota from 2014 in Europe. They will also identify possibilities for other projects.

Vestas wins order for China’s Gaopai wind farm

December 1, 2011. Vestas Wind Systems A/S (VWS) said it won an order for 24 turbines producing 48 megawatts, to be installed at the Gaopai wind farm in China’s Hainan province.

EU delays single CO₂ registry launch

November 30, 2011. The European Commission has delayed the startup of a single carbon registry for the European Union's emissions trading scheme until the second half of the year, as it needs more time to finalize preparations. The Commission is hoping that a single EU-wide registry will improve the efficiency of the scheme and provide greater security following the theft of more than 3 million EU carbon permits from member state registries late last year and early this year.

China to double surcharge to subsidize renewable power

November 30, 2011. China will double a surcharge on power sales to 0.008 yuan per kilowatt hour to subsidize renewable power generation. The revenue from an existing surcharge, at 0.004 yuan/kWh, is not enough to cover the difference that power grid operators pay for electricity output from renewable power developers. Grid feed-in tariffs for solar and wind power are higher than the rates for coal-fired power, the staple of China's electricity sources.

SolarCity revives military homes solar project

November 30, 2011. Solar power developer SolarCity and Bank of America Merrill Lynch will go ahead with a plan to build more than $1 billion in new solar projects on military housing, despite their failure to win a U.S. loan guarantee. The project, named "SolarStrong," aims to put about 300 megawatts of solar generation on 120,000 military housing units over five years.

[1] World Energy Outlook 2010

[2] Global Oil Chock Points: How Vulnerable is the Global Oil Market, 2008. Lehman Brothers Global Equity Research

[3] Marco D. Tomasi, M D. 2009. ‘Water-borne IED Threats and the Strait of Hormuz’, JIEDDO J2 Global Information Research Center (GIRC)

[4] World Energy Outlook 2010, International Energy Agency

[5] Reuters Fact Box on the Straits of Hormuz

[6] Reuters Fact Box on the Straits of Hormuz

[7] Reuters Fact Box on the Straits of Hormuz

[8] BP Statistical Review of World Energy 2011

[9] El-Sayyed El-Shazly, N. 1997. ‘The Gulf Tanker War: Iran and Iraq’s Maritime Swordplay, London: Macmillan Press

[10] Operation Earnest Will, Global Security.org accessed on

[11] Kelley, S.A. 2007. Better Lucky Than Good: Operation Earnest Will As Gunboat Diplomacy, Thesis, Naval Post Graduate School, Monterey, California

[12] Kelley, S.A. 2007. Better Lucky Than Good: Operation Earnest Will As Gunboat Diplomacy, Thesis, Naval Post Graduate School, Monterey, California

[13] Said Zahlan, R. 2001. ‘The Impact of U.S. Policy on the Stability of the Gulf States: A Historian’s View’, in ‘Iran, Iraq and the Gulf Arab States’, in Kechichian, J (ed.), New York: Palgrave

[14] Partin, J. 1998. ‘Special Operation Forces in Operation EARNEST WILL, Prime Chance I, MacDill Air Force Base, FL: U.S. Special Operations Command, History and Research Office

[15] The Economist 8-14 November 2008

[16] Auerswald, P. 2007.’The Irrelevance of the Middle East’. The American Interest May/June 2007

[17] Van Doren, P & Taylor, J. 2007. ‘The Energy Security Obsession’ in ‘The Energy Game’. Eurasian Review of Geopolitics.

[18] Ilias, S. 2008. ‘Iran’s Economy’, CRS Report for the Congress, Congressional Research Service, United States. .

[19] Economist Intelligence Unit, Country Profile: Iran 2008

[20] Erdbrink,T. 2008. ‘Oil Cash May Prove A Shaky Crutch for Iran's Ahmadinejad’, Washington Post, 30 June 2008

[21] U.S. Congress, Joint Economic Committee, ‘Iran's Oil and Gas Wealth’, 109th Cong., 2nd sess., 2006. Research Article #109-31.

[22] Talmadge, C. 2008. Closing Time: Assessing the Iranian Threat of the Strait of Hormuz, International Security, Vol 33, No 1 (Summer 2008, pp 82-117

[23] Mills, R A. 2008. US Iran and the Strait of Hormuz: Saber Rattling or Global Energy Nightmare? Naval War College, Newport

[24] Multiple sources. $ 27, is the most recent estimate by McKinsy

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