Energy News Monitor I Volume VIII, Issue 39

Increasing Uncertainty over Coal Availability Undesirable

 

 

NEWS BRIEF

OIL & GAS

March 7, 2012. Keen on expanding oil and gas explorations in Vietnam's East Sea, energy-hungry India said it will be a "win-win" situation for both the economies. State-owned Oil and Natural Gas Corp's overseas arm ONGC Videsh accounts for much of India's investment in Vietnam. It has 45 per cent stake in one gas field --- Block 06.1 in the Nam Con Son basin off Vietnam's south coast --- in a joint venture with TNK-BP and PetroVietnam. It won a contact in 2006 to jointly explore with PetroVietnam in Blocks 127 and 128 in the Phu Khanh basin further north. China had protested against Indian presence in these two blocks in South China Sea where Beijing is embroiled in territorial disputes with Vietnam, the Philippines, Taiwan, Malaysia and Brunei. New Delhi has pledged to continue exploring for energy as Blocks 127 and 128 were in Vietnamese territorial waters. South China Sea, which Beijing claims almost in its entirety, is thought to be rich in oil and gas and is one of the world's most important shipping routes.

March 13, 2012. Essar Oil Ltd said it has commissioned a unit that would produce Euro-V grade diesel at its Vadinar refinery in Gujarat. Diesel Hydrotreater Unit-I (DHDT-I) is part of the expansion project that will enhance Vadinar refinery capacity to 18 million tons per annum from current 14 million tons a year. Essar Oil has already commissioned the Isomerisation Unit, which was the first expansion unit to be commissioned, that gives the refinery the capability to produce gasoline of high octane rating and almost zero sulphur content. Market for low sulphur content fuel is rapidly expanding, with 20 top Indian cities requiring retailing of only Euro IV compliant fuels. In the EU (European Union), the Euro V standard has been applied since 2009. Alongside the Phase I expansion, an optmisation project is also underway at the Vadinar Refinery that will further increase the capacity to 20 million tonnes by September, 2012. The capacity expansion, complexity enhancement and subsequent optimisation will give the Vadinar refinery the capability to process over 80 per cent heavy and ultra-heavy crudes, which are lower cost than light crudes.

March 13, 2012. The process of bringing gas through a pipeline to Jammu has begun and recently a team of Gujarat Petronet Limited was to conduct a survey as per the directions of the Union Ministry of Petroleum and Natural Gas, Jammu and Kashmir government said.

March 9, 2012. Essar Oil (EOL) said it has signed an agreement with Indraprastha Gas (IGL) to set up CNG dispensing facilities at the former's petrol pumps in the national capital region. The agreement provides for EOL using IGL's CNG pumping facilities at the outlets, the company said. For Auto LPG, EOL has a similar tie-up with and Aegis Logistics. The company has CNG facilities at 12 of its retail outlets in Gujarat and plans to add another 30 such facilities across its network. EOL is also increasing non-fuel retailing activities at its retail outlets to provide an additional source of revenue for its franchisees. EOL has forged alliances with non-fuel retailers in segments, like lubricants, food & beverages, agro products, telecom and banking & finance.

March 7, 2012. Oil & Natural Gas Corp (ONGC) has resumed exports from Hazira port, which was shut down for a month for maintenance, and sold a cargo to China's Unipec. ONGC sold the 35,000-tonne cargo for March 25-26 loading to the Chinese trading firm at premiums of $45.00-$46.00 a tonne to Middle East quotes on a free-on-board basis. This came shortly after it sold similar volumes, also to Unipec, but with the cargo lifting from Mumbai terminal at record premiums of $59.50 a tonne. ONGC usually exports 1-3 naphtha cargoes a month through the Hazira terminal and another 1-3 parcels a month via Mumbai port, but maintenance works at the port had affected exports.

March 13, 2012. The shortfall in natural gas supply from the Centre to gas-fired power plants in Gujarat has resulted in an annual loss of ` 1,156.83 crore until December 2011. Against a per-day gas requirement of 17.23 standard cubic metre (SCM) to run gas-based power plants in the state, 12.20 million cubic metres per day (MCMD) was received from the central pool in 2010-11. While, the state has received 9.86 MCMD until December 2011 in the FY 2011-12. The gas shortage has compelled the state government to buy spot natural gas from the market at higher prices, thereby, resulting in losses of ` 1,156.83 crore. The state government gets natural gas on Administered Price Mechanism (APM) from GAIL, RLNG from GAIL and RIL's natural gas from the central pool, for its gas fired power plants in the state. The total losses due to shortfall in natural gas supply from Centre in last two years is pegged at ` 2,320.36 crore.

March 12, 2012. GAIL India said it plans to commission the long-delayed LNG terminal at Dabhol in Maharashtra by month end or early April. GAIL, which owns 31.52 per cent stake in Ratnagiri Gas and Power Co Ltd -- the firm that owns the 1967 MW power plant and adjacent 5 million tons a year LNG import terminal --, has contracted a shipload of gas (LNG) to commission the facility. The power plant and LNG terminal were originally built by now bankrupt US energy major Enron Corp. Ratnagiri Gas and Power Co (RGPPL) took over the project in 2005 after the Enron's bankruptcy. The LNG terminal was 70-80 per cent complete when RGPPL took over the plant. GAIL mechanically completed the plant in late 2010 and dredging work of the sea-channel leading to the Dabhol port was completed. But since construction of breakwater facility is not yet complete, the terminal will be commissioned through smaller ships thereby leading to only 30-40 per cent capacity utilisation. The construction of a breakwater that will guard ships against high tides, was not likely before 2013-14. The LNG terminal will become fully operational only after the completion of the breakwater facilities. GAIL will be sourcing liquefied natural gas (natural gas that has been converted into liquid by freezing below sub-zero temperature) from the spot market. The firm is talking to suppliers for long-term LNG supply tie-up. The power plant currently runs on 5.6 million standard cubic meters per day of natural gas supplied from Reliance Industries' eastern offshore KG-D6 fields. Dabhol generates 1,000-1,100 MW of electricity currently. GAIL and power generator NTPC own 31.52 per cent equity stake each in RGPPL while 16.68 per cent is with Maharashtra State Electricity Board. The remaining 20.28 per cent stake is with financial institutions. GAIL would be sourcing 16 LNG cargoes from the spot market to meet domestic demand.

March 11, 2012. Fertiliser firms like RCF have sought supplies of natural gas from Reliance Industries at a price that would mean getting paid for buying the fuel. In response to the bids called by RIL for the gas it plans to produce from coal seams in Madhya Pradesh, Rashtriya Chemicals and Fertilisers Ltd has quoted a low rate. If accepted it would result in RIL not just supplying 2.5 million cubic meters per day of gas free of cost but also paying $ 2.75 per million British thermal unit (mmbtu) to the fertiliser firm. Fertiliser firms put very low bids in the tender invited by RIL to discover the price of gas it plans to produce from Sohagpur coal-bed methane (CBM) block by end-2014. RIL had invited companies to quote a variable 'v' that can be added or subtracted from its CBM pricing formula of 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus $ 0.26 per mmBtu. RCF quoted a negative 15.05, adding at $ 95 per barrel oil price, this translated into RIL paying $ 2.75 per mmBtu to the fertiliser firm besides supplying gas. Tata Chemicals Ltd quoted a price of a measly $ 1.55 per mmBtu. Indo Gulf Fertiliser Ltd, Nagarjuna Fertilisers and Chemicals Ltd, Deepak Fertiliser and Petrochemical Corp Ltd and National Fertiliser Ltd too quoted a negative value of 'v' ranging between 9.45 to 10.38. RIL wrote to the Oil Ministry saying "non-serious" bids of these fertiliser companies and eight others had been rejected as they were "not aligned to the market". Despite these, the company's pricing formula of 12.67 per cent of JCC plus $ 0.26 per mmBtu had generated a demand six times the 3.5 mmcmd gas it will produce from Sohagpur blocks. At $ 100 per barrel oil price, CBM from RIL's Sohagpur CBM blocks in Madhya Pradesh will cost $12.93 per mmBtu. The pricing formula RIL has proposed for CBM is different from the one natural gas from the company's eastern offshore KG-D6 block is priced at. KG-D6 gas at cap crude oil price of $ 60 per barrel translates into a sale price of $ 4.205 per mmBtu. Sohagpur CBM at $ 60 per barrel oil price would be $ 7.862 per mmBtu. RIL told the ministry that it got 59 valid bids seeking about 70 mmscmd of gas in open bids that were invited as per the provisions of the Production Sharing Contract (PSC) to discover market price of CBM. It got a demand of 20.63 mmcmd (about six times the gas offered for sale under the process of price discovery) if the biddable parameter 'v' is kept at zero.

March 9, 2012. Gail India will provide 2.5 million standard cubic meters per day domestic gas to fuel-starving power units in Andhra Pradesh from the share of its LPG plant and meet the shortfall with imported gas by a revenue neutral swapping arrangement. Gail has been allocated RIL's D6 gas for extraction of liquefied petroleum gas (LPG) and power plants will pay the price difference between D6 and imported gas. The swap will be temporary till May 31. This is second such swap of scarce resources since March last year, which continued for three months. Power plants will pay approximately $12 per unit cost for the domestic gas to make up for Gail's plant that would actually be using imported gas in the swapping arrangement. D6 gas price is $4.2 per unit.

March 9, 2012. Oil & Natural Gas Corp. (ONGC) is set to lead India’s top state resources companies in paying a record dividend as Prime Minister Manmohan Singh seeks to use part of their $27 billion cash hoard to fund his government’s deficit. Eight energy, mining and metals companies will likely pay at least ` 157.1 billion ($3.1 billion) to the government for the year ending March 31, based on interim payouts and Bloomberg forecasts for special and final dividends. That’s 6.7 percent higher than the amount that ONGC, Coal India Ltd., Oil India Ltd., NMDC Ltd., GAIL India Ltd., NTPC Ltd., Steel Authority of India Ltd. and Bharat Heavy Electricals Ltd. paid in the previous fiscal year.

Singh’s government has asked its companies to increase dividends and buy back shares for the first time as it struggles to raise money by paring stakes in some of them. It received $2.5 billion selling a 5 percent interest in ONGC, with investors bidding for fewer shares than offered. India’s budget deficit topped the target for the year in the 10 months through January, adding pressure for steps to restrain the gap.

March 8, 2012. US President Barack Obama has warned that growing energy demands in populous and emerging economies like India, China and Brazil would be responsible for the increase in global oil prices in the long term.  There are a lot of people there, Obama said. In 2010 alone, China added nearly 10 million cars on its roads.  Those numbers are only going to get bigger over time, Obama said.

POWER

March 13, 2012. Adani Power synchronized the fifth unit of the Mundra power plant, taking its total generating capacity to 4,620MW, making it the world's largest single-location coal-fired plant in the private sector. China, Poland and Taiwan have three thermal power plants exceeding 5,000 MW but they are all state-owned, making Mundra also the fifth largest globally. Adani, which ventured into power generation in 2009-10, has become India's largest power generation company in the private sector and its current capacity is 15% more than the ultra mega power projects (UMPPs) being executed by Reliance Power and Tata Power in states of Gujarat, Madhya Pradesh, Andhra Pradesh and Jharkhand. Even India's biggest state-owned power producer NTPC does not produce over 4000 MW of power in a single location. The company has signed long-term power purchase agreement with Gujarat and Haryana for sale of 80% of the capacity while the remaining 20% the company intends to sell at merchant basis. The PPAs signed with the state governments envisages sale of power at ` 2.34 per a unit to ` 2.94 per unit. However, with the price of Indonesian coal going up substantially with the new Indonesian law to sell it at market-linked prices, the company is looking at renegotiating the terms of the PPAs. Adani Power intends to complete commissioning of 3300 MW at Tiroda and another 1320 MW at Kawai by March 31, 2013. The company intends to reach a capacity of 20,000 MW by 2020.

March 11, 2012. State-run hydropower company Uttarakhand Jal Vidyut Nigam (UJVN) will invest ` 2,500 crore to set up two gas-based power plants in a joint venture with GAIL. UJVN said the company has got 50 acres of land in Kashipur and has identified another 55 acres of land in Haridwar for the two gas plants. UJVN has already taken the Cabinet approval in this regard. UJVN had signed an MoU with GAIL to set up the two gas-based power plants of 350 MW each. A total of ` 2,500 crore is proposed to be invested in the two power plants. The majority of the power from these power plants would be sold to Uttarakhand through a long-term power purchase agreement (PPA). Similarly, the gas pipeline for Haridwar is also at advance stage and the project is expected to be completed by 2015-16 also. Initially these two projects will be of 350 MW but later the capacity of these projects would be increased to 450 MW. With the hydropower sector taking a beating due to heightened environmental and religious concerns in India, several hydropower companies have now chalked out plans to diversify into gas-based power.

March 9, 2012. Tata Power said it has commissioned the first unit of Mundra ultra mega power project (UMPP), heralding the use of 800 MW super critical boiler technology in the country. The 4,000 MW plant is the country's first UMPP to start generation. The first unit of 800 MW was commissioned in a record 48 months of construction work starting on the project, the country's largest private power utility Tata Power said. According to the company, work on unit 2, 3, 4 and 5 of the project is on track and progressing well. The first unit was synchronised with the national grid on January 8 and achieved full load on February 25. The first unit was ready for synchronisation since June 29 but was waiting for transmission evacuation system from Power Grid Corporation of India. The same got commissioned on September 29. The Mundra UMPP is being implemented by Tata Power's wholly-owned subsidiary Coastal Gujarat Power Ltd (CGPL). Located in the Kutch district of Gujarat, the project consists of 5 units, each of 800 MW which will generate saleable power of 3,800 MW to be supplied to five states -- Gujarat, Maharashtra, Rajasthan, Haryana and Punjab.

March 13, 2012. This summer, electricity tariff may go up in Delhi. The real effect of the power tariff hike will be felt when increased power consumption accompanied by the rise in tariff is likely to escalate bills in the hot months of May, June and July. In addition to last year's tariff hike of 22% and the implementation of the 5% quarterly fuel surcharge, discoms' demand for overall power purchase adjustment formula are expected to send bills surging during these months.

March 12, 2012. Tata-backed discom NDPL (North Delhi Power Limited) has made arrangement to buy an additional 300 mega watt of power to meet the increasing demand during the summer months. NDPL said the additional quota of power would be available to it from April to September. The Delhi government had directed all three private discoms in the city to prepare a 'summer action' plan and make available additional power so that the city does not face shortage of power during the season.

March 7, 2012. L&T Construction said it bagged orders worth ` 1,454 crore across various business segments in February and March 2012. The company's water and effluent treatment business unit secured new orders worth ` 579 crore from Tamil Nadu Water Supply & Drainage Board. The company's power transmission and distribution unit won orders in both domestic and international markets. Domestic orders worth ` 351 crore include civil work for 1,320-MW thermal power plant and another civil works order from Gulbarga Electricity Supply Company Ltd. International orders valued at ` 320 crore for construction of a substation in Kuwait has been received.

March 13, 2012. The Jammu and Kashmir government said it has received ` 480.61 crore as royalty of water usage charges from NHPC for running hydro power projects in the state. The government has received ` 480.61 crore as royalty of water usage charges from NHPC for running of Salal, Uri, Dulhasti and Sewa-II hydro electric projects against ` 543.761 crore till ending December 2011. The percentage of state employees working in the projects executed by NHPC is about 67 per cent. Out of 3250 employees working in NHPC projects, 2192 employees belong to Jammu and Kashmir. The cabinet has accepted the recommendations of the Cabinet Sub-Committee (CSC) for transfer of Salal and Uri projects to the state. For transfer of Salal hydro electric project, the government shall secure its interest at least in terms of those components which were part of the national policy at that time and which were agreed by the central government.

March 13, 2012. The Union Territory of Chandigarh's electricity department said it would procure power from other sources to meet the demand and supply gap of 110 MW in coming summer. The department has projected a power supply of 135-220 MW against the demand of 276-303 MW. The electricity department has made arrangements to receive 30MW power from Jammu and Kashmir from May till August this year and the same quantity of power will be returned in winter from November to February next year. The Joint Electricity Regulatory Commission (JERC) has approved long-term power purchase agreements executed between UT Chandigarh and NTPC for sourcing power from Feroze Ghandhi Unchahar Thermal Power Station Stage-IV and Rupsiabagar Khasiyabara Hydro Project through which about 6 MW power will be made available from 2015-16. The majority of the power requirement for UT Chandigarh is met through its share from central generating power stations of National Thermal Power Corporation (NTPC), National Hydro Power Corporation (NHPC) and Nuclear Power Corporation of India Limited (NPCIL) as allocated by the Centre.

March 13, 2012. Final bids for the ` 20,000 crore Ultra Mega Power Project at Odisha may be invited in April as the Power Ministry is likely to soon finalise amendments in the bidding documents for this plant. The amendments are required to proceed to the next round of bidding. Power Finance Corporation is likely to start the second (and the final) round of bidding for the 4,000 MW Bedabahal UMPP in Odisha in the second week of April. Meanwhile, the Power Ministry said the comments for carrying out amendments to the standard bidding documents (SBDs) of the UMPPs have been received by the stakeholders and the government is in the final stages of framing the new documents. After this, the RFP or Request for Proposal for the Odisha UMPP can be floated. As many as 20 companies including Tata Power, Essar, Adani Group have qualified in the first round of bidding for the Odisha UMPP. The RFQ or the Request for Qualification for this UMPP opened in July.

March 12, 2012. Aiming to strengthen trade relations with India, Malaysia offered its expertise and evinced interest in investing in hydro-electric power. Malaysia was interested in utilising the opportunities available and also invited Indian businessmen to invest in his country. The objective of the two MoUs was to strengthen and establish bilateral trade with the existing and potential buyers in India and also to promote Sarawak (a state in Malaysia) as favourite investment destination in energy intensive high tech industries. The MoU aims to promote and facilitate good collaboration and business networking between members of the both parties.

March 12, 2012. Public sector power financing company Power Finance Corporation (PFC) expects to maintain its non-performing asset at the same level during the 4^th quarter as posted in the third quarter despite issues being faced by power producers. The power finance company had posted an NPA of 0.45 per cent during the October-December period with its absolute NPA shooting up to ` 600 crore from ` 200 crore earlier. The addition was mainly due to loans extended to the Koneseema gas power plant in Andhra Pradesh, promoted by the VBC Group, which turned NPA in the third quarter.

March 9, 2012. The Nuclear Power Corporation of India Limited (NPCIL) is losing nearly ` 5 crore everyday due to the delay in commissioning of the Kudankulam nuclear plant in Tamil Nadu beacuse of protests from locals. The first and second units of the project are being built with the help of Russian Federation, and the first of the 1,000 MW Vodo Vodyanoy Eenergeticsky Reactor (VVER), which is the Russian version of pressurised heavy-water reactor, should have been commissioned. Besides the first and second units, there were plans to have two more 1,000 MW VVER around the same site. However, because of the delay, those too hang in balance. The Corporation, which is awaiting Tamil Nadu decision on the re-commissioning of the work, expects the project to be completed within three to four months once it receives the final go ahead.

March 8, 2012. Global power utilities are quietly firming up plans for the vast Indian market and have posted expats to hunt for opportunities, including M&A deals, in the sector where local companies are pleading for government support to battle rising costs, fuel scarcity and inefficient distribution networks. European power and gas giants GDF Suez of France and E.ON of Germany, whose combined capacity matches India's total installed capacity of 1,87,550 MW, are among half a dozen global firms scouring the Indian market for growth opportunities. The two companies have also shown interest in the sale of BG's 65% stake in Gujarat Gas Co. Industry officials say several international firms have dispatched executives to prepare for business in India. E.ON, which has 85,000 employees in facilities across Europe, Russia and North America, recently set up an office in Mumbai with a team of expatriate executives. Industry officials say that the Indian market, despite its complexity and regulatory challenges, is luring international players who have the expertise, cash and diversified fuel assets but investment opportunities in their home markets have evaporated because of the economic slowdown. Hong Kong-based major CLP Holdings, the biggest foreign player in India's power sector, remains cautiously optimistic. The problems in India's power sector did not have magic solutions but they can be resolved. French electricity and natural gas major GDF Suez, which has operations in 70 countries and employs 2.2 lakh people, is actively studying the nitty-gritty of the Indian market. Consultants and industry officials say that several other global players are scrutinising the Indian market and drawing up plans. India's power companies are faced with uncertain times as Coal India is unable to supply adequate coal and many developers have bid aggressively for projects without taking into account possible rise in fuel costs. But the perception about India's power sector has improved after Prime Minister Manmohan Singh's office started monitoring the power sector and directed top government functionaries to resolve the sector's problems.

March 7, 2012. Drake & Scull International said its utilities unit had won a 100 million dirham ($27 million) contract to set up an intake water system for a thermal power station in Orissa. Work on the project will start immediately and is expected to be completed in March 2013, the company said. Drake & Scull is strengthening and expanding its utilities, infrastructure and water industries in India.

OIL & GAS

March 9, 2012. Petrobras said that the company's second well drilled in areas acquired from the government in 2010 confirms the discovery of high-quality crude. Petrobras drilled the well in an area known as Nordeste de Tupi, which is northeast of the Lula field that was the first Santos Basin pre-salt discovery to enter production. The federal oil company is accelerating development of the pre-salt fields, with plans to invest $225 billion through 2014 to increase crude oil output. A cluster of oil deposits was found in the Santos Basin off the coasts of Rio de Janeiro and Sao Paulo states, potentially holding as much as 100 billion barrels of oil equivalent. Well tests showed the reserve contained oil rated at 26 degrees on the American Petroleum Institute's rating scale. Petrobras plans a well-formation test to evaluate the well's productivity after drilling is completed. In 2010, Petrobras acquired the rights to produce 5 billion barrels of oil from areas held by the government as part of a capitalization of the company that included a $70 billion secondary share offer. The first well drilled in these areas was at a prospect known as Franco.

March 12, 2012. The State Oil Company of Azerbaijan Republic (SOCAR) intends building a new oil refinery in Kyrgyzstan with a likely location in the country's Chuy province, the Kyrgyz Energy Ministry said. The Chuy province administration has offered four parcels of land for the construction of SOCAR's oil refinery with a capacity of two million tons. 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.

March 9, 2012. Oil refiners in Thailand have been asked to increase inventories voluntarily, as the first among measures to be adopted in light of growing tensions in the Middle East. The Ministry of Energy had several more measures in store, which could lead to a cut in consumption, a ban in crude- and refined-oil exports, and a relaxation in fuel standards. They would be implemented according to the tensions. Hit by sanctions over its nuclear programme and amid the looming threat of a military strike, Iran has been threatening to shut down the Strait of Hormuz, a choke point between the Persian Gulf and the Arabian Sea. The closure could cut off access to 20 per cent of oil shipped around the world, which would send fuel prices skyrocketing. Economists and oil analysts foresee a barrel of crude soaring to US $200 (Bt6,000) or more if a military conflict erupts. In 2011, Thailand's average daily crude-oil import exceeded 800,000 barrels. Thailand has sought voluntary cooperation from refiners in stocking up inventories of crude and refined oil, to protect itself against possible supply disruptions. Energy Ministry said refiners were capable of raising the inventory from 55 days of crude oil supply to 64 days. Refiners were currently required to stock crude oil at 5 per cent of refining capacity, enough for 18 days of consumption. Excluding deadlock or dirty crude that needs extra refining, stocks ready for use would last only 12 days. But due to working reserves or crude for refining total crude-oil inventory would last about 23 days.

March 8, 2012. Pakistan's Ambassador to United Arab Emirates (UAE) Jamil Ahmed Khan said UAE was willing to start its Khalifa Refinery Project in Pakistan, involving a huge amount of $6 billion investment. He said establishment of a 500-MW power project was also part of the Khalifa Refinery Project. The refinery will have a capacity of 250,000 barrels per day, equal to 13 million tonnes of petroleum products per year. The project was approved by the government of Pakistan in October 2007, but it could not be initiated due to various reasons.

March 8, 2012. Tens of millions of gallons of gasoline that did not meet California's clean fuel specifications were delivered to the city of Martinez and sold across the state by petroleum giant BP, state regulators said. Gasoline refined in Washington and shipped to Contra Costa County contained permissible levels of toxic and cancer-causing compounds, including benzene, when in fact the fuel failed to meet state standards. BP has in recent years seen the green image it had been fostering -- at one time it adopted the slogan Beyond Petroleum -- fade with a refinery explosion in Texas in 2005 and the Deepwater Horizon explosion and oil spill in 2010.

March 13, 2012. Chesapeake Energy Corp. Chief Executive Officer Aubrey McClendon is cultivating investors from Seoul to New Delhi eager to own natural gas that’s 85 percent cheaper than Middle East supplies because of a glut in the U.S. As head of the second-largest U.S. natural gas supplier, McClendon met executives of Asian power utilities and state-run energy companies. He said they’re unfazed by Chesapeake’s $10.3 billion debt load, more than twice Exxon Mobil Corp.’s burden, and gas trading near a 10-year low of $2.23 per million British thermal units -- two factors that have helped send its stock down 26 percent in the past year. Chesapeake’s up-front costs to amass leases in gas-rich rock formations from Appalachia to the Rocky Mountains will pay off as overseas buyers flock to the U.S. market, the world’s biggest, for cheap and plentiful supplies of the fuel, he said.

March 12, 2012. Oil exports from Iran, OPEC’s second-biggest producer, may drop because the nation’s tanker fleet is too small to carry all its cargoes as European Union sanctions cause international ship owners to avoid the country. NITC owns 39 vessels able to carry about 70 million barrels of crude. The fleet would be insufficient to deliver the nation’s monthly exports of about 65 million barrels because journey durations can be as long as two months. Sanctions already cut shipments by 300,000 to 400,000 barrels a day.

March 9, 2012. Senate Republicans vowed to try again to speed up approval of TransCanada Corp.’s Keystone XL oil pipeline after falling four votes short of rounding up enough Democratic support to expedite the project. The Democrat-led U.S. Senate narrowly rejected a Republican amendment to a transportation funding bill that would have fast-tracked the project. The measure, which received 56 votes in favor, failed because Senate rules require 60 votes to include the amendment. Obama lobbied wavering Senate Democrats on the pipeline proposal before the vote. He urged them to reject the amendment, which would have overturned his decision to deny a permit for the pipeline until more environmental reviews are complete.

March 8, 2012. The U.S. Energy Information Administration has taken steps to ensure that weekly statistics on oil and natural-gas supplies tracked by commodities traders are protected against computer cyber attacks. The administration, the statistical arm of the Energy Department, gathers and posts data about oil, natural gas, electricity and renewable energy that is of interest to traders. The administration “will block robots” that attempt to download or access survey information in an excessive manner. The agency is having to shield its data from market participants who attempt to gain access and prevent other users from getting the information as quickly. The administration has blocked some computer Internet-protocol addresses.

March 13, 2012. The Iran-driven run in oil prices to the highest since 2008 masks the Middle East producer’s diminishing importance to global oil supplies as record spending on drilling unearths reserves from Argentina to Angola. New fields will ease pressure on prices. Futures show investors expect benchmark Brent crude to drop to less than $100 a barrel in 2015 from $125. Global exploration spending, led by Exxon Mobil Corp. and Royal Dutch Shell Plc, will jump 20 percent to at least $90 billion.

March 11, 2012. Russian oil company Lukoil plans to invest around $2 billion in Iraq this year. The main projects for 2012 include production and exploration drilling, design and survey work, the start of construction of a pipeline to the Tuba terminal, and involvement in the construction of shared facilities for sea-water supply. The company also plans to sign the necessary contracts for these projects. Lukoil's capex for Iraq in 2011 came to $203 million, up from $172 million in the previous year. Lukoil completed demining operations at production sections, launched a Pilot Camp workers settlement housing 172 people, prepared contracts for the drilling of 23 production wells, built a gas-turbine electrical plant and a storage plant at the Tuba terminal. Lukoil signed a contract for development and production at the West Qurna 2 field in southern Iraq. West Qurna 2 has recoverable oil reserves of around 12.9 billion barrels. Operation at West Qurna 2 is set to be launched by the beginning of 2014. Oil production was originally supposed to begin at the end of this year, but Lukoil later postponed it to the beginning of 2013. In 2017, West Qurna 2 oil production will total 1.7 million barrels, or 94 million tonnes. Lukoil estimates that it will invest roughly $4.5 billion in the project over the next three years, and $27 billion as a whole. It is assumed that the Russian oil company will be able to place around 10 million tonnes of oil from West Qurna 2 on its balance sheet.

March 10, 2012. Oil at $110 a barrel is taking only half as big a bite out of Americans’ pocketbooks as it did in 1981, the last time Iranian shipments were disrupted. The cost of a barrel of crude in the U.S., adjusted for total disposable income, was $107.92 in January of this year, compared with a peak of $213.44 in the same month in 1981. Oil consumption was 4.8 percent of income in 2010, compared with 9.7 percent in 1981. For all the concern over the fallout from sanctions against Iran and the prospect of gasoline topping $4 a gallon in a U.S. election year, the distress caused by rising oil prices is being mitigated by improved household purchasing power, a strengthening economy and America’s growing energy independence.

March 9, 2012. Earthquakes last year in Ohio were probably caused by wastewater from oil and natural-gas drilling injected into a disposal well, and regulations are needed to address concern about seismic activity, a state report said. The Ohio Department of Natural Resources proposed creating rules for fluid transportation and disposal that it said would be “among the nation’s toughest” including banning drilling into some rock formations and requiring geological reviews before wells are approved. The recommendations are a response to 12 quakes centered within a mile (1.6 kilometers) of an injection well in Youngstown, Ohio.

March 9, 2012. U.S. lawmakers are targeting global insurers as they seek to expand sanctions aimed at crippling Iran’s economy and forcing its leaders to make concessions involving the country’s disputed nuclear program. Representative Brad Sherman, a California Democrat, introduced legislation to penalize underwriters that insure or reinsure any deals with Iran prohibited under U.S. law, including oil and gas investments or insurance for companies or banks that are subject to U.S. sanctions.

March 8, 2012. The Indonesian Energy and Mineral Resources ministry has asked the Kuwait Petroleum Corporation (KPC) to build the crude oil refinery in Balongan, Indramayu district, West Java, despite the fact that not all of the import duty exemption has been given. The government hoped KPC would not resign from constructing the crude oil refinery with a production capacity of 300,000 barrels per day. KPC's incentive request is excessive and KPC actually has received many benefits such as the tax holiday, among others. Pertamina and KPC had signed a Memorandum of Understanding (MoU) over the feasibility study of the Balongan crude oil refinery. Kuwait had also agreed to supply crude oil to the Balongan oil refinery. Nevertheless, Pertamina deserves to seek another partner to build the Balongan crude oil refinery. The government has carried out negotiation with another country regarding the Balongan crude oil refinery. The government itself can construct the crude oil refinery if it has enough funds. The government hoped that an agreement to build the Balongan crude oil refinery can be reached in 2012. Apart from the Balongan crude oil refinery, Pertamina also signed an MoU on Tuban oil refinery in East Java province with Saudi Aramco`s subsidiary, the Saudi Aramco Asia Company Limited (SAAC). Tuban oil refinery is expected to produce 300,000 barrels of crude oil per day, of which 250,000 barrels constitute a long-term contract with SAAC, and the rest (50,000 barrels per day) cover a contract with another oil producer. Currently Pertamina has six crude oil refineries that process 1,031 million barrels of crude oil per day.

March 8, 2012. The Federal Government gave the National Refineries Special Task Force 60 working days to revive the four refineries in the country, even as it said government would not force producing companies in the country to go into refining of petroleum products in order to meet local demand. The government also disclosed that three proposed Greenfield refineries would be functional by the year 2017.

March 7, 2012. Crude oil output from the Organization of the Petroleum Exporting Countries (OPEC) climbed by 400,000 barrels per day (bpd) to 31.27 million bpd in February from 30.87 million bpd in January, the highest volume from the 12 producing countries since the autumn of 2008, a Platts survey of OPEC and oil industry officials and analysts showed. Continuing recovery in Libyan production accounted for 250,000 bpd of the month-on-month increase. Smaller increments came from Angola, Kuwait, Nigeria, Saudi Arabia and Venezuela. Output dipped slightly in Iran, Iraq and the UAE. A European Union embargo on Iranian oil is due to come into force on July 1, giving refiners several months to seek alternative supplies. But non-EU countries which have been big buyers of Iranian crude have also shown interest in diversifying their supplies, partly from concern about similar U.S. sanctions. The survey shows that the group overproduced its 30-million-bpd output ceiling by 1.27 million bpd. This output agreement established in December and does not set individual country quotas. OPEC production has been steadily ramping up alongside climbing crude prices, which saw North Sea Brent crude oil last settle below the $100-per-barrel level. The 2011 average close for front-month Brent price was $110.91 per barrel. North Sea Brent crude oil futures traded at $128.40 per barrel. This is the highest traded price seen since July 23, 2008 – the same month which saw U.S. light crude futures prices trade at all-time highs of more than $147 per barrel. Collective production from OPEC's current 12 members averaged 31.41 million bpd in October 2008, down from 31.61 million bpd in September and from 31.93 million bpd in August that year.

POWER

March 13, 2012. Emerson Process Management is automating two new 1,000MW, ultra-supercritical, power-generating units at the Jiangsu Xinhai power plant with its Ovation expert control system in eastern China. The new units will be built by Jiangsu Guoxin Investment Group, which owns and operates the plant in Lianyungang city, near the East China Sea in the Jiangsu province. The ultra-supercritical technologies offer both higher efficiency and lower emissions than traditional coal-based electricity generation. Emerson's Ovation technology has been selected for 40 of 64 1,000MW ultra-supercritical units in China. The Jiangsu Xinhai facility currently has a generating capacity of 660MW. The new units, 5 and 6, will replace two old, less-efficient 220MW units that have been decommissioned. Unit 5 is anticipated to go into commercial operation in late 2012, while unit 6 is scheduled to come online the following year. Emerson will supply a total of 66 Ovation controllers and 16 workstations. Ovation technology will monitor and control boilers and turbines supplied by Shanghai Electric Group.

March 12, 2012. Iran has inked an agreement with Syria to construct a 470-MW thermal power plant. The plant will be built in Swaida city to the south of Damascus, the Syrian capital. Iran Power Plant Projects Management Company said that the preparation to carry out the project has been started. The project would go on stream by mid-2014. Iran has already built two. The second is close to completion, and the first is already in operation. Iranian firms are currently carrying out several other projects in Syria, such as constructing cement factories, hydroelectric power plants, glass factories and silos.

March 12, 2012. Huaneng Power International, Inc. announced that one 1,000MW ultra-super critical coal-fired generating unit (Unit 5) of Henan Huaneng Qinbei Power Plant Phase III Project has completed trial run recently. The Company's total controlled generation capacity has increased from 59,078.5MW to 60,078.5MW, and total equity-based generation capacity has increased from 54,167.4MW to 54,767.4MW. The Company is one of China's largest listed power producers with controlled generation capacity of 60,078.5MW and equity-based generation capacity of 54,767.4MW. The power plants of the Company are located in 19 provinces, municipalities and autonomous regions in China. The Company also has a wholly-owned power company in Singapore.

March 7, 2012. China has taken a lead in power generation by producing a total of 4.8 terawatts of electricity. China also has the world's second largest installed generation capacity, which currently stands at 1.06 terawatts, the State Electricity Regulatory Commission (SERC) said. For the next stage, the SERC will enhance monitoring over the power industry, supervise the country's power development strategy and better serve local development. The SERC will also enhance scientific management over the power network to ease divergences between supply and demand, and further increase installed capacity to support China's economic and social development. More efforts will be made to boost reform in the power sector and provide high-quality power services to Chinese citizens.

March 9, 2012. Reading electricity meters isn’t typically a dangerous profession -- unless you happen to be employed by AES Eletropaulo.  Residents of Sao Paulo’s Morro do Indio slum watch the reader warily as he makes his rounds, worried he’ll detect rogue wires siphoning away power illegally. Some co- workers have lost teeth in encounters with angry customers. To avoid confrontations with the street toughs who walk around with guns tucked into their trousers, the reader practices a studied indifference. Electricity theft is rampant across much of Latin America, so much so that statisticians have devised a formula that uses the purloined wattage to measure the size of a country’s informal economy. In some parts of Brazil, power losses reach as high as 20 percent. To combat the problem and avoid violent encounters, utilities are turning to smart meters. The devices, which cost about $150 to $400 each, including hardware, communications software and installation, let power companies monitor customers’ usage remotely and in real time. The meters can detect unusually heavy demand, which may signal an illegal hookup. They can also be used to shut off service to households and businesses that don’t pay their bills. The devices remove the human factor from the equation, so customers can no longer collude with dishonest meter readers to cheat the power company. The meters may save utilities as much as 8 billion reais ($4.5 billion) a year. Makers of the wireless gadgets, including Toshiba Corp.’s Landis + Gyr AG, Echelon Corp. and Elster Group SE, are increasingly counting on developing markets to offset shrinking revenue in the U.S., where government funding to support smart meter deployment has dried up. Sales of smart meters in Latin America are expected to generate $24 billion in revenue through 2020, two-thirds of it in Brazil, according to Northeast Group LLC, a Washington-based research company. Brazilian utilities may install as many as 63.5 million smart meters by the end of the decade, at a cost of approximately $15.2 billion, according to Northeast Group. The company estimates that Mexico will deploy 22.4 million, Argentina 4.9 million and Chile 3.2 million over the same period. Elster, based in Essen, Germany, has retooled its factory in southern Brazil to produce smart meters as well as the regular variety. Hong Kong-based ATC International Group is considering teaming up with a local partner to open a facility in the country by 2013. In Rio de Janeiro, utilities are taking advantage of preparations for the 2014 World Cup soccer championship and 2016 Olympic Games to deploy the meters. Before August about 80 percent of electricity in Tabajara and Morro dos Cabritos, two of the city’s more violent slums, was stolen through illegal connections. After police established a constant presence in the favelas, Light began installing 50,000 of Elster’s meters. Theft has dropped to zero since. Companies like Elster are anticipating a substantial payday. Brazil may require utilities to replace all of the country’s 67 million existing power meters with smart devices under a program expected to be introduced.

March 13, 2012. China is expected to consume 270 million mt/year less standard coal equivalent for electricity generation by 2015, compared with 2011 levels, China Electricity Council said in a report. This will be achieved through development of more non-fossil energies and improving coal consuming technologies, the report said. By 2020, China's electricity industry is estimated to save about 235 million mt/year of standard coal equivalent compared with the coal consumption level in 2015. In 2011, China's electric power generation sector consumed coal at an average rate of 330g/kWh of electricity generated, down 3g/kWh, or 0.9%, year-on-year. China's coal-fired power output totaled 3,825.32 billion kWh in 2011, up 14.8% year-on-year. As such, China's coal-fired power sector consumed a total of 1.262 billion mt of standard coal equivalent in 2011, according to Platts calculations. China's national electricity consumption is estimated by CEC to reach the range of 6,020 billion - 6,610 billion kWh/year in 2015, with an annual growth rate of 7.5-9.5% from 2011 through 2015, the CEC report said. By 2020, China's electricity consumption is estimated to reach the range of 8,000 billion kWh - 8,810 billion kWh/year, with an annual growth rate of 4.6-6.6% from 2016 through 2020. To meet electricity demand, CEC estimates that China's national installed capacity will reach 1.463 billion kW by 2015, including 342 million kW of hydropower, 928 million kW of coal-fired power, 43 million kW of nuclear power, 40 million kW of natural gas-fired power, 100 million kW of wind power, 5 million kW of solar power, and 5 million kW of biological and other energies. By 2020, China's national installed capacity is estimated to reach 1.935 billion kW, including 420 million kW of hydropower, 1.17 billion kW of coal-fired power, 80 million kW of nuclear power, 50 million kW of natural gas-fired power, 180 million kW of wind power, 25 million kW of solar power, and 10 million kW of biological and other energies. China consumed 4,690 billion kWh of electricity in 2011, up 11.7% year-on-year; at the end of 2011, China's national installed capacity totaled 1.056 billion kW, up 9.2% year-on-year, as reported previously.

March 13, 2012. Negotiations on the price of the Bogoslovsk combined heat-and-power plant between its owner IES Holding and UC Rusal are scheduled to be completed in March. The parties have already agreed on Rusal's purchase of equipment that was ordered for the construction of the Novo-Bogoslovsk CHP plant. Rusal has prepared a plan for the modernization of the Bogolovsk Aluminum Smelter. Reports have said the Bogoslovsk CHP plant's sale could be closed by June 1.

March 13, 2012. South Korea’s plan to install smart meters in half the country’s households by 2016 could cut electricity consumption equivalent to the cost of one nuclear power plant. South Korea expects it will be able to save the cost of building a reactor by 2016 by helping households and utilities to manage electricity consumption through the meters. The country is investing in smart meters amid opposition from citizens and political parties over plans to expand its reliance on nuclear energy after the Fukushima disaster last year in Japan. State-run utility Korea Electric Power Corp., also known as Kepco, has awarded contracts to companies including LS Industrial Systems Co., Iljin Electric Co. and Nuri Telecom Co. to install the meters from a program that has won a 1.47 trillion won ($1.3 billion) commitment from the government. Smart meters show customers what they pay for power at each time of the day, which utilities say will smooth demand fluctuations by encouraging more people to shift consumption to off-peak hours when it’s cheapest to generate electricity. The devices cost from 20,000 won to 140,000 won a unit, depending on whether they are for small or large electricity users. Energy consumption in South Korea, the fourth-largest user in Asia, more than doubled in the 12 years to 2010, the highest rate among developed countries. Electricity prices in the country only cover 87 percent of the cost of generating electricity, according to the government. South Korea plans to replace all analogue meters at households with the new devices by 2020. The government on Feb. 28 said it plans a 14-fold increase in the number of meters to 10 million units by 2016. As many as 30 bidders have participated in a series of tenders by Kepco to supply 2.3 million smart meters. LS Industrial Systems Co., Iljin Electric Co. and Nuri Telecom Co. were among companies selected to supply the meters to Kepco. Western smart meter makers like Landis+Gyr, the world’s biggest, may start to participate as Kepco ramps up the volume of meters to be installed. Kepco plans to issue a tender for 1.5 million units in June or July, and in 2013 for more than 2 million units. It plans to install the meters at 15.2 million households between 2016 and 2020. If South Korea meets its 2016 target to install the meters at half its households, it will be second in Asia only to China, which plans to install them at 80 percent of households by 2016. In Europe, Italy already has these meters in all houses, while in the U.S., they are installed in about half of all households. The meters are part of the Smart Grid project announced by the government in 2009 to help reduce energy consumption by 3 percent and cut electricity consumption by 10 percent by 2030. In 2030, when the project is completed, it will lead to the reduction of 230 million metric tons of greenhouse gas emissions and 47 trillion won of energy imports, according to government estimates. South Korea, the world’s biggest producer of ships, televisions and computer memory chips, plans to legislate a cap- and-trade carbon trading system.

March 7, 2012. Two nuclear power plants perched near earthquake faults in California could struggle to get relicensed after a cascade of natural and nuclear disasters across the Pacific Ocean in Japan galvanized opposition groups. Fukushima-inspired concerns have rippled through Orange County, where the cities of Laguna Beach and San Clemente asked regulators to decide whether Edison International’s San Onofre atomic plant 60 miles (97 kilometers) southeast of Los Angeles could withstand an earthquake and tsunami before extending its permit to 2042 from 2022. Further north, PG&E Corp. asked for a delay in relicensing Diablo Canyon pending seismic studies. Nuclear anxiety in the most populous state, a bellwether for political and environmental issues nationwide, is echoing in New York, Ohio, Virginia and Vermont, where local groups oppose operators’ efforts to extend the lives of their plants. Eleven U.S. power companies including Edison, PG&E, Entergy Corp. and Progress Energy Inc. seek 20-year license extensions to keep 15 atomic generators running through age 60. At stake is whether reactors designed in the 1960s and 1970s, the same vintage as those overwhelmed by a 9.0-magnitude quake and 46-foot (14-meter) tsunami in Fukushima, Japan, should remain the foundation of a 104-reactor U.S. fleet through mid- century. The debate over atomic energy, which provides about 20 percent of the nation’s power, extends even into new projects.

March 7, 2012. China`s plan to reform energy use and resource pricing has positive implications for the country`s centrally owned electricity grid and nuclear power companies. But the reforms are likely to leave thermal generators out in the cold, says Fitch rating. In his formal report to the National People`s Congress (NPC), Chinese Premier Wen Jiabao outlined the government`s plan to optimize the country`s energy structure, promote the clean and efficient use of traditional energy sources, safely and effectively develop nuclear power, and increase the share of new energy in the country`s total energy consumption, it said. The NPC speeches and documents underline our view that there is strong government support for China`s energy sector. Moreover, the way in which support is allocated among the centrally owned energy companies will continue to distinguish the haves the oil, grid, nuclear and city gas companies from the have-nots, the thermals.

March 13, 2012. Suzlon Energy Ltd. rose as much as 7.1 percent after India’s biggest wind-turbine maker sold five Brazilian wind farms for 540 million reais ($300 million). A renewable-energy investment fund managed by Banco do Brasil SA and Banco Votorantim SA and Oleoplan Group’s Enerplan unit bought the five farms in Ceara state comprising 136.5 megawatts of capacity.

March 12, 2012. Tamil Nadu will soon come out with a new policy on solar power to generate 3,000 MW by 2015-16. The state was rolling out the country's largest rooftop solar power programme by powering 300,000 houses and 100,000 street lights through solar power. The state has received only 22 MW out of the 1,000 MW capacity under the Phase I of National Solar Mission. The state government will promote small rooftop solar power systems as well as encourage wind-solar hybrid installations and aero generators for meeting captive energy requirement of educational institutions. Tamil Nadu accounts for over 7,500 MW of renewable energy capacity out of the country's total 20,000 MW of installed capacity. The state leads in wind power accounting for 6,800 MW and the industry's growth is hindered due to lack of evacuation infrastructure.

March 12, 2012. Wind turbine manufacturer Suzlon Energy Ltd., said its Group would launch its latest 1.5 MW range turbine S8X for the Indian market, the next generation low-wind turbine focused on harnessing Class III, low-wind sites. The S8X, scheduled for launch in 2012, is designed with advanced rotors, with diameters of 86.5 and 89 meters, and a lower height of 90 meters, which will bring improvements in energy yields of between 15 to 20 percent over the current S82 - 1.5 MW offering in low wind conditions. Additionally, it is designed specifically to operate in high temperature, and to meet the current and future grid requirements in India.

March 11, 2012. With the aim of generating more power, Kerala Electricity department plans to install solar power plants on rooftops of 10,000 houses to generate power which would then be distributed through KSEB lines. Each solar power plant atop houses would have capacity to generate 1 kw of power. The details of financial assistance for setting up the plants and sale price of the power generated would be announced after the budget. KSEB expects to get around 6 units of power daily from each house. The installation of equipment for a plant would cost ` 2 lakh. Union Ministry for Non-Conventional Energy would bear one-third of the cost of the project and the state would provide an equal share.

March 13, 2012. Water pollution from agriculture is costing billions of dollars a year in developed countries and is expected to increase in China and India as farmers race to increase food production, the Organization for Economic Cooperation and Development (OECD) said. In some regions of China, pollution of waterways from agriculture may already have reached the point where it may trigger health problems in people. The OECD report is part of a series of studies published to coincide with the World Water Forum in Marseille. Ministers, industry representatives and non-government organizations are discussing resource management, waste, health risks and climate change at the meeting. Pollution from farming is gaining prominence as the global population increases, raising demand for food and putting strain on water resources. Fertilizers such as nitrates and phosphates as well as pesticides that run off farms can contaminate drinking water, harm aquatic life and result in eutrophication, or a proliferation of plants that reduces oxygen content in water and eliminates other sea life. By 2050 the nitrogen surpluses per hectare from agriculture are forecast to drop in OECD member countries and rise in China and India Costs from agricultural pollution include money spent treating water to remove nitrates, phosphates and pesticide chemicals as well as paying farmers to store manure safely and block contamination from reaching waterways, according to the study. Environmental contamination such as algal blooms also adds to the bill. Beaches covered in green algae are becoming an annual occurrence in Brittany, France’s westernmost region. The issue pits the region’s 3.6 billion-euro ($4.7 billion) tourism industry against its 8.2 billion-euro farming sector, whose large quantities of animal waste and use of fertilizers are blamed by scientists for feeding the so-called green tides that form in Brittany’s shallow bays.

March 13, 2012. Big business will prove an unexpected ally of the European Commission in pushing for firm policy to cut carbon after existing 2020 targets expire, as companies draw up their own plans for a future of greener power. Many business leaders, independent of official European Union policy, take the view that locking into fossil fuels creates the danger of stranded assets when a low-carbon grid looks more and more likely.

March 13, 2012. Building more electricity links between Britain and its neighbouring markets could be an answer to managing its growing renewable energy output which is hard to predict and cannot be stored, a manager at National Grid said. Interconnectors to continental Europe and Scandinavia can help balance Britain's electricity system when renewable energy production, such as wind or solar power, exceeds demand levels. They also allow Britain to import extra electricity when green energy output is low during times of weak wind or cloudy weather. Britain probably needed more interconnectors than the new ones planned for Norway, Belgium and France, but exact figures had not been researched. Britain is currently linked to France, Ireland and the Netherlands through cables with a combined capacity of 3,500 megawatts (MW). The government estimates 31,000 MW of onshore and offshore wind power capacity could be available in the UK by 2020, a more than fourfold increase of current installed wind capacity. Britain has to meet a legally-binding target of sourcing 15 percent of the country's energy demand from renewable sources. Britain could build as much as 5,000 MW in interconnector capacity with Norway. Norway could decide to build further interconnection with other countries too, such as Germany where managing huge amounts of intermittent renewable energy is already a reality, leaving less flexibility for transport to the UK. The benefit of building interconnectors to manage excess green energy output over other technologies, such as huge batteries, is financial. The 260-kilometre long BritNed interconnector linking Britain and the Netherlands, which opened in April 2011, cost 600 million euros to build, while battery storage has not been proven on a commercial scale.

March 13, 2012. President Barack Obama said his decision to challenge China’s export limits on rare-earth minerals at the World Trade Organization is part of his quest to make the U.S. more competitive in the global economy. The U.S., EU and Japan requested consultations with China, a step that will lead the governments to ask WTO judges to rule should negotiations fail to resolve the issue. China produces at least 90 percent of the world’s rare earths, 17 chemically similar metallic elements used in Boeing Co. helicopter blades, Nokia Oyj (NOKIA) cell phones, Toyota Motor Corp. hybrid cars and wind turbines. China says it curbed output and exports to conserve resources and protect the environment. In a similar case, the WTO found in July that Chinese limits on raw-materials exports broke global rules and gave domestic companies an unfair advantage. WTO appellate judges in January upheld the ruling, which supported a complaint by the U.S., the EU and Mexico. 

March 13, 2012. As world political and business leaders ready for the Rio+20 U.N. sustainability conference in June, Brazil’s leaders are debating policy changes that could jeopardize the leadership it has earned from reducing Amazon deforestation and greenhouse gas emissions. Since hosting the 1992 “Earth Summit,” which produced the first international agreement on forest protection, Brazil has risen from the ninth- to sixth-largest economy, ahead of the U.K. and just behind France. Deforestation in the Amazon last year fell to the lowest rate since government began monitoring the world’s biggest rainforest in 1988. The rate is down almost 80 percent in six years. Brazil is now in danger of backtracking because of a proposed overhaul to the country’s 1965 Forest Code, which requires farmers to keep as much as 80 percent of their land as forest, environmentalists say. Brazil’s House and Senate have each passed legislation that farmers and ranchers say is necessary to update current law and that activists call unacceptable. The proposed bills include lowering the amount of forest that landowners must maintain, granting farmers amnesty and exempting them from having to replant areas that were illegally cleared before 2009. The measures still must be reconciled and sent to President Dilma Rousseff for approval.

March 13, 2012. Siemens AG plans to introduce technology in 2015 that will allow wind-turbine electricity to be converted into gas, giving wind farms an alternative revenue stream when the grid is fully charged. The electrolyser, a soccer-field sized plant that converts power into storable hydrogen, is in the testing phase. It promises to overcome the challenge of how to harness fluctuating electricity output from wind farms, especially at night when demand is at its lowest. Siemens, based in Munich, allots 1 billion euros ($1.3 billion) annually to devising new technology for the energy industry. Wind farms have suffered commercially because power can’t be stored on a large scale. By contrast, the converted hydrogen can be stored by feeding it into the gas grid. While Germany subsidizes renewable energy, there’s no reimbursement when supply exceeds demand. Prices on the European Energy Exchange have on occasion turned negative, implying wind farms pay to offload output. Europe’s largest economy has about half a gigawatt of offshore wind-power connected to the grid, and aims for a 20-fold increase to 10 gigawatts by 2020 after turning away from nuclear power. Electrolysers may appeal to utilities or financial investors seeking to profit from fluctuating electricity prices. For Siemens, it’s part of a plan to boost revenue from energy equipment by more than 40 percent. Siemens booked 203 million euros in charges in its most recent quarter at its power-transmission division amid delays connecting offshore wind parks to the power grid.

March 12, 2012. Farmers will need 19 percent more water by 2050 to meet increasing demands for food, much of it in regions already suffering from water scarcity, according to a United Nations report. The UN Food and Agriculture Organization has said food output must rise 70 percent by 2050 to feed a world population expected to grow to 9.3 billion from 7 billion now and as increasingly rich consumers in developing economies eat more meat. A quarter of world farmland is “highly degraded” by intensive agriculture that has depleted water resources, reduced soil quality or increased erosion. The UN’s latest warning about water shortages comes as the World Water Forum begins in Marseille, where ministers, industry representatives and non-government organizations will discuss resource management, waste, health risks and climate change.

March 12, 2012. Airbus SAS and Europe’s biggest airlines called on the European Union to find a compromise on aviation carbon curbs, warning that the EU emission limits on foreign carriers could lead to increased retaliation. The world’s biggest maker of civil aircraft and eight airlines including Air France-KLM, Deutsche Lufthansa AG and British Airways urged European leaders to “use their influence” and push for a global agreement to tackle emissions from the industry and avoid an escalating trade conflict. At stake is the first expansion of the EU emissions trading system, or the ETS, beyond European borders. The bloc, which wants to lead the global fight against climate change, decided in 2008 that aviation should become as of 2012 a part of the ETS after airline carbon-dioxide discharges in the region doubled over two decades and international organizations failed to enact pollution curbs.

March 12, 2012. New lenders in the European Union carbon market including banks and pension funds may narrow the premium of 2013 futures compared with those for 2012. Carbon permit spreads have widened to 6 to 7 percent above the Euribor rate. The premium was unchanged at 66 cents a metric ton, which would match its lowest close since Jan. 30. A market in contango has future-dated contracts that are more expensive than those closer to expiration.

The premium widened to 83 cents, the highest level since Oct. 14. Factories, especially those in countries with high levels of sovereign debt, have sold near-dated carbon allowances and bought longer term because that may be a cheaper way to raise finance. Banks and other investors are starting to realize that there is little risk of rule changes in the carbon market that would make lending against allowances risky. Phase two of the market ends this year. From next year, factories will continue to get most allowances for free, while most power utilities will need to pay for all their permits. Carbon allowances for December dropped 2.4 percent to 7.90 euros a metric ton on ICE as of 3:41 p.m. in London. They earlier fell as low as 7.72 euros, the cheapest since Feb. 14.

March 12, 2012. Greenland’s ice sheet is more sensitive to global warming than previously thought and may already be approaching a critical threshold, researchers in Spain and Germany found. The ice sheet may lose its ability to grow once warming reaches 1.6 degrees Celsius (2.9 degrees Fahrenheit) since pre- industrial times, according to a study published in Nature Climate Change. That’s below the previous best estimate of 3.1 degrees, the scientists at Madrid’s Complutense University and Germany’s Potsdam Institute for Climate Impact Research found.

The United Nations estimates the Greenland ice sheet contains enough water to raise global sea levels by about seven meters (23 feet), threatening coastal cities from New York to London and Bangkok. Even so, the researchers said it could take thousands of years for the entire sheet to melt. Temperatures have warmed 0.8 degree since industrialization began in the 18th century, an increase that marks the lower limit of the 0.8 degree to 3.2 degree range of uncertainty within which the melt threshold could be reached, according to the paper. With 2 degrees of warming, it would take 50,000 years to melt the ice sheet, the scientists said. At 4 degrees, the time frame decreases to 8,000 years, and at 8 degrees, it’s 2,000 years. The researchers used computer models that were able to replicate past growth and shrinkage of the Greenland ice sheet to project what might happen in the future. They factored in the effects of melting of the 3,000-meter thick ice sheet below certain altitude thresholds, which makes refreezing less likely, even with a return to previous temperatures. They also included the warming effect caused by exposure of dark land and sea areas that absorb more light rather than reflect it, as ice does.

March 9, 2012. Coal-reliant Poland vetoed European Union efforts to move further towards a low carbon economy, pitting itself against the rest of the 27-member bloc. Denmark, holder of the rotating EU presidency, has placed the environment at the heart of its leadership, backed by the Commission and the business community on the need for clear direction on EU climate policy beyond an existing set of 2020 goals. But Poland, which relies on carbon-intensive coal for more than 90 percent of its electricity, said it could not agree to any inclusion of milestones for future carbon reductions in an EU text debated at a meeting of environment ministers.

March 9, 2012. Fewer solar panels will be installed this year as the first drop in more than a decade worsens a glut of the unsold devices that’s already slashed margins at the top five manufacturers, an analyst survey showed. Homes and businesses will put up 24.8 gigawatts of solar panels worldwide. That’s equal to the power of about 20 nuclear reactors and down 10 percent from the 27.7 gigawatts. Installations have grown 61 percent a year on average since 1999.

The decline would be the first since Germany began offering premium rates for solar power in 2004, opening the way for mass, utility-scale installations. It will exacerbate price-cutting and a surge in inventories that last year forced Solyndra LLC into bankruptcy, prompted SunPower Corp. to seek a buyout and gutted margins at top manufacturers led by Suntech Power Holdings Co. and First Solar Inc. Germany and Italy, the biggest photovoltaic markets, cut subsidies to curtail a boom last year, helping depress prices for panels by more than 50 percent.

The capacity of factories to produce photovoltaics may top 38 gigawatts this year, 53 percent more than the median demand forecast, according to New Energy Finance estimates. The London- based research company expects installations to slip this year to 24.6 gigawatts. That overcapacity dissolved margins of as much as 30 percent that the biggest solar manufacturers enjoyed two years ago. Trina Solar Ltd. said its gross margin was 7.1 percent in the fourth quarter of 2011, down from 31 percent a year earlier. Suntech, the world’s biggest solar company, said its gross margin fell to 9.9 percent in the most recent quarter from 17 percent.

March 9, 2012. The U.S. Commerce Department said it delayed a decision on antidumping duties for Chinese solar-cell imports following three postponements in its separate decision on countervailing duties. A preliminary determination will be made on May 17. The determination had been scheduled for March 27. The postponement follows delays in the agency’s determination of countervailing duties. The investigation into China’s subsidies for the nation’s solar companies has been “extraordinarily complicated. The decision on countervailing duties, was moved to March 19 from Jan. 12.

U.S. solar-equipment manufacturers, led by Bonn-based 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. The U.S. International Trade Commission took the first step toward imposing added tariffs on Chinese solar imports on Dec. 2, saying U.S. solar-equipment makers are being harmed by Chinese imports. China rejected the ruling, with the nation’s Ministry of Commerce saying the decision shows American “inclination to trade protectionism.” Anti-dumping duties apply to goods sold overseas at or below the price in the home country. Countervailing duties seek to offset the benefits of government subsidies to industries.

March 9, 2012. Mitsubishi Heavy Industries Ltd. must pay about $170 million to General Electric Co. after a jury in the U.S. found the company infringed a wind-turbine patent. Mitsubishi Heavy, Japan’s biggest heavy-machinery maker, will challenge the verdict and seek to have the GE patent ruled unenforceable in a second phase of the trial in Dallas. A second GE patent, related to the turbines’ base design, was ruled invalid by U.S. District Judge. GE accused Mitsubishi Heavy of infringing a patent on a way to keep turbines connected to utility grids during voltage fluctuations without sustaining damage. The dispute is part of an effort by GE to maintain its market lead in the U.S., where the Fairfield, Connecticut-based company says it has made about half of the turbines in use.

March 9, 2012. Solar panel installations in Germany will probably reach a record 8,000 megawatts this year. It may appear that the government’s reductions in subsidies for solar power aren’t sufficient to prevent an increase in demand for panels but this could be a rush for installations before subsidies are cut.

March 8, 2012. La Nina, a cooling in the Pacific Ocean that can cause drought across the southern U.S., is expected to fade by the end of April, the national Climate Prediction Center said. The phenomenon, which also enhances hurricane formation in the Atlantic, weakened in February, the center said. The impact of La Nina may linger through May because the atmosphere needs time to adjust. La Nina has been blamed for drought that has hit Texas and Georgia particularly hard. Rain has eased drought conditions in eastern Texas, including Dallas, in recent months. The weather pattern occurs on average every three to five years and usually lasts from nine to 12 months. It sometimes occurs in back-to-back years, as happened this year and last. The current La Nina has parched crops in Argentina and Brazil and flooded plantations in Thailand and Malaysia. It also contributed to Australia’s wettest two-year period on record.

The Pacific is expected to return to neutral conditions between La Nina and the warming phenomenon known as El Nino, in June, July and August, said the climate center, which is based in Camp Springs, Maryland. La Nina cuts down on wind shear in the Atlantic, which can inhibit hurricane formation there, according to the National Oceanic and Atmospheric Administration. Neutral conditions usually won’t inhibit hurricane growth. Only an El Nino, which increases wind shear across the Atlantic, has been shown to lower the number of hurricanes. Last year’s Atlantic hurricane season spawned 19 storms with winds of at least 39 mph, tying it as the third-most active season in records that go back to 1851. Three other years, 2010, 1995 and 1887, also had 19 storms.

March 8, 2012. Suntech Power Holdings and JinkoSolar Holding Co became the latest solar companies to record big impairment charges, as losses mount on weak demand and a steep fall in prices. The solar industry was hit hard last year as prices for the equipment that turns sunlight into electricity halved, pushing many companies into losses and forcing the likes of First Solar, SolarWorld AG, MEMC Electronic Materials and Yingli Green Energy to incur huge charges. Suntech, the world's biggest producer of photovoltaic solar panels, said on Thursday its operating expenses in the third quarter included non-cash, impairment charges of $482.9 million, while JinkoSolar took a $7.3 million hit in the fourth quarter.

March 8, 2012. Sports cars, reputed for being energy guzzlers, are now trying to boost their green credentials as they seek to attract environmentally conscious consumers and meet new climate standards. At the Geneva Motor Show, Ferrari conscientiously draped signs on its new models saying that the vehicles' carbon emissions have been cut by 30 per cent.

The F12 Berlinetta, a 12-cylinder car with 740bhp, is equipped with a system which automatically halts its engine at red lights or in traffic jams, thereby saving some fuel. The brand is also developing a hybrid model, the F599 HY-Kers, although it is still a prototype at the moment. If sports car makers are making this effort to go green, it is partly because they are driven by new and tougher environmental standards in Europe. By year end, carbon emissions of new cars would have to be below 130g per km. On 2015, all cars sold must reach this target, or their manufacturers would be heavily fined. Some firms are also pushed by consumer demand to develop greener sports cars.

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