MonitorsPublished on Mar 06, 2012
Energy News Monitor I Volume VIII, Issue 38
India’s energy security policy: Only in the eyes of the beholder?

Lydia Powell, Observer Research Foundation


he rest of the world sees India’s interpretation of ‘energy security’ as one that is drawn from the realist approach in international relations. Under the lens of realism, India is said to be seeing itself as struggling to secure its energy supplies in an anarchic world of scarce resources with no world-wide authority. 

The realist framing of energy security is not always the direct consequence of a specific threat but rather the result of political interpretation of a threat, a process which in theory is labeled ‘securitisation’. The conceptualization of energy security is thus a ‘non-linear’ response to a perceived ‘threat’. 

One of the key reasons why India is seen to be following the realist approach to energy security is the overwhelming involvement of state oil and coal companies in the energy sector.  If India were to use the liberal interpretation of ‘energy security’, it is argued, India would see inter-dependence rather than dependence and emphasize the role of markets.  However as India is seen to be wedded to the realist interpretation it is seen to be emphasizing political dependency. 

While a liberal interpretation would have called for a separation between economics and politics, India’s realist interpretation is seen to be treating economics as subordinate to politics.  Rather than seeking a market driven quest for equilibrium between energy supply and demand India is said to be seeking a geo-political competition for energy resources, trade routes and so forth. 

Is this perception true? Is India pursuing a well thought through ‘realist’ approach to energy security or is it just a set of facts such as the dominance of state owned companies in the sector and its inability to implement market reforms in the domestic sector which gives rise to this impression? For those who have observed the Indian energy sector for some time now, the latter rather than the former view would appear to be closer to the truth. India’s state owned energy companies are a legacy of its socialist past rather than the result of its presumed ‘realist’ present. Its inability to introduce a role for the market in its domestic energy sector is the result of persistent social and economic inequalities rather than India’s commitment to realism. 

However the ‘realist’ interpretation of energy security can be skillfully used by state owned energy companies to gain state support for their purely commercial objectives. As distorted as the idea of national security and energy security are, they can offer an excellent allegory for a protecting narrow commercial interests of energy companies. This happened in the United States when it became a net importer of oil in the 1940s. Small domestic producers of oil argued that cheap imported oil disrupted local economies and since most of the imported oil originated in the Middle East, it was too close a target for attack by the erstwhile Soviet Union.  International majors led by Standard Oil of New Jersey (currently Exxon) which produced most of the oil that was ‘imported’ into the United States, took a hard line against import controls and suggested that spare domestic capacity was a good thing for military security.  It argued that the import of oil during peace time would conserve domestic capacity for emergency utilisation and hence improve ‘national security’.  In the Indian context, Indian state owned oil & gas companies such as ONGC argue that ‘equity oil’ will somehow enhance ‘energy security and thus lead to national security knowing very well that oil has a liquid global market and owning oil can make no unilateral difference to the energy security of India. Companies such as the ONGC need to widen their own asset base to justify their existence in the future. As hydrocarbon resources do not appear to be abundant in India they have to go overseas to secure assets, which is a purely commercial motive of survival rather than the result of state policy. Likewise, the nuclear establishment in India has argued that import of Light Water Reactors is preferable to the import of 500 million tonnes of coal as the imported LWRs would apparently lead India to the thorium cycle and thus release India from the clutches of energy dependence.  The ‘national security’/ ‘energy security’ argument is also used by domestic equipment suppliers such as BHEL to seek protection from cheaper imports. 

The absence of a realist energy security policy does not automatically mean that India is committed to a liberal market based policy secure its energy. Most of India’s citizens are too poor to be subject to the vagaries of liberal market forces. As per experts (see excerps from the speech by Dr Kirit Parikh in this volume) over 70 percent of India’s population would need energy subsidies in the form of a universal cash transfer of about ` 1200 per person per annum excluding only the ‘visibly rich’ to replace India’s inefficient and leaking existing subsidy system. 

In this light, the question arises as to whether it is fair to accuse India (and China) as countries that follow deliberate realist policies in the area of resource security to destabilize the emergence of a new world order.  India may appear to be a large economic power with well ordered economic and strategic policies but in reality India is just bungling along amidst its many constraints.  The realist policies towards energy security exist only in the eyes of the beholder!



Efficient Management of the Coal Sector

Ashish Gupta, Observer Research Foundation


ower is an important input for development and critical for improving the GDP of the country. It is a critical infrastructure on which the socio-economic development of the country depends. However India is yet to come to grips with issues in the power sector. Coal makes good for almost 70 percent of the country’s power requirements not withstanding rising concerns about the environment. Despite the push towards alternate and atomic sources, India’s electricity generation is predominantly through coal plants. India has huge reserves of coal but still power plants do not get adequate supply of coal required for electricity generation. We have to look for imported coal and even that does not reach power generators on time because of infrastructure bottlenecks and around 10 percemt of indigenous coal is lost during transportation and other problems.

Even China which is producing 2 billion tonnes of coal a year is also grappling with infrastructure problems but with their effective management China has overcome its problems through better management and there are lessons for India. Reducing pilferage, shortfalls that occur in loading, illegal mining etc can be reduced. These things account for loss of almost 10 percent or in other words approx 40 MT of coal. Strikes by coal miners at critical times is also a sign of poor management. There is need for a reform of the entire coal sector and it entails resolving all issues related to coal mafias, coal unions and Maoists/ Naxals that have been the cause of illegal mining, extortion activities and interference in the administration of coal companies.

There is also a need for a coal regulator which at present does not exist. There is good news that the Coal Regulatory Authority Bill which is in drafting stage is likely to be introduced in this budget session. It is believed that if the bill is approved it will address the transportation problems faced by consuming industries among other problems. It is imperative because it will not only eliminate government interference but also bring transparency in the pricing mechanism, safety and performance standards, productivity enhancement and in laying down procedural framework. But again we need to ensure that the role of regulator should be properly put in place independent of the government and not in the paper only.

We also have to work on cost reduction measures through deployment of modern techniques to remain cost competitive against international volatile coal prices. Not only large scale deployment of clean fuel technologies, but also use of modern techniques like GPS, remote sensing, satellite surveillance etc. should be adopted for effective resource management. Overall performance can be improved by using wash coal or blending of F-grade coal with A- grade coal instead of only using F- grade coal which has high ash content.

Productivity is another area which is vital for the coal sector and through modern technology, well suited training program and skill development programs we can increase production as well as productivity. Productivity does not depend only on the resources, but also on many factors such as improving policy guidelines, development of environmentally accepted techniques including exploiting of indigenous resources. Given the resource constraint we need to understand that we can not change the equation in a day and but through proper and effective management we can achieve much improve results.   


India’s Renewables Attractiveness Rank Remains Static

Sonali Mittra, Observer Research Foundation


espite the innumerable initiatives, schemes and programs to develop the renewable energy, India maintains a static position in the ‘All Renewables Index’ formulated by Ernst & Young Environmental Finance Team – Feb, 2012. After China, USA and Germany, India was ranked 4th in the Country Attractiveness Indices, which ranks relative attractiveness of 40 countries’ renewable energy market across a selection of technologies. The current Government of India policy frameworks may be inadequate to sustain the position.

Besides the National Solar Mission, India hasn’t been able to formulate more holistic polices for renewable energy development. Even, the Jawaharlal Nehru National Solar Mission, under which only 400 MW were connected to the grid in the past fiscal year (albeit two-thirds less than originally planned), is being questioned for its credibility. The scalar dichotomy that exists amongst different renewable energy sources in terms of policies, regulations and execution is the key to understand the future of the Indian renewable energy market. Assessments based just in terms of economically viable potential may not be sufficient to lay emphasis on one source more than the other. For instance, solar which offers a potential of 5000 trillion kWh/yr as compared to biomass at 19,500 MW, Small Hydro at 15,000 MW and Wind at 45,000 MW, have experienced a lot more attention. There are evidences that suggest that life cycle assessment of power produced and distributed through each of these sources dramatically changes in the ranking (which purely based on ‘potential capacity’).  It is very clear that to make a significant thrust in the renewable energy market in India, a more inclusive vertical and horizontal integration of developmental planning and policies need to be devised for an upward growth trajectory. 

It is being constantly argued by the industry experts as well as energy analysts, that a completely different strategy needs to be adopted for developing renewables. Through the prism of energy security, power deficit and climate change, renewables have little to offer at the moment, mainly due to the amateur market, technological and financial constraints. Excessive focus on developing the domestic market may not be best way to develop the renewable energy industry in India instead, industrial policies focussing on building capacities of local manufacturing, research and development for technology innovation might provide the required momentum to the sector. Renewables offer several choices that can be combined for maximizing the benefits and for economic competitiveness, given the adequate institutional framework and implementation efficiency has the potential to make India more attractive in the global market.

In conclusion, it can be suggested that for India to maintain its rank and to push it further up, it needs to one, start considering alternative measures to make the environment more conducive for foreign investments; two, disseminate lessons learnt from already mature markets especially Europe to incorporate precautionary measures in planning and implementation to reduce risks; three, establish a link between end-users, developers and policy makers for informed decision making while planning for long-term development objectives for renewables.


Petroleum Subsidies & Excluding the Easily Identifiable Rich

(Excerpts of the Special Address by Dr. Kirit Parikh, former Member (Energy), Planning Commission delivered at the 10th Petro India Conference held on December 12, 2011 at New Delhi)



hat can we do about subsidies? We know that every $10 per barrel increase in international oil prices means about Rs 25,000 to Rs 30,000 crore ($4.8 to $5.8 billion; $1= Rs 52) of additional burden of under-recoveries.  We know that under-recoveries are today expected to be around Rs 140,000 crore ($26.92 billion) for this year only on petroleum products.  You can add other subsidies that the government giving and the number would be around Rs 300,000 crore ($57.69 billion).  But let us look at only the petroleum subsidies.  How can we reform it?  One way is, as suggested by Mr. Tripathi and Mr. Krishnan, is that we move in small steps.  The only concern I have is that we have never had any reforms which had moved in small steps completed because after a while the government loses its momentum.  The only successful reforms were the reforms of 1991 which were done in one big step.  So, I think there is some reason to say that we need to think about subsidy reforms which can be done quickly and at one go.  I have two suggestions. Of course, we can say increase the price immediately.  The answer is clearly a ‘no’. You know that nobody is likely to buy it.  My suggestion is let us liberalize diesel, for example, without changing the current retail price. For example, there is currently subsidy of under-recoveries around Rs 10 per litre (around 19 cents) of diesel and I think if you reduce taxes it can be around Rs 7 a litre.  Then, States can be persuaded to reduce their sales tax about 50 percent, that will come down to around at least Re1 or Rs 2 less and the consequential competition would reduce it by another Re1 or Rs 2.  So, you could say that if you do this retail price should come down to by about Rs 7 – Rs 8 per litre and it would still leave an under-recovery of around Rs 5 per litre.  So, my suggestion would be liberalize diesel prices at one go, fix a subsidy at Rs 5 per litre and then you can say ‘let the diesel price adjust to the international prices gradually as we have seen in the case of petrol.’  Now petrol price changes do not really lead to media frenzy and we have learnt to take it in our stride. 

There is a differential tax on petrol and diesel and that differential tax can be mopped up in two ways.  One is put a large excise tax upfront. The diesel car vehicle manufacturers do not like this because they say, ‘no, our sales depend on the initial cost and that we don’t want this Rs 100,000 ($19.23 billion) of additional cost on diesel vehicles.’  But it does create distortions.  One way to moderate that distortion would be to reintroduce annual road taxes.  We are taking road tax as one lump sum initially.  Instead let us take road tax on an annual basis and then we can put a differential road tax for diesel and differential road tax for petrol vehicles so that you can really encourage people to be more efficient in their use of diesel. 

The other thing I would like to point out is that if you consider that we have Rs 140,000 crore ($26.92 billion) worth of subsidy, we have 120 crore (1.2 billion) people. Rs 140,000 crore divided by 120 crore would be something like Rs 1200 ($23) per person.  If we say that this is given as a direct cash transfer by excluding the easily identifiable rich because our attempt to identify the poor has been a dismal failure.  The targeted public distribution system, 50 percent of the people below the poverty line do not have a PDS card and if you look at those who are buying food from the PDS about 30 percent are rich.  We have large errors of inclusion and large errors of exclusion, but the errors of exclusion are larger.  So, my suggestion would be to offer a universal subsidy without trying to identify people but just exclude the easily identifiable rich. Who are the ‘easily identifiable rich?’ One could say those who have a PAN card, those who are income tax payers, those who have a registered motor vehicle and those who have a monthly salary of more than Rs 15000 ($288) in an organized or public sector are the identifiable rich who can be excluded from subsidies.  My guess is some 30 percent can be excluded this way.  Then, you have to distribute to these 70 percent of the people, i.e. some 90 crores of persons, Rs 140,000 crore that are currently wasted in subsidies.  You will give them around Rs 1400 – Rs 1500 ($27-29) per person per year.  That will be roughly Rs 7500 ($144) per family per year.  Now, what is the worth of kerosene subsidy to a household?  National Sample Survey data shows that on an average people buy around (I am talking about the poorest classes, but the average remains the same across all consumer expenditure classes), about 3 litres of kerosene per month from the PDS.  That means that at a price of Rs 20 per litre they are getting Rs 60 of subsidy per family per month.  If the price is increased by 5 or 10 rupees the subsidy will be Rs 100 per month or Rs 1200 per year.  If we distribute the subsidy we can give Rs 7500 to every family compared to Rs 600 to Rs 1000 worth of subsidy per year from kerosene, if he / she gets subsidy at all. Similarly, if you look at the six cylinders of LPG the total amount of subsidy that a family who uses LPG in a somewhat efficient manner would get would be around Rs 1500 to Rs 1800 per year.  If you are distributing Rs 7500 per family per year this would be covered.  I think that we should really go for ‘unconditional’ cash transfer with the only ‘condition’ that we exclude the rich or those who have income above a certain level. 

Coming to the question about Aadhar card, its great advantage is that there is a biometric information which makes it very difficult to fake.  It may not be completely reliable but it is very difficult to fake it and so you can exclude ghost cards completely.  If you can eliminate the rich then the subsidy programme can be extremely effective.  It is not that we need to really think about what we need to do.  There are ways in which we can deal with the problem that we have and I hope one of these days we will be able to convince the politicians that this is the right way to go.

Distinguished speaker may not be quoted as this is an edited version of the actual speech. The speech may not be reproduced without the permission from the Observer Research Foundation.

The recommendation report based on the proceedings of the conference can be downloaded from ORF’s website



India's Civil Nuclear Cooperation Deals

Akhilesh Sati, Observer Research Foundation




Area of interest and details


CNC Agreement

Discussing uranium import and reactor construction


CNC (ongoing)

Showing interest in uranium export and import


CNC (ongoing)

Discussing Business; having interest in the safety of India's

nuclear power plants


CNC Agreement

Kudankulam and Haripur projects


CNC Agreement

Discussing uranium export and import, technology collaboration


CNC Agreement

Discussing technology exchanges and safety


CNC (ongoing)

Discussing technology in medical research and Myrrha

experimental fast reactors


CNC (ongoing)

Showing interest in uranium export and import


CNC (ongoing)

Planning to replace India's old reactors with new ones


CNC (ongoing)

Showing great interest in India due to Spain's saturated industry


CNC Agreement

Exchanges of nuclear technologies and scientists


CNC (ongoing)

Discussing exchanges between the public and private sectors


CNC (ongoing)



CNC Agreement

Uranium export and import


CNC Agreement

Exchanges relating to nuclear power plants by and large


CNC Agreement

Jaitapur project ongoing

South Korea

CNC Agreement

Showing interest in technology exchanges and participating in



CNC (ongoing)

Planning to discuss technology cooperation


CNC (ongoing)

Uranium export and import

CNC: Civil Nuclear Cooperation

Source: This table is taken from an analysis “The heated Indian nuclear energy market” by Ji Yeon-Jung appeared in Winter 2012- POSRI Chindia Quarterly in the source for the above table mentioned as DAE, Government of India, Sitakanta Mishra, India’s Civil Nuclear Network: A Reality Check, Journal of Air Power & Space Studies, 5(4): 107-132






Cairn awaiting nod to raise Mangala oilfield output

March 5, 2012. Cairn India is awaiting approval of a crucial committee, where its partner ONGC is represented, for raising output from its largest oilfield in the prolific Rajasthan block. Cairn says it is ready to raise output from Mangala field in the Rajasthan block to 150,000 barrels per day from current 125,000 bpd but this needs approval of Operating Committee (OC), which comprises its representative and that of its partner ONGC. Once OC gives its approval, the proposal would then go to the block oversight panel, called the Management Committee which is headed by the oil regulator, the Directorate General of Hydrocarbons (DGH). Independent consultants have cerfified oil reserves in Mangala field support increased output as well as the adequacy of surface facilities to handle higher production. Mangala, the largest of the 25 oil and gas finds made by Cairn in Block RJ-ON-90/1 in Thar desserts of Rajasthan, began production in end August, 2009 and has been producing at the approved peak of 125,000 bpd for the past six months. Cairn had in January won approval to start production from Bhagyam, the second largest discovery in Rajasthan. While the approved field development plan for Bhagyam envisages a peak output of 40,000 bpd, the MC had for the time being given nod for production of up to 25,000 bpd from the field. Bhagyam is currently producing about 20,000 bpd and together with Mangala, the Rajasthan block is currently at 145,000 bpd. The output from Bhagyam was to increase gradually so as to test the reservior and support facilities. Cairn India, which was recently taken over by London-based mining group Vedanta, is the operator of the Rajasthan block with 70 per cent interest while the remaining 30 per cent is with ONGC. Cairn believes Bhagyam has an ultimate potential of 60,000 bpd which can be reached with after making some more investment. Aishwariya, the third largest field in the Rajasthan block, can produce 25,000 bpd, compared to 10,000 bpd that it is envisaged to produce from end 2012. Together, the Rajasthan block has a potential to reach 300,000 bpd (15 million tons) with other fields in the block contributing 65,000 bpd. At present, the approved peak output from Rajasthan is just 175,000 bpd -- made up of 125,000 bpd from Mangala, 40,000 bpd from Bhagyam and 10,000 bpd from Aishwariya.

ONGC to increase production in Tripura

March 2, 2012. ONGC would increase its production within next year in Tripura to supply gas to different gas based thermal power projects and industrial houses in the state. ONGC would enhance production of natural gas from 1.8 Million Metric Standard Cubic Meter (MMSCMD) per day to 5 MMSCMD per day within 2013-14 financial year. ONGC would supply 2.56 MMSCMD gas per day to gas based 726 MW power project at Palatana in South Tripura district which would be operational this year. ONGC has so far dug 159 gas wells of which 73 wells are gas bearing and added the striking rate in this case is 46 per cent when the national rate is 30 per cent. ONGC has given extensive exploration drive throughout the state and renovating its gas collection stations (GCS). ONGC which started exploration in the state since 1972 has a recoverable reserve of 32.17 Billion Cubic Meter gas. Besides ONGC, the Consortium of GAIL and Jubilant Oil and Gas Pvt. Ltd started exploration of gas in the state since 2004 and so far dug three wells and possibility of striking gas in one well was disclosed by GAIL recently. Tripura earns ` 30.62 crore per year as revenue from the exploration companies.

ONGC in talks to spend at least $1 bn on U.S. shale deal

March 2, 2012. ONGC is close to an agreement to buy its first shale gas asset in the U.S. and plans to spend at least $1 billion on purchases. ONGC is working with various banks. The company may buy stakes in more than one shale gas asset. Shale is a sedimentary rock that can hold gas and oil. The government raised at least ` 122 billion ($2.5 billion) in an ONGC share auction, with 95 percent of the bids placed in the final 10 minutes. The target was to raise 124 billion rupees and a delay in disclosing the final results spurred speculation the sale had failed after the issue was priced at a premium. Companies that have invested in U.S. shale include Marubeni Corp., which said it agreed to buy a 35 percent stake in an acreage from Hunt Oil Co. in a $1.3 billion deal that includes future drilling costs. The deal values the fields at about $25,000 an acre. Total SA’s $2.32 billion acquisition of a stake in the Utica region in New York from Chesapeake Energy Corp. was for about $15,000 an acre. Reliance’s purchase of Eagle Ford acreages from Pioneer Natural Resources Co. in June 2010 valued the deal at $11,100 an acre. India imports more than 80 percent of its oil and 25 percent of its natural gas requirements. ONGC would look to bring gas to India from the U.S. after the shale acquisition. The U.S. produced 96 billion cubic meters of gas in 2009, overtaking Russia as the world’s biggest producer. Output surged to 142 billion cubic meters in 2010, causing prices to slump. Cheniere Energy Inc. (LNG) and Freeport LNG Development LP are among companies that plan to liquefy and export U.S. gas.

Videocon chairman, could land windfall gain from Cove Energy sale

March 2, 2012. As billion-dollar bids and counter-bids stack up for LSE-listed Cove Energy, Venugopal Dhoot, chairman of Videocon Industries, a consumer electronics maker, is keeping a close watch on the frenetic action that is unfolding from his perch at Fort House in Mumbai. He is an interested party as his flagship firm, Videocon Industries, owns more stake in the blockbuster oil and gas block than what Cove Energy owns in the Rovuma basin, a prized asset off the coast of Mozambique. Cove is coveted even though it owns just 8.5% of the basin while Videocon owns 10% in the same asset.


RIL keen on Cairn crude for Jamnagar SEZ refinery

March 6, 2012. RIL wants to buy Cairn India's Rajasthan crude oil for processing at its only- for-exports Jamnagar refinery in Gujarat and has approached the government for its approval nod for the same. RIL currently buys 80,000 barrels per day (bpd) or 4 million tonnes a year crude from Rajasthan, that it processes at its old 33 million tonnes a year domestic tariff area (DTA) refinery on the West Coast. It has now applied to the government to buy another 30,000 bpd of Cairn crude for turning it into fuel at its 29 million tonnes SEZ (Special Economic Zone) refinery adjacent to the old unit. The company's request would be considered by the Board of Approval. Any sale to a SEZ or only-for-exports unit is considered outward shipment or exports out of India. The current policy does not allow export of domestically produced crude oil. RIL's request comes just when Cairn is beginning to ramp up production from Rajasthan fields. Cairn currently produces 125,000 barrels per day from Mangala oilfield, the largest find in the Rajasthan block. Another 20,000 bpd is produced from Bhagyam fields. Mangala can go up to 150,000 bpd or 7.5 million tonnes a year anytime now while Bhagyam has an approved peak of 40,000 bpd and can go up to 60,000 bpd with more investments. Cairn currently sells 15,000-20,000 bpd to state-owned Indian Oil Corp (IOC) and another 30,000-40,000 bpd to Essar Oil.

State-run refiners scale down crude oil imports from Iran

February 29, 2012. India's imports of Iranian crude oil are expected to fall further as state refiners reduce their exposure to the country facing US sanctions, even as the shift is being officially explained as a drive to diversify the country's crude basket to avoid offending major oil suppliers such as Iran. India maintains its declared policy that it will keep buying crude from Iran and maintain friendly relations with it unless there are UN sanctions against the country. But the oil ministry is quietly nudging state refiners to explore new grades of crude oil from Africa and Latin America, which are cheaper and can improve refining margins of complex refineries.

Policy / Performance

Oil cos push for over ` 5 per litre hike in petrol price

March 6, 2012. With electioneering in five states coming to an end, state-owned oil companies are pushing for raising petrol price by over ` 5 per litre but the actual increase would depend on the government nod. Oil firms had last revised petrol prices on December 1 after which rates have not been changed because of Assembly elections in states like Uttar Pradesh. IndianOil, Bharat Petroleum and Hindustan Petroleum together have lost over ` 900 crore since the last revision which was done at international gasoline price (the benchmark for deciding domestic retail rates) of $ 109 per barrel. Gasoline rates have since risen to $ 130.71 a barrel. With Congress faring poorly in the Assembly polls, it remains to be seen if the UPA-government would give nod for an increase just ahead of the Budget session of Parliament which begins on March 12. Oil firms also want an increase in diesel and cooking gas prices but that call would have to be taken by an Empowered Group of Ministers, where key allies like Trinamool Congress and DMK are represented. Mamata Banerjee-led TMC is opposed to any fuel price hike. State-owned oil firms lose ` 13.55 per litre on diesel. They also lose ` 29.97 a litre on kerosene and ` 439 per 14.2-kg domestic LPG cylinder. Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are losing about ` 450 crore per day on sale of diesel, domestic LPG and kerosene. The call on raising diesel prices would be taken by the EGoM as and when it meets while petrol rates would be revised by oil firms themselves. Petrol price were freed from government control in June 2010 but rates have not moved in tandem with imported cost. While petrol price were last revised on December 1 when they were cut by ` 0.78 per litre to ` 65.64 per litre in Delhi, diesel currently costs ` 40.91 a litre.

Govt urged to finalise modalities for crude production in Nagaland

March 5, 2012. Kyong Students' Union urged the Nagaland government to finalize the modalities for exploration of oil and gas from the proven fields. The union asked the cabinet sub-committee on petroleum and natural gas to finalize the modalities for crude extraction from Changpang oil fields of Wokha district. After exploratrion and production for some years, ONGC abandoned the oil fields in 1994 after a serious law and order problem there. The government constituted a cabinet sub-committee with Planning Minister T R Zeliang as convener to prepare modalities taking into consideration the interests of all stake holders for resumption of oil production in the area and other potential places in Nagaland.

Oil Ministry to seek Law Ministry's opinion on RIL demand

March 5, 2012. The Oil Ministry is likely to refer Reliance Industries' demand for an increase in price of natural gas it produces from eastern offshore KG-D6 fields to the Law Ministry. RIL had on January 6 written to the Oil Ministry and the Prime Minister's Office (PMO) seeking a gas price revision, saying the current $ 4.2 per million British thermal unit rate for KG-D6 gas was "sub-market" price compared with three times higher price being paid for imported gas (LNG). The PMO subsequently asked the oil ministry to legally examine if the government can allow RIL to increase the price. The government had in 2007 fixed $ 4.20 per mmBtu as the price of gas produced from KG-D6 fields for first five years of production. KG-D6 fields started production in 2009. But the Oil Ministry's letter on October 10, 2007, informing RIL of the pricing decision did not stop at this and went on to state that if the company was to realise a price higher than $ 4.20 per mmBtu, then that rate would be used for determining government's take from KG-D6 block.

Budget 2012: Oil firms ask for tax incentives in Union Budget

March 5, 2012. An association of private and PSU oil companies has demanded a slew of tax incentives, including income tax holiday for natural gas production and extending the same for oil refineries by another five years. In a pre-Budget memorandum to the government, the Petroleum Federation of India (PetroFed), a body comprising almost all public and private sector oil companies, sought seven-year holiday for payment of income tax to all refineries that are commissioned by March 2017. Currently, the tax breaks are available only for units beginning production by March this year. PetroFed said the period of tax holiday for both exploration and refining activities should be extended to 10 years as in case of power sector.

CNG price raised by up to ` 1.90 per kg in Delhi, adjoining areas

March 5, 2012. CNG price in the national capital and adjoining towns has been increased by up to ` 1.90 per kg, as costlier LNG was being imported to make up for fall in output from Reliance Industries gas field. CNG in Delhi will cost ` 1.70 per kg more at ` 35.45 per kg. IGL hiked price of CNG sold to automobiles in Noida, Greater Noida and Ghaziabad by ` 1.90 per kg to ` 39.80 per kg. This is the sixth increase in CNG rates this year. IGL had last raised CNG prices in Delhi by ` 1.75 per kg to ` 33.75 per kg from December 31. The hike had been necessitated because IGL is buying more of imported liquefied natural gas (LNG) after supplies from RIL's KG-D6 gas fields dried up. Imported fuel costs at least three times more than $ 4.20 per million British thermal unit rate fixed for domestic gas. City gas distributors like IGL are not getting any supplies from KG-D6 since September last year, after a 40 per cent output drop forced the government to cut supplies to non-priority sectors so that requirement of power and fertiliser plants can be fully met. The proportion of costly imported LNG vis-a-vis domestic gas in the overall pool of natural gas being procured for supply as CNG has risen to around 25 per cent. The increase would have minor impact on the per km running cost of vehicles.

Outcome of ONGC auction tarnished PSU's image

March 5, 2012. Ratings agency Moody's said the result of the government stake auction in ONGC has tarnished the image of the oil major. On March 1 the government had auctioned 5 per cent of its stake in ONGC. Although the issue was subscribed 98.3 per cent and fetched the government ` 12,767 crore, as much as 84 per cent of the shares on the block were bought by state-run LIC. Moody's said that one of the reasons for investors staying away from the ONGC auction was that the shares were priced higher than the market price. While the shares were trading around ` 286 a piece, the government fixed the floor price for auction at ` 290.

India cancels Iran oil shipment due to sanctions

March 2, 2012. India's largest shipping company was forced to cancel an Iranian crude oil shipment because its European insurers refused to provide coverage for the vessel on the grounds of tightening sanctions on the OPEC member. The European Union announced new sanctions in January prohibiting European insurers from indemnifying ships that carry Iranian crude and oil products anywhere in the world. Iran is India's second-biggest supplier of oil after Saudi Arabia, with some $11 billion a year in shipments meeting about 12 percent of India's crude import needs.

India diversifying sources to reduce dependence on Iranian oil

February 29, 2012. India will increase imports of crude oil from Africa and Latin American countries to reduce dependence on Gulf countries, especially Iran which is facing sanctions from the US and the European countries. Crude oil imports from Africa and Latin American countries especially from Venezuela have increased sharply in the recent years. Saudi Arabia is the biggest supplier of crude oil to India followed by Iran. Although imports from Saudi Arabia has remained steady at around 27 million metric tonne per year, oil purchases from Iran have gone down in the last couple of years. Imports from Iran fell to 18.5 million metric tonnes in 2010-11 as compared to 21.19 million metric tonnes in the previous year. They are likely to drop further in the current financial year.

India said to consider asking Iran to deliver oil, get insurance

February 29, 2012. India may ask Iran to take responsibility for delivering crude to the South Asian nation, allowing domestic refiners to avoid arranging insurance on the shipments. The plan is one of two options being considered by the government as it seeks to maintain oil imports from Iran amid tightened international sanctions against the Persian Gulf supplier. The other option is for India to provide sovereign guarantees to domestic companies hauling crude from Iran.



Adani Enterprises in pact to provide 4 MT coal to NTPC

March 5, 2012. Adani Enterprises signed five agreements for supplying 4 million tonnes (MT) of imported coal to power generator NTPC. The imported coal is required to meet the coal blending requirements of the NTPC power stations, it said. The company will supply one million tonne of imported coal to NTPC's Talcher power stations, one million tonne for Farakka and Kahalgaon, 0.5 MT for Simhadri and Ramagundam, 0.8 MT for Dadri, Rihand, Singrauli, Tanda, Unchchar and Vindhyachal and 0.7 MT for Korba and Sipat stations. The company is expected to mine 200 MT of coal per year in 2020. The company is also operating coal mines in India, Indonesia and Australia.

NTPC to invest ` 240 bn for two new projects in Odisha

March 3, 2012. Unveiling its ambitious plan to augment generating capacity by about 4,500 MW in Odisha, NTPC said it would invest over ` 24,000 crore to set up two power projects in the state during 12th five-year plan. Both the projects were proposed to be commissioned during the 12th five-year plan, land acquisition was likely to be completed by June this year while the company ready for global tendering for procurement of equipment and machinery.

NTPC's JV firm for B'desh project may be registered

March 1, 2012. The joint venture (JV) company between Bangladesh Power Development Board and NTPC for setting up a 1,320 MW power project in the neighbouring nation is likely to be registered this month. The nearly $1.5-billion Khulna project, based on imported coal, would help in easing the power scarcity in Bangladesh. In January, state-run Bangladesh Power Development Board (BPDB) and NTPC inked the pact to build the plant. The project would be implemented by 50:50 joint venture company. Bangladesh, grappling with significant power shortages, has a generation capacity of over 7,600 MW. In a move that would help in boosting the bilateral ties, NTPC has also agreed to supply 250 MW power to Bangladesh. The transmission systems between the two nations is expected to be completed by end of July 2013. Late last year, BPDB and NTPC had signed a memorandum of understanding (MoU) for setting up two thermal power plants at Khulna and Chittagong in the neighbouring nation. Bangladesh is looking to attract foreign entities, especially from India, to make investments in that country's growing power sector.

Transmission / Distribution / Trade

Aggreko sets up India headquarters in Pune

March 6, 2012. Aggreko, a provider of temporary power and temperature control services, announced the opening of its India head office at Pune. The company had been operating with depots in Pune and Chennai for the last two years. The company decided to consolidate the country headquarters in the city due to its thriving industry, pool of highly qualified engineering and business professionals based locally, and its proximity to key business centres such as Mumbai.

As costs rise, power cos to up tariffs 33 pc

March 5, 2012. Come April and households across India should prepare for an average one-third rise in electricity bills as distribution firms seek to raise tariffs to share increasing fuel cost and revenue gaps with consumers. While most proposed distribution reforms remain on paper, some consumers in Mumbai may be asked to pay as high as 11 per unit of power consumed and an average household consuming over 500 units in Andhra Pradesh may end up paying 7 in the coming year. Tamil Nadu's distribution utility has demanded a 64% rise in energy charges for 2012-13. Besides, most distribution firms have proposed to raise or modify other components of electricity bills like fixed and demand charges, analysis of tariff petitions filed with electricity regulators show. The proposals come as a double blow to consumers in states such as Rajasthan, Punjab and Delhi.

Power Grid likely to get $400 mn funding from IFC

March 4, 2012. State-run Power Grid Corporation is likely to get $ 400 million (over ` 1,980 crore) funding from the International Finance Corp for undertaking electricity transmission projects in the country. The proposed funding would make up for 15 per cent of the national power transmission company's projects cost, estimated to be worth $ 2.3-3.5 billion, according to the IFC. The entity, part of World Bank group, focuses on lending to entities in developing countries. IFC would put up the $ 400 million funding proposal before its board on May 3. Power Grid Corporation of India Ltd (PGCIL) is expected to fund 70 per cent of the projects' cost through debt while the remaining 30 per cent will be from internal accruals. Apart from this loan, Power Grid has also asked for IFC's support to enter other markets. The public sector major already has board approvals for investments worth about ` 70,000 crore related to 12th Plan Period (2012-17) projects.

BGR, BHEL to bag ` 90 bn NTPC, DVC contracts

February 29, 2012. BGR Energy and Bharat Heavy Electricals Ltd (BHEL) have emerged as lowest bidders for ` 9,000 crore contract seeking supply of equipment for five projects of NTPC and Damodar Valley Corp (DVC). BGR Energy is likely to be awarded contract for supply of 660-MW energy-efficient boilers to three projects, while BHEL is expected to bag rest two. The equipment is being sourced for NTPC's Mouda, Solapur, Meja, Nabinagar and DVC's Raghunathpur projects.

NTPC to supply 250 MW power to Bangladesh

February 29, 2012. The country's largest electricity producer NTPC will supply 250 MW power to Bangladesh, a move that will help strengthen trade ties between the two nations. NTPC will export 250 MW power to Bangladesh from the unallocated quota available with the Power Ministry. A power purchase agreement has been inked between NTPC Vidyut Vyapar Nigam Ltd (NVVN), a wholly owned subsidiary of NTPC and Bangladesh Power Development Board (BPDB).

NTPC opens bids for ` 160 bn equipment order

February 29, 2012. NTPC, India's top power producer, opened the price bids for ` 160-billion equipment order. Three power equipment makers -- state-run BHEL, a joint venture between BGR Energy Systems and Hitachi Power Europe GmbH, and another JV between Larsen and Toubro and Mitsubishi Heavy Industries -- have bid for supplying supercritical boilers. The process of awarding equipment order for NTPC's nine units of 660 MW each was delayed by more than a year after utility boiler maker Ansaldo Caldaie challenged its disqualification on technical ground in the Delhi High Court. The Delhi High Court stayed opening of price bids and later ruled in favour of Ansaldo. After India's top court overturned the High Court's order, NTPC resumed the process.

Policy / Performance

Electricity export to India possible, Iran minister

March 6, 2012. Iran is keen to explore the possibility of exporting electricity to energy-hungry India after the much-touted tri-nation gas pipeline project with New Delhi slid into limbo. Iran's energy minister Majid Namjou said Iran might well export electricity to India instead of gas. Namjou said that India is one of the frontrunners in the field of generating renewable energies and Iran will prepare the ground for the development of new energies in the country in cooperation with India. The minister said India has expressed readiness to import electricity from Iran, pointing out that holding related negotiations with India has been placed on the ministry's agenda. He noted that a new power plant is under construction on Iran's border with Pakistan.

60 cos may lose licence for going slow on coal blocks

March 6, 2012. Tata Power, Reliance Power, ArcelorMittal, Jindal Steel and Power and Monnet Ispat & Energy are among 60 companies that face risk of cancellation of mining licences for being slow in exploration of coal blocks. A review committee headed by coal ministry's additional secretary Zohra Chatterjee has recommended issuing 'show-cause notices' for 58 blocks asking for reasons why mining licences should not be revoked. A coal ministry official said appropriate action would be initiated against companies that are not able to justify the delay. The companies include Hindalco Industries, Tata Sponge, Electro Steel Casting, MMTC, National Aluminium Co Ltd and power and mining utilities of Jharkhand, Orissa, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Tamil Nadu. Coal ministry's latest review found that only 29 of 195 allotted coal blocks have started production while progress at 90 blocks was found dissatisfactory as critical milestones like acquisition of land, forest clearances and execution of mining lease were not achieved for various reasons.

Tata Power in JV with Exxaro Res

March 5, 2012. Tata Power has formed an equal joint venture with South Africa's Exxaro Resources to develop and operate power generation projects in the African nation. Tata Power will form the joint venture, named Cennergi (Pty) Ltd, through its unit Khopoli Investments. Cennergi will initially focus on renewable energy projects in South Africa and will later have projects in Botswana and Namibia.

Iran may export 5 GW power to India

March 5, 2012. Iran is likely to supply 5,000 MW of electricity to India as power exports are more cost- efficient, says an Iranian media report. India has indicated its willingness to import 5,000 MW of electricity from Iran. As per the report, India is currently producing 17,000 MW of power from renewable energy sources. Therefore, India can share its experience in the development of power plants operating on renewable energies with Iran. At present, however, there is no grid connection between India and Iran. Iran's Oil Ministry inked the first gas-to-wire contract for converting natural gas to electricity and exporting power to neighboring countries. Going by the contract, the ministry would first develop the offshore Forouz B gas field in the Persian Gulf whose natural gas would be then used to generate power. Iran is currently exchanging electricity with Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, the Republic of Nakhichevan, Turkey and Turkmenistan.

Govt may soon issue notices to cos sitting idle on coal blocks

March 4, 2012. The coal ministry is likely to issue show-cause notices within a month to about 50 block holders asking them to either start production or face deallocation. The development comes close on heels of a direction from the Prime Minister's Office to the coal ministry to ensure adequate supplies of coal to power producers. The decision to issue show-cause notices to those sitting idle on captive coal blocks was taken by a panel looking into the development of reserves. Concerned over the increasing demand supply gap, the coal ministry had in January reviewed the progress of mines allocated to companies, including Tata Steel, Coal India, SAIL and NTPC for captive use.

Bangladesh expects $7-9 bn investment by Indian power cos

March 4, 2012. Looking for increased co-operation with India in the energy space, Bangladesh expects Indian companies to invest $ 7-9 billion in its power sector and a few entities have already evinced interest. Bangladesh would need about $ 30 billion for its planned power capacity addition over the next five-six years and expects about 25-30 per cent of the investments for the same to come from India. Grappling with acute electricity shortage, Bangladesh is embarking on significant capacity addition plans and is in the process of inviting tenders for projects having capacity of over 5,000 MW. The country needs about $ 20 billion investment in power generation activities alone in the next five to six years. Currently, Bangladesh has an installed capacity of over 7,600 MW and is expected to go up to 21,000 MW by 2021. Many companies, including those from India have participated in tender processes for various power projects.

Narayanasamy questions govt 'silence' over Kudankulam Nuclear power plant

March 4, 2012. Expressing dismay over Puducherry government's 'silence' over the Kudankulam Nuclear power plant issue, Union Minister of State in PMO V Narayanasamy said it was intriguing as the union territory would also stand to get power from KNPP. Narayanasamy said he was really taken aback at the 'silence' of the government, which was maintaining a stand as if the issue was not its concern.

India's first smartgrid project to be implemented on pilot basis

March 2, 2012. A smart grid project recommended by the Power Ministry's India Smart Grid Task force will come up on a pilot basis in the union territory, reportedly the first in the country. A Memorandum of Understanding to introduce the innovative project was inked in the presence of Chief Minister N Rangasamy between the Department of Electricity and Power Grid Corporation of India Limited (PGCIL). The Ministry proposed to set up such smart grid projects in eight cities across India and that Puducherry is the first to implement it on an experimental basis.

Budget 2012: Decision on raising duty on import of power gear deferred

March 1, 2012. The government deferred a proposal to increase duty on import of power equipment and an announcement on the issue is expected in the upcoming Budget. The Cabinet Committee on Economic Affairs (CCEA) in its meeting postponed a decision on imposing higher import duty on power gear. Currently, equipment imported for projects of less than 1,000 MW capacity attract five per cent customs duty, while those above that enjoy exemption. The plan to slap higher duty on overseas power gear is aimed at providing a level-playing field for domestic manufacturers which are battling intense competition, mainly from China. Power and Commerce Ministries have suggested a total of 19 per cent levy on imported power equipment while the Heavy Industry Ministry has recommended a duty structure of 14 per cent.

GoM clears NTPC Jharkhand power plant

March 1, 2012. Over-ruling environment minister Jayanthi Natarajan, a group of ministers decided to shift the proposed site of NTPC's 1980-MW North Karanpura power plant in Jharkhand, a move which will save six billion tonnes of coal reserves. While relocation of the NTPC's plant would save the coal bed, Natarajan opposed most of the projects that came up for discussion before the GoM citing green concerns. The group of ministers (GoM), headed by Finance Minister Pranab Mukherjee, decided that the NTPC's plant can be relocated to low coal-bearing areas in the vicinity.




Kuwait Energy spots new oil in Egypt

March 5, 2012. Kuwait Energy and their main partner, the Egyptian General Petroleum Corporation (EGPC), announced a new oil discovery, the El Salmiya-1 well, in the Abu Sennan concession located in the Western Desert in Egypt. The company said that this is the fourth exploration success in the Abu Sennan concession following the GPZZ-4 and Al Ahmadi-1 gas and condensate wells discovered in August 2011, and the Al-Jahraa-1X oil well discovered in January 2012. Kuwait Energy is one of the fastest growing independent oil and gas exploration and production companies in the Middle East. Kuwait Energy is the operator of the concession and holds a 50 percent working interest. The remaining working interest is held by Beach Petroleum (Egypt - 22 percent working interest) and Dover Investments Limited (28 percent working interest). The new discovery brings the total number of Kuwait Energy discoveries in Egypt to 16 since the start of its operations in 2008. Egyptian operations contribute the largest share to Kuwait Energy's total working interest production, comprising 17,500 boepd as of year-end 2011. The 2011 production level excludes the discoveries made in the Abu Sennan concession۔

South Korea takes stake in UAE oilfields

March 4, 2012. A Korea National Oil Corporation (KNOC)-led consortium has secured South Korea's first oil production assets in the United Arab Emirates (UAE), the Korean government said. Korea has finalized a deal with Abu Dhabi National Oil Co. (ADNOC) to take a 40 percent stake in two onshore and one offshore oil drilling areas, as part of a wider push by oil import dependent Asian countries to secure upstream assets. Under the deal, KNOC will hold 34 percent and GS Energy will hold a 6 percent stake in the projects. ADNOC will own 60 percent. The Korean consortium is expected to invest $2 billion of the estimated $5 billion total cost of developing the fields, the Korean government said. The deal gives South Korea access to fields with combined reserves of at least 570 million barrels of oil, which Seoul has previously said it would have exclusive rights over if other oil supply sources were disrupted. Oil production is expected to begin in 2014, if the development starts as planned, and could rise to 43,000 barrels per day.

Surgut cited as best Russia oil with $28 bn secret

March 2, 2012. Russia’s fourth-largest oil producer pumps more crude than the U.K., employs 100,000 people and trades on stock exchanges in Moscow, London and New York. What’s not disclosed is how much cash OAO Surgutneftegas (SNGSP) holds and the identity of its biggest shareholders. A law to align Russian financial reporting with international standards this year promises to lift the veil on the Siberian driller, run by General Director Vladimir Bogdanov since his Soviet-era appointment in 1984 at the age of 33. Citigroup Inc. estimates the company holds $28 billion in cash, more than double the balance of Exxon Mobil Corp.

Petrobras finds oil in pre-salt area in Campos Basin

February 29, 2012. Petroleo Brasileiro SA said it made a new oil discovery in the pre-salt area in Brazil’s Campos Basin. Petrobras said tests at the well in the BM-C-33 block indicated output of 5,000 barrels of oil and 807,000 cubic meters of gas per day. Repsol-Sinopec Brasil is the area’s operator, with a 35 percent stake, while Petrobras has 30 percent and Statoil has 35 percent of the project.


SOCAR, Kyrgyzstan consider two options on refinery's location

March 5, 2012. Azerbaijan and Kyrgyzstan are considering two options for the location of the oil refinery of the State Oil Company of Azerbaijan (SOCAR) in Kyrgyzstan. If the plant is built in the south, it will be possible to process Kyrgyz oil. Where Kyrgyzneftegaz is located it produces about 100,000 tons per year, whereas during the Soviet era production it was about 500,000 tons. The oil production volume at this enterprise may be increased up to one million tons per year. If the refinery is built in the country's north, oil for its processing will be delivered under the swap terms, which anticipates the transfer of Azerbaijan's oil to Kazakhstan in the Caspian Sea. Kazakhstan, in turn, will give oil at the border with Kyrgyzstan in the Zhambyl and Shymkent regions. The oil refinery is scheduled to be commissioned in late 2013. The minimum cost of the oil refinery which SOCAR plans to build in Kyrgyzstan, hits $100 million.

U.S. was net oil-product exporter in 2011

March 1, 2012. The U.S. exported more gasoline, diesel and other fuels than it imported in 2011 for the first time since 1949. Shipments abroad of petroleum products exceeded imports by 439,000 barrels a day. In 2010, daily net imports averaged 269,000 barrels. U.S. refiners exported record amounts of gasoline, heating oil and diesel to meet higher global fuel demand while U.S. fuel consumption sank. Oil demand in Latin America will climb 2.5 percent to 6.64 million barrels a day, while contracting 2.4 percent in Europe and 0.5 percent in North America. Mexico’s use of U.S.- made gasoline was 44 percent higher last year than in 2010. Distillate shipments rose 30 percent from a year earlier to a record 854,000 barrels a day, and daily exports of finished gasoline and blending components jumped 57 percent to 526,000 barrels in 2011. Refiners are expanding on the Gulf Coast and in the Midwest, even as unprofitable plants along the East Coast were shut. Operable capacity in the U.S. climbed 0.8 percent to 17.7 million barrels a day in December from a year earlier. U.S. refineries in the Gulf Coast, where about half of U.S. capacity is located, operated at 88.8 percent last year, up from 88.6 percent in 2010. In the fourth quarter, Valero, the largest U.S. independent refiner with 14 North American plants, exported about 5 percent of its gasoline output and 17 percent of its heating oil and diesel production. The U.S. will ship abroad 350,000 barrels a day more petroleum products that it imports in 2012 and 320,000 barrels daily in 2013. Gasoline demand in the U.S. sank 2.9 percent to 8.736 million barrels a day last year as pump prices averaged $3.521 a gallon, the highest in records dating back to 1919. Total U.S. oil product demand fell 9.5 percent to 18.8 million barrels a day last year from 20.8 million in 2005.

Transportation / Trade

Billionaires buying gasoline tankers as fuel demand accelerates

March 6, 2012. The richest investors in shipping are buying gasoline tankers, anticipating that fuel demand will expand faster than the fleet for the first time in nine years. Global shipments will jump 4.3 percent in 2012 as vessel capacity gains 3.7 percent. Daily rates for Medium- Range tankers, each hauling enough fuel to fill about 780,000 cars, will rise 19 percent to an average of $14,844. That’s more than the $10,999 anticipated in forward freight agreements, traded by brokers and used to bet on future rates.

Enbridge plans to start shipments on Illinois crude pipeline

March 6, 2012. Enbridge Inc. plans to resume crude deliveries on an Illinois pipeline that shut over the weekend, allowing supply to reach Chicago-area refineries run by BP Plc, Exxon Mobil Corp. and Citgo Petroleum Corp. Line 14 may start operating late on March 7 and Line 64 the following day. Lines upstream of Superior will be slowed or shutdown to manage tank levels. Enbridge halted crude deliveries on line 14/64 after two vehicles collided, starting a fire at the pumping station near New Lenox, Illinois, 36 miles (58 kilometers) southwest of Chicago.

El Paso investors lose bid to stop Kinder Morgan’s $21.1 bn takeover

March 1, 2012. Kinder Morgan Inc. may proceed with a $21.1 billion takeover of El Paso Corp. after a judge rejected claims that Goldman Sachs Group Inc.’s conflict of interest in the deal warranted blocking a shareholder vote. Delaware Chancery Court Judge rejected calls by some El Paso shareholders to block rival pipeline operator Kinder Morgan’s $25.91-a-share offer. El Paso didn’t negotiate a high enough price and Goldman Sachs, which owns 19 percent of Kinder Morgan, wrongfully served as adviser to El Paso on the deal and improperly influenced negotiations.

Singapore oil trader Kuo to ship fuel oil cargo from Iran

February 29, 2012. Kuo Oil Ltd., the Singapore trader that the U.S. censured last month for trading with Iran, has booked a fuel-oil shipment from the Persian Gulf nation for loading in March. Closely held Kuo Oil hired the Mire to load 80,000 tons from Bandar Mahshahr on March 12 for delivery to Singapore. The Liberian-flagged vessel is anchored in the northern Gulf of Oman near the Strait of Hormuz. Fuel oil is a residual product of refining often used for power generation and as shipping fuel. The fixture is provisional and subject to change or cancellation.

Policy / Performance

Kazakhstan to tap Malaysia's oil expertise

March 5, 2012. Kazakhstan intends to tap Malaysia's oil and gas expertise in an effort to develop its own oil and gas industry, especially the Kashagan oil field (Kashagan) project. The first stage of oil extraction is at the completion phase. Kazakhstan hopes Malaysia's biggest oil and gas field player Petroliam Nasional Bhd (Petronas) will participate in the subsequent developing stages of the field. Due to its size and technical complexity, the Kashagan will be developed in three phases. The first commercial production or extraction is targeted to be by the end of this year or early 2013. It is estimated that up to 50 million tonnes of oil will be extracted in the first phase, annually. Kashagan is a huge area and it provides many opportunities for Malaysian companies. Kashagan, the world's second largest oil field, has commercial reserves of up to 16 billion barrels of oil. Kazakhstan produces about 1.6 million barrels of oil a day.

BP Gulf of Mexico case shifts to pollution fines that may top $17 bn

March 5, 2012. BP Plc may face as much as $17.6 billion in civil pollution fines and possibly billions of dollars more in criminal penalties as its settlement with businesses and individuals harmed by the 2010 Gulf of Mexico oil spill shifts the focus to government claims. BP said it would pay an estimated $7.8 billion to resolve private plaintiffs’ claims for economic loss, property damage and injuries. The settlement, to be paid from a $20 billion trust for spill victims set up in 2010, doesn’t resolve federal and state government environmental damage claims. BP has set aside $37 billion to cover spill costs.

Saudi Aramco raises oil premium for April sales to Asia, U.S.; cuts Europe

March 5, 2012. Saudi Arabian Oil Co., the world’s largest crude exporter, said Arab Light crude sold to Asia will be priced at a premium of $2.80 a barrel to the regional benchmark for April loading compared with $1.55 for March. Saudi Aramco, as the state-run company is known, raised the premiums for other light grades sold to Asia, as well as its Arab Medium crude, and narrowed the discount for Arab Heavy. Aramco also raised the differentials for most grades sold to U.S. customers while cutting the formulas for deliveries to Northwest Europe. Each of the three regions is priced against a different benchmark.

Canadian natural gas gains as power generators switch fuels

March 3, 2012. Canadian natural gas rose as low prices encouraged power producers to use more of the fuel. Alberta gas for April delivery gained 1.5 cents after falling 37 percent this year, making it more competitive with coal for generating electricity. Nuclear output slipped to a four-month low, raising demand for other fuels. Alberta gas for April delivery was at C$1.81 a gigajoule ($1.74 per million British thermal units). Gas traded on the exchange is shipped to users in Canada and the U.S. and priced on TransCanada Corp.’s Alberta system. Natural gas for April delivery on the New York Mercantile Exchange rose 2.1 cents to settle at $2.484 per million Btu. Spot gas at the Alliance delivery point near Chicago fell 4.59 cents to $2.4942 per million Btu on the Intercontinental Exchange. Alliance is an express line that can carry 1.5 billion cubic feet a day from western Canada. At the Kingsgate point on the border of Idaho and British Columbia, gas dropped 6.58 cents, or 2.9 percent, to $2.2145. At Malin, Oregon, where Canadian gas is traded for California markets, gas was down 14.08 cents, or 5.8 percent, at $2.2855.

HSBC says oil replaces Greece as threat to economic growth, asset values

March 2, 2012. Soaring oil prices have displaced Greece’s sovereign debt as a threat to global economic growth and financial markets, HSBC Holdings Plc, Europe’s largest bank by market value, said. Brent crude surged to as much as $128.40 a barrel, the highest since July 2008. Brent for April settlement slipped 1.2 percent to $124.67 on the London-based ICE Futures Europe exchange. Equity investors should “take insurance” by becoming overweight in energy stocks while foreign exchange investors should favor the currencies of oil-producing nations such as Norway, Malaysia, Brazil and Russia.

N.Y. oil futures rise above $110 a barrel

March 2, 2012. Oil in New York rose above $110 for the first time since May in electronic trading after the floor closed on the New York Mercantile Exchange. Futures in New York gained 1.7 percent in floor trading as U.S. officials escalated warnings that the nation may join Israel in attacking Iran to stop the development of nuclear weapons. The Federal Reserve said that the housing market has shown improvement.

Global fuel shortage would grow without Iran’s supply, U.S. says

March 1, 2012. Excluding Iran from the global oil market would increase the shortfall between worldwide supply and demand sixfold based on February production and consumption estimates, the U.S. Energy Department said. Global fuel use averaged 3 million barrels a day more than output when Iran is excluded from the calculations and 500,000 more when Iran is included, the department’s Energy Information Administration said in a report.

Oil makes commodities best investment first time since July on Iran threat

March 1, 2012. Commodities, led by oil, beat stocks, bonds and the dollar for the first time since July as the European Union prepared to embargo Iranian crude, the U.S. economy improved and China took steps to shore up growth. The Standard & Poor’s GSCI Total Return Index of 24 raw materials rose 6.5 percent in February, extending the previous month’s 2.2 percent gain, as Brent crude advanced 11 percent. The MSCI All-Country World Index of shares increased 4.8 percent, extending stocks’ best start to a year since 1991. Bonds of all types were little changed on average, according to Bank of America Merrill Lynch’s Global Broad Market Index. The Dollar Index slid 0.6 percent.

Philippines gets 38 bidders for O&G exploration

March 1, 2012. Thirty-eight firms have signed up as possible bidders for 15 oil and gas prospects in the Philippines, including two exploration sites which China claims as its own. This comes on top of forty-two firms that expressed interest in the auction of coal exploration sites offered up under the 4th Philippine Energy Contracting Round. The list of prospective bidders for oil and gas sites includes giants Shell Philippines Exploration B.V., Total E&P Activities Petrolieres, Esso Exploration International Ltd., French gas and power firm GDF Suez, Spain's Repsol Exploracion S.A. and Italy's ENI. Other bidders include Nido Petroleum Philippines Pty. Ltd., Philex Petroleum Corp. and Mitra Energy. The Energy department also renewed assertions that all of the 15 areas being offered for oil and gas exploration are within Philippine territory.



‘Power generation to increase by 10 GW in 2014 in Nigeria

March 6, 2012. James Olotu, managing director of Niger Delta Power Holding Company (NDPHC) said with enough gas the country’s power supply would increase to 10,000 megawatts by 2014. The power supply is currently put at 4,300 megawatts. Olotu said if all plants had enough gas, they could deliver 4,770 megawatts of electricity to the consumers by the end of 2013. He said that additional 3,420 megawatts would be injected to the national grid by NIPPs in December.

Va. Power plans $1.1 bn gas plant in Brunswick County

February 29, 2012. Dominion Virginia Power's planned $1.1 billion natural gas-fired power station in rural Southside Virginia will help make Virginia more energy independent and reduce costs for customers. The Richmond-based utility selected a site in Brunswick County over one in Chesterfield County for a new 1,300- plant, which, if approved by state regulators, would start operations in 2016. Chesterfield has given the utility approval for a new power plant that would be built adjacent to its Chesterfield Power Station at Dutch Gap. The company said Chesterfield is still in consideration for a plant that would be built in 2019, similar to the one in Brunswick. The Brunswick site provides the best alternative to replace generation Dominion Virginia Power is losing with the retirement of several coal-fired units in Hampton Roads, the company said.

Transmission / Distribution / Trade

Iran electricity exports up by 29 pc

March 6, 2012. Iran exported over 8,162 gigawatt hours (GWh) of electricity to the neighboring countries since the beginning of the current calendar year (March 21, 2011), showing some 29 percent rise year on year. Iran has indigenized the technology for building thermal and combined cycle power plants and is now self-sufficient in this field. The country is currently exporting technical and engineering services to different countries for building power plants. Iran is currently building seven large power plants in Syria, Oman, Iraq, and Tajikistan. A number of power plants will be also built by Iran in African states. By the end of the fifth five-year economic development plan (2015), Iran will boost its electricity generation capacity by 25 gigawatts (GW) to reach 73GW. The country’s installed power generation capacity is currently about 64GW. The country’s electricity exports would amount to $1 billion by the end of the current calendar year (March 19, 2012). Iran currently exchanges electricity with Turkey, Armenia, Turkmenistan, Azerbaijan, Pakistan, Afghanistan and Iraq.

New transmission lines to support a new O&G production sites in USA

March 5, 2012. PowerSecure International, Inc. announced it has been awarded a new contract to build electrical transmission infrastructure to support a series of new oil and gas production sites. The boom in oil and gas drilling and production activity, driven by new low-cost technologies, is driving an immediate need for new electrical infrastructure in remote areas to support these operations. PowerSecure’s work under this new contract will be performed on behalf of a major energy company, in partnership with a prominent electric utility. The award is for several million dollars of electrical transmission design and construction, the majority of which is expected to be completed by mid-2012.

Alberta transmission lines going ahead

February 29, 2012. The Alberta government is moving forward with the construction of two new electricity transmission lines between Edmonton and Calgary, which will be financed by current users. The recommendations of the Critical Transmission Review Committee have been accepted by the Alberta government. As a result, the government has directed the Alberta Utilities Commission (AUC) to conduct an inquiry that examines ways to reduce the cost impact of the two lines to consumers. The Alberta government appointed an independent panel of four experts to review plans for the construction of two new multibillion-dollar transmission lines, between Edmonton and Calgary. The committee reviewed the Alberta Electric System Operator’s assessment of the electricity transmission requirements in this part of the province, the selection of High Voltage Direct Current technology and the timing of the planned north-south lines.

Policy / Performance

EU energy chief says nuclear stress tests need time

March 6, 2012. European Union safety tests on nuclear plants should be completed by around the middle of the year as time is needed to ensure they are thorough enough, EU Energy Commissioner Guenther Oettinger said. Oettinger said stress tests would be completed "not later than summer". A June council meeting of energy ministers is expected to receive a report on the stress tests, as has long been planned. The full process might not be completed by then. Oettinger said the tests were strict and objective and sought to establish whether nuclear plants could withstand natural disasters, aircraft crashes, management failures and what systems were in place to deal with power disruptions. The EU embarked on the tests among the 14 member states which operate nuclear plants as a first stage of its response to the Fukushima tragedy. Green groups and politicians have questioned whether the EU is doing enough and Germany last year said it would phase out all its atomic plants by 2022, while Italy voted to ban nuclear power for decades. Oettinger has said the stress tests offer the potential to reassure on nuclear safety well into the future and that cooperation across the bloc on a sensitive issue was significant progress.

US investors unveil $167 mn gas-fired 300 MW power plant project

March 5, 2012. A group of investors announced the construction of a natural gas-fired power plant with a capacity to produce 300 megawatts, to be built next to the port near the town Pepillo Salcedo, northwestern Montecristi Province. The company North Central Energy, SRL (NEC)  said the liquefied natural gas-fired plant’s first stage will cost US$167.0 million to build, and will participate mostly U.S. but also Dominican investors.

Scots may extend life of nuclear plants before renewable target

March 5, 2012. Scotland may extend the life of the country’s two nuclear plants, which are operated by Electricite de France SA, to help the transition to producing all of its electricity from renewable sources by 2020. The Scottish government said it still plans to phase out nuclear power over time and rely on cleaner thermal energy to reduce carbon emissions. It said it was on track to meet the target in eight years time. The Scottish administration in Edinburgh, which is campaigning for independence from the rest of Britain, has the most ambitious target in the European Union for generating electricity from wind, hydro and marine energy. Its nuclear policy differs from the U.K. government, which has agreed to build more power stations as part of its strategy of meeting EU targets to cut carbon emissions. Electricite de France is planning to submit plans to extend the operating life of the Torness and Hunterston plants in Scotland by at least five years, the government said. Hunterston, which is situated on the west coast south of Glasgow, is otherwise due to close in 2016. Torness, which is east of Edinburgh, is scheduled to shut in 2023.

Japan without nuclear a ‘disaster’

March 2, 2012. Japan’s failure to resume its atomic plants would be a “disaster” for the country because of its limited alternatives, said Nobuo Tanaka, the International Energy Agency’s former executive director. Japan’s diminished nuclear capacity makes it especially vulnerable to the potential loss of crude supplies if Iran disrupts shipments through the Strait of Hormuz, Tanaka said. Every one of Japan’s 54 nuclear reactors may be shut by late April for scheduled maintenance and safety tests following the radioactive leak at Tokyo Electric Power Co.’s Fukushima Dai-Ichi plant that followed the March 11 earthquake. Tanaka said he has advised government officials to integrate Japan’s electricity grid with Russia’s and South Korea’s to increase the island nation’s diversity of power sources. Blackouts following the loss of the Fukushima nuclear plant were a result of utilities’ over-reliance on a single power source and their resistance to allowing competing generation companies to access their grids, he said.

Post-Fukushima reactor safety rules advanced by U.S. nuclear agency votes

March 2, 2012. The U.S. Nuclear Regulatory Commission moved closer to imposing tougher safeguards at the nation’s reactors, a year after a disaster in Japan that triggered radiation leaks from a crippled power plant. A majority of commissioners led by Chairman Gregory Jaczko voted to issue three orders for safety steps at 104 operating reactors. The agency now will complete writing of the rules for release by March 9. Companies including Southern Co. and Exelon Corp. would have until early next year to write a plan and comply by 2016.



BHEL commissions 13 MW solar plants

March 5, 2012. Bharat Heavy Electricals Ltd (BHEL) said it has commissioned 13-MW of solar power plants in various parts of the country during the current financial year. The projects commissioned by the company during the year include a 3-mw grid connected solar plant at Raichur in Karnataka, a 5-MW plant in Rajasthan, 2 plants of 2-MW each in Maharashtra and over 1-MW in Lakshadweep. All these projects have been commissioned by BHEL on engineering, procurement and construction basis. The company is further executing 7.5-MW solar power projects for various companies and they are in the final stages of commissioning, it said.

Suzlon arm SEFORGE wins ` 3.6 bn deal to supply wind towers' equipment

March 5, 2012. Wind turbine major Suzlon's subsidiary SEFORGE secured a contract worth ` 367 crore for supplying equipment for wind towers over a period of three years, the company said. SEFORGE signed a purchase agreement with a leading wind turbine manufacturer for the supply of equipment used for building wind towers, Suzlon said. The ` 367 crore contract covers supply of flanges (used for wind turbine towers) for projects in India and international markets, the company said.

Import restrictions to boost local solar power equipment makers

March 1, 2012. India will encourage local manufacturers of solar power equipment and restrict imports to help domestic industry grow in the competitive environment, minister for new and renewable energy Farooq Abdullah said. The approach would be reflected in the second phase of the Jawaharlal Nehru National Solar Mission (JNNSM), he said. He said that the foreign companies must set up manufacturing facilities along with research and development centres if they want to enter India for solar power generation. The minister's comments will cheer domestic players who have been asking the government to curb foreign involvement in the solar mission as it is hitting their market. Foreign companies have recently quoted and won bids at abnormally low prices - as low as 7.18 per unit for solar power - which domestic manufacturers say was possible because Indian players get lower subsidy.

Suzlon's arm REpower ties up 750 mn euro debt

March 1, 2012. Suzlon Energy's subsidiary, REpower Systems SE has signed an agreement with a consortium of banks led by BayernLB, Commerzbank Aktiengesellschaft and Deutsche Bank AG for a syndicated loan of 750.0 million euros. Loss making-Suzlon Energy has adopted a strategy of incurring capex on a "must have" basis given the huge debt it needs to service and the poor health of the wind energy market globally. The Indian wind turbine major has put on priority REpower's capex "only for offshore and multi MW turbine manufacturing."

Union Budget 2012: Govt may continue breathing incentives into wind energy sector

March 1, 2012. The Ministry of New and Renewable Energy is seeking extension of existing incentives for the wind energy sector in the upcoming Union Budget. This would ensure growth momentum in the coming years after the sector added record 10,500 megawatt in the 11th five year plan. The sector is expected to add another 15,000 MW in the next five years. In the past, wind energy has thrived even as other sectors missed targets. It was helped by generation-based incentives to independent power producers and accelerated depreciation available to captive users - both of which expire in March.


Japan says will announce new 2020 emissions target in ‘summer’

March 6, 2012. Japan said it will decide on a new emissions reduction target for 2020 this summer after a revision of its energy and environment goals prompted by the nuclear power accident at Fukushima. Japan is developing “new energy policies from scratch”. The country’s existing pledge is to cut emissions by 25 percent from 1990 levels in 2020. It will propose a new target “this spring” and set policy in the summer, after “public consideration”.

Wind turbine prices dropped 4 pc in second half of 2011

March 6, 2012. The price for wind turbines fell 4 percent to the lowest since at least 2008 because of competition from Chinese manufacturers and excess capacity to build the machines. Turbine contracts signed in the second half of 2011 for delivery in 2013 dropped to 910,000 euros ($1.2 million) a megawatt compared with the previous six months. The price was the lowest since the analyst began tracking prices in June 2008 and down from as much as 1.21 million euros a megawatt in 2009. Competition in the market for wind turbines has depressed prices worldwide, trimming profits at companies led by Vestas Wind Systems A/S, the world’s largest turbine maker. Vestas, based in Aarhus, Denmark, reported a loss four times wider than analyst estimates in February, squeezed by Chinese competition including from Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co.

EU should refrain from changing CO2 permits supply

March 6, 2012. The European Union should avoid “spoiling” its carbon market with measures to bolster emission prices by withholding permits or changing the bloc’s pollution caps, according to Poland’s Environment Minister Marcin Korolec. The 27-nation bloc’s environment ministers are scheduled to meet in Brussels on March 9 to discuss climate strategy. The EU should stick to its current target to reduce emissions by 20 percent in 2020 compared with 1990 levels and refrain from steps that would change the design of the carbon market.

EU needs to “reactivate” carbon program

March 6, 2012. The European Union needs to “reactivate” its emissions trading system after carbon prices fell to a record low earlier this year, the bloc’s energy chief said. The European Parliament’s industry committee backed an option of withholding permits in the ETS in a draft amendment to an energy efficiency law. The amendment is not “a direct instrument for our energy efficiency directive,” Oettinger said. It will be a point in our agenda in the summer this year.

Australia coal-gas explorers face cost risks

March 6, 2012. Coal-seam gas explorers including AGL Energy Ltd. and Santos Ltd. that are active in Australia’s Queensland and New South Wales states face the risk of higher costs and delays because of stricter rules, Deutsche Bank said. Queensland’s Liberal National Party, expected to win the March 24 state election, proposes regulatory changes, including “full and fair” compensation to landowners, that may increase the cost of new coal-seam gas wells. The New South Wales government plans to release the results of an environmental and safety review of the coal-seam gas industry in the coming months that may lead to additional rules. The state also may remove a royalty discount for coal-seam gas companies, bringing its policy in line with other states. AGL, Santos, Dart Energy Ltd. and Arrow Energy Ltd. are among companies developing coal-seam gas projects on the east coast of Australia to meet rising demand for the fuel. Some environmental groups and politicians are concerned the projects will damage aquifers, contaminate and deplete water supplies, and diminish the capacity of food-producing land.

Natural gas seen benefiting from U.S. clean energy mandates for utilities

March 5, 2012. Natural gas, which already is edging aside coal in American electricity generation, would be one of the biggest beneficiaries of a clean-energy mandate for utilities under consideration in Congress this year. Senator Jeff Bingaman, a New Mexico Democrat and chairman of the Energy and Natural Resources Committee, introduced a measure to force electricity companies to use an increasing share of energy produced from “clean” sources over the next two decades. The bill reshapes the energy debate by calling for sources that emit less carbon than coal, a definition that includes natural gas, instead of focusing on zero-emission renewable sources such as wind and solar. While the proposal faces long odds of getting enacted this year, Bingaman’s plan may gain a powerful ally -- and new opposition from environmental groups. Bingaman’s clean-energy mandate may benefit companies like Exxon Mobil Corp. of Irving, Texas and Oklahoma City-based Chesapeake Energy Corp., the two largest producers of natural gas in the U.S.

Scotland to fit carbon capture at existing coal plants by 2025

March 5, 2012. The Scottish government plans to fit carbon capture and storage at all coal plants by 2025 and said demonstrating the technology could generate 3.5 billion pounds ($5.6 billion) in the next decade. The government plans to complete a review by 2018. All coal plant applications must demonstrate CCS on at least 300 megawatts of capacity, and from 2020, they will require CCS for all their capacity. CCS technology sequesters emissions from fossil fuels, allowing coal plants to keep delivering a baseload of electricity without releasing pollution as Scotland transitions to renewable energy sources. The nation plans to get 100 percent of its electricity from technologies including wind, wave and biomass by 2020. Successful demonstration of CCS technology in Scotland could create as many as 5,000 jobs over the decade.

Webco of Kenya to build sugar-beet ethanol plant

March 5, 2012. Webco, a Kenyan company backed by investors from the U.K., China and Qatar, will build a 12 billion-shilling ($144.4 million) biofuel plant that will begin trial operations next year. The facility will produce ethanol from tropical sugar beet. The fuel will be sold in bulk to KenolKobil Ltd. and the state-owned National Oil Corp. for blending with gasoline and distribution in Kenya.

Dovre buys stake in Singapore’s Sararasa in biomass expansion

March 5, 2012. Dovre Group Plc, a Finnish project management services provider, bought a minority stake in Sararasa Biomass Pte. Ltd. to expand into renewable energy. Dovre will invest about 1.4 million euros ($1.9 million) in Sararasa’s first project, an Indonesian plant making pellets from wood waste materials. Stahl Capital Ltd., a financial investor, also owns the plant. Sararasa, based in Singapore, makes pellets made from waste such as sawdust or shavings for use in power plants in Asia. The waste material is compressed under high pressure to form pellets that are a “virtually carbon dioxide neutral” source of energy. The company, which had net sales of 73 million euros, is studying developing, financing and managing renewable energy projects with local developers.

Iberdrola completes 304 MW Blue Creek wind park in U.S.

March 5, 2012. Iberdrola SA, the world’s largest owner of wind parks, finished building a 304 MW station in the U.S that’s one of the world’s largest wind farms. Iberdrola has an agreement to sell electricity produced by the Blue Creek power plant in Ohio. The wind farm uses turbines made by Gamesa Corp. Tecnologica SA of Spain.

China sets 2012 energy-conservation target after missing in 2011

March 5, 2012. China, the world’s fastest-growing major economy, plans to cut energy use per unit of gross domestic unit by 3.5 percent after missing the same target in 2011. The government also wants to reduce carbon dioxide emissions by at least 3.5 percent and sulfur dioxide emissions by 2 percent. The government’s attempt to meet last year’s energy- conservation goal by shutting inefficient factories failed as energy use rose at the fastest pace in four years. Consumption per unit of gross domestic product fell 2.01 percent in 2011.

China’s power generation will rise 7.5 percent to 5.05 trillion kilowatt-hours this year, according to the report. Coal production will climb 3.7 percent to 3.65 billion metric tons, while crude-oil output will be unchanged at 204 million tons. Electricity generation increased 11.7 percent, while coal output rose 8.7 percent and crude production advanced 0.3 percent. China cut its economic growth target to 7.5 percent for this year after aiming for 8 percent every year since 2005.

Electric-car loans dry up ahead of election on Solyndra

March 5, 2012. Four times, the U.S. Energy Department offered terms to Bright Automotive Inc. for a loan the startup company was seeking to finance production of electric commercial vans. Each successive, conditional offer arrived with stiffer terms. While Energy Secretary Steven Chu says the vehicle program is evaluating applications, it hasn’t awarded new money since the bankruptcy of solar-panel maker Solyndra LLC, which won a $535 million loan guarantee through another department program. Solyndra’s bankruptcy filing put a damper on all Energy Department loans. The $25 billion vehicle-loan program, created in 2008, last made an award in March 2011.

Softbank, Sharp to build solar power plant in Japan’s Gunma

March 5, 2012. A unit of Softbank Corp. will build a solar power plant in Japan’s central Gunma prefecture. Sharp Corp. will build the 2.4-megawatt plant, and Softbank plans to begin operations in July.

Liquid battery could charge green energy

March 3, 2012. Engineering professor Donald Sadoway used an old-school chalk board at the prestigious TED gathering to write the formula for a liquid battery that could one day cut the need for new power plants. Inexpensive batteries made from liquid metal could store electricity from solar panels, wind farms, or existing generation facilities and save it for when it is most needed. That would be a major change from consume-it-now-or-lose-it systems.

Sadoway and his team of students at Massachusetts Institute of Technology were so confident in their creation that they started Liquid Metal Battery Corporation and plan to have bistro-table size models out in two years. Microsoft co-founder Bill Gates is among the company’s backers. The company plans to eventually bring to market a liquid battery the size of a 40-foot shipping container and capable of holding enough electricity to serve the daily needs of 200 typical US households. The key metals in the battery are common vanadium and magnesium, the professor explained as he chalked a basic chemical equation on the board.

Agaoglu of Turkey plans to sell 147 MW of wind power plants

March 2, 2012. Turkey’s Agaoglu Group, which has interests in construction, tourism and energy, is in final stages of talks with eight energy and private equity investors to sell 147 MW of wind plants, chairman Ali Agaoglu said. The Istanbul-based group is negotiating with four energy companies and four private equity funds, Agaoglu, the 10th richest man in Turkey.

Brazil's sugarcane electricity faces brownout on cost

March 2, 2012. Sugarcane-based electricity generation projects in Brazil are being blown out of the water by wind power and other lower-cost energy alternatives, slowing ambitions to expand one of Brazil's largest potential new sources of clean energy, experts said. The world's No. 1 sugar producer and No. 2 ethanol maker amasses 140 million tonnes a year of bagasse from crushed cane, some of which is burnt in high-efficiency boilers to crank generators supplying a hitherto growing share of Brazil's power. The sugarcane industry estimates bagasse could generate 15,300 megawatts (MW) of electricity by 2020, roughly the entire annual needs of Ecuador and about a fifth of its own -- but only if it can be made competitive with cheaper wind and natural gas.

Europe’s biggest union asks Germany to soften solar subsidy cuts

March 2, 2012. IG Metall, Europe’s biggest trade union, asked the German government to soften planned cuts to solar subsidies to avoid an increase risk of bankruptcies. A plan to curb subsidies by as much as 29 percent may spread insecurity with investors and fail to reduce costs substantially, IG Metall, which represents about 3.6 million workers, said in a letter to Environment Minister Norbert Roettgen and Economy Minister Philipp Roesler. Germany, home to manufacturers including Q-Cells SE and Conergy AG, should instead provide state loans for domestic companies to help them survive the threat posed by Chinese competition, the union said.

TIAA-CREF forms venture with native Alaskans to invest in wind

March 2, 2012. TIAA-CREF, the manager of retirement accounts for teachers, formed a joint venture with an Alaskan Native American-owned holding company to invest in North American wind power. The venture, Capistrano Wind Partners LLC, is using $238 million from TIAA-CREF and Cook Inlet Region Inc. to acquire three operating wind farms from a unit of Edison International (EIX). Capistrano bought the 61-megawatt Mountain Wind I and 80- megawatt Mountain Wind II projects in Wyoming, and the 150- megawatt Cedro Hill project in Texas.

TIAA-CREF and Cook Inlet plan to invest a total of $460 million in the venture, which will eventually buy as many as seven Edison Mission Group wind projects with a total of 500 megawatts of capacity. That includes the 42-megawatt Crofton Bluffs and the 80-megawatt Broken Bow wind farms in Nebraska that Capistrano expects to acquire when they go into operation. Edison Mission Group owns 31 wind projects that are either in operation or under construction in 11 U.S. states with a total of 2,000 megawatts of capacity. Marathon Capital LLC advised Edison on the deal, and Gibson, Dunn & Crutcher LLP provided legal counsel.

SMA solar drops as outlook dims on subsidy cuts

March 2, 2012. SMA Solar Technology AG, Germany’s biggest solar-energy company by market value, slumped to its lowest value since April 2009 after it predicted declining sales and earnings because of subsidy cuts.

Decision on Chinese solar-imports tariff delayed by U.S.

March 1, 2012. The U.S. Commerce Department delayed a decision on additional tariffs for Chinese solar-equipment makers until March 19. The decision, scheduled for, is being postponed because of the “extraordinarily complicated” investigation. U.S. solar-equipment manufacturers, led by SolarWorld AG’s U.S. unit, claim they are being harmed because China’s government uses cash grants, discounts on raw materials, preferential loans and tax incentives, and manipulates its currency to boost exports of solar cells.

GE invests in $550 mn LS Power Solar Plant in Arizona

March 1, 2012. A General Electric Co. unit bought a $100 million stake in a 127-megawatt solar project that LS Power Group is developing in Arizona. The $550 million Arlington Valley Solar Energy II project near Arlington, Arizona, is expected to be complete at the end of 2013 and will sell power to Sempra Energy’s San Diego Gas & Electric Co., Stamford, Connecticut-based GE Energy Financial Services Inc. said. GE Energy Financial Services more than doubled its investment in solar energy in the past year to more than $1.4 billion. The company has backed projects in Australia, Canada, Italy, Portugal, the U.S. and Spain valued at almost $5 billion.

Buffett plans more solar bonds after Topaz deal

March 1, 2012. Warren Buffett’s MidAmerican Energy Holdings Co. is planning a second round of bonds to finance its $2.4 billion Topaz Solar Farm in California after investors sought more of the debt than was offered in the first public issuance for a U.S. photovoltaic power project. The first Topaz bond offering, for $850 million, was oversubscribed by more than $400 million. Fitch Ratings, which gave the deal its lowest investment-grade rating of BBB-, said the second tranche will probably cover the balance of the $1.265 billion in debt MidAmerican needs to complete the 550-megawatt project.

The demand shows that renewable-energy projects, which provide reliable revenue through long-term contracts to sell power to utilities, are becoming more appealing to investors, said Chris Yonan, a project finance director at Barclays Capital, which led a group of investment banks in underwriting the debt. MidAmerican, a unit of Berkshire Hathaway Inc., has been expanding its investments in renewable energy as it adds to its portfolio of coal and natural gas. The company created a business unit in January to support investments in wind, geothermal, solar and hydroelectric projects.

Brazil ethanol mills get $2.6 bn of loans to store fuel

March 1, 2012. Ethanol producers in Brazil will receive as much as 4.5 billion reais ($2.6 billion) of government financing to stockpile fuel as the South American nation seeks to stabilize prices. The loans will carry annual interest rates of 8.7 percent and allow mills to store 3.7 billion liters (1 billion gallons) of ethanol. The funds will help companies comply with a government regulation that requires them to store ethanol to avert a repeat of last year’s price spike in the renewable fuel.

Prices of anhydrous ethanol, which is mixed with gasoline, rose 30 percent to 2.30 reais a liter in April from December 2010, when mills in the south shut down between crops. Brazil will require mills to keep 40 days of production in stock through the harvest year as of April 2013.

Merkel Cabinet backs solar curbs without need for vote

February 29, 2012. Chancellor Angela Merkel’s Cabinet backed measures giving ministers authority to adjust subsidies for renewable energy in Germany, a move the industry says will destabilize its ability to finance plants. A draft from the environment and economy ministries endorsed by the Cabinet includes a clause that enables officials to change rates paid for solar power without fresh backing from parliament. It would come into force should installations exceed a government target of 2.5 gigawatts to 3.5 gigawatts a year. Germany, the world’s largest solar market, wants to cut in half the annual pace of installations after incentives for the industry pushed capacity past government targets. Merkel is encouraging renewables as a replacement for nuclear power stations that close by 2022.

Abound Solar shutters plant, raising specter of Solyndra failure

February 29, 2012. Abound Solar Inc., which received a $400 million U.S. loan guarantee to build two factories, shut down production and fired 180 people after panel prices fell by half last year. Abound stopped making its first-generation solar panels and will refit its manufacturing lines to produce more efficient products. The move is a response to the same forces that drove Solyndra LLC into bankruptcy after it received a $535 million loan guarantee from the same U.S. Energy Department program. The company expects to resume full production by year-end with cadmium-telluride panels that will be able to convert 12.5 percent to 13 percent of the energy in sunlight into electricity. Its current products have conversion efficiency rates of 10.5 percent.

Yingli forecasts 56 pc jump in solar shipments

February 29, 2012. Yingli Green Energy Holding Co., the sixth-biggest silicon-based solar module maker, said it expects shipments to rise as much as 56 percent after a slump in the fourth quarter when the market was oversupplied. The company forecast module shipments of 2.4 gigawatts to 2.5 gigawatts, compared to 1.6 gigawatts during 2011. Shipments in the fourth quarter were down 30 percent from the third quarter as gross margins slipped to 3 percent from 10.8 percent. Yingli posted a net loss of $509.8 million for the full year even as it increased shipments by 51 percent from 2010. The industry experienced “tremendous” pressure on margins as manufacturers boosted supply while European nations that are the biggest solar markets cut incentives for the technology. Yingli, based in Baoding, increased its sales in China, the country it sees as one of the most promising markets. The company’s sales there rose to 22 percent of its output, compared to 6 percent a year ago, and are forecast to reach 35 percent.

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