MonitorsPublished on Mar 27, 2012
Energy News Monitor I Volume VIII, Issue 41
Shale Gas: The Bootlegger looking for a Baptist?

Lydia Powell, Observer Research Foundation



he issue of developing shale gas, like all political issues, is not a simple and straightforward choice between the good and the bad. The political decision to develop shale gas or not depends critically on its effects on the distribution of costs and benefits among various stakeholders in the energy and environment sectors.  Each will support one decision or the other that will improve their well being measured in terms of tangible and intangible factors. The ultimate decision will be driven, not by scientific truths, general public interest or the interest of the majorities but by the interests of well organized minorities as public choice theory has shown. In 1983 Bruce Yandle developed the public choice theory of the Baptists and the Bootleggers which relates to the unfolding story of shale gas development in the United States.   

Several centuries ago, the Baptists and the Bootleggers fought over laws banning the sale of alcohol on Sundays in the United States. For the Baptists the sale of alcohol on any day was unacceptable leave alone Sundays and for the Bootleggers a ban on the legal sale of alcohol was an opportunity for growth of their business.  Though there was no connection between the two groups, they were both pushing political decision making in the same direction. Such a coalition is convenient for the politician as he can promote a decision as being motivated purely on public interest while promoting business interests as it is happening in the case of shale gas. 

In 2008 when the shale gas boom was unfolding in the United States, Aubrey McClendon, Chairman & CEO of Chesapeake Energy, a front runner in exploiting shale gas announced that they had made friends with the environmentalists who wanted to promote natural gas as a an alternative to ‘evil’ and ‘dirty’ coal. T Boone Pickens, another shale gas tycoon contributed over $ 400,000 to the Centre for American Progress and other think tanks to promote natural gas as a clean fuel and as the perfect substitute for imported oil and the key to ‘energy independence’. At that time Pickens was pushing law makers to adopt a bill that would subsidise the construction of natural gas filling stations.  

In 2011 the US Environmental Protection Agency released revised methods for estimating fugitive methane emissions from natural gas emissions resulting in an estimate of methane emissions in 2008 that was 120 percent higher than its previous estimate. The increase was attributed two methods which were not common previously – gas well completions and workovers with hydraulic fracking. Natural gas systems were estimated to be the largest source of non-combustion, energy related GHG emissions in the United States at 296 million metric tonnes of CO2 equivalent (mmt CO2e) in 2009 while coal came in third with an estimated 85 mmt CO2e of emissions.  In general shale gas was estimated to have a GHG footprint which is 8-11 percent higher than that of conventional gas on a life cycle basis per mmbtu. These revisions have raised questions over whether replacing coal with natural gas would actually reduce green house gases when the entire emissions over the entire lifecycles of both fuels are taken into account. This does not change the fact that when combusted natural gas emits about 50 percent less carbon-di-oxide than coal but it complicates the debate as methane is known to be 25 times more potent than carbon-di-oxide even though its potency lasts only for 20 odd years compared to that carbob-di-oxide whose potency lasts for over a 100 years.

Some of the Baptists in the story such as Sierra Club have already exited the field affirming that they would no longer be interested in funding from the shale gas industry. It is not clear if they will now be on the same side as coal opposing shale gas. Is there a lesson from the Baptist and the Bootlegger theory in relation to shale gas? Yes there is and it is that the current portrayal of the debate as involving big company (oil) interests on one side and moral bastions on the other is inaccurate. Every policy debate sees heterogeneous coalitions facing each other some of whom are motivated by sincere conviction while others are motivated by their own interests or people driven by both. This is true of any coalition in any debate and so we cannot resolve complex questions by dismissing the opposition as a lobby group of big interests or enemy of the people and environment. The battle must not be seen as that between naïve tree huggers and selfish profit seekers but rather between those who believe that the world is intelligent and robust enough to withstand the process of ‘development’ seen as the betterment of human life and those who believe otherwise. One side believes that irrespective of who or what may have caused climate change, development could be both the cause and the cure to the problem. The other side believes that the world has reached the final limit to ‘growth’ and ‘development’ and it should be stopped at any cost beginning with the production of fossil fuels. For them anything that is done in the name of ecology is intrinsically good irrespective of human and social cost. The same debate is unfolding in many other areas and it is unlikely that there will be a logical conclusion soon.  However it what is important is to keep in mind that the battle is not between saints and sinners but between ordinary people with different views and different capabilities.   



Project Status of JNNSM Batch 1, Phase 1

Sonali Mittra, Observer Research Foundation



inistry of New and Renewable Energy released the status of the commissioning of the solar projects under Batch 1, Phase 1 of Jawaharlal Nehru National Solar Mission on Mon, 26th Mar, 2012. Despite the huge balance capacity that still needs to be commissioned by the end of this year, MNRE doesn’t seem sceptical about meeting the targets.

Under the Rooftop PV and Small Solar Power Generation Program (RPSSGP), 98.05 MW of the capacity was to be commissioned as per the power purchase agreements. The status report suggests that only 37.8 MW has been actually commissioned so far and that the balance of 60.25 MW is yet to be commissioned. Of the 12 states which show some progress towards solar project implementation, Haryana leads at 4.8 MW, followed closely by Andhra Pradesh at 4 MW. On the lower end lies Madhya Pradesh and Punjab with zero and 1 MW project approvals. Standing out in performance was Maharashtra and Chhattisgarh with 4 MW projects done. On an average, most of the states have reached the performance level of 40% (with 3-4 MW capacity addition).

Figure 1.1: Source: MNRE, 2012

It is not surprising that Maharashtra has shown efficient compliance in meeting its targets to install solar PV. It has successfully set a benchmark for other states by installing India’s largest solar cooking systems at Shirdi. On the other hand, Chhattisgarh is quickly catching up on its targets, with innovative initiatives to install solar PV. It has installed solar PV in 42 health centres, fitted more than 20,000 solar water heating equipments in houses and 78 SPV water pumping systems, along with SPV applications in telecommunication and tourist guest houses. Nevertheless, there is still a long way to go for both of these states.

Providentially, the results of the JNNSM Batch 1, phase 1 comes as a surprise with respect to the success rate of the states which were least expected to perform. As far as predictions go, Phase 1 might not be able to complete its targeted 90 MW capacity addition through rooftop solar and small solar power generation but it has definitely shed light on the challenges that accrue in the process of planning, designing and implementing such projects. MNRE has been undertaking wide stakeholder participation in designing its strategic plan to give a boost to the renewable energy sector in India and trying to combat the effect of the budget 2012 on the renewable energy development. Definitely more in-depth analysis of the progress or failure of individual states needs to be undertaken and reviewed for identifying the gaps.




What is holding up Coal Production?

Ashish Gupta, Observer Research Foundation



here is uproar regarding coal block allocation and related issues in the country and is gaining a national importance in the mainstream media. The facts are yet to be established and therefore it would not be fair to indulge in commentary. On the other hand we can look at available information on coal why coal production is far below projected levels (shown in the table below):

Project name



Commission Date

Reason of Delay

AES Orissa


Captive Coal


Delayed due to no-go issue (MoU)



Captive Coal


Delayed due to no-go issue (MoU)

AES Chhatisgarh


Domestic Coal


Delayed due to no-go issue (MoU)

Mundra Phase 1, U – 1, 2


Imported Coal


Indonesian coal Price hike

Mundra Phase 2, U – 3, 4


Imported Coal


Indonesian coal Price hike

Mundra Phase 3, U – 5


Imported Coal


Denial of coal from supplier

Ratnagiri U – 1, 2, 3, 4


Imported Coal


Indonesian coal Price hike

Mundra Phase 4


Blended Coal (domestic + imported)


Linkage coal shortage & Indonesian coal price hike

Mundra Phase 3 Unit 6


Domestic Coal


Denial of coal from supplier

CLP Jhajjar


Domestic Coal


Linkage coal shortages



Domestic Coal


Linkage coal shortage

Tiroda Phase 3 (U – 4, 5) Phase 1 (U -1)


Domestic Coal


Linkage coal shortage


As from the table it is clear that there are many reasons for coal shortage.  Many of the projects which are based on imported coal are getting delayed because of the price rise of coal due to imposition of minimum price notification by the Indonesian government. There are many blocks which are getting delayed because of the no-go issues on the part of the government. Let’s take a case for Essar - The Mahan coal block, allotted to Essar for its 1,200 MW power project in Madhya Pradesh. Essar has already invested ` 15, 000 Crore and employed nearly 10, 000 people. The Mahan coal block was granted environmental clearance in December, 2008, but forest clearance has been pending with MoEF since December, 2007.

Adani Phase III, which is based on the imported coal, the company has also signed PPA’s with GMDC who have committed to supply 4MTPA for the project but were unable to provide the committed quantity which is to be supplied from Morga II Coal block. But when Adani terminated the PPA with GMDC, Gujarat Electricity Regulatory Commission rejected Adani’s termination and asked them to specifically honour the PPA. The case is pending in the Appellate Tribunal. This is simply a case where an accused went free and the victim was fined.

Each of the cases above can be elaborated in a similar manner but what is important is to note that none of these are unsolvable project stopping issues.  What is needed is clear thinking on how we can balance between the competing need for economic efficiency, environmental protection and social equity. 


2010-11: India’s Crude Imports: Country-wise Share

Akhilesh Sati, Observer Research Foundation


Crude Imports from

Million Barrels*

% of Total

























































































586 barrels
























*These figures are converted from Tons using 1 Ton = 7.33 Barrels

Source: Ministry of Commerce & Industry







India taps Canada for gas as domestic production falters

March 27, 2012. For the first time, New Delhi is looking to the North American continent to secure its energy needs. India has started talks to import natural gas from Canada, the world’s third-largest producer which is facing falling demand from the US, where a shale gas bounty has brought self sufficiency in clean energy. Besides Canada, India has also set its eyes on shale gas from the US. Canada will be able to ship gas to India in a couple of years as construction of gas export terminals like the one at the Port of Kitimat in British Columbia is completed.

DGH rejects RIL plea on geological complexity of KG-D6 reservoir

March 27, 2012. Upstream oil regulator DGH has rejected Reliance Industries' plea that geological complexities are hindering drilling new wells on KG-D6 gas fields, and has asked the RIL to drill new wells to boost output, the Oil Ministry said. RIL has drilled only 22 wells (18 gas producing well and four wells drilled but not connected or put on production) as against the 31 producing wells approved for drilling up to March 2012 in the field development plan (FDP).

RIL-BP to submit integrated plan for KG-D6 gas finds

March 26, 2012. With KG-D6 output hitting an all- time low, Reliance Industries and partner BP will submit to the government by October an integrated development plan to produce natural gas from all the 18 discoveries in the block. The duo projected first gas from R-Series, the third largest gas find in the eastern offshore KG-D6 block, by 2015 and production from satellite fields by 2016 subject to timely regulatory approvals. RIL began production from D1&D3 fields, the largest among the 18 gas and one oil find, in April 2009 but output has fallen from a peak of 54 million cubic meters per day in March 2010 to 28.16 mmcmd this month. Together with 6.46 mmcmd of gas production from D-26 or MA oil field in the same area, block output is 34.62 mmcmd. The plan would help in cost savings of over $ 1 billion due to integration and optimisation. In addition, un-incurred phase-II cost of D1&D3 field development plan ($ 3.1 billion out of total cost of $ 8.8 billion) would not be required to be spent. RIL-BP plan to connect R-Series and four satellite fields, for which a $ 1.529 billion field development plan was approved by the government in January, to the existing infrastructure used to produce gas from D1&D3 and MA. Also other satellite fields would be hooked up to these. R-series and four satellite fields alone have potential to add 30 mmscmd of output. RIL-BP, however, stressed that delay in approvals of even few months would lead to first gas from R-series delayed by at least a year. Once the integrated plan is approved, RIL-BP would relinquish most of the 7,645 square kilometre KG-D6 block.

India's natural gas output may fall

March 25, 2012. In a worrying development for gas-based power plants, India's natural gas production is likely to fall by 35 per cent to 27.64 million metric standard cubic meters per day (mmscmd) in the next fiscal and may drop further by another 12 per cent to 24.22 mmscmd in 2013-14. This has been revealed by the Ministry of Petroleum and Natural Gas (MoP&NG). The power producers' woes may worsen across the country as some of the plants are ready but sitting idle due to non-availability of gas. A recent communication by the Central Electricity Authority (CEA) to States suggested that developers should not take up new power projects until 2015-16.

Govt approves award of 16 O&G blocks in NELP-IX

March 24, 2012. The government approved the award of less than half of the 33 oil and gas blocks that were bid for in the ninth round of New Exploration Licensing Policy (NELP). The Cabinet Committee on Economic Affairs (CCEA) approved award of 16 blocks, Oil Minister S Jaipal Reddy said. The government had offered 34 areas for exploration and production of oil and gas in the 9th round of bidding under NELP and bids for received for 33 had been received at the lose of bidding on March 28 last year. In the previous eight rounds of NELP, 235 blocks have been awarded so far. The 34 exploration blocks offered in NELP-IX included eight deepwater blocks, seven shallow water blocks, 11 on-land blocks, and 8 Type-S (or small) on-land blocks, he said. Some blocks in Mahanadi basin off the Orissa coast had to be withdrawn as they fell in Naval firing/exercise areas while bids for several others had to be rejected due to various reasons. CCEA approved award of two shallow water and two onland blocks to consortia led by ONGC. State-owned OIL led consortia got two onland blocks in the Assam-Arakan basin. Deep Energy walked away with two Cambay basin blocks while Focus Energy beat Reliance Industries to bag an area in Rajasthan. The five blocks awarded to companies like Sankalp Oil and Natural Resources, Pratibha Oil and Natural Gas Pvt Ltd and Pan India Consultants.

India oil cos not yet placed bid for Cove

March 23, 2012. A consortium of Indian public-sector energy companies, Oil and Natural Gas Corp and GAIL India, have not yet submitted a bid for Africa-focused gas explorer Cove Energy. Cove is at the centre of a bidding war after approaches from Shell and Thai state oil firm PPT. The Indian consortium said it was considering joining the fray. Cove's main asset is an 8.5 percent stake in Mozambique's Rovuma Offshore Area 1, where another operator Anadarko said recoverable reserves could top 30 trillion cubic feet of natural gas - equal to nearly half of Canada's proved reserves. India's Bharat Petroleum Corp and Videocon Industries Ltd each own a 10 percent stake in the Rovuma block.


RIL's profit to be hit by weak refining margins

March 26, 2012. A fall in Asian oil demand has forced Reliance to divert cargoes to Western markets to keep its refinery running flat out, but the shift is hurting refining margins and would have a bearing on its earnings. India's largest private sector refiner is shipping out close to 70% of its fuel to the United States and Europe, because China and Japan are buying lesser oil, changing the dynamics of the Asian market, which has enjoyed high refining margins. Reliance Industries' gross refining margins (GRMs) are expected to diverge from the benchmark Singapore GRMs, which could impact the overall profitability of its refining business.

IOC seeks reimbursement of petrol under recoveries

March 23, 2012. Indian Oil Corp has asked the government to reimburse ` 20 billion ($390.8 million) of under recoveries for petrol sales for the current financial year ending March. It will have to raise petrol prices if under recoveries are not reimbursed. India freed pricing of petrol in June 2010 but continues to subsidize prices of gasoil, kerosene and cooking gas to protect the poor from the impact of inflation pressures.

Essar Oil commissions two units at Vadinar refinery

March 21, 2012. Essar Oil said it has commissioned two more units as part of its ` 8,300-crore expansion of its Vadinar oil refinery capacity to 18 million tons. Essar said with the commissioning of Vacuum Gas Oil Hydrotreating Unit and Sulphur Recovery Unit (SRU), only the one unit, the Delayed Coker Unit, remains to be commissioned. Sulphur recovery unit will help the refinery recover 99.9 per cent of sulphur in acid gases. The SRU plays a key role in helping the refinery meet the latest emission norms. Addition of a new SRU to the refinery configuration will also enable EOL to process sour and opportunity crudes. Alongside the expansion, an optmisation project is also underway at the Vadinar refinery that will further increase the capacity to 20 million tons 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, Essar said.

Transportation / Trade

Reliance looks to sell pipeline biz, earn $1 bn

March 27, 2012. Reliance Industries (RIL) is looking to sell Reliance Gas Transportation Infrastructure, a business that builds pipelines to carry natural gas across the country. The company has contacted bankers to help RIL sell the business and the process is at an early stage. The privately-owned gas pipeline business could be worth around $1 billion. RIL began production of natural gas from its D1&D3 fields in the Krishna-Godavari basin, the largest among the 18 gas and one oil find, in April 2009 but output has fallen from a peak of 54 million cubic metres per day in March 2010 to 28.16 mmcmd this month. Together with 6.46 mmcmd of gas production from D-26 or MA oil field in the same area, block output is 34.62 mmcmd. In February, British oil giant BP Plc agreed to buy a 30% stake in 23 oil and gas blocks owned by Reliance Industries, for $7.2 billion.

GAIL, Oil India show interest in buying RGTIL

March 26, 2012. RIL's closely held company, Reliance Gas Transport Infrastructure Ltd (RGTIL) is up for sale and PSU companies GAIL and Oil India have shown interest in buying the company. RIL may seek a valuation close to ` 10,000 crores for the pipeline business. JPMorgan, Citi and SBI Caps have been appointed for the sale of RGTIL. RIL wants to sell the gas pipeline business as the low gas output from the KG Basin is unable to justify large investments in these pipelines. RGTIL operates the ` 15,000 crore East-West gas pipeline (EWPL) that connects Kakinada to industrial hubs of Karnataka, Maharashtra and Gujarat. RGTIL was granted the license to build two pipelines connecting Kakinada-Vizianagaram-Srikakulam and Kakinada-Ennore-Nellore-Chennai in 2007, but the company has not gone ahead with the projects due to unavailability of gas. GAIL and Oil India sources have confirmed their interest in buying RGTIL but are not sure about the valuation expectation of the promoters.

Petronet LNG seeks extra gas imports from Qatar

March 25, 2012. Petronet LNG is seeking an extra 2-3 million tonne (MT) of liquefied natural gas (LNG) from the world’s top exporter Qatar. India is already the world’s eighth-largest importer of LNG and the market for imported natural gas in the country is set to quadruple in value to nearly $15 billion in a couple of years due to a huge surge in investments on facilities meant to process the fuel. Petronet now receives 7.5 MT a year of LNG from Qatar’s Rasgas under a long term deal at its 10 MT a year regassification terminal at Dahej in Gujarat. It will also buy 1.5 MT of LNG a year from Australia’s Gorgon project from 2014, to be processed at its 5 MT a year terminal at Kochi in southern India. Kochi terminal is expected to start operations in October-December 2012. Additional gas could be received at any of the two terminals. Petronet is also exploring the viability of a third plant in eastern India and will consider acquiring stake in overseas LNG projects in Russia and Africa. Petronet has submitted a bid with ONGC and GAIL (India) for a minority stake in Russia’s Yamal LNG project, which is set to start production of up to 16 million tonne of LNG a year in 2016.

GAIL eyes project stakes, long-term deals

March 24, 2012. GAIL India Ltd is evaluating several proposals for equity stakes and long-term supply deals in the United States, Middle East and Southeast Asia. The company's strategy is part of the country's efforts to secure overseas energy supplies to satisfy rising domestic demand.

Two major US oil cos interested in TAPI pipeline

March 23, 2012. Two major U.S. oil companies are interested in a four-country pipeline that would ship gas worth billions of dollars from Turkmenistan to India and Pakistan. The building of the U.S.-backed "TAPI" pipeline through some of Afghanistan's most volatile regions presents a major challenge, adding to the project's other hurdles such as gas pricing and transit fees. The governments of Turkmenistan, Afghanistan, Pakistan and India are aiming to sign by July 31 the TAPI pipeline deal.

BG Group to respond bidders for GGCL soon

March 23, 2012. BG Group that is in process of hiving off its 65% stake in Gujarat Gas Company Limited (GGCL) said it is pleased with the number and quality of bids received. BG Group's advisor Citigroup is expected to respond bidders anytime soon. BG Group that was expecting eight bidders to make final offer is learnt to have received lukewarm response for its controlling stake in country's largest city gas distribution venture in private sector. Promising bidders like Adani Gas, Torrent Power and some of the global private equity players withdrew from the race.

Policy / Performance

RBS halts India tanker payment due to Iran sanctions

March 27, 2012. The Royal Bank of Scotland (RBS) has halted payments to a Greek ship owner which transported Iranian oil for an Indian shipping company, in line with Western sanctions aimed at hindering Iranian crude exports. The European Union in January placed an immediate ban on new contracts to import, purchase or transport Iranian crude and petroleum products. EU members with existing contracts, however, can honor them until July 1. India's Great Eastern Shipping Co Ltd has not been able to pay Greek firm Eurotankers, which holds an account with RBS, for using one of its supertankers to ship Iranian crude because the UK-based bank would not clear the payment. The deal was considered to be a new contract as it was made in the spot freight market. The action by RBS adds to the difficulties India and other Asian oil buyers face in trying to maintain imports of Iranian crude amid sanctions.

GAIL targets transmitting 121.55 mmscmd gas in FY13

March 27, 2012. GAIL India has set a target of transmitting 121.55 million metric standard cubic meters per day (mmscmd) of natural gas and marketing 85.75 mmscmd of gas sourced from domestic fields and imports in 2012-13. GAIL signed a performance memorandum with the government setting these are targets for the fiscal 2012-13. GAIL is targeting production of 430,000 tons of polymers and 1.37 million tons of liquid hydrocarbons. For 2012-13, it is looking at a gross sales for the fiscal at ` 43,430 crore and a gross margin of ` 6,287 crore.

Market may assign zero value to the RIL's E&P business: Goldman Sachs

March 26, 2012. Reliance Industries may have written the Indian manual on mega-project execution, but its celebrated D6 gas project in the Krishna-Godavari Basin has unravelled to a different script. It began in typical Reliance style: a grand discovery of natural gas in 2002 and quick project execution at a lower cost than most parts of the world. Gas started flowing in April 2009, promising to double India's gas output and alter its energy landscape. And then, things went horribly wrong. Production has fallen, to 28 million metric standard cubic meters per day (mmscmd). This is against 62 mmscmd in April 2010, and the 80 mmscmd Reliance projected in its revised $8.8 billion investment plan-against the initial plan of $2.5 billion for 40 mmscmd- to the government in 2006. The regulator has adopted a stern stance against the shortfall, especially in the context of tripling of costs, which effectively translates into lower royalty for the government. Further, it is resisting Reliance's attempts at a price hike. In the company, there is a sense of exasperation as it struggles to have its way and secure regulatory approvals.

GAIL mulls doubling capacity of Dabhol LNG terminal

March 25, 2012. GAIL India is mulling doubling capacity of Dabhol LNG terminal to 10 million tonne to meet growing energy needs of the country. GAIL is looking to tie-up up to 2 million tonne of LNG for import at the nation's third liquefied natural has terminal, which will receive its first shipment from Norway. The so-called commissioning cargo, which will be offloaded, will be used to prepare the site for commercial operations. Almost 60 per cent of the cargo delivered by Excelerate Energy LLC will be used to test equipments and storages at the 5 million tons a year terminal which was built a decade ago and had been lying shut since then. Doubling of the terminal capacity will depend on success of commission. The terminal, which will take about 45-days to be fully commissioned, is expected to operate at less than 60 per cent of capacity in the absence of a breakwater, which guard ships against high tides. In the absence of breakwater, the terminal may not be able to operate during four monsoon months beginning May-end. The construction of a breakwater is likely to be completed in 2013-14 after which the LNG terminal will become fully operational. Dabhol may see import of 8 shiploads of LNG this fiscal.

‘No plan to decontrol diesel prices’

March 24, 2012. Oil Minister S Jaipal Reddy said the government is not contemplating decontrol of diesel prices and admitted to "some kind of" discontinuation of petrol deregulation of late. State-owned oil companies will need to raise diesel price by ` 14.73 a litre if the government were to free its pricing like it was done in case of petrol in June 2010. Even in case of petrol, oil companies have not revised rates in line with their costs. Oil firms are currently selling petrol at a loss of ` 7.72 a litre. Oil companies have demanded that since they have not been able to raise petrol price in line with increase in cost, they be compensated by the government for the ` 4,500 crore loss they incurred on the fuel sale. The government compensates oil firms for losses only on diesel, domestic LPG and kerosene. EGoM, headed by Pranab Mukherjee, is empowered to decide on pricing of three subsidised products. The EGoM in June 2010 which deregulated petrol and if petrol is to be brought back under regulation, the same ministerial panel will have to take a call. Before petrol price is regulation, the ministry will have to hold consultations with all, he said. Oil companies are currently losing ` 14.73 a litre on diesel, ` 30.10 a litre on kerosene and ` 439.50 per 14.2-kg domestic LPG cylinder. For the full fiscal, they are projected to lose about ` 1,40,000 crore in revenue on selling the three products at government controlled rates.

RIL likely to sell CBM for $10 per unit

March 24, 2012. Reliance Industries Ltd is likely to sell coal bed methane (CBM) at a price of at least $10 a unit as the oil ministry feels the company followed the correct procedure of inviting bids on an arm’s length basis but the issue has to be scrutinized by the directorate general of hydrocarbons. RIL will produce 3.5 million metric standard cubic metres a day of methane gas from its blocks in Madhya Pradesh. The state government has written to the oil ministry expressing concerns about the centre's move to indirectly regulate CBM prices as this could hurt the state's revenue.

RIL set to gain from gas pricing policy reforms

March 24, 2012. Prime Minister Manmohan Singh said that the government had initiated gas pricing policy reforms to incentivize production of natural gas, raising hope for Reliance Industries, which is seeking higher prices for the gas it produces from the D6 block. Reliance has been pushing for raising D6 gas price, which was fixed by an empowered group of ministers (EGoM) for five years ending April 2014. The D6 gas is sold at $4.20 per unit while spot prices of imported liquefied natural gas are about $15. Oil ministry said the government would take a decision on revising D6 gas price only after obtaining legal opinion on mid-term price correction. In last five years, natural gas consumption in India and China has witnessed compound annual growth rates of 14% and 18%, respectively, he said. He said the country would invest in creating infrastructure for importing liquefied natural gas.

Cess hike on crude oil will impact profits by ` 45 bn

March 23, 2012. ONGC said its profitability will be impacted by ` 4,500 crore as Finance Minister Pranab Mukherjee raised cess on crude oil production. The company wants the government to adjust the higher cess rate with the fuel subsidy it bears. Upstream firms like ONGC have to meet a part of revenue that fuel retailers lose on selling diesel, domestic LPG and kerosene at government controlled rates. They made good about 38 per cent of ` 97,300 crore that Indian Oil, Bharat Petroleum and Hindustan Petroleum lost on fuel sales in first nine months of current fiscal. Higher cess along with increased rates of service tax and excise duty will bring down ONGC's profit before tax by ` 5,000 crore. The near doubling of cess rate on crude produced in the country will burn a hole of ` 6,000 crore in the pockets' of upstream oil companies ONGC, Oil India Ltd, Cairn India Ltd, and Reliance Industries Ltd. The cess, levied as per the Oil Industry (Development) Act, 1974, was last revised in the Union Budget 2006-07.

India's 1st ever shale gas exploration bidding by 2013-end

March 23, 2012. India will launch its first-ever bid round for exploration of shale gas by end of 2013, Prime Minister Manmohan Singh said. The country has, so far, only explored and produced conventional oil and gas as well as unconventional sources such as coal bed methane (CBM). Shale gas ---- gas trapped in sedimentary rocks below the earth's surface ---- is the new focus area in the US, Canada and China as an alternative to conventional oil and gas for meeting growing energy needs. Six basins, namely Cambay, Assam-Arakan, Gondawana, KG onshore, Cauvery onshore and Indo Gangetic basins, have been identified that may have shale gas potential. The government, Singh said, was pursuing the development of sources of unconventional gas such as shale gas and coal-bed methane. Oil Minister S Jaipal Reddy said a National Gas Grid of nearly 30,000 km in length is planned to be built by 2017. The network with capacity of 875 million standard cubic metres per day will take natural gas to different markets across the length and breadth of India. Reddy said the nation's dependence on imported LNG is also projected to grow.

India offers to supply natural gas to Pakistan

March 22, 2012. India’s state owned oil and gas company GAIL has offered Pakistan a deal to import natural gas from India at a time when Pakistan is going through a gas crisis. GAIL proposing to extend to Lahore a natural gas pipeline it has recently installed from the west coast to Bhatinda in Indian Punjab. Bhatinda is around 25-km away from the India-Pakistan border. The company has plans to import liquefied natural gas (LNG) at one of its import terminals in Gujrat move this gas through the Dahej-Vijaipu -Dadri-Bawana-Nangal-Bhatinda pipeline to Punjab and then into Pakistan. The company would offer a final proposal to Pakistan only after the approval from the Indian ministry of external affairs. According to a State Bank of Pakistan report from last year, Pakistan may experience its worst gas crisis in 2016 when the deficit is expected to hit 3.021 bcfd (billion cubic feet per day) as supply-demand gap increases. Since Pakistan has not built any LNG import terminal so far, this venture would be more sensible for Pakistan to pursue. The LNG terminal will take a minimum of four years to build while the GAIL pipeline can be expanded into Lahore within months.

IOC to set up LNG terminal in Chennai

March 22, 2012. The Indian Oil Corporation Ltd (IOC) is confident of setting up its ` 4,500 crore, five million tonne per annum liquefied natural gas (LNG) terminal in Chennai by 2015 partnering with Tamil Nadu Industrial Development Corporation (TIDCO). The mode of funding the project cost - ratio of debt to equity - is being worked out. IOC and TIDCO signed the agreement in the presence of Chief Minister J. Jayalalithaa who had earlier released the state's Vision 2023 document. The LNG terminal will be completed by 2015.

ONGC emerges top investor among PSUs

March 22, 2012. ONGC has emerged as the top investor among PSUs for 2010-11 fiscal with pumping a sum of ` 1.95 lakh crore to create assets during the period. Loss-making BSNL was the second largest investor PSU during the fiscal, according to a government survey. Investment in terms of gross block (assets) for ONGC stood at ` 1.95 lakh crore in 2010-11 and its net profit was ` 18,924 crore, the Public Enterprises Survey for 2010-11. In fiscal 2008-09, the maharatna oil and gas producer had ` 1.71 lakh crore as investment in gross block.

Cairn India approaches DGFT to export Rajasthan crude

March 21, 2012. Cairn India has approached Directorate General of Foreign Trade (DGFT) seeking permission to sell its Rajasthan crude oil to Reliance Industries' Special Economic Zone (SEZ) refinery at Jamnagar in Gujarat without going through state canalising agency, IOC. As per present policy, any sale to a unit in a Special Economic Zone is considered export. With country being a net importer of crude oil, export of domestically produced crude oil is not permitted and only under special permits can it be done through state trading enterprise, Indian Oil Corp (IOC). Cairn currently sells 80,000 barrels per day or 4 million tons a year of crude from Rajasthan to RIL's domestic tariff area (DTA) refinery at Jamnagar. As output from Rajasthan is set to rise, it now wants to sell the oil to RIL's adjacent only-for-exports or SEZ refinery.

Swapping of domestic gas with imported LNG okayed

March 21, 2012. The government has granted industrial units the freedom to use domestic natural gas in their plant if they can replace it with LNG at another location, in a bid to help fuel-starved units which do not have the infrastructure to ship imported gas from the west coast to their plants. Several potential customers are located near pipelines that carry natural gas from domestic fields, such as Reliance's D6 block, but they do not have any gas allocation. Such customers will be able to take domestic gas allocated to another consumer, whose plant can be supplied imported LNG. The additional cost would be borne by the new customer. The ministry has framed the swapping policy due to acute shortage of domestic gas mainly because of the sharp drop in output from Reliance Industries-operated D6 block. The policy directs gas suppliers, consumers and transporters to co-operate in arriving at a cost-effective swap arrangement.

India asks Iran to bear oil insurance risk amid sanctions

March 21, 2012. Indian oil buyers are asking Iran to bear the insurance risk for transporting its crude as tighter Western sanctions make it more difficult to buy Tehran's principal export. The number of maritime firms willing to transport Iranian crude has dwindled significantly since the European Union announced in January it would proceed with an oil embargo, leaving Asian oil buyers to rely more on Iranian-owned tankers. With Indian shipping firms uncertain whether they can continue transporting Iranian oil, state-run Indian Oil Corp and Hindustan Petroleum Corp have written to the National Iran Oil Corp (NIOC) asking the company to take on the insurance risk for their crude shipments. NIOC has indicated it may consider the request on a case-by-case basis. The United States has also imposed tougher sanctions against Iran for its disputed nuclear programme, prompting Japan and 10 EU nations to significantly cut purchases of Iranian crude oil in order to win exemptions. Washington, however, has left Iran's top customers China and India exposed to the possibility of such steps. The EU agreed to an oil embargo on Jan. 20 to stop members from importing Iranian oil from July. The embargo also specified a ban on EU insurers and reinsurers from indemnifying vessels carrying Iranian crude and fuel anywhere in the world. Europe's insurers cover the majority of the world's global oil tanker fleet, and the ban could prevent Iran's biggest crude buyers in Asia from importing Iranian crude. EU diplomats were divided on whether to exempt some insurers from the ban after Asian oil importers lobbied for exceptions to ensure oil deliveries. Negotiators hoped to reach an accord before a meeting of EU foreign ministers.



India's N-plants produce 32,000 MU of power

March 27, 2012. India achieved a milestone in nuclear power generation, touching 32,000 million units (MU), a target that nuclear operator Nuclear Power Corporation of India Limited (NPCIL) had set for this fiscal. Some plants are operating at lower power because of fuel mismatch. India, which has a total capacity of 4680 MW from nuclear power, is looking forward to install a "very large number" nuclear plants.

IPCL's Haldia power plant to be commissioned by mid 2013

March 26, 2012. India Power Corporation Ltd (IPCL), holding company of DPSC Ltd, expects its 450 mega watt (MW) Haldia plant to be commissioned by the third quarter of 2013. DPSC came under IPCL fold after divestment by Andrew Yule in 2009-10. While the land for the first phase of Raghunathpur (1 X 270 MW) in Purulia has already been allotted by West Bengal Industrial Development Corporation (WBIDC), BTG order was given to Bharat Heavy Electricals Ltd (BHEL). The Company will also be commissioning a 12 MW thermal power plant at Dishergarh (Asansol) at a cost of ` 60 crore the end of this month. DPSC currently has a generation capacity of 42 MW thermal power from its plants at Chinakuri and Dishergarh in West Bengal. DPSC is expected to close the current financial year with a turnover exceeding ` 500 crore. Power demand this March is expected to touch 200 MW which is about 10 per cent higher than the previous year. This year DPSC has already invested more than ` 120 crore to strengthen its distribution capacity. IPCL has already set up wind projects (35.5 MW) in Gujarat and Karnataka. Another 60 MW wind project in Rajasthan is in advanced stage.

Transmission / Distribution / Trade

` 800 bn losses projected for discoms

March 27, 2012. Power distribution companies are projected to have incurred a whopping loss of ` 80,000 crore, before accounting for government subsidies, in the current fiscal, according to an ICRA report. Rating agency ICRA projected the losses for discoms -- before accounting for government subsidy -- in the country at ` 80,000 crore in FY 2012, much higher than ` 63,500 crore seen in FY 2010. Estimates are based on a study of power distribution companies (discoms) functioning in 11 states. About 70 per cent of the estimated loss was on account of discoms in Uttar Pradesh, Tamil Nadu, Madhya Pradesh, Rajasthan, Punjab and Haryana, it report said. According to ICRA, such losses have largely been funded through bank borrowings and stretched payments to power creditors, especially state-run generating companies.

Power Grid board okays investments worth ` 99 bn

March 27, 2012. State-run transmission utility Power Grid said its board has approved three investment proposals worth ` 9,884.19 crore. The company would be setting up WR-NR HVDC Interconnector for independent power projects in Chattisgarh at a cost of ` 9,569.76 crore. The project is expected to be commissioned within 39 months from the date of investment approval.

India seeks Japanese aid for bolstering power transmission network

March 27, 2012. A proposal aimed at strengthening the power transmission network at a cost of about ` 3,573 crore has been sent by the State government to the Union Ministry of Economic Affairs for seeking financial assistance from the Japan International Cooperation Agency (JICA). The proposal had been prepared by Tamil Nadu Generation and Distribution Company (TANGEDCO). During the current financial year, an all-time high assistance of ` 7,913.35 crore had been provided for the TANGEDCO. A sum of ` 3,068.78 crore had been provided as subsidy support to TANGEDCO in the Budget Estimates for 2012-2013. As a major initiative to promote power savings, compact fluorescent lamps (CFL) would be provided free to 14.62 lakh huts to replace incandescent lights at a cost of ` 14.62 crore. The State government would initiate action to implement the Energy Conservation Building Code in commercial buildings and certain categories of major building complexes based on their energy consumption. At 30 per cent energy savings, this would have the potential to save around 3 MW per 10 lakh square feet area. On the 1,600 MW super critical thermal power project at Udangudi, the joint venture project with Bharat Heavy Electricals Limited did not take off even after four years. Its total cost was ` 8,000 crore. A sum of ` 1,500 crore had been provided for 2012-2013 as share capital support for new projects. Initiatives were being taken to strengthen the transmission infrastructure for evacuation of wind energy and financial assistance had been sought from the Government of India. Measures such as provision of solar lights to houses constructed under the Chief Minister's Solar Powered Green Houses scheme and the scheme for the provision of street lights with solar power would be continued. Next year too, another 60,000 green houses would be provided with solar lights at a cost of ` 180 crore and 20,000 more street lights would be energised with solar power at a cost of ` 50 crore.

Blackstone, 3i, Carlyle eye stake in Lanco Infratech's power business

March 26, 2012. Private equity majors 3i, Blackstone and Carlyle have shown interest in buying a stake in the holding company to be formed by combining all Lanco Infratech's power assets. Debt-laden Lanco is forming a holding company and raising capital for its power plant by selling shares to investors. Some international power utilities such as E.ON, GDF Sues and AES Corporation have also shown interest in the transaction. Lanco operates 4,410 MW of capacity and is planning to develop another 7,103 MW. The holding company could be valued as high as $2 billion and investors could buy stakes worth up to $500 million. The diversified infrastructure company began the process of forming a holding company a few years ago. Poor capital market sentiment, coupled with problems in the power sector affected plans for an IPO forcing it to consider a sale to investors instead. A little more than 25% of the company's power projects run on gas and the recent problems with gas supplies following disruptions at the KG-D6 gas field, the country's biggest, have become red flags for investors.

KEPCO to buy 40 pc in Pioneer Gas Power

March 22, 2012. KEPCO, South Korea's largest electric utility, is set to invest up to ` 500 crore in Pioneer Gas Power, which is setting up a 388 MW gas-based power plant in Maharashtra. The ` 1,250-crore Pioneer Gas Power project is part of the Pioneer Group, promoted by second generation entrepreneurs Sudhir Rao and his brother K Suhan Rao. The promoters had recently sold their listed entity Pioneer Distilleries to Vijay Mallya-owned United Spirits. KEPCO, which owns and operates about 80,000 MW of power plants in Korea, will buy a 40% stake through its subsidiary. The financial closure will be completed through a consortium of nine banks, with IFCI being the lead institution. Tata Projects will be responsible for EPC contract. KEPCO, which posted revenues of $39 billion for December 2011, is responsible for generation, transmission and distribution of electricity and the development of power projects.

Policy / Performance

India looking to localise 45 pc in KKNPP units

March 27, 2012. India is looking to localise upto 45 per cent of work in the third and fourth units of Kudankulam Nuclear Power Plant (KKNPP) after working closely with Russian experts in Units 1 and 2. The nuclear equipment, turbo generator and turbo generator would come from Russia. All that is called balance of plant will be by India. The difficulty is that Russian credit is available at low interest rates and when NPCIL does it may do so at a visibly less cost. Unit 1 at KKNPP would be commissioned, after the conduct of safety drill as stipulated by the Atomic Energy Regulatory Board (AERB).

US willing to consider setting up power JVs in India

March 27, 2012. The visiting US Commerce Secretary is willing to consider the suggestion that American companies should set up JVs for power equipment manufacturing in India. US Commerce Secretary John Bryson, who is heading a business delegation, called on Power Minister Sushilkumar Shinde. Bryson, who is on a five-day official India visit, is leading a 16-member business delegation. Shinde, said the US companies are welcome to set up joint venture entities for making power equipment in the country. His statement came in the wake of Bryson's remarks that import duties are high in India. Shinde had said that many companies including those from France, Germany and Japan are having joint venture entities for power equipment manufacturing. Larsen & Toubro-Mitsubishi Heavy Industries, JSW Energy-Toshiba Corp, BGR Energy-Hitachi Power Europe and Bharat Forge-Alstom SA are among the power equipment making joint ventures. The Power Ministry, had floated a Cabinet note proposing a levy of 19 per cent customs duty on the import of power gear, mainly from China. Currently, equipment imported for projects of less than 1,000 MW capacity attract five per cent customs duty, while those above that enjoy exemption. The plan to slap higher duty on overseas power equipment is aimed at providing a level-playing field for domestic manufacturers like BHEL and L&T, which are battling intense competition, mainly from China.

India to expand nuke generation to 62 GW by 2032

March 27, 2012. Prime Minister Manmohan Singh has insisted that India is bound to expand its nuclear power programme but it will be follow the highest standards of nuclear safety and security, whose synergy is essential to restore public faith in nuclear energy, especially after the tragic events at Fukushima. Prime Minister said that India is in the process of expanding nuclear energy generation to 62,000 MW by 2032.

India stakes claim to membership of exclusive nuclear clubs

March 27, 2012. India made a strong pitch for membership of four exclusive nuclear clubs contending that it would help strengthen its export control systems and maintain highest international standards of its nuclear programme. India had already adhered to the guidelines of the Nuclear Suppliers Group (NBG) and the Missile Technology Control Regime (MTCR). India is keen for membership of the NSG, MTCR, Wassenaar Arrangement and the Australia Group. An agreed multilateral framework involving all states possessing nuclear weapons was necessary to attain the goal of a nuclear weapons free world. The Indian Prime Minister announced a contribution of one million dollars to the International Atomic Energy Agency's Nuclear Security Fund for the years 2012-13.

RSEB debt restructuring cleared

March 27, 2012. In a move that could provide relief to the tune of ` 1.7 lakh crore to the banking system, debt restructuring of the Rajasthan State Electricity Board (RSEB) is all but completed and bankers are hopeful of replicating the same across other ailing state-owned power utilities. The restructuring will include converting the term loans extended to the state-run power utility into working capital loans priced in the range of 11.5-12.5%. The procedure will also involve extending the tenure of the loans by 10-15 years.

Power cos lost 8.7 BU due to coal shortages

March 26, 2012. Power companies in India have reported generation loss of 8.7 billion units (BU) from April- February this fiscal due to coal shortages. These companies suffered a generation loss of 8.4 billion units in the last financial year (2010-11). The government is taking various steps to mitigate the scarcity of coal in the country including asking Coal India to enhance production of domestic coal.

Govt eyes Coal Regulatory Bill

March 26, 2012. Facing heat over a draft report of the CAG over allocation of coal blocks, that had acquired the status of the largest scam ever before being shot down as an 'exaggeration', the Coal Ministry said it will soon come out with a Coal Regulatory Bill, 2012, that will improve transparency in the sector. The bill seeks to provide level-playing field to all stake holders, besides ensuring transparency in allocation of coal blocks to companies. The coal sector regulator, as provided in the Bill, will attempt to expedite resolution of disputes relating to pricing of coal and put in place benchmarks for performance of companies in the sector.

Karnataka to invite bids for four gas-fired power plants of 700 MW each

March 24, 2012. Karnataka government plans to set up four gas-fired power plants of 700 MW each in the state and expected to invite tariff-based bidding from private investors soon after it signs long-term gas supply contract. State-run Gail is keen to sign gas supply contract with Karnataka government as it has required infrastructure. The proposed plants would be set up in Belgaum, Gadag, Davangere and Tumkur under tariff-based competitive bidding routes. The ideal price for gas sould be around $8 per mBtu for developing these projects. Karnataka government has already contracted for offtaking gas from the Dabhol-Bangalore pipeline for 700 MW plant at Bidadi, which would be imported in the form of liquefied natural gas at the Dabhol terminal. Karnataka is managing power supply in state by buying 450 MW peak power from Tata Power, PTC India and National Energy Trading & Services. The state has contracted 300 MW from Tata Power, 100 MW from PTC and another 50 MW from National Energy Trading. The company has also contracted electricity from Gujarat state-owned power generation company Gujarat Urja Vikas Nigam at ` 4.26 per unit till Jun 2013.

REC to sanction ` 546 bn loans in 2012-13

March 23, 2012. State-run Rural Electrification Corp (REC), a leading lender for the power sector, would sanction loans worth ` 54,600 crore during 2012-13 fiscal, around nine cent more than its target for the current fiscal. REC mentioned the 2012-13 target in the Memorandum of Understanding (MoU) signed with the Power Ministry for the next financial year. The targets for sanction and disbursement of loans have been set at ` 54,600 crore and ` 27,300 crore, respectively, for 2012-13, REC said. The company sanctions loans to state electricity boards,power utilities, state governments and rural electric co-operatives, among others.

Haryana Power Utilities fines erring consumers ` 384 mn

March 22, 2012. The Vigilance and Enforcement wing of the Haryana Power Utilities has detected 3,612 cases of theft of electricity and imposed a penalty of ` 38.40 crore on the erring consumers up to February of the current fiscal. The penalty of over ` 4 lakh had been levied in 123 of these cases, which included industrial and non-domestic connections. The amount of penalty exceeded ` 50,000 in as many as 1,713 cases of theft of electricity and unauthorised extension of load. The electricity supply of the erring consumers had been disconnected immediately as per the existing instructions. Under ongoing campaign to check the menace of pilferage of power, unauthorised use of electricity and unauthorised extension of load, special checking of 15,694 consumer premises was carried out by targeting high loss feeders.

No quick fix for India's troubled power sector: S&P

March 22, 2012. Global rating agency Standard & Poor's (S&P) said there is no "quick fix" for India's troubled power sector and stressed on the need for tariff reforms and improved fuel security. S&P stressed that greater push for state regulators to implement model tariff guidelines could have significant benefits for the development of India's power sector. Moves to improve fuel security would also create a more conducive operating environment for companies. The power sector that has embarked on ambitious capacity addition plans is grappling with multiple woes, including acute fuel shortages, high coal prices and poor health of distribution companies (discoms). The government has unveiled various proposals including duty exemption for imported coal and LNG as part of efforts to ease the stress on the power sector.




Eni boosts reserves with new discovery offshore Mozambique

March 26, 2012. Eni announced a new giant natural gas discovery in Area 4, offshore Mozambique, at the Mamba North East 1 exploration prospect. The results of this well, drilled in the Eastern part of Area 4, are of special importance since they increase the resource base of Area 4 by at least 10 trillion cubic feet (tcf) of which 8 tcf of these contained in reservoirs exclusively located in Area 4. This new discovery further improves the potential of the Mamba complex in Area 4 offshore Mozambique now estimated at at least 40 tcf of gas in place.

BG Group makes fourth gas discovery offshore Tanzania

March 26, 2012. BG Group announced a fourth Tanzanian gas discovery from the Jodari-1 exploration well located in Block 1 offshore southern Tanzania. Preliminary evaluation of the well results indicates gross recoverable resources are in the range of 2.5 to 4.4 trillion cubic feet (tcf) of gas. The partnership of BG Group (60 percent and operator) and Ophir Energy (40 percent) have had exploration successes in all four wells so far drilled in Tanzania, with mean total gross recoverable resources currently estimated to be approaching some 7 tcf of gas.

Sinopec to boost oil, gas output to counter refining losses

March 26, 2012. China Petroleum & Chemical Corp., Asia’s biggest refiner, will ramp up crude production and develop natural gas fields to counter losses from selling diesel and gasoline at state-mandated prices. Sinopec, as China Petroleum is known, plans to boost oil production in West China and increase exploration for unconventional resources including gas from shale formations. China, which controls oil-product prices to curb inflation, raised tariffs by as much as 7.1 percent, lagging behind the 20 percent surge in New York crude futures. Fu Chengyu, who became chairman of Sinopec’s parent in April, led the group to bid for $9.3 billion in overseas oil and gas assets to diversify from unprofitable fuel making. Production of crude and gas rose 1.6 percent to 407.9 million barrels of oil equivalent last year, Sinopec said. While crude output fell 1.9 percent to 321.7 million barrels, gas production jumped 17 percent to 517.1 billion cubic feet (14.6 billion cubic meters). China, estimated by the U.S. Energy Information Administration to hold the world’s largest reserves of shale gas, aims to produce 6.5 billion cubic meters of the fuel annually by 2015 and between 60 billion and 100 billion by the end of 2020.

Shale boom in Europe fades as polish wells come up empty

March 26, 2012. Europe’s best hope for a shale-gas boom is fading as explorers in Poland confront rising taxes, a lack of rigs and rocks that are harder to drill than expected. While shale could help Poland lessen dependence on Russian supplies and cut its gas bill, a government proposal for a levy on production threatens to curtail investment. Failed wells by Exxon Mobil Corp. curbed the optimism that led two dozen companies to grab licenses. The government said that shale-gas reserves may be lower than estimated, and drilling a well costs almost three times as much as in the U.S. Exxon, Chevron Corp. and ConocoPhillips acquired rights in Poland, anticipating Eastern Europe’s largest economy would lead the development of shale fields similar to those that upended North America’s energy industry and made the U.S. the world’s biggest natural gas producer. The U.S. Energy Information Administration said Poland may hold 5.2 trillion cubic meters of gas, or enough fuel trapped in shale to meet domestic needs for 300 years.

Oil discovered in Kenya for first time

March 26, 2012. Kenya's president announced that oil has been discovered in his East African nation for the first time, and a foreign oil firm said the find is similar to the valuable light crude previously discovered in neighboring Uganda. President Mwai Kibaki cautioned that commercial viability of the oil find in the northwest Turkana region is still uncertain, but he welcomed the news, calling it "a major breakthrough." The discovery was made over the weekend. Tullow Oil - which is carrying out oil exploration in the region - said that 20 meters (about 65 feet) of net oil pay was discovered at a site called Ngamia-1 in Kenya's Turkana County. The oil discovered in northwest Kenya is considered to be high-quality oil that will yield more gasoline and diesel per barrel than some other crude discoveries in Africa.

Iraq keeps BP in talks for Kirkuk oil development

March 25, 2012. Iraq's oil ministry has confirmed that BP is in talks to develop the Kirkuk oilfield in the north of the country, as officials hope to arrest Kirkuk's long decline and pump an additional 300,000 barrels of oil per day (bpd) from the field. The field neglected and has not received remedial attention since the 2003 invasion beyond ersatz repairs by North Oil Company workers.

Statoil, partners make North Sea oil discovery

March 23, 2012. Norway's Statoil announced that it and its Oseberg Area Unit partners have made a small oil discovery on the PL053 production license in the North Sea. Statoil said that the Oseberg partners are in the process of concluding drilling operations in the exploration well 30/6-28S. The well drilled by the rig COSLPioneer (mid-water semisub) proved an oil column of around 40 feet (12 meters) in the Statfjord Formation. The estimated volume of the discovery is in the range of 12-18 million barrels of recoverable oil equivalents. The oil discovery lies in the Crimp prospect, which was the secondary target for the exploration well 30/6-28S. The primary target was the Crux prospect that Statoil earlier defined as a high impact gas opportunity.

Transportation / Trade

Private equity sees pipes as second shale wave

March 27, 2012. Private-equity firms are ramping up investment in the next phase of North America’s oil and natural gas drilling boom: the estimated $40 billion in annual spending on pipelines and processing to bring the fuels to market. Arclight Capital Partners LLC, EnCap Flatrock Midstream LP and Highstar Capital are among firms behind projects that would connect and help transform fuel from thousands of shale wells expected to be drilled this decade. Some owners, keen to quickly sell their pipeline stakes within a few years, may see 16 to 25 percent returns.

Obama officials may study safety risks in fracking pipelines

March 23, 2012. The Obama administration may start collecting data on pipelines energy companies use to transport natural gas and oil extracted from shale by hydraulic fracturing, according to a government report. Federal and state regulators lack enough information to determine the safety of pipelines that collect gas at well sites and carry the fuel to processing facilities, according to the report by the Government Accountability Office, Congress’s investigative arm. The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, which oversees transmission pipelines, doesn’t collect data on smaller lines at the wells, according to the report. Hydraulic fracturing, or fracking, involves injecting millions of gallons of water, chemicals and sand thousands of feet underground in shale formations to free trapped oil and gas. A surge in exploration in shale formations has been accompanied by a “new infrastructure” of pipelines that may pose unknown safety risks, according to the report.

Morgan Stanley ship hauls frozen gas 14,500 miles to Tokyo

March 23, 2012. A liquefied natural gas tanker hired by Morgan Stanley, the bank that ships the most commodities, is hauling a cargo about 14,500 miles from the U.S. to Japan, where the fuel fetches almost seven times more. The Arctic Spirit, owned by Teekay LNG Partners LP and on a long-term charter to Morgan Stanley, left Sabine Pass, Texas. The ship, sailing to Sodegaura in Tokyo Bay, can carry about 37,000 metric tons, or 16 percent of Japan’s daily imports. The trade would earn about $16.2 million after transportation costs, estimates Arctic Securities ASA, an Oslo-based investment bank. Japan’s gas-fired power plants are boosting output to compensate for nuclear reactors shuttered since last year’s earthquake, driving Asia-bound cargoes to a record. The U.S. has surplus natural gas extracted from shale rocks deep underground, and while it lacks a facility to liquefy that fuel for shipping, cargoes delivered to the country under longstanding contracts can be re-exported when overseas prices are higher.

Tamar partners talking on LNG supply to Gazprom

March 22, 2012. The Israeli partners in the offshore Tamar natural gas field said that they have signed a letter of intent to sell liquefied natural gas, or LNG, to a unit of Russian energy giant OAO Gazprom. The partners, which include Delek Group Ltd. subsidiaries Avner Oil Exploration and Delek Drilling LP , said it would discuss selling 2 million-3 million metric tons of LNG a year to Gazprom for 20 years, beginning 2017. The partners said the price would be based on the market price of natural gas in Asia.

Mexico invites bids for $3.5 bn gas pipeline project

March 21, 2012. President Felipe Calderon said Mexico has begun inviting bids for the Northwest Gas Pipeline, a conduit that will stretch for more than 2,000 km from the border with the US to the western city of Mazatlan and is expected to involve investment of roughly $3.5 billion. He said that pipeline will "revolutionize the northern Pacific coast, especially Sinaloa state, which has no natural gas", the president said. Calderon recalled that last year he unveiled a $10.5 billion plan for structural change in the country's natural gas market, including construction of a natural gas pipeline network in central Mexico and the creation of four gas distribution zones. He said those projects included the Los Ramones gas pipeline, which will extend for some 1,000 km through the states of "Tamaulipas, Nuevo Leon, San Luis (Potosi), Guanajuato, Queretaro (and) Zacatecas".

Policy / Performance

Indonesia fuel-price rise needed to protect growth, Basri Says

March 27, 2012. Indonesia must raise fuel prices to curb a subsidy bill that threatens to sap funds from pivotal health, education and road and port building programs, an adviser to President Susilo Bambang Yudhoyono said. Maintaining subsidies “would have a really bad impact” on growth by causing the fiscal deficit to exceed the legal limit of 3 percent of gross domestic product, forcing cuts in more productive spending, National Economic Committee Vice Chairman M. Chatib Basri said. Surging oil prices led China to boost fuel costs the most in more than two years this month and has added pressure on nations from Indonesia to India to raise tariffs. A proposed 33 percent increase being debated by the Indonesian parliament may cause inflation to double to 7 percent by year-end, Basri said.

EU safety-first view on shale gas makes sense

March 27, 2012. The European Union lags the United States in developing shale gas but leads it on safety - a cautious approach that may pay off in averting the sort of environmental backlash that's scuppered the best laid energy plans in the past. This approach ultimately could lead to greater production of European shale gas than otherwise, if it stops countries from joining France and Bulgaria in banning exploration.

Obama’s confused energy policy

March 26, 2012. U.S. President Barack Obama has discovered too late that symbols matter. His administration is trying and mostly failing to reverse the impression that it is hostile to fossil fuels such as oil, gas and coal after the president’s peremptory and opportunistic decision to block the Keystone XL pipeline in January. In a string of speeches, beginning with the State of the Union, the president has articulated a carefully scripted “all of the above” strategy which embraces clean energy from wind and solar, improvements in energy efficiency, and an increase in domestic hydrocarbon production — especially clean-burning gas but also oil from shale. It is all part of a complicated balancing act that aims to mollify his environmental base, ease fears about the rising gasoline prices and neutralize opposition from the oil industry and congressional Republicans, angered by continued restrictions on drilling and pipelines, who are seeking to exploit rising oil prices to hurt the president ahead of November’s election.

Mexichem to target shale gas should Mexico relax monopoly

March 26, 2012. Mexichem SAB, the chemicals maker that has bought more than 15 companies since 2007, will seek to develop Mexico’s first shale-gas projects if the country sells licenses that would bypass a monopoly on fossil fuels. Petroleos Mexicanos, the state-run oil producer known as Pemex, “notoriously” lacks the budget to boost deep-water drilling and develop shale-gas deposits. Mexico, the third-largest oil supplier to the U.S., has as much as 460 trillion cubic feet of natural gas trapped in shale-rock formations. Shale-gas projects may lure investments of $10 billion a year.

Ahmadinejad gets blame and sanctions as economy sputters

March 26, 2012. Iranians are celebrating the Persian New Year under austerity conditions exacerbated by the U.S. drive to isolate the Islamic republic’s $480 billion economy -- about the size of Norway. Measures aimed at curbing Iran’s nuclear program have targeted trade, banking and oil exports. Some imports have disappeared from the shelves and others have soared in price amid a run on the Iranian currency that saw its dollar value drop by half on the black market. The sanctions are pushing up costs that were already surging after the government started removing energy subsidies less than a year and a half ago. Inflation has been above 20 percent since May. Mahmoud Ahmadinejad became the first Iranian president to be summoned to parliament and grilled about his economic policy, and in legislative elections his allies lost ground.

Shell sued in U.K. over ’massive’ 2008 Nigerian oil spills

March 23, 2012. A unit of Royal Dutch Shell Plc, Europe’s largest oil company, was sued in Britain by 11,000 Nigerians who say their land, rivers and wetlands were spoiled by two “massive” spills in the Niger River delta in 2008. The lawsuit against Shell’s Nigerian subsidiary was filed in London by residents of the coastal Bodo community after talks failed to produce a deal. While Shell admits liability for the leaks, it claims local people spilled most of the oil. The lawsuit, claiming a leak of 500,000 barrels, comes two months after Nigerian President Goodluck Jonathan said he would seek compensation from Shell, based in The Hague, for the country’s worst offshore spill in more than a decade -- a leak in December of nearly 40,000 barrels of oil at the company’s Bonga field off Nigeria’s coast.

Chevron risks losing Brazil oil license, regulator says

March 23, 2012. Chevron Corp. runs the risk of having its oil exploration contract canceled in Brazil after regulators found it could have avoided a 3,000-barrel spill off Rio de Janeiro’s coast. Chevron has come under mounting attack from Brazilian politicians, prosecutors and regulators following the leak at its $3.6 billion Frade project in November and a second seep. Federal Prosecutor Eduardo Santos, who’s probing the slick independently from the regulator, charged executives at Chevron and rig operator Transocean Ltd. with environmental crimes and called for prison sentences of as many as 31 years.

U.S. exempts Japan, 10 EU nations from Iran oil sanctions

March 21, 2012. The Obama administration is sending a message to major buyers of Iranian oil -- in particular China, India and South Korea -- that they can avoid new U.S. sanctions by curtailing their imports of Iranian crude by the end of June. Secretary of State Hillary Clinton announced that an “initial group” of countries -- Japan and 10 European Union nations -- have “significantly reduced” their Iranian oil purchases and thus qualified for an exemption from sanctions for a renewable period of 180 days under the law. The U.S. didn’t grant waivers to China, the leading importer of Iranian crude in the first half of last year, or to India and South Korea, which were the third- and fourth-largest buyers, according to the U.S. Department of Energy.

Saudi Arabia can raise output 25 pc if needed, Naimi says

March 21, 2012. Saudi Arabia can increase crude production by as much as 25 percent immediately if needed, the country’s oil minister Ali al-Naimi said, seeking to allay the concern over supplies that has driven prices to the highest in three years. Brent crude has gained 15 percent in London to about $124 a barrel. Iran has threatened to shut the Strait of Hormuz at the entrance to the Persian Gulf, a transit point for a fifth of the world’s traded oil, in response to sanctions on its crude exports imposed over its nuclear program. Saudi Arabia increased production to 10.047 million barrels a day in November, the highest in at least three decades. The kingdom, the world’s biggest crude exporter, has the capacity to produce 12.5 million barrels a day and will pump about 9.9 million barrels a day this month and in April.



TEPCO shareholders to propose building thermal power plant

March 27, 2012. A group of individual shareholders of Tokyo Electric Power Co. said that it plans to propose that the utility scrap its nuclear reactors in Niigata Prefecture and build a liquefied natural gas-fired thermal power station at the site. It will be the 21st time the group has made proposals at TEPCO shareholders' meeting seeking the utility's withdrawal from nuclear power generation. Its proposals in the past were rejected. The utility has three nuclear power plants in Japan -- the Kashiwazaki-Kariwa plant in Niigata Prefecture and the Fukushima Daiichi and Daini plants in Fukushima Prefecture. Both plants in Fukushima have been affected by the huge earthquake and tsunami on March 11, 2011. The group will also make four other proposals at the annual meeting of shareholders, likely to be held in June, including selling the company's power transmission and distribution facilities to pay the massive amount of compensation related to the nuclear accident. It will also propose a health survey be conducted for the rest of their lives on the people who worked to contain the crisis at the Fukushima Daiichi plant. According to the group, the members hold over 30,000 shares, which are needed to make a proposal at the shareholders' meeting. Tokyo Electric Power has about 1.6 billion shares outstanding.

GE signs power plant deal with Nigeria

March 26, 2012. General Electric Corp. (GE) said it signed an agreement with Nigeria's government to potentially build and operate power plants in the electricity-starved nation amid a push to privatize the failing state-run power company. GE said the five-year deal is part of the oil-rich nation's ambitious plans to sell off its Power Holding Company of Nigeria PLC. Citizens widely joke the company name stands for "Please Have Candles Nearby" in a nation where businesses and the wealthy rely on gasoline and diesel generators.

Transmission / Distribution / Trade

Appalachian coal fights for survival on shale boom

March 22, 2012. Coal mining in Appalachia has survived deadly explosions, the Great Depression and the country’s largest armed insurrection since the Civil War. The latest threat is booming shale-gas production. U.S. power utilities are favoring natural gas, which is trading at its cheapest in a decade as hydraulic fracturing opens up previously inaccessible reserves. Consumption of coal to generate electricity will fall 5 percent in 2012 to less than 900 million tons, a 16-year low, according to the U.S. Energy Information Administration. Mining companies in Appalachia, an area covering 12 eastern states and home to 85 percent of U.S. coal mines, have cut at least 21 million tons of production this year. The industry needs to curtail about another 90 million tons nationwide, with the “lion’s share” coming from Appalachia, to stem losses. Average operating costs now exceed coal prices for the first time in three years. Appalachian coal, the U.S. benchmark grade, fell 28 percent in the past 12 months. Coal futures closed 0.4 percent lower at $61.75 a ton on the New York Mercantile Exchange.

Policy / Performance

Fukushima disaster offers nuke security lessons: Japan PM Yoshihiko Noda

March 27, 2012. The tsunami-triggered meltdown at a Japanese nuclear power plant offered important lessons in protecting such facilities from terrorism, Japanese Prime Minister Yoshihiko Noda said. Noda said the disaster at the plant at Fukushima had shown the difficulties in preparing for the worst-case scenario, when officials could not comprehend the scale of the threat to the nuclear power plant. In the case of Fukushima, officials had only prepared for a tsunami just over five metres (16 feet), but the the waves that swamped the coastal plant were three times higher, according to Noda. Noda said the most important lesson to be learnt from the Fukushima meltdown was that there was no end in the efforts to ensure safety.

Nigeria’ll ensure safety for nuclear power plant - Jonathan

March 27, 2012. President Goodluck Jonathan has assured the global community that Nigeria would do everything possible to ensure that adequate safety measures were deployed when the country introduced nuclear power into its energy mix. Nigeria remained fully committed to complying with all international legal and regulatory requirements for safety and security in the use of nuclear energy. He said Nigeria would ensure the conversion of reactor from high enriched to low enriched uranium.

US regulators set vote on new SCE&G nuke reactors

March 26, 2012. Federal regulators are expected to approve a proposal to build two nuclear reactors at a site near Columbia, a decision that would make it just the second nuclear project to receive federal approval in a generation. The Nuclear Regulatory Commission is set to vote on the request by South Carolina Electric & Gas (SCE&G), a unit of SCANA corp., to build two 1,100-megawatt reactors at the V.C. Summer Nuclear Station near Jenkinsville, about 25 miles northwest of Columbia. The reactors, which would be jointly owned and operated with state-owned utility Santee Cooper, will be needed to meet future power demand. The first is expected to generate power by 2016, with the second going online in 2019.

Zamboanga City water officials fear power plant may affect water supply

March 26, 2012. An official of the Zamboanga City Water District expressed anxiety over the construction of a coal-fired power plant that may contaminate this city’s watershed. The 100-megawatt coal-fired power plant to be established by the San Ramon Power Inc. is very near the watershed area—where the city gets its water supply—and is even being opposed by the officials of Barangay Talisayan where it will be constructed. The coal-fired power plant is set in a 60-hectare area of the Zamboanga Economic Zone and Freeport Authority (Ecozone) in Sitio San Ramon, Barangay Talisayan. The construction of the plant is scheduled to start next year and will be completed in 2015.

Nuclear industry says back on track after Fukushima `speed bump’

March 25, 2012. Within months of the Fukushima nuclear disaster, the worst in 25 years, Germany, Belgium and Italy vowed to quit atomic energy. Twelve months on, the nuclear industry says it’s almost back to business as usual. As Japan mourned this month for the 19,000 people killed or presumed dead from the earthquake and tsunami that also wrecked the Fukushima Dai-Ichi nuclear station, India overrode six months of local protests to approve the start of its Kudankulam plant. In February, the U.S. gave the green light to build the nation’s first reactor in 30 years. China is “very likely” to resume approval of new nuclear projects this year, said Sun Qin, president of China National Nuclear Corp. With 650 million people in China and India living without access to electricity, the nations are looking to the atom to provide power without raising emissions and fossil fuel costs. Nuclear is not the only alternative to fossil fuels, but the use of renewable energy for now is restricted by technology and costs, according to South Korea’s Prime Minister Kim Hwang Sik.

Brazil may invest $3 bn in energy efficiency as loans rise

March 24, 2012. Brazilian businesses may invest as much as $3 billion in energy-efficiency measures through 2020 as banks become more comfortable offering loans that will be repaid mainly through cost savings, according to the International Finance Corp (IFC). Energy-service companies, which provide consulting and power audits, may spend as much as $400 million next year on systems that help corporate clients cut their power consumption.

England Tsunami risk swells costs at EDF after 40 pc slump

March 22, 2012. Since Japan’s 2011 nuclear disaster, Sizewell-B’s operator Electricite de France SA has earmarked about 200 million pounds ($317 million) to protect its U.K. reactors from previously inconceivable events. The collapse of an island off northwest Africa would be the most likely cause of a wave big enough to threaten Britain. EDF, the largest producer of atomic power, is preparing for so-called black swan events, crises that are almost impossible to predict, following the earthquake and tsunami that crippled the Fukushima atomic complex a year ago. While such a wave hasn’t hit Britain since around 6,000 B.C., public concern over nuclear safety has combined with escalating costs to push EDF stock down about 40 percent since the Japanese crisis.



REpower signs contract with PNE Wind AG for supplying 54 turbines

March 27, 2012. REpower Systems, an arm of wind power equipment maker Suzlon, has signed a contract for supplying 54 wind turbines in Germany. REpower Systems SE has signed a contract with German firm PNE Wind AG to deliver 54 offshore wind turbines at a wind farm in Germany, Suzlon said. However, financial details of the contract have not been disclosed by the company.

Azure Power gets U.S. grant for Indian rural solar project

March 27, 2012. Azure Power India Pvt., a developer of solar plants, won a grant from the U.S. Trade and Development Agency for a project aimed at helping to bring sun-based power to rural villages. The $476,670 grant will fund microgrids powered by two 500- kilowatt photovoltaic plants in the states of Gujarat and Chhattisgarh. A microgrid helps deliver electricity locally to communities that don’t have access to grid power by setting up standalone generators, storage and distribution infrastructure nearby. Azure plans to set up 100 microgrid solar systems to power as many as 1,000 villages, the company said.

India's new energy companies being 'crushed' by Chinese: Farooq Abdullah

March 26, 2012. Country's new energy companies were being "crushed" due to the dramatic slashing of prices of solar equipment by Chinese industry and the government will have to adopt regulatory measures to safeguard Indian interests, Union Minister Farooq Abdullah said. The Minister admitted that the slashing of prices has helped in bringing down the cost of one unit of solar power from ` 18 to Es 7 in recent times but the country will have to safeguard its interests to help the local producers. Indian new energy sector has been demanding some sort of protection against the Chinese imports and have been demanding anti-dumping duties to be imposed on Chinese firms.

India's onshore wind energy potential is 3 TW

March 26, 2012. A study is pegging Indian potential for wind energy at 3,000 GW (3 TW). It claims that the potential for wind energy utilisation with the prevalent technologies is far in excess of earlier estimates by Center for Wind Energy Technology. The Centre estimated Indian wind energy potential at 49,000 MW and increased to 100 GW subsequently.

India invites South Korean investments in energy sectors

March 26, 2012. Prime Minister Manmohan Singh asked South Korean businessmen to help India expand its burgeoning solar and nuclear power sectors by investing in these environment-friendly technologies. Among the CEOs present was Kim Joong-Kyum of the Korea Electric Power Corporation (KEPCO) which has interests in nuclear power that meets 45 per cent of Korea's electricity requirements. South Korean President Lee Myung-bak, during a bilateral meeting with Singh, had requested that his country be allocated a site in India to build nuclear reactors.

UP's first solar power plant starts functioning

March 22, 2012. Amid growing emphasis on adopting alternative and environmental-friendly means to meet energy demands, the first solar power unit of Uttar Pradesh has started functioning on the outskirts of the city. Situated at Naini, about 25 kms from Allahabad, the 5 MW solar power plant developed by Kolkata-based company, EMC Limited, as part of the Union Ministry of New and Renewable Energy's Jawharlal Nehru National Solar Mission became operational on March 4.


Italy's EGP wins 3 geothermal concessions in Chile

March 27, 2012. Enel Green Power, Italy's biggest renewable energy company, has won three geothermal exploration concessions in Chile as part of a plan to expand in the promising Chilean market, the company said. EGP now holds eight geothermal concessions in Chile and is about to begin building the first geothermal plant in South America, a 40 megawatt (MW) facility in the Chilean region of Antofagasta, it said. EGP, which generates power from wind, water, sunlight, biomass and earth's heat, already has an installed geothermal capacity of about 775 MW in Italy and North America and is developing further geothermal projects in Italy, the United States, Turkey and Central America.

EPA Said to be close to limiting U.S. greenhouse-gas emissions

March 27, 2012. The Environmental Protection Agency is close to issuing the first limits to cut U.S. greenhouse gases from power plants, with an announcement possible as soon as. The rules from President Barack Obama’s administration would set emissions for all power plants at the level established for a natural-gas plant, or about half what is released from a coal-burning facility. Any new coal plants would need expensive carbon-capture equipment. The proposed nationwide standards would be the first by the EPA for carbon-dioxide from power plants, the largest source of those emissions in the U.S. Environmental groups such as the Sierra Club are pressing the Obama administration to issue tight standards to head off an increase in global warming that they warn could be catastrophic. While the initial impact would be minimal because utilities are not building coal plants as natural gas prices fall to 10- year lows, adopting the EPA proposal would fuel industry complaints in coal-dependent states such as Ohio and Pennsylvania. The rule would only apply to new plants.

Enel’s renewables unit taps emerging markets as recession bites

March 26, 2012. Enel Green Power SpA, the renewable energy unit of Italy’s biggest utility, is targeting Morocco, South Africa and Turkey as the recession hurts power demand in its home market. Enel Green has earmarked global spending of 6.1 billion euros ($8 billion) through 2016 to add 4.5 gigawatts of installed capacity. As demand wanes in Italy and Spain, its biggest markets, the Rome-based company is looking to emerging markets to help achieve that goal. Enel Green plans to add 100 megawatts of wind energy in Morocco by 2016 and 140 megawatts of solar power in South Africa. It may seek joint-venture partners or even acquisitions. The company is waiting to hear back on its bid to take part in a solar tender in South Africa and is also looking “very carefully” at a Moroccan plan to harness 2,000 megawatts of power from the sun’s rays.

U.K. Supreme Court refuses govt appeal on solar cuts

March 23, 2012. A U.K. government appeal to bring forward solar-power subsidy cuts was refused by the Supreme Court, which upheld two previous rulings that early tariff changes would be unlawful. The court withheld permission for Energy Secretary of State Edward Davey to appeal a Jan. 25 Court of Appeal ruling, it said. That ruling prevented cuts in so-called feed-in tariffs, or premium rates paid for solar power, before a consultation on the matter was completed.

U.K. subsidy curbs will end ‘free solar,’ cut jobs, HomeSun says

March 23, 2012. The U.K.’s proposed reduction to solar-power subsidies will bring an end to free installations and increase job losses, according to developer HomeSun Ltd. The government outlined plans to lower solar feed-in tariffs, a premium rate paid for renewable energy, from April after photovoltaic-panel prices slumped. The proposals include a new rate, at 80 percent of the full amount, for projects where the company or owner has more than 25 solar installations.

E.ON urges Europe to stretch CO2 plans out to 2030

March 23, 2012. E.ON, Germany's biggest utility, joined other heavy polluters in urging the European Commission to stretch its carbon-cutting policy out to 2030, to harmonise renewable energy targets and to back the bloc's energy industry in global competition. The view of E.ON, one of the EU's big carbon polluters, chimes with calls by other blue chips, such as Shell, for clearer indications from Brussels as to on policy after 2020.

EU sees window of opportunity for aviation CO2 curbs deal

March 23, 2012. The European Union sees a “window of opportunity” for reaching a global deal on aviation carbon- emissions curbs by the start of next year. The inclusion of flights to and from EU airports in the European emissions trading system as of this year triggered opposition from countries including the U.S., China and Russia, which said Europe should let the United Nations’ International Civil Aviation Organization, or ICAO, decide on greenhouse-gas limits for the industry.

Green energy must dodge ’valley of death’

March 22, 2012. Renewable energy startups may struggle to line up financing to move their technology from the laboratory to the market because investors are seeking better short-term returns, said Morgan Stanley. The time and effort required to commercialize a promising concept may exceed some investors’ expectations. The majority of the capital to commercialize renewable energy technologies will come from governments and venture capital companies, which don’t have shareholders who are expecting quick returns on investments.

U.S. intelligence says water shortages threaten stability

March 22, 2012. Competition for increasingly scarce water in the next decade will fuel instability in regions such as South Asia and the Middle East that are important to U.S. national security, according to a U.S. intelligence report. An all-out water war is unlikely in the next 10 years, as nations will be more likely to use water as a bargaining chip with each other, according to the report. The report, drafted principally by the Defense Intelligence Agency, reflects a growing emphasis in the U.S. intelligence community on how environmental issues such as water shortages, natural disasters and climate change may affect U.S. security interests.

Trina considering U.S. factory to increase solar market share

March 22, 2012. Trina Solar Ltd., China’s third- biggest maker of solar panels, may build a U.S. factory to increase its market share as President Barack Obama’s administration imposes tariffs on solar equipment imported from China. Trina is evaluating strategies to increase U.S. sales and minimize the impact of the tariffs. A U.S. production facility would let Changzhou-based Trina avoid duties imposed on solar panels produced in China. The U.S. Commerce Department announced tariffs on all Chinese producers March 20 and singled out Trina for the highest rate, 4.73 percent.

Wind industry should mull tax credit phase-out, U.S. Finance Committee

March 21, 2012. The wind energy industry should think “very seriously” about backing a proposal to phase out a tax credit for building more energy-generating turbines, U.S. Senate Finance Committee said. The Montana Democrat said that phasing out the tax credit might be the most realistic way to keep it from expiring altogether at the end of the year. Companies that invest in wind energy include General Electric Co., based in Fairfield, Connecticut, and Denmark’s Vestas Wind Systems A/S. The production tax credit provides an incentive for installation of wind turbines, based on the number of kilowatt- hours generated. For wind, the credit will cost the government $1.3 billion in fiscal 2012. Similar credits are available for energy produced from other renewable sources. Given the tight budget outlook, the idea of phasing out the wind credit rather than extending it has drawn support from Republican senators.

U.K.’s ‘fraught’ CO2 tax on power cos doubles for 2014

March 21, 2012. The U.K. plans to almost double its carbon surcharge, a measure aimed at spurring investment in nuclear and renewables generation, in its second year. The so-called carbon price support was set at 9.55 pounds ($15.13) a metric ton for 2014. That compares with 4.94 pounds from April 2013, when the policy takes effect. U.K. power producers burning fossil fuels like gas and coal will have to pay the government surcharge, which is calculated two years in advance, in addition to buying European Union permits to cover emissions.

U.S. imposes low duties on Chinese solar panels

March 21, 2012. The United States dealt a blow to U.S. manufacturers of solar panels and boosted shares in their Chinese rivals when it imposed preliminary punitive duties of less than 5 percent on imports from China. The Coalition for American Solar Manufacturing, a U.S. industry group that has complained that massive Chinese subsidies were driving them out of business, put the best face on the lower-than-expected initial duties. It said it believed the U.S. Commerce Department would uncover more subsidies and unfair pricing practices as it continues its probe in the coming months, which would result in higher final duties. The United States imported $2.8 billion worth of solar cells and panels from China in 2011, up sharply from about $1.2 billion in 2010, according to industry estimates. The Commerce Department will announce preliminary anti-dumping duties in May to address a separate set of charges that Chinese producers are selling solar panels in the U.S. market at unfairly low prices. Chinese producers and U.S. companies opposed to the duties said the preliminary decision belied charges the Chinese government was flooding the Chinese solar sector with subsidies. The Commerce Department determined Chinese solar cell and panel manufacturers received government subsidies worth 2.90 percent to 4.73 percent of the value of their product, industry officials on both sides of the case said. Importers will have to post bonds or cash deposits based on the preliminary countervailing duty rates while the department continues its investigation. SolarWorld Industries America, the U.S. arm of leading German solar manufacturer SolarWorld AG, has led the U.S. industry coalition seeking import relief. The group says U.S. production of solar cells and panels is threatened by Chinese competitors that receive generous government subsidies and "dump" their products in the United States at unfairly low prices. Analysts had expected preliminary countervailing duties in the range of 20 percent to 30 percent. Instead, the Commerce Department set a preliminary duty of 2.90 percent on SunTech Power Holdings, the world's biggest producer of photovoltaic solar panels, and a preliminary duty of 4.73 percent on Trina Solar. All other Chinese solar panel producers and exporters received a duty rate of 3.59 percent.

U.S. Navy wants to increase use of biofuels by armed forces

March 21, 2012. U.S. Navy Secretary Ray Mabus said he’s working to boost use of biofuels and other forms of renewable energy by the armed forces because falling behind on the technology raises security risks for the nation. The Navy spends $45 billion a year on fuel and is considering ways to use renewables as an alternative to oil. Each $1 increase in the cost of a barrel adds $31 million to the Navy’s energy bill, he said. The Navy will use a 50 percent blend of biofuels at war games near Hawaii in July, Mabus said. The U.S. imports about half its oil from overseas, according to the Energy Information Agency.

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