Energy News Monitor I Volume VIII, Issue 4

Bi-weekly column Asian Waters Tridivesh Singh Maini, Associate Fellow, Observer Research Foundation

China:

A story titled ‘Chemical spill pollutes wells in east China, affecting 1,300 villagers’, in the People’s Daily edition of July 12 states that as a result of a chemical spill which contaminated six wells in a village in east China's Zhejiang Province, 1300 villagers found themselves without a reliable source of drinking water for four days.

The significance given to water by the political class is underscored through a write up titled ‘ water conservancy’, which appeared in the July 14 edition of the China Daily brings to light some of the salient features of a meeting on water conservancy was held in the name of the Central Committee of the Communist Party of China (CCCPC). According to the write-up this meeting which ended July 9 provided a boost to the lacklustre stock market. It also brings to light another interesting fact, ‘The country is expected to invest at least 400 billion yuan ($61.8 billion) a year in the next decade to upgrade irrigation works. That is a lot more than a one-time stocks booster’. While highlighting the importance of water conservancy, for the country’s agriculture it also makes the point that water conservancy may replace express railways as the growth driver of the country’s economy.

The July 10 edition of the People’s Daily in a story ‘China pledges to step up construction of water facilities’ summarizes some of the key points made by the Chinese President and Premier during this meeting. While the President Hu Jintao according to paper emphatically stated that ‘China will prioritize water projects in its infrastructure construction and take irrigation and water conservancy as a major task in rural infrastructure improvement ... Hu said water has exerted more evident impact on China's economic security, ecological security and national security as the economic and social development and improved livelihoods are facing water strains’. Premier Wen Jiabao ‘reiterated the importance of water projects, saying the major task is to improve water facilities to combat floods and drought, step up reinforcement of small reservoirs, expand irrigation and ensure drinking water’.

Pakistan:

The English daily, Dawn in a story, ‘2008: Water scarcity reigniting Anti-India sentiment in India’, which appeared on July 2, 2011 uses wiki leaks in attempt to highlight the fact that the US is mindful of the fact that if Pakistan’s fears with regard to water are not addressed adequately by India, it could lead to conflict. Quoting the conclusion of the wiki leaks report dated March 11, 2008 ‘.. that Pakistan is facing a 34 percent water shortage which translates into lower crop yields for winter wheat as irrigation levels are lowered and has already resulted in extended blackouts across the country due to reduced hydropower production. This water issue has the potential to become an official ‘dispute’ under the Indus Basin Water Treaty if left unresolved and has already resulted in increased anti-India sentiment among the local population’.

A story in The News, dated July 7, ‘Pakistan virtually loses out on Indian Dam’, makes the point that Pakistan has been unsuccessful in preventing India from going ahead with the Kishenganga project. Says the project, ‘Thanks to the incompetence of Pakistani government’s so-called water experts, Pakistan has, for all practical purposes, lost the case against India on the controversial 330MW Kishenganga Hydropower project even before the formal commencement of the legal battle in the court of arbitration as India has already completed 40 percent construction work on the project, reveals the latest monthly report of the project exclusively available’.

Domestic water issues:

Amongst the important domestic issues covered in the newspapers, a story in The News, dated July 9, ‘IRSA cuts additional water supply to provinces’, states that the Indus River System Authority (IRSA) has decided to cut down supply of additional water to provinces due to a decline in the pressure of water stream. As a consequence, water shares of Sindh and Punjab will be cut down by 11000 and 5000 cusecs respectively. The pressure of the water stream in the Indus river has recorded a 7 percent decline due to a drop in climatic temperature. In view of this, the meeting decided to supply 169000 cusecs water to Sindh instead of 180000. Similarly, the Punjab will get a reduced share of 113000 cusecs water rather than 118000.

Another story, ‘Misuse of water filters’, July 8, in the same paper brings to light the excessive misuse of filtered water in Lahore. Says the story ‘... filtered water is used by the shopkeepers for washing and cleaning purposes. Some mechanics are using this water for pressure cleaning ACs’ condensers through water-air pumps. Many shopkeepers are using trolleys to carry potable water from the filter to their shops. All this is taking place before the very eyes of the supervising staff as well as the mobile vigilance teams. Measures should be taken to stop the use of potable water for washing and cleaning purposes’.

A report in The Dawn, July 4, ‘Around 79 per cent water samples unsafe in rural areas of Punjab’, brings to light the shocking fact that 79 per cent water samples in rural areas of Punjab are unsafe and only a miniscule 21 per cent samples were safe when compared with Pakistan Standard and Quality Control Authority (PSQCA). According to the report, this monitoring programme was conducted in 49 tehsils, 1227 union councils and 2090 villages. In all 10,440 water samples were collected and evaluated by conducting field and laboratory analysis.

to be continued…

Views are those of the author

Author can be contacted at [email protected]

Can Pipelines Lead to Peace?

Saleem H. Ali*

onflicts in the Middle East have been exacerbated by competition over natural resources. Within the United States, there is growing bipartisan interest in reducing dependence on foreign oil. Little attention, however, has been paid to the role of transboundary oil and gas pipelines as a means of conflict prevention rather than a source of conflict. This analysis paper argues that the fixed infrastructure of pipelines can foster economic cooperation between states and increase regional security. The Baku-Tbilisi-Ceyhan and Chad-Cameroon projects are examples of how pipelines can bring more than just revenue to their host countries; they can contribute to the amelioration and even resolution of local conflicts.¹

There is compelling evidence to suggest that pipelines can encourage cooperation if there are clear policy interventions to integrate the development of energy infrastructure within a broad economic and security framework. This paper will review the performance of existing pipelines in the Middle East to glean lessons for proposed projects in Southwest Asia. The proposed routes from Iran to India and from Turkmenistan to Pakistan are cases that have the potential to spur significant cooperation between the parties involved.

The existing literature on oil and gas transport has not been bullish on the peace dividends of pipelines. Where the issue has been considered, as with pipelines in Central Asia, they have largely been viewed as a source of conflict. Some analysts have framed the clash between Russia and Georgia in this vein.²

Of particular relevance to the Gulf region are data from modeling conducted by Rice University’s Baker Institute, suggesting that “nations rich in natural gas resource such as Qatar, Iran, and Saudi Arabia could be major players. However, they will have a disadvantage because they bear the fixed cost of market entry due to lack of existing infrastructure.”³ Another obstacle will be persuading investors to devote more attention to the Middle East and Southwest Asia in light of political instability and security risks. However, it is precisely such areas where pipelines can play a constructive role in reducing tensions and promoting greater interstate cooperation. Considering that world demand for gas is growing faster than supply, pipelines have the potential to facilitate regional security, helping to preempt conflicts caused by resource scarcity.

At the same time, as much as energy cooperation should be encouraged, it is one factor among many and no panacea, particularly when longstanding political disputes remain unresolved. For example, during the opening ceremony of the Sakhalin-2 export terminal in Russia, Japanese Prime Minister Taro Aso noted to Russian President Dmitry Medvedev: “Regardless of the increasing mutually beneficial cooperation between two important neighbors, Japan and Russia, there still exists the unnatural situation that no peace treaty has been signed because of a territorial dispute.”⁴ That said, because pipelines are—and become— permanent facts on the ground, their positive impact on relations between governments is likely to build over time. This potential was noted by Balaji Sadavisan, Singapore’s senior minister of state for foreign affairs: “Pipelines have a real chance to increase peace and security in the region: they tie countries together by making the interconnected costs of conflict unacceptably high.”⁵ In other words, pipelines increase the costs of conflict thereby increasing incentives for cooperation. However, the pipelines themselves are not enough. What is needed is an attitudinal shift—a long-term policy outlook that views pipelines as a means of promoting bilateral and regional cooperation on economic and security issues.

In their study of the trans-ASEAN gas pipeline, Toby Carrol and Benjamin Sovacool develop a framework of “contested regionalism” which suggests that countries in a geographic region with scarce resources scramble for greater regional influence, producing more conflict than cooperation.⁶ Accordingly, collective bodies such as ASEAN are not “abstract entities but [rather the] product of particular power relationships.”⁷ Put differently, regionalism, as currently conceptualized, is a much less promising force for the kind of integration that politicians say they seek. The analysis presented here builds on this emerging framework, but rather than simply highlighting current failures in meeting cooperative goals, this paper presents policy guidance on how to reconfigure energy policy to promote greater coordination and cooperation.

Notes:

* The author is professor of environmental planning and Asian Studies at the University of Vermont.

1 See Rafael Kandiyoti, Pipelines: Flowing Oil and Crude Politics (London: I. B. Tauris, 2008); Scott Pegg, “Can Policy Intervention Beat the Resource Curse? Evidence from the Chad-Cameroon Pipeline Project,” African Affairs 105, no. 418 (January 1, 2006): 1-25.

2 Daniel Freifeld, “The Great Pipeline Opera,” Foreign Policy, August 24, 2009.

3 Mark Hayes, “Algerian Gas to Europe: The Transmed Pipeline and Early Spanish Gas Import Projects,” Paper Series no. 27, Baker Institute Energy Forum, May 2004.

4 Roman Kupchinsky, “LNG: A Wolf in Sheep’s Clothing?” Policy Paper no. 2, Global Public Policy Institute, 2009.

5 Benjamin Sovacool, “Energy Policy and Cooperation in Southeast Asia: The History, Challenges, and Implications of the Trans-ASEAN Gas Pipeline (TAGP) Network,” Energy Policy 37, no. 6 (June 2009): 2362.

6 Toby Carrol and Benjamin Sovacool, “Contested Regionalism in South-east Asia: The Politics of the Trans-ASEAN Pipeline Project,” Working Paper no. 2, Center on Asia and Globalization, National University of Singapore, September 2008, p. 15

7 Ibid., 6.

Concluded

Views are those of the author

Courtesy: Brookings Doha Center

The Strategic Logic of Pipelines: Toward “Rational Regionalism”

Saleem H. Ali*

il and gas continue to be the most versatile fuels facilitating economic growth and individual mobility. Global demand for gas is growing particularly rapidly; according to the International Energy Agency, an estimated $105 billion per year in infrastructure investment is needed to boost supply. Pipelines, while not without their drawbacks, remain the most effective and economical means of transport.

Developing pipeline infrastructure is thus essential to ensuring energy security but may serve other purposes if the right political decisions are made with an eye toward the effective integration of economic and security priorities. At the same time, pipeline construction is often seen as an intrusion into personal, communal, or national spaces, thus becoming a subject of controversy for citizens, activists, and representatives of local communities. The Baku-Tbilisi-Ceyhan (BTC) pipeline, completed in 2006 between Azerbaijan and Turkey via Georgia, exemplifies such challenges. During construction, activists objected to the potential negative effects despite detailed environmental and social impact assessments commissioned by the World Bank and private investors.¹ The pipeline could have been more efficiently routed through Armenia, but taking into account security risks and geopolitical interests, a fairly expensive bypass route was found directly from Georgia to Azerbaijan. If, however, the routing had been considered within a broader frame of regional cooperation—and perhaps as a bargaining item—the pipeline could have been used as a conflict resolution instrument between Armenia, Azerbaijan, and Turkey.

Means of Transport

There is an ongoing debate over the most effective means of oil and gas transport, and a number of tradeoffs should be taken into consideration when comparing pipelines to terrestrial and marine tankers. Oil is carried along pipelines usually at a speed of around 7 km per hour, with pumping stations every 60 to 100 km that provide needed pressure to keep the pipelines functional. Environmental hazards of pipeline transport tend to be less than for terrestrial and marine tankers since leaks can be contained by simply shutting off valves. While sabotage of pipelines remains a problem, transport by tanker is also growing more hazardous due to piracy, particularly in the Indian Ocean.

In comparison to oil, which is largely transported worldwide by a fleet of more than 38,000 marine tankers, 93 percent of the world’s gas continues to be supplied through pipelines. Over 60 countries have on average 2,000 km of pipelines for gas transmission within their borders and about 10,000 km of new pipelines are planned for this decade, most of which will traverse difficult terrain and deep marine waters.² However, pipelines have a new competitor in Liquefied Natural Gas (LNG) operations, which have been introduced in a growing number of markets. LNG is gas cooled to negative 161 °C, at which point it liquefies and occupies only 1/600th of its original volume, making it convenient for shipping. While considerably more costly due to the capital intensive infrastructure needed for cooling, the advantage of LNG shipments lies in access to distant markets which become relatively uneconomical for pipeline transport.

LNG Versus Pipelines

There is some polarization among researchers regarding the prospects for LNG as a long-term solution to gas transport. As noted in a recent study by the Global Public Policy Institute:

“LNG has been vilified as a vehicle which might facilitate the cartelization of the price of gas and raise it to unjustifiable levels. LNG has also been denounced by critics as being a potential weapon of mass destruction in the hands of terrorists bent on inflicting catastrophic damage to heavily populated cities where LNG tankers dock. Finally and most significantly, LNG has been depicted as a powerful geopolitical weapon, a factor which is destined to become even more important in the coming decade.”³

While some gas producers such as Qatar have chosen to focus on LNG as their primary export route, pipelines continue to be a vital force in the sector. Even if LNG becomes relied on more heavily, diversification of export mechanisms remains advisable since LNG pricing – usually negotiated on different terms than pipelines – may be more vulnerable to market fluctuations and inflationary pressures. From 2004 to 2008, for instance, LNG costs rose twice as fast as pipeline construction costs.⁴

Given the distance from source to market and cost concerns, the case for privileging pipelines in much of South Asia is strong (Appendix 1). One analysis comparing pipelines to LNG, coal, and high-sulfur fuel oil revealed pipeline gas to be the second-least costly alternative after coal. Even considering the fairly high prices for the gas being offered by Iran to Pakistan, with pipelines, the latter could save between $652 million and $1.17 billion annually compared to its current energy profile (depending on the range of oil prices from $50 to $100 per barrel of Brent crude). The total savings for Pakistan over the life of the reserve with discounting factors of 10 percent could be as much as $11 billion.⁵

Toward “Rational Regionalism”

Despite their economic benefits, pipelines are not always prioritized as the preferred means of transport due to various factors within the source, demand, and transit countries. In particular, countries fear the permanent infrastructure of pipelines will create a situation of energy dependence. As such, the cooperative potential of pipelines has not been realized. However, with political buy-in from policymakers—and a commitment to accountability and transparency— it may be possible to move away from “contested regionalism” through which pipelines are currently perceived to a more “rational” regionalism. “Rational regionalism” implies that countries consider the logic of comparative advantage as their primary unit of analysis. Framed this way, a zero-sum game can be transformed into an integrative trading regime. Mechanisms to move policymakers in this direction are now beginning to gain momentum in economic and political institutions in the Middle East and South Asia.

Appendix 1

The South Asian Pipeline Projects

Notes:

* The author is professor of environmental planning and Asian Studies at the University of Vermont.

1 For a review of some of these local conflicts refer to the Bank Information Center’s website on the BTC project, <http://www.bicusa.org/en/Project.3.aspx>.

2 Theodoropolos, Theodore E. Oil, Gas and Petrochemicals, (Doha: State of Qatar Publications, 2009). Data on pipeline per country from Oil and Gas Journal,February 2005.

3 Kupchinsky, “LNG: A Wolf in Sheep’s Clothing?”

4 Jensen Associates Study, 2008, quoted in presentation at the Qatar Gas Conference, March 2009.

5 Interstate Gas Systems, e-mail correspondence with author, May 14, 2009.

Concluded

Views are those of the author

Courtesy: Brookings Doha Center

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

Essar Oil eyes coal-bed methane gas blocks in India, abroad

July 12, 2011. Essar Oil is looking to acquire coal-bed methane gas blocks both in India and abroad. Essar had India's largest CBM acreage with over 10 trillion cubic feet of reserves and resources spread across five blocks. Essar was one of the three companies in race to pick up a significant stake in state-run ONGC's CBM blocks in Raniganj, Bokaro and Jharkhand. CBM blocks were a big focus area for the group's exploration and production strategy. Raniganj in West Bengal, Essar's first block under development, is producing about 30,000 standard cubic metres per day of gas and 30 more wells have been drilled there.

Cairn Energy says sells 10 pc of Indian unit to Vedanta

July 12, 2011. British oil explorer Cairn Energy announced that it had sold 10 percent of its Indian unit to Vedanta Resources for a net cash sum of $1.362 billion. India had given conditional clearance to the sale of Cairn Energy's Indian oilfields to mining group Vedanta. Cairn had agreed to sell a 40-percent stake in Cairn India to Vedanta nearly a year ago, but the deal had become bogged down in a dispute over royalties.

KG-D6 gas fields: Reliance Industries says CAG not giving enough time to respond

July 10, 2011. Ahead of a planned meeting with the CAG, Reliance Industries has said that it was not being given enough time to respond to the audit observations on KG-D6 gas fields. The CAG submitted its draft report to the oil ministry indicting RIL of receiving undue favours. RIL said it received extracts of the CAG audit on June 23 and was asked to respond by June 30.

ONGC to relinquish one CBM block, go for product sharing in four

July 6, 2011. ONGC, which is exploring coal bed methane in eastern India, will relinquishing one block and file product sharing contract for four on which it has found gas in viable quantities. ONGC had received nine blocks in eastern India. At Bokaro in Jharkhand, ONGC has found coal bed methane gas and the volume of reserves has been estimated to be commercially viable. ONGC is also planning to drill two wells at its Jharia CBM block in Jharkhand, where it has found gas. The company can start production only after the Directorate General of Hydrocarbon approves its CBM development plans. ONGC has started selling some gas from its Jharia block.

Downstream

IOC is India's first Fortune 100 companies, 7 others on 500 list

July 12, 2011. Eight Indian companies have made the cut in the list of world's 500 largest companies compiled by Fortune magazine, with Indian Oil finding a place in the top 100 and Reliance Industries in 134th spot. Out of the eight, five are state-run entities. Indian Oil has cornered the 98th spot, up from 125th place. Reliance Industries has also improved its ranking from previous year's 175.

Essar to shut Vadinar refinery from September 18 for revamp and upgrade

July 11, 2011. Essar Oil plans to shut its 280,000 barrels per day (bpd) Vadinar refinery in western Gujarat from September 18 for 35 days for a revamp and upgrade.

The planned shutdown is aimed at raising capacity to 360,000 bpd and increasing the complexity of the plant to process more ultra heavy and heavy crude and to produce Euro V-compliant fuel for exports. The private-sector refiner also plans to carry out routine maintenance work during the shutdown besides hooking up new units and revamping some of the existing ones like the fluid catalytic cracker and crude unit.

Transportation / Trade

More M&As in pipeline after Cairn-Vedanta, BP-RIL deals

July 8, 2011. India's energy sector is ripe for a wave of M&A deals following the government's approval of the Cairn-Vedanta deal and strong endorsement of the $7.1-billion BP-Reliance deal. The deal pipeline after the completion of two of the largest cross-border deals in India includes potential transactions between ONGC and companies such as ENI or BG for stakes in the state-run firm's offshore exploration blocks, and outbound M&A activity by Indian firms seeking foreign petroleum assets.

PetroChina buys rare small-sized India fuel oil cargo

July 7, 2011. PetroChina bought a rare small-lot fuel oil cargo from India, for end-July lifting, at strong price levels, signalling that its months-long supply woes are not over.

The 30,000-tonne lot of 380-centistoke fuel oil, for July 20-22 lifting from the eastern Indian port of Vizag, was bought from Hindustan Petroleum Corp Ltd at a discount of $15.00-$16.00 a tonne to Singapore spot quotes on a free-on-board basis, up from minus $24.00-$25.00 previously.

PNGRB authorises GSPL gas grid projects

July 7, 2011. The gas regulator Petroleum and Natural Gas Regulatory Board (PNGRB) issued much awaited authorisation to the state venture Gujarat State Petronet Limited (GSPL). It clears the path for GSPL to lay 4,000 km long pipelines on three routes at an investment of ` 12,500 crore.

GSPC and IOC control 52% and 26% respectively while refining and retail majors BPCL and HPCL have 11% stake each in the project that has been hanging fire since four years. Currently, GSPL transports over 35 MMSCMD of gas through its 1,573 km of gas grid in Gujarat.

Proposed pipelines will carry around 100 MMSCMD of gas and traverse through Andhra Pradesh, Maharashtra, Madhya Pradesh, Gujarat, Rajasthan, Haryana, NCR, Punjab and Jammu & Kashmir. Earlier, consortiums led by GSPL emerged as the most competitive bidders for Bhatinda - Jammu pipeline (700 km), Mallavaram - Bhilwara pipeline (1595 km) and Mehsana - Bhatinda (1650 km). However, PNGRB could not issue LoI to GSPL on account of legal complications. The LoI will enable the consortium to proceed for fund raising for 4,000 km gas transmission projects entailing an investment of ` 12,500 crore.

Policy / Performance

GGCL increase CNG prices in Gujarat

July 12, 2011. Gujarat continues to pay highest CNG price. Now, BG Group subsidiary Gujarat Gas Company Limited (GGCL) too revised CNG price to ` 39.75 per kg, 8% higher than ` 36.75 earlier. GGCL market CNG to through 42 stations in and around Surat, Bharuch and Ankleshwar. Last month, private player Adani Gas, state-centre JV Sabarmati Gas and country's only gas cooperative Charotar Gas Sahakari Mandali revised CNG price to ` 40.50 per kg, up from ` 37-38. State owned GSPC Gas is now marketing CNG at ` 40.25 per kg. CGD players market 9 mmscmd of gas in Gujarat covering pipe network to 8 lakh piped gas consumers and close to 250 CNG stations.

According to GGCL, an approximate comparison between the mid size vehicle running on petrol and CNG shows that, the daily operating cost for an average run of 35 km for CNG vehicle comes at ` 65 as against ` 160 for petrol vehicle.

Soon, LPG refills may cost you ` 800

July 9, 2011. If the oil ministry has its way, cooking gas consumers would soon get only four refills in a year at subsidized rate. Every subsequent cylinder would cost ` 800. The ministry proposes to limit the number of subsidized cylinders for even BPL (below poverty line) at four cylinders a year. But the government would give them a one-time assistance of ` 1,400 for getting a connection.

Oil Min blocks Cairn's Bhagyam oil field plans

July 7, 2011. In fresh confrontation, the Oil Ministry has blocked Cairn India's plans to begin crude oil production from the Bhagyam oilfield, the second biggest find in the prolific Rajasthan block. Cairn had plans to put the Bhagyam oilfield into production by October to take total output from the Rajasthan block to 175,000 barrels per day. Bhagyam is targeted to produce a peak output of 40,000 bpd by the year-end.

Oil Ministry backs BP's stake buy in RIL

July 7, 2011. The oil ministry has unequivocally supported BP's $7.2-billion deal to buy stakes in Reliance Industries' 23 oil and gas blocks, paving the way for approval of the landmark deal that marks the first significant investment by a global oil major in India.

The oil ministry, which recently secured cabinet approval for the Cairn-Vedanta deal and also took the bold decision of raising fuel prices, could have approved this deal itself, but chose to seek the cabinet's clearance, given the large size of the deal.

The proposal has been sent to the ministries of law, finance and home. The home ministry has cleared the proposal after some initial reservations. BP, which announced the deal, reacted cautiously. Oil ministry said the referral of the Reliance-BP deal to the cabinet was significantly different from its move to seek the cabinet's nod for the Cairn-Vedanta deal.

RIL to sell non-controlling stake in Reliance Gas Transportation Infrastructure

July 7, 2011. RIL plans to sell a non-controlling stake in Reliance Gas Transportation Infrastructure Ltd to bring aboard a partner that brings skills and value to the company involved in building pipelines in India. The extent of the stake sale was flexible but would not be a controlling stake.

The company has held talks with international bankers for the stake sale, which may value the company at about $1 billion. The plan to sell a stake in RGTIL comes at a time when the government is poised to approve oil major BP's $7.2-billion deal to buy stakes in 23 oil and gas blocks of Reliance Industries.

Reliance and BP also plan to set up a 50:50 joint venture for sourcing and marketing gas in the energy-hungry country. RGTIL had plans to build two pipeline projects that will transport gas from the Krishna Godavari basin to various industrial hubs in southern India but the company had been going slow on the projects as there was not enough gas available to justify large investments in these pipelines. However, Reliance Industries' planned joint venture with BP could change the gas supply situation and boost RGTIL's business prospects. The joint venture is likely to incorporated soon after the government approves BP's acquisition of stakes in Reliance's blocks. The company may accelerate work on the pipelines if RIL starts importing liquefied natural gas. RGTIL was granted the licence to build these two pipelines connecting Kakinada, the landfall point of the KG Basing has to various regions in southern India. These lines are a part of RGTIL's two trunk lines that run from Kakinada to Haldia (1100 km) and to Chennai (445 km). The petroleum and natural gas regulatory board has been monitoring the progress of these pipeline projects.

India's natural gas sector and the related pipelines infrastructure is expected to grow significantly as the country is boosting capacity to import LNG, while gas output from the KG-Basin, which has fallen in the past year, is expected to rise. Reliance Industries says that the KG Basin reservoir turned out to be more complex than initially envisaged, forcing the company to go slow in pumping gas to avoid permanent reservoir damage. However the involvement of BP in the gas-rich block is expected to help Reliance boost gas output with the help of the oil major's expertise and experience in deep-sea fields.

POWER

Generation

NTPC to provide 14 MW power to 118 villages

July 12, 2011. National Thermal Power Corporation (NTPC), India's largest power generation utility would provide 14.32 MW power to 118 villages located within a radius of five km from its two power stations- the 3000 MW NTPC Kaniha and the Talcher Thermal Power Station (TTPS). While the Kaniha plant would offer 4.55 MW, TTPS would offer 9.77 MW under a Central government scheme which will benefit about 1.4 lakh people belonging to 28458 families in 118 villages of the state.

The scheme will cover five blocks in Angul district- Kaniha, Talcher, Orapada, Barjang and Banarpali. The project to be taken up at a cost of ` 29.50 crore is expected to be commissioned within 12 months. The detailed project report (DPR) has already been prepared by the Central Electricity Supply Utility of Orissa Ltd (Cesu). The Orissa government entered into a tripartite agreement with NTPC and Cesu.

New gas-fired power plants likely to come up this year

July 9, 2011. New gas-fired power plants with a capacity of over 3,150 mw are likely to come up this year but there's no gas available, worsening the fuel crisis in the sector. Already, coal-based plants are suffering as state-run Coal India is unable to step up production significantly because of environmental restrictions on new mines. Coal-based plants with capacity of 17,000 mw are likely to be stranded because of fuel shortage.

Nalco to infuse ` 17 bn equity in Kakrapar N-plant

July 8, 2011. Aluminium PSU major Nalco would infuse ` 1,700 crore as equity in the Kakrapar nuclear power plant in Gujarat to pick up 49 per cent stake.

The size of the Kakrapar plant would be 2X700 MW in phase II. Nuclear Power Corporation of India Limited (NPCIL) is also a partner in the project.

The plant would be commissioned by 2015. The company was also planning to set up a 50-MW windmill in Andhra Pradesh at a cost of ` 274 crore, besides bidding for the Ultra Mega Power Plant (UMPP) at Sundergarh in Orissa. Nalco was already having a 1200-MW power plant for its captive use.

Monarchak power plant to start generation by Jan 2013

July 6, 2011. Gas-based 100 MG watt Monarchak power plant in West Tripura district would start generation by January 2013.

North East Electrical Power Corporation (NEEPCO) said that in the first phase 60 MW would be generated by 2013 and later another 40 MW would be generated.

Transmission / Distribution / Trade

DERC may allow the option to choose power supplier between BSES Rajdhani, BSES Yamuna, NDPL & NDMC

July 8, 2011. Private discoms will not have monopoly in their area of operation in the city if Delhi Electricity Regulatory Commission (DERC) has its way. Within a year, Delhiites may be able to choose their power supplier. On the final day of the four-day public hearing for consumers and stakeholders related to tariff determination for 2011-12.

The three private discoms - BSES Rajdhani, BSES Yamuna and NDPL - besides government-owned NDMC will remain the power suppliers. At present, the cap for open access is 1MW - the consumer needs to have a load of at least 1MW. So, there are no takers for it. The cap will have to be scaled down considerably for domestic consumers.

After fuels, power tariffs likely to go up

July 6, 2011. After motor and kitchen fuels, pressure is mounting for an increase in power tariffs. Recent discussions among the power ministry, central and state regulators and distribution utilities point to a situation where it will soon be difficult to continue supply without raising the price.

According to a status report on power distribution prepared by the ministry, the cumulative loss of the country's 110 power utilities, including 37 purely distribution entities, are estimated at ` 86,136 crore. If the tariffs remain stagnant, the loss will balloon to ` 1,16,089 crore by 2014-25. The actual losses are higher if one includes the subsidy provided by the state governments.

State-run lender Power Finance Corporation reckons the subsidies to be ` 29,665, or 19% of the revenues of state utilities, in 2008-09. This is a substantial increase over ` 13,590 crore, or 11% in 2006-07 and ` 19,518, or 14%, in 2007-08.

Policy / Performance

Reliance Power aims to earn ` 50 bn in carbon credits from 3 ultra mega power projects

July 12, 2011. Reliance Power aims to earn ` 5,000 crore from carbon credit from the three ultra mega power projects of 4,000 MW that it is developing.

The company seeks to earn almost ` 2,000 crore in 10 years by registering its 4,000 MW Tilaiya ultra mega power project for carbon credits after it got two of the other mega projects registered with the Clean Development Mechanism Executive Board (CDM-EB) of United Nations Framework Convention on Climate Change.

Reliance Power said that its ` 17,400-crore ultra mega power project at Krishnapatnam in Andhra Pradesh has qualified for carbon credits, which will help it earn ` 1,100 crore in the first 10 years of operations.

The imported coalbased project, which is scheduled to be completed in 2014, is in a 25-years pact to supply power at an average rate of ` 2.33 a unit to four states. Prior to this, the company had got its ` 16,000-crore unit at Sasan in Madhya Pradesh registered for carbon credits, which will help it earn around ` 2,000 crore.

The clean development mechanism allows less polluting projects in developing countries to earn certified emission reduction credits, which can be sold to industrial countries which need to meet their emission reduction targets under Kyoto Protocol.

Delhi's power demand to double in 5 years

July 10, 2011. The power demand in Delhi will almost double in the next five years from average requirement of 4,500 MW to 8,700 MW, according to an estimate by the Central Electricity Authority.

The Delhi government, following the projection by the CEA, is contemplating setting up more gas-based power plants with an aim to raise its own generation beyond 4,000 MW from the current 1,000 MW by 2017.

The city government has also proposed to set up a separate entity to promote solar energy generation in a big way. The CEA estimate about the increase in power demand has been mentioned by the Delhi government in its recent report to the Planning Commission. The CEA is a statutory body which advises the government on matters relating to the National Electricity Policy and formulates short-term and perspective plans for the development of electricity systems. At present, Delhi's power demand ranges from 4,100 MW to 4,900 MW, depending on the weather condition. The city gets 2,400 MW from central quota, while nearly 1,000 MW is produced by Delhi's own electricity generating stations.

Steel Ministry bans import of low-grade transformer components

July 9, 2011. The government has banned import of low-grade version of a critical transformer component, a development that promises to vastly reduce power breakdowns. The steel ministry, in its quality control order, mandated Bureau of Indian Standards certification for coal rolled grain-oriented steel sheets, also called electrical sheets, which form about 35% of the cost of a transformer. In September 2008, the government had notified use of electrical steel sheets from February 12, 2009. But the order was revoked before it came into effect, opening door to unrestricted electrical steel sheets imports.

NTPC to receive ` 100 bn loan from SBI

July 8, 2011. Country's largest power producer NTPC said it has inked a ` 10,000 crore loan agreement with State Bank of India (SBI) for financing its projects. The loan amount would be the largest extended by SBI to any Indian or foreign corporate.

NTPC said the loan would be utilised for financing capital expenditure of its ongoing and new projects. NTPC, which has a total installed capacity of 34,584 MW, plans to add 1,28,000 MW by 2032. For 2011-12, the state-run thermal power major has an outlay of ` 26,400 crore for capital schemes.

INTERNATIONAL

OIL & GAS

Upstream

Orca to boost gas production in Tanzania

July 11, 2011. Orca has signed an agreement with Songas Limited to increase the capacity of the Songo Songo gas field processing plant from 90 MMcfd to a potential of 110 MMcfd. This will increase the overall infrastructure capacity that processes and transports the gas to Dar es Salaam to 105 MMcfd.

PetroVietnam mulls buying ConocoPhillips offshore Vietnam assets

July 8, 2011. State-run Vietnam Oil and Gas Group, or PetroVietnam and its partners are considering buying ConocoPhillips' stakes in three oil and gas projects off the coast of Vietnam. ConocoPhillips' assets in Vietnam are valued at up to $1.5 billion.

ConocoPhillips, the third-largest U.S. oil company by market value after ExxonMobil and Chevron, has a 23.3% stake in a group of five fields in Block 15-1, where oil production started in 2003, a 36% stake in Rang Dong Field in Block 15-2 in the Cuu Long basin and a 16.3% stake in the Nam Con Son Gas Pipeline project.

Namibia sees 11 billion barrels in offshore oil reserves

July 6, 2011. An estimated 11 billion barrels in oil reserves have been found off Namibia's coast, with the first production planned within four years. The finding could put Namibia on par with neighboring Angola, whose reserves are estimated at around 13 billion barrels and whose production rivals Africa's top producer, Nigeria.

Brazilian firm finds offshore oil, gas fields

July 6, 2011. Oil giant Petrobras said it found two new offshore oil and gas fields in a deepwater area in the Espirito Santo basin.

The fields are estimated to contain roughly 80 billion barrels of oil equivalent and could potentially transform Brazil into a major crude exporter.

Downstream

Petrolimex plans refinery, pipeline for Chinese products

July 11, 2011. Petrolimex, Vietnam's top oil products importer and distributor said it planned to invest between $4.4 billion and $4.8 billion in building a 200,000-barrel-per-day oil refinery complex in the country's central region.

Petrolimex said progress on the complex, one of five new refineries planned in Vietnam for some years, was expected by 2015, but it was not clear if that referred to the start of construction or the start of operations.

Petrolimex also said in the prospectus that it had discussed a $212 million project with China's top oil producer, PetroChina, to build a pipeline to take Chinese refined products to Vietnam. The pipeline would have an initial annual capacity of 10 million tonnes of petrol, diesel and other products, close to the total volume of Vietnam's oil product imports in 2010.

Transportation / Trade

Study warns of leak risks of Canada-U.S. oil pipe

July 12, 2011. TransCanada Corp, a company that hopes to build a $7 billion pipeline to take crude from Canada's oil sands to Texas, has underestimated the number and volume of leaks that could occur on the duct and hurt water supplies.

Kuwait trims discount for August crude sales to Asia to 60 cents a barrel

July 10, 2011. Kuwait narrowed the discount for August oil shipments to Asia to the slimmest margin in almost two years after Saudi Arabia raised the price for its comparable Arab Medium crude to refiners in the Far East.

State-owned Kuwait Petroleum Corp. said its Export Crude will sell in August at a discount of 60 cents a barrel below the average of Oman and Dubai crudes. The narrowest discount since October 2009 comes after an increase in the cost from the 85 cents below the Gulf benchmarks used by traders in Asia for sales to long-term customers this month.

Policy / Performance

Iran: will spend $18 bn on O&G fields in south through 2015

July 11, 2011. Iran will invest $18 billion in the development of its oil and gas fields in the hydrocarbon-rich south of the country in a 5-year development plan ending 2015. The plan included a $3 billion investment planned for the current Iranian year, which ends March 2012. Many plans are being implemented to accelerate development of shared oil and gas fields while the ministry aims to increase oil production in the oil-rich region of the south to 3 million barrels a day.

Romania starts record $870 mn Petrom share sale to attract investors

July 11, 2011. Romania will seek to lure international buyers to its 2.56 billion-lei ($861 million) sale of shares in OMV Petrom SA over the next two weeks, the biggest offering ever on the Bucharest Stock Exchange. The government is selling 5.57 billion shares in the country’s dominant oil company, or 9.8 percent, at a maximum price of 0.46 lei per share and will hold promotional tours in European cities, including London, Frankfurt, Vienna and Warsaw, according to Ioana Tanase, the head of EFG Securities SA, one of the lead managers.

Goldman, Morgan Stanley stay bullish on oil, copper on demand recovery

July 7, 2011. Goldman Sachs Group Inc. (GS) and Morgan Stanley kept their bullish view on oil and copper, predicting a global recovery in the second half that will push up prices. Both banks maintained their Brent-crude forecasts even after a 4.2 percent decline in the second quarter. The world economy will accelerate in the second half, boosting demand and helping raw materials with supply constraints.

POWER

Generation

ABB wins $80 mn power order for Itaipu hydro plant in Paraguay

July 12, 2011. ABB Ltd. won orders worth about $80 million from Itaipu Binacional, the operator of the Itaipu hydroelectric power plant, to build a new substation in Paraguay and expand an existing installation.

Chinese firm to help Pakistan generate 10 GW of power

July 11, 2011. China will help Pakistan generate 10,000 megawatts of electricity through different projects, China Three Gorges Project Corporation (CTGPC) said. The CTGPC has built the world’s biggest hydroelectric project ‘Three Gorges Dam’- located in Hubei province of China. Under the China-Pakistan collaboration, a number of Chinese experts were working in Pakistan on scores of power projects. The Water and Power Development Authority (WAPDA) is a government-owned public utility maintaining power and water in Pakistan.

Three power generation units will be delivered to Azerbaijan for COP

July 11, 2011. The Azerbaijan International Operating Company (AIOC) operated by BP is in the process of delivery of three main power generation units from Mount Vernon (US) to Baku (Azerbaijan).

The units, which have been purchased from Rolls Royce, will be used for the Chirag Oil Project (COP) to provide power for the West Chirag Platform to be installed on the Azeri-Chirag-Gunashli (ACG) field in the Azerbaijan sector of the Caspian Sea. The transportation of the cargo is expected to take nearly four months to complete. The first power generation unit is scheduled to leave Mount Vernon this month with arrival in Baku expected in October before transportation via the Russian canals closes for the winter season. Each unit is 18m (60 ") long, 4.8m (15" 7) wide, 4.5m (14 "3) high and weighs 185 tons (407,000 lbs) with a maximum output of 27 megawatts.

Banks lend $1.46 bn to thermal power plant in Vietnam

July 11, 2011. Twelve foreign banks will join hands to lend more than $1.46 billion to Mong Duong 2 coal-fired power plant in northern Vietnam. The first disbursement is expected next month for the $1.95 billion 1,240-megawatt plant in the coal hub province of Quang Ninh.

The build-operate-transfer (BOT) plant is Vietnam's largest private sector power plant. Korea Eximbank, the biggest single provider of direct debt, and Korea Trade Insurance Corporation would provide commercial guarantees and political risk cover.

POSCO Power, an affiliate of South Korea's POSCO, owns 30 percent of stake in the project and China Investment Corporation has the remaining 19 percent after state coal miner Vinacomin had left the project. French lender CIC Bank and DZ Bank are lead arrangers of the loan joined by another 10 banks.

Malaysia's Jaks Resources Berhad has secured an investment licence to build a $2.25 billion coal-fired power plant in northern Vietnam, also using the BOT scheme.

Vietnam is cutting coal export this year to save the fuel for power plants and has imported the first cargo of Indonesian thermal coal as it grapples with rising demand for power and has to continue to buy electricity from southern China among measures to avoid outages.

Vietnam's electricity consumption would nearly double to 175 gigawatt-hours in 2015 from 98 gigawatt-hours this year, while supply will increase to 196 gigawatt-hours from the current 110.8 gigawatt-hours.

Transmission / Distribution / Trade

ADWEA signs power grid, transmission agreements with Omani companies

July 11, 2011. Abu Dhabi Water & Electricity (ADWEA) has signed two agreement for a 220 KV power grid and a power transmission line with Oman.

The power grid and transmission agreements were signed by ADWEC and Abu Dhabi Transmission & Dispatch Company (TRANSCO) - both ADWEA subsidiaries - with Oman Power and Water Procurement Company (OPWC) and The Oman Electricity Transmission Company (OETC) respectively. Under the agreements, ADWEC and OPWC will exchange procurement of power and water, while TRANSCO OETC will establish a link between the two sides' power networks.

France finances Ethiopian power transmission line to Kenya

July 8, 2011. France has provided Ethiopia with a $101.5 million grant to build a power transmission line to Kenya. France has dramatically escalated its aid to Addis Ababa, as the amount for the transmission line equals France’s entire bilateral assistance in 2004.

France has now become one of the major foreign supporters of Ethiopia, with its official aid to Ethiopia increasing nearly 800 percent since 2006.

Bilateral trade between Ethiopia and France has now topped $65 million a year, but is heavily weighted in favor of France, whose imports account for more than 90 percent of the sum. Kenya is one of three countries bordering Ethiopia in negotiations with the Ethiopian Electric Power Corp to buy electricity.

EEPCo has already started a test transmission of 50MW to Djibouti over a $64 million transmission line built with a loan from the African Development Bank, and Sudan has also signed a memorandum of understanding for purchasing power.

Malaysia's YTL Power, Japan's Marubeni sign power deal

July 7, 2011. Malaysia's YTL Power International and Marubeni Corp entered into a share purchase agreement to enable the Japanese company to co-invest in YTL's Indonesian power generation unit. YTL said that Marubeni would acquire a 43 percent stake in YTL Jawa Power Holdings for $224 million through its wholly-owned subsidiary, Aster Power Holding BV. YTL Jawa has a 35 percent equity interest in PT Jawa Power, which owns a 1,220 megawatt coal-fired power generation plant in East Java, Indonesia.

Renova to get over 25 pc in Gazprom power co merger

July 7, 2011. Russian tycoon Viktor Vekselberg's Renova Group will receive at least 25 plus one share in Gazprom's power subsidiary after the two companies merge power assets, Renova and Gazprom said. According to a deal signed by both parties, Gazprom Energoholding will acquire Vekselberg's stakes in four Russian power plants. Following the merger, which Vekselberg said could take place by the end of the year, Gazprom Energoholding will then be restructured and could list shares on the stock market. State-controlled Gazprom is the world's largest natural gas producer and owns four power companies that together produce 17 percent of Russia's electricity, or 36 gigawatts of power.

Policy / Performance

China's push for more hydropower tests limits

July 12, 2011. Plans to use massive new hydropower development to boost China's power capacity by nearly half by 2015 will not dent coal demand enough to cut greenhouse gas emissions and could further damage the country's strained river system. China wants to raise installed power capacity by 490 gigawatts (GW) to 1,440 GW by 2015. At least 140 gigawatts of the new capacity will be from hydro power -- equivalent to more than seven Three Gorges hydropower projects and enough to run the whole of France.

Kan Demands Less Nuclear Power for Japan

July 12, 2011. Prime Minister Naoto Kan pledged to reduce Japan’s reliance on nuclear power and called for debate on whether private companies should be allowed to run atomic plants in the light of the Fukushima disaster.

Japan idled reactors could restart after stress test 1st stage

July 11, 2011. Japan's idled nuclear reactors could be turned on again if they pass the first stage of two-step post-Fukushima safety checks. Still, without a timeframe for the tests, concerns remain about summer power shortages that could hurt the economy.

The government would conduct stress tests alarmed corporate Japan and outraged some local authorities, who had been prepared to approve reactor restarts after receiving safety assurances from the government.

The first stage of the stress tests will target reactors which have already completed routine checks and are ready for restart. The checks will assess tolerance of severe phenomena exceeding those for which they were designed.

A second stage of tests will assess all of Japan's 54 reactors and involve a comprehensive safety assessment of all Japan's nuclear plants.

Indonesia's Bayan signs 100 million tonne coal deal with Indian firm

July 8, 2011. Indonesian coal miner Bayan Resources Tbk has signed a deal with India's Universal Crescent Power Private Ltd to supply 100 million tonnes of coal over 15 years from 2015. Bayan, Indonesia's eighth-largest coal producer, said it was aiming to more than double its annual output to as much as 25 million tonnes by 2013 to meet rising demand from consumers such as India.

The company produced 11.9 million tonnes of coal last year and expects output to rise to between 14.5 million and 15.5 million tonnes in 2011. Bayan is 20 percent-owned by Korea Electric Power Corp and has open-pit mines located in East Kalimantan.

The firm exports most of its coal to countries and regions that include Europe, Taiwan, Malaysia, Japan and South Korea. India, Asia's third-largest economy, is the biggest market for Bayan by volume, accounting for about 30 percent of all exports.

Japan to conduct stress tests on nuclear reactors

July 6, 2011. Japan's trade minister Banri Kaieda said the government would conduct stress tests on all nuclear power reactors in Japan. The minister also said he would ensure there were no problems with power supplies.

S.Korea says Tavan Tolgoi bidding process unfair, unclear

July 6, 2011. South Korea said the bidding process for Mongolia's Tavan Tolgoi coal project was "unclear and unfair" and its companies were excluded from the three short-listed groups to develop one of the world's biggest coking coal projects. Mongolia had said it picked U.S. miner Peabody Energy, China's Shenhua and a Russian-Mongolia consortium out of six preferred bidders.

South Korea said Mongolian government had asked the preferred bidders in April to form one grand consortium for the project and bidders have since been in talks to meet the fresh request. Mongolia picked a newly formed Russian-Mongolia consortium and excluded Korean and Japanese firms.

The project is one of the key assets South Korea has been eyeing to boost natural resources self-sufficiency to feed its manufacturing-focused economy. Members of the South Korean firms participated in the Russian-Korean-Japanese consortium include state-run Korea Resources, POSCO , utility firm KEPCO , trading firm LG International and Daewoo International .

The Tavan Tolgoi coal deposit in Mongolia's south Gobi region has estimated reserves of 6 billion tonnes of coal, including the world's largest untapped deposit of steelmaking coking coal.

The project, which may require an initial investment of more than $7 billion, will also generate billions of dollars in revenue for the companies involved and add tens of millions of tonnes of increasingly rare coking coal used by steel makers.

China, Japan and South Korea are snapping up iron ore and coking coal mines globally to diversify from heavyweight suppliers such as BHP Billiton and Rio Tinto.

Renewable Energy / Climate Change Trends

National

India’s Karnataka state seeks 350 MW of solar capacity

July 12, 2011. India’s Karnataka state announced its solar power policy outlining terms for 350 megawatts of capacity that it’s targeting to build by 2016. Under the program, Karnataka on India’s southwest coast plans to award permits to companies to build 200 megawatts of projects through bidding and the remaining 150 megawatts by application. Solar photovoltaic projects, which use panels to convert sunlight directly into electricity, must be 3 megawatts to 10 megawatts in size. Solar thermal plants that use the sun to heat liquids to produce steam for generators must be at least 5 megawatts. India aims to boost development of alternative energy as waning growth in conventional power output threatens to deepen a slowdown in Asia’s third-largest economy. State-run programs have been among the most ambitious, such as western Gujarat state, which has awarded 959 megawatts of solar projects, almost the capacity of one nuclear power plant. Karnataka will use a bidding process that will award capacity to those developers who offer to sell their solar power at the steepest discount to the state tariff. The current tariff for solar power plants set by the state electricity regulator is 14.50 rupees ($0.32) per kilowatt-hour for photovoltaic plants and 11.35 rupees per kilowatt-hour for solar thermal plants. Karnataka requires power distribution companies to procure 0.25 percent of their electricity from solar resources, which will create demand for sun-powered electricity.

India’s $3 bn wind market to slump as tax break may end

July 12, 2011. Ending a federal tax break for wind farms in India, the largest market for turbines after China and the U.S., would cause a $540 million drop in demand just as suppliers including General Electric Co. (GE) expand local capacity.

Wind park installations may fall 15 percent in the financial year starting April 2012 from the 2,600 megawatts projected for this year should the benefit be discontinued.

The government wants to axe an accounting rule next year that encouraged companies to erect most of India’s 14,157 megawatts in wind projects as a way of cutting taxes rather than generating power. It favors a less-generous subsidy that companies have been slow to adopt.

India’s biggest property developer DLF Ltd. and Hindustan Zinc Ltd., Vedanta Resources Plc, used the tax benefit called accelerated depreciation to build some of India’s largest wind farms, project design documents show. The accelerated depreciation accounting method allows companies to write off investments at a faster rate than normal, which reduces tax liabilities.

The government says an alternative subsidy will do more to address a power deficit that tops 39 percent in some areas, hampering the second-fastest growing major economy after China. The Generation-Based Incentive rewards projects on how much clean energy they produce instead of the size of installations.

Carbon credits for Reliance Power coal plant stoke criticism

July 12, 2011. Environmentalists criticised the United Nations after it ruled that a large Indian coal-fired power project is eligible to earn carbon credits worth $165 mn at current prices.

Several green organisations said the U.N. rules, or methodology, applied to the 4,000 MW supercritical plant owned by Reliance Power were flawed and that the project was viable without the sweeteners of tradeable carbon credits called certified emissions reductions (CERs). The power station, Andhra Pradesh's Krishnapatnam, is the second Reliance Power project to be formally registered by the United Nations under its Clean Development Mechanism. In total, five high-efficiency coal power plants have been registered under the CDM -- four in India and one in China -- meaning they are all eligible to earn CERs that they can sell.

The CDM is meant to reward developers of clean-energy projects in poorer nations by giving them CERs as a way to make the projects viable. The executive panel that governs the CDM has been under pressure to suspend the methodology under which firms can apply for U.N. offsets on the basis of cutting greenhouse gas emissions through more efficient power generation technology.

Supercritical and ultra-supercritical power plants use more efficient boilers that cut coal consumption per megawatt/hour. The Indian government has rolled out a programme that supports the building of 4,000 MW supercritical plants to try to meet booming power demand. Reliance, Tata Power and NTPC are investors.

India solar power projects to submit funding proof by July 24

July 11, 2011. Companies awarded permits in India’s first national auction of rights to build solar power plants have until July 24 to submit documentation to prove they’ve arranged funding.

The December auction granted licenses for 620 megawatts of solar projects to companies including Reliance Power Ltd. and Lanco Infratech Ltd.

According to auction rules, developers that don’t arrange funding in time must forfeit their permits and bank guarantees they have posted to back their bids. Guarantees are valued between 91.5 million rupees ($2.1 million) and 1.8 billion rupees.

India in top 5 green energy nations

July 11, 2011. India has an installed renewable energy base of about 20 GW, which is around 11 per cent of the country's total power capacity and accounts for 4 per cent of the electricity mix. India today stands among the top five countries of the world in terms of its renewable energy capacity.

India recently launched a unique and ambitious National Solar Mission, which seeks to facilitate the generation of 20,000 MW of solar power by 2022. India is working on a National Biomass Mission, which will help tap bio-energy potential of over 25,000 MW.

Tata BP Solar bags three solar projects in Gujarat

July 11, 2011. Tata BP Solar India Ltd, a joint venture of Tata Power and BP Solar, has three solar power projects totalling more than 30 megawatts in the state of Gujarat. It these projects under the first phase of the state solar power policy of the Gujarat government. The projects are located in the Patan, Kutch and Mithapur areas of the state. Each solar power project will comprise of an array of solar photovoltaic modules of 230 Watts and above, laid out in a modular combination to generate power from solar radiation. Each project will generate local employment and entrepreneurship since the company plans to use local contractors and labour force in the execution of these projects. The projects have to be completed by the end of the current year. These plants are of different sizes between 5 and greater than 15 megawatts and are located in the northern and western belt of Gujarat, which is one of the sunniest areas in the country. Power purchase agreement has been signed with the Gujarat government agencies for 25 years under which the solar power will be sold at the rate of ` 15 per unit for the first 12 years and at ` 5 per unit for the remaining 13 years of the project life.

India calls for cooperation with Africa in solar energy

July 8, 2011. India has offered to expand and strengthen its cooperation with the African countries in the field of Renewable Energy. India had announced an offer of 5 billion US dollars for the next three years under lines of credit and 700 million US dollars as assistance to help Africa achieve its development goals. Over 250 training positions on Rural Electrification, Small Hydropower, Solar Energy and Wind energy for African learners and professionals. India's success in providing energy access through decentralized energy sources and explained how small stand alone solar and biomass based systems are being used to provide energy to some of the farthest and remotest corners of India.

Tata BP Solar installs first plant in Tamil Nadu

July 8, 2011. Tata BP Solar India Ltd, a joint venture of Tata Power and BP Solar, said it has installed and commissioned a megawatt scale solar power plant under the `Rooftop and Other Small Solar Power Generation Plant' scheme administered by IREDA under the Jawaharlal Nehru National Solar Mission (JNNSM). The project is owned and developed by B&G Solar Private Limited at Komal West Village, Mayiladuthurai, in Tami Nadu.

The one megawatt plant was synchronised to the grid on June 10, three months ahead of the schedule. The project uses 4,400 crystalline silicon modules of 230 Watts each spread out over an area of 5.5 acres.

The modules generate electric current when solar radiation falls on them. This DC (direct current) electricity will be converted to AC (alternating current) through inverters and upgraded to 11 KV via transformers so that it is fed into the electricity grid of Tamil Nadu Electricity Board at 11 KV.

Climate changes may affect tea production in Assam

July 7, 2011. Climatic changes in the Brahmaputra basin in near future may affect tea production in Assam, experts feel. A “preliminary study” carried out by IIT-Guwahati on impact of climate change on water resources of Brahmaputra basin revealed that there will be significant changes in rainfall pattern and temperature of this basin.

Global

EU carbon falls to lowest since March 2009 amid debt crisis

July 12, 2011. European Union carbon permits fell to their lowest level in more than two years because an oversupply through 2012 may overwhelm demand amid faltering efforts to limit the region’s sovereign-debt crisis.

UK power reforms to reward low-carbon energy

July 12, 2011. Long-term contracts to reward low-carbon energy were part of proposals unveiled by the UK government as it looks to incentivize a power sector set to shed a quarter of its traditional capacity over the next decade.

The UK will see old coal and nuclear power stations close this decade, requiring more than 110 billion pounds ($176 billion) of investment to build the equivalent of 20 large power stations and upgrade the grid, the government said.

The government's electricity market reform white paper, aimed at introducing reforms to take effect by mid-2013, failed to decide on a capacity mechanism which ensures enough back-up power capacity is available at peak demand times. The government confirmed it will limit emissions from coal-fired power plants to 450 grams of carbon dioxide per kilowatt hour to ensure that no new coal plant will be built without carbon capture and storage technology.

Ethanol, China keep U.S. corn supply tight

July 12, 2011. U.S. corn stocks will languish near 15-year lows for longer than expected as ethanol plants overtake livestock as the biggest consumers of the feed grain and China buys more American corn.

The U.S. Agriculture Department, as expected, boosted its forecasts of ending stocks this year and next, largely due to weaker-than-expected consumption by the livestock sector this year. But the revisions fell short of analysts' forecasts and supported prices that have fallen 15 percent from their peak on signs of healthier supplies.

Incandescent bulbs defended by republicans over Obama opposition

July 12, 2011. U.S. House Republicans urged passage of a measure to block a phase-out of traditional light bulbs, as the Obama administration called the bill anti-consumer. The legislation, which was debated on the House floor and is scheduled for a vote would cost Americans $6 billion in energy savings in 2015.

Australia carbon tax hits shares of miners, airlines

July 11, 2011. Coal miners, steel firms and airlines were sold off a day after Australia's unpopular government introduced a carbon tax scheme, while power suppliers warned the tax could risk A$4-6 billion in assets if banks tightened financing.

But economists said the A$23 a tonne carbon tax, aimed at encouraging the biggest polluting industries to clean up operations, would have little impact on economic growth, riding on the back of China's appetite for its mineral resources. Nor would it significantly affect inflation or interest rates.

Prime Minister Julia Gillard unveiled her long awaited climate policy which will see 500 big polluting firms, including steel and aluminum manufacturers, pay a A$23 a tonne carbon tax from mid-2012.

That will rise by 2.5 percent a year before moving to a market-based trading scheme in 2015. Gillard's government, which maintains a one-seat majority with support from the Greens and independents, sees the tax as a way to recoup popular support ahead of an election due by 2013.

China unlikely to yield on rare earths despite WTO

July 11, 2011. China will probably not yield to demands to ease export restrictions on rare earths, unlike its flexibility in some previous trade disputes, even after the World Trade Organization ruled against it in a related case. The WTO ruled last week that China breached trade law by curbing exports of eight raw materials including bauxite and zinc. Europe and the United States said the judgment meant China should also be forced to increase exports of 17 rare earths as the almost exclusive supplier of these minerals crucial to global electronics, defense and renewable energy industries.

Car makers jump on energy bandwagon as Japan saves power

July 11, 2011. With the country steeped in power-saving mode, energy generation has become all the rage among Japanese automakers. Nissan Motor Co unveiled a new charging system that gets electricity from solar power that can also be stored in the lithium-ion batteries used in its Leaf electric car. The 488 newly installed solar panels at Nissan's global headquarters will produce enough electricity to charge 1,800 Leafs a year, allowing drivers plugging into one of its seven charging spots to travel on carbon-free energy. Nissan's announcement comes just days after Mitsubishi Motors Corp said it would develop and market this business year a portable converter with enough capacity to allow its electric vehicles (EVs) to power household electronics such as rice cookers and washing machines. Japanese automakers have been working on clean-energy initiatives for years, but the earthquake and tsunami on March 11 have made electricity supply and sourcing an immediate concern. Through a joint venture set up with Sumitomo Corp, Nissan plans to re-fabricate and resell its electric cars' high-capacity batteries as power storage units when the car is traded in or scrapped starting in 2016.

GD Power to develop 288 MW wind farm in Yunnan province

July 11, 2011. GD Power Development Co. plans to develop a 288-megawatt wind farm in China’s Yunnan province.

EDF, Dong, Alstom form pact for $14 bn French wind plan

July 11, 2011. EDF Energies Nouvelles SA (EEN), Dong Energy A/S and Alstom SA (ALO) agreed to join in the 10 billion-euro ($14 billion) French offshore wind plan aimed at boosting the nation’s clean energy sources and domestic industry.

Australia’s carbon tax won’t alter RBA policy

July 11, 2011. The Reserve Bank of Australia will likely “see through” the inflation effects of a carbon tax proposal announced by Prime Minister Julia Gillard. Qantas Airways Ltd., Australia’s largest airline, said it will raise fares, and electricity and gas costs are likely to climb after Gillard unveiled a tax on carbon dioxide emissions and an increase in the excise on aviation kerosene. The central bank, which aims to keep inflation in a range of 2 percent to 3 percent on average, will likely monitor broader price moves and wage demands to ensure there isn’t a sustained inflation impact, economists say.

China targets 13 GW of biomass capacity

July 11, 2011. China aims to have 13 gigawatts of biomass installed capacity by the end of 2015. The country will increase subsidies in the biomass power industry within the next five years.

Enel Green Power plans 2 thermal solar plants

July 9, 2011. Italy's biggest renewable energy group, Enel Green Power (EGP), plans to build two concentrated solar power (CSP) plants to diversify its energy mix. EGP, which listed shares in Milan and Madrid, generates more than 80 percent of its power from wind plants but is considering increasing the share of solar power generation in its energy mix.

SMA Solar eyes Japan, Thailand markets

July 9, 2011. SMA Solar, the world's largest maker of solar inverters, plans to move into Japan and Thailand as it seeks new markets outside of Germany, where state support for the solar industry is set to be cut. SMA made 45 percent of its sales outside of Germany in 2010 and should reach 50 percent in 2011. Solar inverters convert electricity generated from solar modules into a form which can be fed into an electricity grid.

Australia to set up A$3.2 bn renewable energy agency

July 8, 2011. Australia’s government will set up a A$3.2 billion Australian Renewable Energy Agency to consolidate support for renewable energy technology development. The agency will have an independent decision-making board appointed by the government and a chief executive officer appointed by the energy minister on recommendation of the board.

Brazil’s BSBios considers expansion into U.S. biodiesel market

July 8, 2011. BSBios Industria e Comercio de Biodiesel Sul Brasil SA, a Brazilian biodiesel producer, may expand into the U.S. to tap the country’s growing market. The company’s first U.S. production facility is expected to go into operation in August. The “small” facility near Miami will help the company evaluate how to approach the North American market, where demand for the renewable fuel is increasing. Fuel distributors in the U.S. will mix 3.8 billion liters (1 billion gallons) of biodiesel next year into their standard diesel fuel. That’s up more than fourfold from the 840 million liters (222 million gallons) consumed in the U.S. in 2010, according to data compiled by the U.S. Energy Information Administration. BSBios’s Miami plant will produce biodiesel from various raw materials including soybean oil and palm oil. Battistella wouldn’t discuss the size or cost of the facility.

German solar stock pioneer restructures as loan deadline looms

July 8, 2011. Solon SE, which in 1998 became the first German solar photovoltaic company to sell shares to the public, is speeding up cost-cutting plans as a deadline to pay back a 275 million euro ($393 million) loan approaches. Solon has hired Alvarez & Marsal Inc. to “quickly finalize” a plan started in 2010 aimed at cutting structural, process and product costs. Solon must pay back by the end of this year the loan Deutsche Bank AG made with a group of seven German banks.

Italy solar capacity to hit 30 GW in 2020

July 8, 2011. Italy's booming solar power market is expected to grow nearly four times to 30 gigawatts of capacity by 2020 as part of incentive-driven efforts to fight climate change. Italy's solar market, the world's second-largest after Germany, has rapidly grown since 2007 when the government boosted production subsidies, attracting the world's biggest makers of photovoltaic modules, which turn sunlight into power. Rome cut incentives in May to reduce the burden on consumers who support the scheme through power bills. However, market growth has once again picked up as investors and industry operators still see satisfactory returns. Italy remains a very promising solar market for Japan's Sharp Corp, Sharp Corporation. Italy has an additional investment appeal as it is expected to reach the so-called grid parity -- when solar power generation becomes competitive with traditional power generation and would not rely on incentives -- in a few years, ahead of many other countries.

Solaria signs EU20 million financing agreement for solar plant

July 8, 2011. Solaria Energia & Medio Ambiente SA signed a 20-million euro project finance agreement with Bankinter SA for its solar plant “Fuenmayor 10 MW,” the company said.

Climate impact threatens biodiesel future in EU

July 8, 2011. Europe's biodiesel industry could be wiped out by EU plans to tackle the unwanted side effects of biofuel production, after studies showed few climate benefits. Europe's world-leading $13 billion biodiesel industry, which has boomed in the wake of a decision by Brussels policymakers in 2003 to promote it, is now on the verge of being legislated out of existence after the studies revealed biodiesel's indirect impact cancels out most of its benefits. The EU has been arguing for two years over the extent of indirect damage to the environment caused by it setting a target of increasing biofuel use to 10 percent of all road fuels by 2020, from less than three percent today.

German parliament set to okay clean coal bill

July 7, 2011. Germany's lower house is expected to pass legislation that would open up EU funding for technology that traps greenhouse gases from burning coal, one week after parliament voted to phase out nuclear power in the next decade.

Utility group Vattenfall Europe has applied for EU aid for a controversial pilot plant in the economically underdeveloped region of Brandenburg, the only so-called carbon capture and storage (CCS) facility currently foreseen for Germany due to widespread opposition by local residents.

Germany, Europe's largest economy and a global manufacturing powerhouse, has committed to reducing its carbon footprint by 40 percent in 2020 compared with 1990, with further cuts to come over the following three decades.

Pointing to the low level of planet-warming gases emitted by nuclear reactors, critics have warned Berlin that its anti-nuclear policies will make climate targets even more difficult to achieve. Coal accounts for just over 40 percent of the country's energy needs, but it is also the dirtiest fuel when it comes to carbon dioxide (CO₂) emissions. This is particularly true for brown coal, for which Germany is the largest global producer before even commodity-rich Australia. Scientists say capturing carbon dioxide emissions and sequestering them underground could hold the key to an environmentally friendly way of burning the fossil fuel.

The current bill lays the foundation for testing and demonstration efforts only. Wider introduction would not take place without consulting local residents, who often oppose sequestering carbon dioxide below the earth for fear the potentially lethal gas could escape in large amounts. A clause that would allow regional states to veto plans for CCS plants for fear of widespread opposition means the legislation's impact would probably be limited. Even Brandenburg's own regional government has said its citizens may scarcely accept bunkering CO2 produced in local power plants and steel mills in sites around the state.

NH Gov. Lynch vetoes plan to opt out of greenhouse initiative

July 7, 2011. New Hampshire Governor John Lynch vetoed a bill that would have ended the state's participation in a regional greenhouse gas reduction program, citing concerns about environmental and economic competitiveness. Lynch, a Democrat, said pulling out of the Regional Greenhouse Gas Initiative (RGGI) would cost the state $16 million in revenue from the distribution of funds raised by regional carbon auctions -- money that could be used to increase energy efficiency and create jobs. The RGGI, which includes 10 New England and Mid-Atlantic states, established limits on carbon dioxide emissions, thought to be a key factor in global warming. Under the plan, states agreed to cap and then reduce carbon dioxide pollution by 10 percent by 2018.

Turkish Anel Enerji, Austria’s Kioto sign accord for solar unit

July 7, 2011. Anel Elektrik Proje Taahhut & Ticaret AS and Anel Telekomunikasyon Elektronik Sistemleri Sanayi & Ticaret AS said their unit signed a final agreement with Austria’s Kioto Photovoltaics GmbH to make solar panels in Turkey.

Tokio Marine, Mitsui to launch $123 mn solar fund

July 7, 2011. Tokio Marine Asset Management Co and Mitsui & Co plan to launch a 10 billion yen ($123.3 million) fund to construct 10 or more large solar power plants across Japan. Solar is one of the power sources the government of the world's third-largest economy is focusing on after the March earthquake and tsunami shattered Tokyo's nuclear-dependent energy policy. Mitsui will build, operate and maintain the facilities, which are expected to have an output capacity of 1-2 megawatt (MW). The electricity generated will be sold to utilities, with profits to be distributed to the fund's investors. Tokio Marine Asset will gather funds from institutional investors that mainly invest over the long term, including corporate pension funds, life insurers and public pension programs. The asset management firm, which expects the fund to generate returns of 3-4 percent yearly, aims to raise a total of about 100 billion yen in five years.

Australia’s Gillard says 500 companies affected by carbon plan

July 7, 2011. Australian Prime Minister Julia Gillard said 500 companies will be affected by the government’s carbon tax plan scheduled. Gillard said nine out of 10 households will receive family payments or tax cuts to help as costs are passed through to consumers from an emissions trading system in the world’s biggest coal exporter.

New Zealand eyeing position as regional carbon trading hub

July 7, 2011. New Zealand, the first nation outside Europe to set up a carbon-trading scheme, hopes to become a trading hub for the region as neighboring Australia and other countries move toward market-based schemes for cutting carbon emissions.

New Zealand has been running an expanded carbon market for more than a year, with polluters buying emission permits on an open exchange, and is now well ahead of its closest neighbor in gaining the skills and knowledge needed to manage such a complex market.

Airlines prepare to take off on fuel made from algae, wood chips

July 7, 2011. After decades of waiting, commercial airlines have been given the go-ahead to use fuel made from algae, wood chips and other plants with obscure names. Test flights in recent years by United Continental Holdings Inc., Japan Airlines Co. and Virgin Atlantic Airways Ltd. have shown that planes can fly on everything from coconut oil to Jatropha, a plant that grows in the tropics.

Renewable tariffs ‘distort’ market, Alberta energy minister says

July 6, 2011. Feed-in tariffs, used to support renewable energy development in Germany, the U.K. and more than 40 other countries, “distort” markets and there are no plans to use them in Alberta, the Canadian province’s energy minister said.

Feed-in tariffs have been used for more than a decade in much of Europe to encourage the development of renewable energy and have helped make Germany the world’s largest producer of solar power.

Electricity and heat generated from sunshine, wind and biofuels must compete on price with fossil fuels, without government incentives. Alberta is home to the world’s third-largest reserves of crude in addition to coal and natural gas, and has almost 1 gigawatt of installed wind-power capacity, the most in Canada.

The western province is also working with other Canadian regions and the federal government to craft a national energy policy. Ontario, the nation’s most populous province, is the only one that has a large-scale feed-in tariff policy.

Canada’s energy plan will involve coordinating policies on energy consumption, transmission and eventually carbon emissions. Canada has committed to reducing carbon dioxide emissions by 17 percent by 2020 from 2005 levels, in line with a target set by U.S. climate change negotiators at United Nations talks.

A system of cap-and-trade, which limits the total emissions of greenhouse gases and allows emitters to trade permits to pollute, has “fallen off the back burner” in the U.S. A tax on carbon has “worked well” in Alberta, where large emitters are charged C$15 ($15.58) a ton. The money goes into a fund to support clean energy technology. Taxes on carbon may be a solution for a federal energy strategy.

Businesses back Australia carbon plan as Gillard boosts campaign

July 6, 2011. Fifty-five companies doing business in Australia including electricity retailer AGL Energy Ltd. and builder Grocon Pty Ltd., have signed a statement backing Prime Minister Julia Gillard’s bid to initiate carbon trading.

The companies signed a letter sent to Gillard from the Carbon Markets & Investor Association supporting her plan for an emissions trading system to start in 2012.

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