Winning the War against Fossil Fuel Subsidies
Lydia Powell, Observer Research Foundation
n September 2009, leaders of the group of twenty largest developed and developing countries (G 20) committed to a war on fossil fuel subsidies towards achieving the grand goals of energy security and climate protection. Since then, research and advocacy activities to understand and combat fossil fuel subsidies have accelerated in OECD countries. The International Institute for Sustainable Development (IISD), a Canadian public policy think tank, the World Bank and the International Energy Agency are now among the front line forces in the war against fossil fuel subsidies. The World Energy Outlook 2010, an annual publication of the International Energy Agency carried a special section on fossil fuel subsidies which argued that a reduction in non-OECD fossil fuel consumption subsidies would reduce primary energy demand by 5 percent and cut carbon emissions by 2 Giga tonnes or 5.7 percent. Its subsequent publications continued to discuss fossil fuel subsidies as a key barrier to adoption of climate friendly policies in developing countries. The IISD has a dedicated programme on energy subsidies called ‘Global Subsidies Initiative’ under which many research programmes are being carried out.
For India which is treated as one of the key subsidy offenders, none of the information generated by the IEA and IISD programmes is new. Indian policy makers know the granular details of the problem of fossil fuel subsidies in India. They know that the subsidy schemes are well intended but poorly designed and badly implemented. They also know that they impose extreme stress on public finances and that the schemes rarely meet any of the goals of the subsidy policy. They know that leakages in the system, both financial and social, are counterproductive in that they serve interests of unintended constituencies and yet they also know that there is little that they can do to change the system.
In one of the papers written for IISD, Prof David Victor who understands the Indian energy sector very well has listed some of the difficulties in altering the fossil fuel subsidy regime in India. First, he shows that ‘time inconsistency’, whereby the near term benefits of subsidy schemes are bestowed on the current regime while costs are passed on to future regimes does not offer any incentive for changing the system. Second he argues that it is the well organized minority, the articulate and politically active Indian middle class (also the biggest consuming sector which appropriates most of the energy subsidies on petroleum products and electricity intended for the majority which is the energy poor in India) that prevents reform and re-targeting of energy subsidies to the intended beneficiaries. Third, he rightly points out that India is not only a major ‘subsidiser’ but also a heavy ‘tax taker’ with net taxes earned on fossil fuel consumption adding to more than double the cost of subsidies. The main conclusion of his paper is that the failure to reform subsidies, not just in India but in many other countries including rich countries such as the United States which offers substantial overt subsidies to fossil fuel producers, lies in the political economy of subsidies. In other words subsidies exist because they are rooted in the political logic that is not easy to alter.
In India the political logic that resists change is known. Part of it consists of a small but well organized constituency that profit from diversion of heavily subsidized products such as Kerosene into less subsidized products such as Diesel and Gasoline. The rent collected in the form unaccounted (‘black’) money from such diversions is estimated to be over $ 7 billion at crude prices of around $ 70/bbl. This is sufficient incentive to block every effort to change the system. Though the Government consistently assigns blame on coalition partners, interest groups or the poor masses in India for its inability to reform the system, it is very likely that the Government as the supplier of the subsidy scheme also finds political advantage in sustaining the system.
If the Government is serious about subsidy reforms, the S & P downgrade of India’s long term credit rating from stable to negative offers a fresh opportunity. The trick is to use the downgrade to reframe the issue of energy pricing in the context of a larger set of global and international issues in which India’s prestige as a ‘Rising Power’ is at stake. This will effectively shift the balance of power in favour of the Government administration in its struggle with domestic groups and lobbies over energy pricing policy. In the United States, the Carter administration which came to power opposing decontrol of domestic oil prices ultimately ended up de-controlling prices in 1979. To take on the opposition, the Carter administration’s foreign economic policy officials linked oil price decontrol to a larger set of international economic problems and to a diplomatic agreement that addressed these problems. The context was the 1978 Bonn summit in which leaders from major industrialised countries attempted to forge a trans-national bargain linking the growth of Germany and Japan with the decontrol of domestic oil prices in America. They argued that unrestrained demand for oil in America driven by domestic price controls was driving up global oil prices thus stifling growth of other countries. Though there is some disagreement over the nature of pledge made by America, Carter admitted in his biography that US inability to implement energy price reforms was ‘becoming an international embarrassment’. For India which never tires of calling it self a ‘Rising Economic Power, it is an embarrassment to be downgraded by a credit rating agency. The Government should use this opportunity positively to redeem itself and the nation.
Welcome Thrust for Renewable R&D
Sonali Mittra, Observer Research Foundation
entioned as one of the major objectives of Ministry of New and Renewable Energy, Research and Development finally gets a fair share of attention in the recently released Result Framework Document for renewable energy in India. The document signifies genuine efforts towards successful development of renewable energy in India, through a set of criteria, indicators and targets set for the financial year 2012-13.
According to the weights given to varied objectives, promotion of renewable energy research, design and development was evaluated higher than the average, next only deployment of JNNSM projects, wind energy projects and small hydro grid connected projects. Thereafter, the criteria for further classification of success indicators show a stricter measure for ensuring full capacity utilization of the R&D resources. 14-16 projects need to be completed, out of the benchmark figure of 20 projects to qualify under successful implementation. Whether this principle standard measure would be able to provide the steer to the R&D industry in India for renewable energy projects is hard to predict.
In the statement released in the International conference on ‘Renewable Energy and Climate Change – exploring opportunities for Sustainable Development’ in April, 2012, Minister Dr. Farooq Abdullah pointed out the importance of research works in bringing down the cost and improving the efficiency of renewable energy sources. He emphasized on the need for more and continuous research in the sector for the development of renewable energy capacity in the country. On a global comparative note, the deployment of renewable energy is distributed very unevenly round the world. The distribution of R&D in renewables is similarly uneven and is dominated by a small number of industrialised countries (Japan, USA, Germany), though developing countries such as China, India, and Brazil are playing an increasingly important role. It has been argued that the current pattern of activities in terms of industries, markets and R&D could become a main obstacle to the widespread take-up of renewable energy technologies unless the R&D reciprocates to the demands of the domestic market in the country.
To underpin the long-term contribution of renewable energy to a sustainable energy system, R&D activities need to be accelerated. There is a particular need to ensure that efforts are made across a range of regions to support the wider deployment of modern renewables technologies. Joint (collaborative) research addressing well-chosen issues can play an important role in achieving the critical mass required to meet the sector’s ambitions. Existing R&D institutions should be encouraged to undertake activities in the field of renewable energy.
China’s Foray into World Nuclear Power Market
L.V.Krishnan*
hina now seems very confident of exporting its latest design nuclear reactor known as CAP1400 capable of generating 1400 MWe. It has come a long way since the only previous export, which is of its first indigenous plant of 300 MWe capacity to Pakistan in 1985. But this latest version belonging to Generation III is based on technology acquired from Westinghouse. Interestingly, Westinghouse is also involved in its development by China.
Turkey is the most recent addition to the countries China hopes to export this reactor. This is evident from the visit of the Turkish Prime Minister Erdogan to Beijing a few days ago on April 9, the first such visit from Turkey in 27 years. The main object of the visit seems to be to seek China’s assistance in setting up a second nuclear power station in Turkey which will be on the Black Sea coast in a place called Sinop. A standard agreement on nuclear cooperation was signed with Wen Jia Bao, but there is more to it. China is believed not to be seeking any financial guarantees and seems willing to offer its latest design. This works out to be cheaper than what the competitors have to offer and would help China establish a wider global presence. Turkey’s plans include a third nuclear power station and China could land that as well much to the delight of the Chinese nuclear industry circles.
Chinese manufacturers have already begun supplying equipment for reactors in France. They have also begun indigenous manufacture of some key safety related cooling systems for the smaller Westinghouse reactors of 1000 MWe capacity known as AP1000 currently under construction in China. China is presenting their larger cousin CAP1400 as a wholly indigenous one. The technology transfer agreement with Westinghouse allows China to export it without any restrictions on account of intellectual property considerations. However, China plans to begin construction of the first unit of this version on its soil, only next year. But, several AP1000 reactors are now under construction in various provinces. The first of these is expected to be commissioned next year. India too had planned to order these reactors from Westinghouse for two of the proposed new sites.
Turkey’s interest in nuclear electricity generation dates back to the 1970s. Since then, tenders were floated on several occasions without success. It was only in 2010 that Turkey finalized a deal with Russia to build the first nuclear power station in Akkuyu on the Mediterranean coast. The station is to have four units each of 1200 MWe at a total cost of US$ 20 billion. Rosatom, the Russian firm will build, own and operate the station, an arrangement that is the first of its kind in the world to have progressed from conceptual to implementation stage for establishing a nuclear plant. Turkish power distributing firm will buy 70% of the output at an agreed rate for 15 years after which Rosatom can sell the generated power in open market but will have to pay 20% of the profit to Turkey. Rosatom is expected to train Turkish staff free for operation of the reactors. Wen Jia Bao had visited Turkey in 2010, but at the time negotiations were reaching the final stage between Turkey and Russia. The visit ended with an agreement to raise bilateral trade to US$ 50 billion by 2015 and double it over the next five years.
The Akkuyu project has just commenced and Turkey is planning the second power station on a similar ‘build, own, operate’ basis. Several offers were received among which Korea and Japan showed keen interest to garner the contract. Korea was confident after having won the UAE contract earlier on lowest cost basis beating the French and the Japanese. Failure in UAE, seemed to have made Japan determined to win the Turkish contract, but Japan decided to withdraw after the Fukushima accident. Korea too gave up because of differences on the power purchase guarantee. The condition that the reactor supplier should take back spent fuel may have been another reason. It is also believed that Turkey expects the supplier to undertake decommissioning of the reactor and arrange for waste disposal eventually.
It is in this context that the Turkish PM undertook the journey to China. Significantly, Turkey is celebrating a ‘Year of China” this year and this will be followed by China observing a “Year of Turkey” next year. The build, own, operate arrangement is attractive for countries without requisite financial resources for utilization of nuclear power, but it is not without problems. One of these relates to the need for extensive and continuing training for operating staff, which in the case of Russian and Chinese suppliers would be in a foreign language. It is not clear how good the arrangements for training of foreigners in China are. The Chinese themselves have launched a training program for their nuclear scientists and engineers with the help of France by establishing an Institute in Gwangdong to train 100 of them over the next five years. The program is piloted by Grenoble Institute of Technology in France and the training is said to be in French. France contributes half of the budget for the program. Perhaps, these trainees are intended to work mainly in the reactors in China that are based on French design. There are quite a few of them.
There is another and trickier issue in allowing a foreign entity to own and operate nuclear reactors. It relates to assigning clearly and to mutual agreement, the responsibilities of that entity for civil nuclear liability. China has also signed a nuclear cooperation agreement with Saudi Arabia. This happened during Wen’s visit to Riyadh in January this year. With Saudi Arabia’s plan to diversify from oil to nuclear power and willingness to spend US$ 100 billion over the next 20 years for the purpose, it opens up for China lush possibilities of more sales of nuclear reactors. The condition that spent fuel must be taken back may work in China’s favour by providing a source of plutonium for its planned fast reactor program.
The South African plan for a new nuclear power station would provide China yet another export opportunity to explore. Preliminary studies had shown a preference for the earlier Chinese design of CPR1000 that is based on the French design that China had procured. China’s agreement with France does not allow it to sell these reactors to other countries. Besides, indications are that after the Fukushima accident, as in many countries, South Africa’s interest is in a Generation III design with enhanced safety features. China’s CAP1400 then becomes an automatic choice.
There is great expectation among Pakistani sources of further supply of reactors by China. There are now two small Chinese reactors in operation in Chashma and two more similar ones are reportedly under construction. There are no definite indications from China of any additions to these as of now although Pakistan continues to seek them. One should not be surprised if the idea on the part of China is to build CAP1400, the advanced version free from intellectual property issues.
China has limited experience in the operation of nuclear reactors at home and even less of it in exporting reactors of its design. Nevertheless, there are now hopes of selling reactors to many countries and China seems to be fairly certain of a large share of the future market in nuclear power.
India is the only country to have refrained so far from attempts to export its reactors despite having fully indigenous expertise in all aspects of the nuclear fuel cycle from uranium mining to disposal of high level waste. The heavy water reactors it builds do not need enriched uranium and make the best use of natural uranium. They have a cost advantage as well. They render the management of spent fuel easier because of much lower radioactivity content. They are also simpler to decommission. But, India is not getting any marks for its restraint. That said, it must also be noted that India cannot offer assurance of uranium supply. Neither is it likely to take back spent fuel.
Concluded
Views are those of the author
*The author is former Director- Safety Research Group, Indira Gandhi Centre for Atomic Research, Govt of India, Kalpakkam, Tamil Nadu, India. Email:[email protected]
Courtesy: Chennai Centre for China Studies
Status of Rural Electrification
(under Rajiv Gandhi Grameen Vidyutikaran Yojana)
Akhilesh Sati, Observer Research Foundation
as on 31/03/2012
|
State/UT Name
|
Numbers of Electricity Connections to Rural Households (including BPL)
|
|
Coverage
|
Achievement
|
|
ANDHRA PRADESH
|
3954128
|
3272724
|
|
ARUNACHAL PRADESH
|
76407
|
26771
|
|
ASSAM
|
1414828
|
807290
|
|
BIHAR
|
6022036
|
2149834
|
|
CHHATTISGARH
|
1121626
|
915407
|
|
GUJARAT
|
1595853
|
802818
|
|
HARYANA
|
569686
|
215942
|
|
HIMACHAL PRADESH
|
36479
|
19349
|
|
JAMMU & KASHMIR
|
295221
|
57232
|
|
JHARKHAND
|
2926260
|
1272755
|
|
KARNATAKA
|
1932797
|
1002259
|
|
KERALA
|
92736
|
17238
|
|
MADHYA PRADESH
|
2653536
|
882287
|
|
MAHARASHTRA
|
2633742
|
1248180
|
|
MANIPUR
|
192148
|
28814
|
|
MEGHALAYA
|
188648
|
62768
|
|
MIZORAM
|
44334
|
14743
|
|
NAGALAND
|
142992
|
38200
|
|
ORISSA
|
4635981
|
2748137
|
|
PUNJAB
|
405023
|
53925
|
|
RAJASTHAN
|
2229442
|
1701528
|
|
SIKKIM
|
28166
|
16372
|
|
TAMIL NADU
|
1692235
|
767469
|
|
TRIPURA
|
228759
|
80986
|
|
UTTAR PRADESH
|
1694075
|
1044494
|
|
UTTARAKHAND
|
357309
|
230558
|
|
WEST BENGAL
|
3974005
|
1943922
|
|
ALL STATES
|
41,138,452
|
21,422,002
|
Source: RGGVY, Ministry of Power
NEWS BRIEF
OIL & GAS
RIL decides to surrender 10 exploration blocks including one with Hardy Oil
April 24, 2012. London-based Hardy Oil & Gas Plc has agreed to relinquish a deepwater block in prolific Krishna-Godavari basin after partner Reliance Industries found that the block was not viable. Reliance announced surrendering 10 blocks which would shrunk its oil and gas portfolio to 17 exploration blocks excluding the producing D6 and Panna-Mukta & Tapti fields. KG-DWN-2001/1 or D9 is one of them. Reliance had made a gas discovery in the D9 block but after drilling three exploration wells and analyzing geoscientific data found that block's hydrocarbon potential was low. D9 is located in the same basin, which hosts RIL's D6, India's biggest gas field.
Out of the 10 blocks Reliance has relinquished, BP is partner in three of them. Reliance had sold 30% stakes in 21 oil and gas blocks to British energy major including D6 and D9 for $7.2 billion. Hardy said it would focus its attention on another block, D3, in the Krishna Godavari, where RIL and BP are its partners. The block has three discoveries; Dhirubhai 39, 41 and 44 and has estimated gas reserves of 9.5 trillion cubic feet.
Despite China's objection, ONGC to go ahead with oil exploration in South China Sea
April 24, 2012. Oil giant ONGC along with a Vietnamese company will launch joint exploration for oil in the South China Sea despite objections from China. ONGC-Videsh is an arm of the oil PSU to prospect for oil and gas acreages abroad. China has been objecting to any activity in the South China Sea region including Indian oil exploration as it has territorial disputes with ASEAN countries like Vietnam and the Philippines.
India had inked an agreement with Vietnam to expand and promote oil exploration in South China Sea. ONGC would set up a ` 500 crore gas based fertilizer unit at Khobal in North Tripura district for which six investors have expressed interest.
ONGC to get six months more to drill Raniganj-North block
April 23, 2012. The oil ministry will grant ONGC another six months to drill the required number of wells and draw plans for producing coal bed methane (CBM) from the Raniganj-north block in West Bengal, which was given to the state-run firm nine years ago. This will be the third extension for the project, in which ONGC holds 74% stake and its partner Coal India holds the rest. ONGC initially held nine CBM blocks, but relinquished five of them. After successful drilling of pilot wells in the block, ONGC will submit a development plan to the government for producing CBM from the blocks. ONGC is yet to start commercial production from the blocks whereas private firm Great Eastern is already producing gas from Raniganj-south and Reliance Industries and Essar are set to start commercial production after the oil ministry approves CBM prices for their respective blocks.
Cairn India's Rajasthan block has record 7.3 billion-barrel oil reserve
April 22, 2012. Cairn India's Rajasthan block is now estimated to hold a record 7.3 billion barrels of oil reserves that can produce 15 million tonnes of oil, the highest by any field in India, the company said. The crown-jewel Rajasthan block is now estimated to hold discovered and yet to be discovered reserves of 7.3 billion barrels of oil equivalent, an increase of 12 per cent over previous estimate, the company said. Of these, 3.1 billion barrels of reserves are yet to be discovered. Considering risk prospectivity, 530 million barrels have potential to be recovered.
Downstream
NOCL in fuel sales pact with IOC
April 20, 2012. Nagarjuna Oil Corp (NOCL) has signed a fuel sales deal with the country's biggest refiner Indian Oil Corp, a move which could reduce import dependence for meeting refined products demand in the southern part of the South Asian nation. India has surplus refining capacity but its private refiners prefer to export or sell in local markets through state-run firms, which only get compensation from the government for sale of fuel at subsidised rates. Oil trader Trafigura has just bought a 24 per cent stake in Nagarjuna's 120,000 barrels per day refinery in the southern Tamil Nadu state, India's third privately-owned coastal plant after Reliance Industries and Essar Oil. The refinery will be commissioned later this year. The agreement would help cut the current deficit of about 3 million tonnes for supplies of gasoline, diesel and liquefied petroleum gas (LPG) in the state, NOCL said.
BPCL seeks diesel cargo on domestic supply shortage
April 19, 2012. Bharat Petroleum Corp (BPCL) is seeking a diesel cargo for early May as domestic supply remains tight on the back of refinery maintenance. The refinery is seeking 40,000 tonnes of 350 ppm sulphur diesel for delivery into Kochi over May 8-10. The tender closes on April 23. Refinery shutdowns at India's 60,000 barrels-per-day (bpd) Numaligarh refinery and Mangalore Refinery and Petrochemicals' 300,000 bpd plant has caused a double impact on BPCL's diesel supply and prompted the need for imports. MRPL has completely shut its plant due to water shortages and has declared force majeure at the refinery, with all shipments except some to Mauritius to be affected. The Numaligarh refinery, which is 61.65 percent owned by BPCL with the government of Assam and Oil India owning the rest, was due to shut after a planned maintenance was brought forward due to a fire at one of its secondary units over the weekend.
India requests Qatar for immediate supply of 3 MT of LNG
April 24, 2012. India has requested Qatar for immediate supply of 3 million tonne (MT) of LNG to India to be imported by Petronet LNG Ltd and GAIL. The requested amount will increase to 15 million tonnes in the next 3-4 years. India currently imports 7.5 MMTPA (million metric tonne per annum) of LNG from RasGas, Qatar, as per a 25 year contract signed by Petronet LNG limited (PLL) in July 1999. The supply of 5 MMTPA LNG from Qatar commenced in 2004, with the balance 2.5 MMTPA starting in January 2010. India now needs additional long-term tie up for 15 MMTPA of LNG from the country. Qatar has expressed keen interest in an ONGC offer to jointly participate in upstream projects in third countries. ONGC offered its upstream expertise. The Qatari side welcomed the same and also said they are now looking for appropriate projects.
Petrol pump dealers call off strike as Jaipal Reddy agrees to accept their demands
April 21, 2012. Over 40,000 petrol pump dealers have decided not to go on a nation-wide strike after oil minister Jaipal Reddy agreed to accept their demands, Federation of All India Petrol Traders' secretary Ajay Bansal said. Dealers were pressing their demand for raising their commission on petrol by about 27 paise per litre and diesel by 14 paise per litre as recommended by the official panel. The government has fixed dealers' commission at 1.49/litre on petrol and 0.91 paise/litre on diesel. The committee also recommends higher commissions and levy of user charges on services such as filling up air and providing drinking water and toilets. Earlier, they were demanding a 5% commission. Federation of All India Petrol Traders' secretary general Bansal said it was agreed that IOC, BPCL and HPCL would follow 'prescribed guidelines' before opening new pumps. Dealers were opposing state oil firms' plan to open 12,000 new pumps in the same market that would reduce their sale and squeeze margins. He said that dealers wanted the government "to implement its own committee's report in toto." Ministry officials said that imposing user charges could invite political oppositions during the Budget session of Parliament. The report proposes charges such as 2 per vehicle for filling air in two-wheelers, 5 in a car and 20 in a truck or a bus. It also allows dealers to charge 2 from customers for using toilets and some nominal charges for drinking water.
GDF Suez to take 26 pc capacity in LNG import facility at Andhra Pradesh coast
April 18, 2012. French power firm GDF Suez SA will take 26 per cent capacity in the 3.5 million tonne a year floating LNG import facility being set up off the Andhra Pradesh coast. Andhra Pradesh Gas Distribution Corp Ltd (APGDC), a 50:50 joint venture of GAIL Gas Ltd and Andhra Pradesh Gas Infrastructure Corp Pvt Ltd, would have access to 74 per cent of the nation's first floating liquefied natural gas (LNG) terminal. The 3.5 million tonne floating terminal in shallow waters of Bay of Bengal will be designed to berth LNG carrying vessels, regassify or transport chilled natural gas into gaseous state before moving it onshore for transmission to consumers. The terminal, which will take almost half the time construction of a LNG receipt facility on land takes, will be completed by first half of 2014.
TAPI pipeline project: India, Afghanistan fail to agree on transit fee
April 18, 2012. India and Afghanistan failed to agree on transit fee for gas passing through Afghan territory under the USD 7.6-billion Turkmenistan-Afghanistan-Pakistan- India (TAPI) pipeline project. Consequently, Islamabad and New Delhi too could not agree on the transit fee for the segment of the pipeline passing through Pakistan, which has linked its fee structure to any India-Afghanistan agreement. Technical teams of Afghanistan, India and Pakistan held talks for two days in Islamabad. The talks were held in a positive atmosphere and there was considerable progress on all major issues. The three countries were trying to settle their differences on the issue of transit fees. Afghanistan will charge Pakistan and India a transit fee for gas passing through the pipeline from Turkmenistan and Pakistan will charge India the same amount as the Afghan side. Afghanistan had demanded 54 cents per million British thermal unit (mmBtu) as the transit fee but this was rejected by India. Subsequently, the Afghan side made a demand of 50 cents per mmBtu and India responded with an offer of 47 cents.
OilMin to decide on RIL' CBM gas price formula
April 24, 2012. Stating that rules provide for the government to approve gas sale price formula within 60 days, the Oil Ministry said it will decide on Reliance Industries' proposal for pricing of CBM gas "in line with the provisions". The government has signed with companies like RIL and Essar Oil, for producing coal bed methane (CBM) or gas from coal seams, provides for approval of the sale price formula within 60 days RIL had submitted a proposal to the ministry the results of an "open bidding process" it undertook to discover the price of gas it plans to produce from its Madhya Pradesh CBM blocks. RIL has proposed to price CBM at 12.67 per cent of price of JCC, or Japan Customs-Cleared Crude, plus USD 0.26 per million British thermal unit (mmBtu) from end-2014. At USD 100 per barrel oil price, CBM will cost USD 12.93 per mmBtu. It had proposed a formula of 12.67 per cent of JCC, or Japan Customs-Cleared Crude, plus USD 0.26, plus 'V', where 'V' was the biddable number that users were asked to quote. 'V' could have been either positive or negative. RIL got a demand of 20.63 million cubic meters a day (about six times the gas available for sale) if the biddable parameter 'V' was kept at zero.
India's March fuel sales up 5.1 pc y/y
April 24, 2012. India's local oil product sales rose 5.1 percent in March from a year earlier on higher demand for gasoline and diesel. Oil product sales, a proxy for oil demand in Asia's third-largest oil consumer, totalled 13.5 million tonnes in March. Annual fuel sales rose 4.9 percent to 147.99 million tonnes in 2011/12, higher than the government's forecast of 146.9 million tonnes. Fuel consumption in March grew at a slower pace than the previous month, when demand for industrial fuels drove up sales by an annual 7.3 percent. Growth in diesel sales, which account for over a third of India's refined products consumption, rose an annual 10.3 percent in March to 6.05 million tonnes mainly on higher sales of diesel-driven cars and power sector demand. Gasoil prices in India are fixed by the government at a cheaper rate to protect the poor and control inflation. But gasoline is sold at market rate, widening the gap between the prices of the two fuels. Diesel consumption has also surged as its state-set prices are lower than that of fuel oil, prompting a switch over. Fuel oil is sold at market rates in India.
SC seeks Centre's response on PIL against Cairn-Vedanta deal
April 23, 2012. The Supreme Court (SC) sought the Centre's response to a plea challenging the validity of the $ 8.5 billion Cairn-Vedanta deal and seeking a CBI probe into the reasons for ONGC and government in "not asserting" their legal rights on the issue. A bench of justices issued notice to the Centre seeking its reply on the PIL which also sought an audit by the Comptroller and Auditor General (CAG) into the various aspects of the deal. It also sought the CAG audit of the government's approvals for acquisition of majority stake of Cairn India Vedanta Resources on the ground that the offer in this regard should have gone first to the state-owned PSU ONGC. On the PIL, the bench issued notices also to the ONGC, Cairn Energy and Vedanta Resources.
Govt allows RIL-BP to survey only 5 gas fields in KG-D6 block
April 23, 2012. The government has rejected Reliance Industries' proposal to invest in survey of all discoveries made in KG-D6 gas block, and has instead directed the company to restrict pre-development expenses only to fields that have been proved to be commercially viable. RIL and its British partner BP Plc had proposed undertaking concept validation and Front End Engineering Design (FEED) for all the 16 gas discoveries surrounding the currently producing Dhirubhai-1 and 3 fields in the 7,645 sq km KG-D6 block. But the block oversight committee, headed by upstream oil regulator the Directorate General of Hydrocarbons, rejected the proposal saying pre-development investments can only be done in fields which have either been proved to be commercially viable or whose field development plan has been accepted by the authorities.
RIL moves SC on KG-D6 arbitration with oil ministry
April 19, 2012. Reliance Industries has sought the Supreme Court's intervention to help start arbitration with the oil ministry over recovering its investment in the D6 block from gas sales, ruling out amicable resolution of its dispute with the government after months of discussions. It has complained to the court that the oil ministry was not approving its budgets and putting undue pressure to drill more wells, although geological data suggests this may be counterproductive. The move highlights the widening gulf between the oil ministry and the company, which has historically enjoyed a close relationship with the government. RIL has been frustrated by long delays in official approvals and faced difficulties in meeting top officials. The company also felt the national auditor had ignored many of its arguments in preparing an audit report that accused the oil ministry of being lenient in enforcing contracts with private firms. Under the arbitration process, the government also has to appoint an arbitrator, but the oil ministry initially sought more time to respond, and subsequently asked the company to withdraw its arbitration notice. RIL's contract with the government says if one party fails to appoint an arbitrator in 30 days, the other party can request the SC to appoint an arbitrator. As per RIL the government would not allow it to recover all its development costs in the D6 field. The oil ministry said since it had not taken such action, there was no need for arbitration. RIL says the oil ministry has refused to approve the revised work programme and budgets for 2010-11 and 2011-12. Gas output from D6 has dropped significantly from about 61.8 million standard cubic meters per day in March 2010 to 33.67 mmscmd.
Govt allows Cairn to increase crude oil output from Rajasthan block after ONGC endorsement
April 19, 2012. The government has approved Cairn India's proposal to ramp up its Rajasthan block's output by another 25,000 barrels per day after its partner in the block, state-run ONGC has endorsed raising production would not damage reservoir and infrastructure is adequate to handle about 16% jump is crude oil output. ONGC, which had locked horns with Cairn over royalty issue about three months ago, came out in full support of its partner for raising output from 150,000 barrels per day to 175,000 barrels per day. ONGC is a 30% partner of Cairn-operated Rajasthan oil fields, which is currently producing 125,000 barrels per day oil from the Mangala field and 25,000 barrels per day from Bhagyam. ONGC was earlier against raising output from the block because a 15-year old contract between the government and Cairn held it liable to pay 100% royalty on the produce. But the $9.6 billion Cairn-Vedanta deal gave an opportunity to the government to force Vedanta to accept paying its share of royalty, easing ONGC's liability and making the venture profitable for the state-run company. Oil ministry said ONGC had reviewed reports of third-party consultants and agreed with their findings that output from Mangala oilfields in the block could be raised to 150,000 barrels per day without damaging the reservoir and surface facilities could process 175,000 barrels of crude oil per day.
Cut excise or we hike petrol price by ` 10 per litre, says IOC
April 18, 2012. Taking a cue from the RBI governor D Subbarao, market leader Indian Oil Corporation indulged in grand standing by saying state-run retailers would raise petrol price by almost ` 10 per litre, if the government did not reduce excise duty or did not compensate their ` 49-crore daily loss on the fuel. The bold public stand by a state-run oil marketing company chief on fuel prices is unusual. No wonder many industry insiders say the oil ministry, could have engineered it with the aim of pressuring the finance ministry to cut excise duty. An excise duty cut would help avoid raising petrol price too steeply. Though petrol is officially deregulated, the oil companies do not move without a cue from the oil ministry. The ministry did not allow the retailers to raise fuel prices due to electoral and coalition compulsions. Besides losses on petrol, the state fuel retailers also lose another ` 573 crore a day on diesel, cooking gas and kerosene. Oil PSUs in the first 15 days of April lost ` 745 crore on petrol. The states also levy VAT or sales tax ranging from 15% to 33% (` 10.30 to ` 18.74 per litre), which too can be cut to avoid a price hike.
POWER
NTPC commissions 500 MW Mouda power plant in Maharashtra
April 21, 2012. State run-power utility NTPC has commissioned the first units of 500 megawatts at its Mouda power plant in Maharashtra, of which around 150 MW would be supplied to the host state. The power from the plant would ease the power deficit in Maharashtra. The state, excluding the island city of Mumbai, sees demand in its area rising to 15,500 MW in summers as against 15,000 MW in non-summer months. The first unit of Mouda Super Thermal Power Project, NTPC's first project in Maharashtra, attained full load of 500 MW. The plant at Mouda is being set up with a total capacity of 2,320 MW. This includes the first phase of 1,000 MW (two units of 500 MW each) and the second phase of 1,320 MW (660 MW each). Second unit of 500 MW is slated to be commissioned in the current financial year. Of the total generation at the plant, 30% would be supplied to Maharashtra, while the balance would be supplied to Gujarat, Madhya Pradesh, Chhattisgarh, Goa, Daman and Diu, Dadra and Nagra Haveli.
Handover of Katwa power project gets West Bengal cabinet approval
April 18, 2012. The handover of the proposed 1,600 MW thermal power project at Katwa in West Bengal's Burdwan district to the National Thermal Power Corporation (NTPC) received the Cabinet approval. Conceived a decade ago, the project was shelved in the post-Nandigram-Singur land acquisition controversy. With the approval of the state cabinet, the project is ready to go ahead following handover of the 550 acres acquired during the erstwhile Left Front regime and logistics developed by the WBPDCL to the NTPC. The remaining land will be purchased directly by the NTPC. WBPDCL spent about ` 175 crore on acquisition and development of the land spread over 11 mouzas in two blocks of Katwa-I and Ketugram. NTPC was enrusted by the erstwhile LF government to set up the project with half the generation to go to the state and to sell the remainder.
Transmission / Distribution / Trade
Maharashtra power regulator says concerned over distribution losses, mounting arrears
April 23, 2012. The Maharashtra Electricity Regulatory Commission (MERC) is concerned over the distribution losses in the state and the mounting arrears of consumers and has strongly advocated installation of meters for all supply. MERC has taken the initiative to identify measures for strengthening the transmission network in Mumbai and Maharashtra in view of the increasing inflow and the projected outflow of power in the coming years. A group of experts, which has been constituted by MERC for preparing a 5-year business plan with a 15-year perspective for Mumbai and Maharashtra, has done considerable work in this regard.
Policy / Performance
No auction of coal blocks for power sector
April 23, 2012. India will not auction new coal mining blocks to the power sector and will instead allocate them to companies that offer to sell electricity cheapest. The country is introducing a new system that will put an end to allocation of captive blocks to power plants at the government's discretion, as done in most cases in the past, and will help bring transparency at a time when the government is being buffeted by corruption scandals. Power companies will be vying for about 16 of 54 coal blocks that the government has earmarked for allocation through bidding expected to take place by the year-end.
Power plants grapple with coal shortage
April 23, 2012. Power plants in the country continue to grapple with coal shortage as 19 stations suffered acute scarcity, with only four days of fuel stock. As per the Central Electricity Authority data, 19 power plants spread across all the four regions of the country had less than 4 days of coal stock. However, some plants in the northern region faced grave coal stock position or coal reserves for less than four days, on account of inadequate fuel allocation.
India to be world's 3rd largest energy consumer by 2020: Shinde
April 21, 2012. Power Minister Sushilkumar Shinde has said that India is projected to become the world's third-largest energy consumer by 2020 after the US and China. Shinde said India has conducive policy environment as well as regulatory framework for securing a sustainable energy future. Noting that energy requirement is expected to increase in the coming years, Shinde said India is projected to become third-largest energy consumer in the world by 2020. Shinde said that a two-pronged strategy has been adopted to meet this challenge. It would look at augmenting domestic supply sources including renewable energy apart from focusing on demand-side management and energy efficiency measures. Domestic capacities for building power plants with super critical and ultra-super critical technologies are also being established to reduce dependency on coal for power generation. International players such as Mitsubishi, Toshiba, Hitachi, Alstom and Ansaldo have already started the process of partnering with Indian manufacturers to set up super critical manufacturing facilities in India, Shinde said. The fast-growing Indian economy is grappling with acute power shortage. Estimates show that to achieve an economic growth of 9 per cent, the country's energy supply would need to rise 6.5 per cent annually.
Andhra Pradesh Govt panel probes alleged irregularities in Hinduja Power Project
April 20, 2012. The Andhra Pradesh government has started an investigation into alleged irregularities in Hinduja National Power Corporation's coal-fired project in the state, a development which could further delay a venture that is already years behind schedule. The government has set up a panel to probe whether the project has come up on disputed land and if the power purchase agreement (PPA) is detrimental to the interests of the state. The panel was set up on the orders of the Public Accounts Committee of the state's legislature. Hinduja National Power, a Hinduja Group company that severed joint venture with UK's National Power, denies the charges. The state, which has been facing a severe power crisis, is also at odds with Reliance Power, which is setting up a 4,000-megawatt project in the state. Reliance wants the tariff increased, citing higher coal costs, but Andhra Pradesh, along with other southern states has slapped a ` 400-crore penalty on the company, saying it is delaying implementation.
Coal Ministry may issue notices to 58 companies
April 18, 2012. The Coal Ministry is likely to begin the process of issuing show-cause notices to 58 captive coal block holders, including PSUs, which have not started the development work of mines in stipulated time. The decision to issue show-cause notices to the firms sitting idle on captive coal blocks was taken by a panel looking into the development of reserves. Concerned over the increasing demand-supply gap, the Ministry had reviewed the progress of mines allocated to companies, including Tata Steel, Coal India, SAIL and NTPC for captive use.
Tehri Hydro Power Corp seeks advice from World Bank to assess Alstom bids
April 18, 2012. State power utility Tehri Hydro Power Development Corp has sought advice from the World Bank to assess bids from Alstom Projects for a 444 MW hydroelectric project in Uttar Pradesh funded by the global development bank. The power utility was prompted to seek World Bank advice after the latter banned two of the subsidiaries of French parent company Alstom SA on charges of alleged bribery. Alstom Projects had approached THDC for issuance of tender documents to pre-qualify for the Vishnugadh-Pipalkoti project in UP.
OIL & GAS
Shell agrees to buy Cove after raising bid to $1.8 bn
April 24, 2012. Royal Dutch Shell Plc, Europe’s largest oil company, agreed to buy Cove Energy Plc after raising its bid to 1.12 billion pounds ($1.8 billion), securing a stake in gas fields discovered off Mozambique. Shell increased its offer for Cove to 220 pence a share from 195 pence, matching a rival proposal from Thailand’s PTT Exploration & Production Pcl. The board of London-based Cove has agreed to the Shell bid. The African explorer put itself up for sale in January after reporting one of the world’s largest natural gas discoveries in a decade off the coast of Mozambique. It controls an 8.5 percent interest the Rovuma Area 1 natural-gas block that may hold 30 trillion cubic feet of the fuel. The gas will supply a liquefied natural gas plant that can ship fuel across the Indian Ocean to Asian markets.
Chesapeake falls out of favour: personal conflict involving CEO
April 24, 2012. Chesapeake Energy Corp. Chief Executive Officer Aubrey McClendon has been adding oil fields to his personal holdings faster than he can find cash to drill them. He’s steering the company down the same road. Chesapeake, producer of more U.S. natural gas than any company except Exxon Mobil Corp., outspent its cash flow in 19 of the past 21 years while amassing millions of acres of drilling leases from the Rocky Mountains to Appalachia. As the company moved to close this year’s projected funding gap with $12 billion in planned asset sales, investor criticisms of McClendon over a potential conflict of interest are stoking concern about the stability of the company.
BG Group begins production at Greater Bongkot South
April 23, 2012. BG Group announced the start of production from the Greater Bongkot South field in the Gulf of Thailand, approximately 125 miles (200 kilometers) east of the city of Songkhla in southern Thailand. The field, located some 44 miles (70 kilometers) to the south of the existing Bongkot North development, has new standalone facilities with processing capacity of 350 million cubic feet of gas and 15,000 barrels of condensate per day. Production is expected to reach plateau in the second quarter of 2012. Gas from the project is exported via a new-build spur line while condensate is exported to a floating, storage and offloading vessel at Bongkot North. Production is sold to Thailand's national energy company PTT Public Company. BG Group has a 22.22-percent interest in the Bongkot field (PTT, operator, 44.45 percent and Total 33.33 percent).
Guendalina production in line with Mediterranean O&G expectations
April 23, 2012. Production from the Guendalina gas field for the first quarter of 2012 achieved an average gross production (100 percent basis) of 580,000 scm/day, in line with the Mediterranean Oil & Gas' expectations. This represents net production by the Company of 116,000 scm/day and yielded revenue of $5 million (EUR 4 million) for the first Quarter of 2012.
Iran oil reserves increase by 2.8 billion barrels
April 21, 2012. The Iranian Oil Ministry says the country's oil reserves have increased by 2.87 billion barrels. The National Iranian Oil Company said that more than 847 billion cubic meters of new gas reserves have been discovered during the same period. The five new oil and gas fields, including three gas and four oil layers, were discovered in Iran. The discovery of more hydrocarbon reserves aims to increase the country's oil and gas production capacities in the long run, adding that his department has planned the discovery of 1.1 billion barrels of crude oil and gas condensate. The actual amount of oil and condensate discovered last year exceeds 2.87 billion barrels which is 2.6 times higher than the projected goal. The Iranian Oil Ministry's natural gas discovery target was 280 billion cubic meters last year, the actual discovery figure exceeded 847 billion cubic meters.
Israel-Cyprus deal on gas as Lebanon won’t negotiate
April 19, 2012. Israel’s biggest gas discovery, potentially turning the fuel importer into an exporter, is prompting a race by nations from Lebanon to Turkey to tap similar deposits in disputed waters of the East Mediterranean. Noble Energy Inc. is developing the Leviathan and Tamar fields off Israel that hold about 30 trillion cubic feet of gas, more than triple the U.K.’s remaining reserves and worth about $670 billion prices. With the U.S. estimating the region holds about 122 trillion cubic feet of gas, enough to supply the world for one year, Lebanon and Turkey stepped up prospecting. Territorial disputes will have to be resolved first or the potential will remain untapped.
Authorities probe nearly 'catastrophic' refinery fire in Utah
April 24, 2012. A slew of federal, state and local officials are investigating a fire at a recycled oil refinery in Utah County that shut down the plant and had crews scrambling to place booms in Utah Lake over fears of where the oil may go. The fire in an oil tank at Rock Canyon Oil, 1669 S. 580 East in American Fork, re-ignited roughly a half-dozen times. The company believes the fire may have been caused by a crack in a tube that is used to heat the oil tank, although the official cause has not been determined.
China could finance Refineria del Pacifico: Ecuador's Correa
April 23, 2012. Ecuadorean President Rafael Correa said China could fully finance the $13 billion Refineria del Pacifico, a joint project between Ecuador and Venezuela's state oil companies. According to Correa, China has a surplus in liquidity but a shortage in oil for its consumption, while Ecuador has surplus in oil but needs liquidity, so the operation is attractive for both parties. Refineria del Pacifico, a refining and petrochemical complex, will be 51% owned by Ecuador's state-run Petroecuador and 49% owned by Venezuela's state-run Petroleos de Venezuela. Chinese companies China National Petroleum Corp and China Petroleum & Chemical Corporation are interested in partnering in the project. Refineria del Pacifico will include a refinery to process 300,000 barrels of oil per day, a basic petrochemical plant to produce benzene, xylene and polypropylene as well as on- and offshore marine facilities. Correa said Refineria del Pacifico, located in the coastal province of Manabi, is scheduled to go on line in 2016.
Sunoco-Carlyle JV would keep Philly refinery running
April 23, 2012. Sunoco, Inc. announced that it has entered into exclusive discussions with The Carlyle Group, a global alternative asset manager, regarding a potential joint venture involving Sunoco's 330,000 barrel-per-day refinery in Philadelphia. If a transaction were to be consummated, Sunoco would contribute its Philadelphia refinery assets in exchange for a non-operating minority interest in the joint venture. In addition, Sunoco would have no on-going capital obligations with respect to the refinery. Carlyle would contribute cash to the joint venture, hold the majority interest and oversee day-to-day operations of the joint venture and the facility. No other financial terms of the potential transaction were disclosed and there can be no assurances that the two companies will come to agreement.
Gas pipeline, high voltage transmission pylon blown up in Balochistan
April 24, 2012. A gas pipeline and a high voltage transmission pylon were blown up in separate incidents in restive areas of Dera Bugti and Barkhan. An explosive device was planted along the eight inch diameter gas pipeline in Dera Bugti. The detonation caused a big blast, disrupting the gas supply from Well No. 29 to the gas purification plant. Law enforcement agencies rushed to the spot, shortly, after the explosion and cordoned off the area. A team started repair work soon after the incident.
Technip wins Chinese pipeline installation contract
April 24, 2012. French oilfield services business Technip announced that Offshore Oil Engineering Co. has awarded it a pipeline installation contract for the Liwan 3-1 shallow water project, located in the Pearl River Mouth Basin, China Sea, at approximately 190 miles (300 kilometers) south of Hong Kong, China. With a total length of 160 miles (260 kilometers), the pipeline will link the Liwan gas platform to China National Offshore Oil Corporation's Gaolan gas plant.
Petronas bags Singapore, Indonesia gas deals
April 23, 2012. Petroliam Nasional Bhd (Petronas) made a major coup, securing two gas supply deals in Singapore and Indonesia. In the latest deal, Petronas signed a gas sales agreement (GSA) with Keppel Energy Pte Ltd, a subsidiary of Singapore-listed Keppel Corp Ltd to supply 43 million standard cubic feet per day (mmscfd) of natural gas to the latter, a deal which is believed to be worth US$2.2 billion (RM6.74 billion). The gas will be used to support the energy needs of Keppel Energy investments, Keppel Corp said. Petronas will source the natural gas from its various supply networks. From its humble beginnings as a local shiprepair yard, the Keppel group has become one of the largest conglomerates in Singapore. Petronas Carigali Sdn Bhd, the exploration and production arm of Petronas, has signed a GSA to supply some 50mmscfd of natural gas to PT Jatim Utama (PJU) in Indonesia.
Mideast oil-tanker supply reaches six-month high, Marex says
April 23, 2012. The supply of the largest oil tankers competing to load cargoes of crude in the Persian Gulf rose to a six-month high on weaker demand to charter vessels, Marex Spectron Group said. There are 103 very large crude carriers available in the gulf. That’s the biggest local supply of the ships since Oct. 10, when 110 vessels were available. Each of the tankers can hold 2 million barrels of crude. Refineries in Asia typically carry out maintenance during the second quarter, so vessel demand usually slows in the period. Hire rates and daily returns for VLCCs on the benchmark Saudi Arabia-to-Japan route rose after slump.
Iraq says crude exports via Turkey are halted by fault
April 22, 2012. Iraq halted crude exports from northern oil fields because of a technical fault at a pipeline network in neighboring Turkey, the Oil Ministry said. The crude oil exports stopped, the ministry said. Transportation of Iraqi crude through the pipeline, which terminates at the Mediterranean port of Ceyhan, Turkey, has been halted at least 13 times since November due to sabotage, bad weather and technical reasons, according to the ministry. Iraq normally exports 450,000 to 500,000 barrels a day from northern oil fields through Turkey. It ships most of its crude from the south on tankers sailing from the Persian Gulf. Iraq pumped an average of 2.81 million barrels a day, the third-largest producer in the Organization of Petroleum Exporting Countries.
Repsol required to buy Eskenazi YPF stake
April 20, 2012. Spain’s Repsol YPF SA, whose YPF unit was nationalized by Argentina, agreed in 2008 to buy back the Eskenazi family’s shares in that oil company in the event that Repsol loses majority control. The accord also calls on Repsol, under certain conditions, to take over loans the family used to buy YPF shares. Madrid-based Repsol said the agreement is “not applicable” in the context of expropriation. An Eskenazi holding company said it isn’t analyzing the sale or liquidation of its shares in YPF. Repsol, based in Madrid, probably would try to fight a move by the Eskenazis to enforce the accord by using a so-called force majeure argument. The Eskenazi family’s 25 percent stake wasn’t nationalized.
Asia to cut West African crude imports to five-month low
April 19, 2012. Asian refiners will reduce daily imports of West African crude in May by 3.6 percent to the lowest in five months. A total of 59 cargoes are scheduled for export from Angola, Nigeria, Republic of Congo, Equatorial Guinea, Democratic Republic of Congo and Gabon, one less than in April, according to the survey. This equals 56.1 million barrels, or 1.81 million barrels a day, the lowest since December, compared with 1.88 million this month. Refiners in Asia can buy Middle Eastern crude or West African grades and their choice normally depends on the value of the lighter, low-sulfur, or sweet, blends from Angola and Nigeria versus heavier, high-sulfur, or sour, grades from Saudi Arabia and Iran. Lighter crude yields more lucrative products such as diesel and gasoline. India bought 17 cargoes for May, one more than this month, according to the survey. Indian Oil Corp., the nation’s largest refiner, cut its purchases to six shipments from nine in April. Reliance Industries Ltd. (RIL), which owns the world’s largest refining complex, doubled its imports to eight cargoes, the most in at least 10 months, the survey showed. Chinese refiners purchased 35 cargoes for loading in May, one more than April, the survey showed. China International United Petroleum & Chemical Corp., known as Unipec, bought 24 shipments compared with 23 for this month. CPC Corp., Taiwan’s state-owned oil company, reduced its purchases by half to three cargoes, while Indonesia’s state- owned PT Pertamina bought three cargoes, one more than this month, according to the survey.
Japan’s LNG imports rise to record for year; oil declines
April 19, 2012. Japan’s imports of liquefied natural gas rose to a record last fiscal year as utilities turned to fossil fuels after the Fukushima nuclear disaster led to the shutdown of almost all the nation’s atomic reactors. Japan purchased 83.18 million metric tons of LNG from overseas in the fiscal year ended March, up 18 percent from the previous 12 months, the finance ministry said in a preliminary report. That’s the highest level since the government started collecting the data in 1980. The cost of the fuel imports climbed to a record 5.4 trillion yen ($66 billion), compared with 3.5 trillion yen in fiscal 2010 and the previous high of 4.5 trillion in fiscal 2009, according to the report. The country’s crude-oil imports fell 2.4 percent to 209.85 million kiloliters in the fiscal year, the ministry said. The cost of the purchases gained 22 percent to 11.9 trillion yen.
US House votes again to approve Keystone XL pipeline
April 18, 2012. The U.S. House of Representatives voted in favor of speeding up the Keystone XL oil pipeline from Canada for the fourth time in two years, but the Nebraska Republican who has championed the project knows the vote may not be the last. The pipeline, put on hold by President Barack Obama, has become an outsized political symbol heading into the November elections as Republicans use it to attack Obama's economic and energy policies.
Iran talks won’t halt oil sanctions, Societe Generale says
April 24, 2012. Negotiations to halt Iran’s nuclear-enrichment program will probably fail, setting the stage for full implementation of U.S. and European Union sanctions against the nation’s oil exports, Societe Generale SA said. A release of strategic oil stockpiles will probably happen in June before the next wave of measures. About 60 million barrels may be sent out with only a “brief, temporary” lowering of prices, according to the report. The U.S. and EU plan new sanctions against Iran’s central bank to cut off oil revenues, and the EU has agreed to embargo purchases of Iranian crude from July. Iran denies that it is developing nuclear weapons and has threatened to block the Strait of Hormuz, a transit route for a fifth of the world’s oil, in retaliation for an embargo.
Russia finance minister sees higher oil prices boosting 2012 revenue
April 23, 2012. Russia will likely see a significant amount of additional revenue in 2012, largely due to higher oil prices, the country's finance minister said. Russia expects to receive an additional $800 billion Russian rubles ($27 billion) in additional oil-and-gas-related revenue, Finance Minister Anton Siluanov said. Russia's budget is calculated with an expectation of oil prices at $100 a barrel, but the finance ministry now forecasts oil will reach $115 a barrel this year, providing the additional revenue. This extra revenue will be utilized to reduce borrowing in the domestic market and to build up the country's Reserve Fund, one of Russia's two funds for stashing oil windfall revenue to cover possible budget shortages. Siluanov said Russia would direct RUB500 billion of the extra revenue to reduce the volume of domestic borrowing, which would reduce the total to be borrowed in domestic markets to RUB1.3 trillion from a previously expected RUB1.8 trillion. The remaining RUB300 billion of the extra revenue would replenish the Reserve Fund, he said. However, Russia still needs to work to consolidate its budget and reduce its dependency on high oil prices, the minister said. The government has to cut out ineffective spending and continue with structural changes. Efforts along these lines include balancing the country's pension system and improving spending patterns in the areas of health care and education. The government, however, doesn't plan to change the current tax regime, with the exception of lowering some tax burdens, like those in the non-oil-and-gas sector, primarily through real-estate exemptions, he said. The finance ministry projects a budget deficit of 1.5% of gross domestic product this year. However, Siluanov said given current conditions, Russia will likely have a "nondeficit" year and could potentially obtain a budget surplus in "favorable foreign economic" conditions.
QIA has $30 bn to invest in 2012
April 22, 2012. Qatar Investment Authority (QIA), the Gulf Arab country’s sovereign wealth fund, has $30 billion to invest this year. Qatar, holder of the world’s third-largest natural gas reserves, is seeking to diversify its economy by investing in companies, industrial projects and real estate abroad. The Qatar Investment Authority has “much more” than $100 billion of assets. Qatar Holding LLC, the fund’s foreign investment arm, has acquired a 3 percent stake in Total SA, Europe’s third-largest oil company. It’s also a shareholder in Volkswagen AG, Barclays Plc and London’s Harrods Ltd.
Argentina seeks Petrobras investment amid license impasse
April 20, 2012. Argentina asked Petroleo Brasileiro SA to almost double its share of the country’s oil market and increase business with nationalized YPF SA as the Brazilian company negotiates to revert the cancellation of a license at Neuquen province. Argentine Planning Minister Julio de Vido asked Petrobras to boost its market share to 15 percent from 8 percent. The Rio de Janeiro-based state-run producer will match $500 million of 2011 investments in Argentina this year and will seek to boost spending in the country as much as possible. Argentine President Cristina Fernandez de Kirchner seized control of YPF from Spain’s Repsol YPF SA this week after several provinces revoked the company’s oil licenses to pressure for increased investment and production. Petrobras had one of its licenses in Neuquen canceled.
Japan is asked to insure Iran oil shipments as EU sanctions bite
April 19, 2012. Japan’s government may insure tankers carrying Iranian oil, joining China and India in responding to European sanctions blocking private providers. The Japanese transport ministry held discussions with the Japan Shipowners’ Association about providing insurance. India is considering sovereign guarantees, and Chinese government officials also met to discuss ways to prevent sanctions from disrupting Iranian shipments. All except 5 percent of the world’s tankers won’t be able to carry Iranian oil without losing cover against risks including collisions and oil spills because their insurers are affected by a European Union embargo that takes effect July 1. The Persian Gulf country’s output may fall more than 20 percent as sanctions start. In China, Iran’s largest customer, the transport ministry and National Development Reform Commission held special meetings on the issue, and the government will make sure shipments will not drop. The 13 members of the International Group of P&I Clubs, based in London, cover 95 percent of the world’s tankers. Members follow EU law to access the reinsurance pool. The Japan Ship Owners’ Mutual Protection & Indemnity Association, the country’s only insurer of this type, will not pay claims involving Iranian cargoes because the EU sanctions affect its reinsurers in the International Group. The China Shipowners Mutual Assurance Association is in the same situation because it is reinsured by the International Group. Sanctions already cut Iran’s production by 250,000 barrels a day to 3.3 million a day, and output may fall to 2.6 million in the middle of the year. Exports slid to 1.8 million barrels a day from 2.3 million.
Obama issues pollution rules for gas wells, offers phase-in
April 19, 2012. The U.S. Environmental Protection Agency issued the first rules to combat air pollution from natural-gas drilling, while giving companies until 2015 to meet the most stringent requirements opposed by the energy industry. The regulations will primarily affect the estimated 13,000 wells a year drilled using hydraulic fracturing, or fracking, to free underground gas in shale formations. The EPA rejected a bid by the American Petroleum Institute to exempt a number of wells from the requirements altogether. An EPA draft of the rule would have put the requirements into effect in about 60 days. The final regulation delays until Jan. 1, 2015, a requirement that drillers capture gases when first tapping a well. Operators must burn off that gas during the phase-in period, the EPA said.
BP, plaintiff lawyers submit proposed spill accord terms
April 19, 2012. BP Plc and lawyers suing the company over the 2010 Gulf of Mexico oil spill submitted their proposed settlement agreement to the judge overseeing the litigation. Lawyers for both sides filed the accord with U.S. District Judge Carl Barbier in New Orleans for preliminary approval. They asked Barbier to hold a fairness hearing before final approval of the accord and to postpone any trial on liability until after the hearing. Barbier set a hearing April 25 to consider the request for preliminary approval. BP in March agreed to pay an estimated $7.8 billion to resolve private plaintiffs’ claims for economic loss, property damage and injuries. The settlement, reached March 2, days before a scheduled trial on liability for the 2010 spill, doesn’t cover federal government claims and those of the Gulf Coast states Louisiana and Mississippi. Also excluded are claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deepwater drilling prompted by the spill.
Obama to urge Congress for more regulation of oil markets
April 18, 2012. President Barack Obama urged Congress to bolster federal supervision of oil markets, including bigger penalties for market manipulation and greater power for regulators to increase the amount of money traders must put up to back their energy bets. Obama asked Congress to fund a six-fold increase for surveillance and enforcement staff at the Commodity Futures Trading Commission to put “more cops on the beat” overseeing oil markets. He also is seeking to give the CFTC new authority to raise margin requirements for traders’ oil positions and stiffen civil and criminal penalties for businesses that are guilty of market manipulation to $10 million from $1 million. The plan would cost $52 million. The price of gasoline has emerged as an issue in the 2012 presidential campaign and raised concern that it may slow economic growth by pinching consumer spending. Obama has been seeking to set out his differences with Republicans. Mitt Romney, the likely Republican nominee, has accused the Obama administration of thwarting domestic oil production through regulations.
POWER
Generation
Aramco, Tihama sign power expansion deal
April 24, 2012. Capacity at three power plants will be expanded under an agreement signed between Saudi Aramco and cogeneration supplier Tihama Power Generation Co, a joint venture between International Power and Saudi Oger. Aramco generates power both through third-party companies that operate and produce electricity and also through its own power assets. It plans to double its power generation capacity to 4 gigawatts by 2015 as it brings new projects on stream.
Diablo Canyon Power Plant operating at 20 pc power
April 24, 2012. Diablo Canyon Power Plant is operating at 20 percent power, after an influx of a small, jellyfish-like organism in the intake structure. The intake structure at the power plant saw an influx of salps. The organisms often chain together, and are now blocking the traveling screens that act as filters. Crews will begin cleaning the screens. When the salps first started causing a problem, the power on the Unit 2 reactor was immediately reduced. Unit 1 was safely shut down for refueling.
Kenya Electricity heads for biggest gain in 6 months on capacity
April 24, 2012. Kenya Electricity Generating Co., the East African nation’s largest power producer, headed for the biggest gain in six months after it said capacity will increase next year. An on-going expansion of Kindaruma dam, one of KenGen’s hydro power plants, is expected to increase generation capacity to 72 megawatts from 42 megawatts. The expansion project was undertaken at a cost of $77 million, according to KenGen. Kindaruma was designed to accommodate as many as three units while only two were installed to begin with. The expansion involved installation of the third unit and replacement of old turbines as well as other machines.
Policy / Performance
Germany plans to build, revamp 84 power plants
April 23, 2012. German utilities and private investors have plans to construct or modernise some 84 power stations, energy and water industry association BDEW said. The planned projects were equivalent to an installed power generation capacity of 42,000 megawatts (MW). It estimated that the projects, taken together, involved investments of more than 60 billion euros ($79.25 billion). BDEW also said that of the total 84, some 69 units (counting those above 20 MW) were fully or partially approved, being built or test-run. The remaining 15 were at the planning stage. Of the total number counted by BDEW, 23 units were to be driven by offshore wind, 10 were pumped storage plants, 29 gas-fired and 17 coal-fired generation plants, it said. BDEW, which represents some 1,800 companies active in supplying power, gas, water and heat, traditionally issues power station plans of its members around April. The plans reflect over a year of debate on how to best replace Germany's nuclear power stations, which must be closed faster than planned in light of the nuclear disaster in Japan in March 2011. BDEW said that the plans' realisation mostly hinged on the German government clarifying the future power market design. If this was not done by 2015, especially the would-be investors in thermal power stations might get cold feet and withdraw, it said.
Myanmar president inspects power plants in Kanagawa
April 23, 2012. Myanmar President Thein Sein toured two thermal power plants in Kanagawa Prefecture to see how Japan is tackling energy problems in the wake of the earthquake and tsunami that hit the Fukushima Daiichi nuclear power station in March 2011. Thein Sein, who arrived in Japan for a five-day visit, first inspected Tokyo Electric Power Co.'s thermal power plant in Kawasaki, south of Tokyo, where the utility's Chairman Tsunehisa Katsumata showed him a cutting-edge gas turbine installed. Recalling how Myanmar's first geothermal power plant was set up with technical assistance from Tokyo Electric, Thein Sein asked for continued cooperation. He then visited the Isogo thermal power plant in Yokohama, run by Electric Power Development Co., known as J-Power, where he was briefed on environmentally friendly and highly efficient coal-fired power plant technology. Myanmar, which enjoys an abundance of natural gas, is hoping for Japanese aid to help develop its thermal power industry. At present, nearly three-fourths of its people live without electricity, and even in its biggest city Yangon there are frequent power outages. Japanese utilities have significantly increased thermal power generation since the Fukushima Daiichi accident, which has led all but one of Japan's commercial nuclear reactors to go offline.
Pak plans to build two N-power plants in Sindh
April 23, 2012. Pakistan plans to build two coastal nuclear power plants with a capacity of 1,000 MW each in the southern port city of Karachi to meet the future energy needs of the financial hub. The military leadership has been briefed about the project and the presidency too is showing interest in the coastal nuclear power projects. Karachi currently has an ageing nuclear power plant that can generate 80 MW. The two new plants will be called the CNPP-1 and CNPP-2. Besides, authorities plan to build four nuclear power plants on the Taunsa Punjnad canal, about 32 km from Muzzafargarh in Punjab province. These plants will generate 1,000 MW. Work on the third and fourth Chashma Nuclear Power Plants too is underway. Chashma Nuclear Power Plant-3 is scheduled to be operational by December 2016 and the fourth plant in 2017. Authorities are hoping to complete these two plants about eight months ahead of scheduled. Each plant will generate 325MW of electricity. The Chashma complex already has two functional nuclear power plants that generate 650MW. Under the energy security plan for 2005-2030, Pakistan plans to generate 8,800MW from nuclear power plants.
RENEWABLE ENERGY / CLIMATE CHANGE TRENDS
ADB expands lending to Reliance Power for solar-thermal project
April 24, 2012. The Asian Development Bank agreed to lend a further $103 million to a solar power project owned by Reliance Power Ltd. in India. The Manila-based bank approved a $48 million loan for Reliance’s 40-megawatt Dahanu photovoltaic project in December. That plant is being expanded to include a 100-megawatt solar- thermal farm. Solar-thermal technology harnesses sunlight to heat liquids that produce steam for generators; photovoltaic plants use panels to turn sunlight directly into power. The solar-thermal plant is expected to be completed in May 2013 and will cost about $415 million.
Suzlon gets orders from Europe for 276 MW of turbines
April 23, 2012. Wind power major Suzlon Group said it received orders for supplying 276 MW capacity turbines across Europe. Suzlon Group subsidiary, REpower Systems announced cumulative orders of approximately 276 MW across Europe over a two-month period, excluding orders announced separately. These cover various orders secured between February 11, 2012 and April 15, 2012 across Italy, France, Germany, Poland and the United Kingdom.
Welspun, Sunborne win Indian solar project contracts
April 21, 2012. Welspun Group, India’s largest solar photovoltaic developer, and Sunborne Energy Holdings LLC, backed by billionaire Vinod Khosla, won contracts to build sun- powered plants in the nation’s Karnataka state. The lowest bid in the auction for 10 contracts by the Karnataka Renewable Energy Development Ltd. (KREDL) came from Helena Power Pvt., which committed to sell photovoltaic-based electricity to the state-run utility at ` 7,940 ($152) per megawatt-hour. That’s about double the wholesale price of coal- based power. India is using auctions to push down average solar power rates, which have fallen 38 percent since December 2010, as it seeks to avoid the surging renewable-energy subsidies seen in Europe. Global solar power prices are also plunging as equipment costs decline after the spot price of solar panels dropped 47 percent in the past year. Global solar power prices are plunging because of declining equipment costs after the spot price of solar panels dropped in the past year as manufacturers ramped up production. Welspun, which is backed by Apollo Global Management LLC co-founder Leon Black, won a 7-megawatt photovoltaic project and Sunborne won a 10-megawatt solar-thermal project, which harnesses sunlight to heat liquids that produce steam for generators; photovoltaic plants use panels to turn sunlight directly into power. KREDL awarded 60 megawatts of photovoltaic capacity and 20 megawatts of solar-thermal capacity. The next auction may cover 70 megawatts of photovoltaic and 50 megawatts of solar-thermal capacity. Other winners included Jindal Aluminium Ltd., Essel Infrastructure Ltd., GKC Project Ltd., United Telecoms Ltd., Sai Sudhi Energy Ltd. and Atria Power Corp., according to a list from KREDL.
Gujarat approves funds for India tidal-energy project
April 20, 2012. The western Indian state of Gujarat plans to spend ` 250 million ($4.8 million) to help develop the nation’s first project to produce power from ocean tides. Gujarat approved the funding along with an additional 100 million rupees for a pilot geothermal power project in its budget for the financial year that started April 1. The state may work with the International Finance Corp., the World Bank’s private-sector financing arm, which is interested in supporting a tidal-energy project with a loan or equity investment. Atlantis Resources Corp., a tidal-turbine maker backed by Morgan Stanley, is developing a marine energy project in the Gulf of Kutch with the Gujarat Power Corp. with an initial capacity of 50 megawatts.
L&T commissions 6 MW of solar project at Gujarat Solar Park
April 20, 2012. Larsen & Toubro (L&T) commissioned 6 mw solar project for Sun Group within three months at Gujarat Solar Park. EPC service provider L&T is claiming to have commissioned of the fastest executed solar projects in India. Sun Group is expected to have invested ` 75 crore in the project. Sun Group is private equity fund manager in India, Russia, and other emerging markets with interests in mining, energy, renewable energy, real estate, infrastructure, technology and food & beverages. L&T is $ 11.7 billion technology, engineering, construction, manufacturing and financial services provider Gujarat Solar Park, with current capacity of about 215 MW, is an initiative of the state government promote solar energy deployment in the state by streamlining the development process. The State Government allocated land to the project developers along with the required infrastructure for solar development such as power evacuation, roads, water, security, as well as single-window approvals.
J&K to have first wind power project at Reasi
April 19, 2012. Jammu and Kashmir (J&K) will have first wind power project in the state and a site in Reasi's mountainous district has been found suitable for it. The process to grant the project has been begun. It will come up at Bidda site in Reasi district that has high wind potential.
Lloyd sets up wind turbine tower facility in Gujarat at ` 2 bn
April 18, 2012. Cooling products maker Fedders Lloyd Corporation (FLC) announced its foray into wind turbine component sector by setting up a tower manufacturing facility in Bharuch district of Gujarat. The B R Punj-promoted FLC has set up a wind turbine tower manufacturing facility, having annual production capacity of upto 250 towers, at Jambusar in Bharuch district of Gujarat with an investment of ` 200 crore. The Government of India (GoI) has set up an ambitious target of having 20,000 MW of installed wind generation capacity under the 12th Five Year Plan (2012-17), against the current installed capacity of 13,000 MW across the country. The production of wind turbine components is projected to triple over the next few years as India aims to have an installed capacity of 4,000 MW annually over the next five years to achieve the 12th Plan target of 20,000 MW.
Solar thin-film panels may outperform rival technology in India
April 18, 2012. Thin-film solar panels may perform better in hot climates than rival crystalline products, based on half a year of data from the first Indian projects. Concerns over use of thin-film panels were raised as First Solar Inc. (FSLR), the largest supplier, in February boosted provisions for warranties by $37.8 million due to potential for “increased failure rates in hot climates.” Developers and their lenders are seeking data on how technologies fare in warmer conditions as Europe, the biggest solar market, cuts renewables subsidies. Traditional crystalline modules are silicon-based, while thin-film technology coats panels with materials such as cadmium telluride, copper indium gallium selenide and amorphous silicon. Crystalline’s competitiveness matches thin-film when placed on trackers to rotate panels with the sun’s movement, boosting output as much as 20 percent. Early results showed dust from desert conditions where most plants are built in Rajasthan and Gujarat states interferes with generation, while thin-film panels are easier to wash. The possibility panels will degrade at different rates at plants expected to last at least 25 years means it’s too early to say which product is better. First Solar, based in Tempe, Arizona, said high ambient temperatures may accelerate stress corrosion cracking in glass and other defects after analyzing panels returned under warranty and other data from markets including the southwestern U.S.
Trump’s spat with Salmond over Scottish wind turbines escalates
April 24, 2012. Donald Trump hailed Alex Salmond as an “amazing man” for championing the financial benefits of his golf resort in northeast Scotland. Now the two are at loggerheads over the linchpin of the Scottish leader’s economic policy as he strives to gain independence from the U.K. The New York real-estate entrepreneur will tell lawmakers at the Scottish Parliament in Edinburgh about his opposition to a proposed 230 million-pound ($371 million) experimental offshore wind farm in sight of the golf course he is opening in July. Trump’s warnings about the effect of the wind energy industry on tourism aren’t borne out by the facts, according to the government.
EU says carbon auctions review won’t reduce amount of permits
April 24, 2012. The planned review of European Union’s carbon-permit auctioning regulation would change the timing of sales, while keeping intact the amount of allowances to be sold in the next trading period from 2013, the EU said. EU Climate Commissioner Connie Hedegaard announced that the bloc’s regulatory arm plans to propose a revision of the rules on auctioning carbon permits to be enacted before the end of this year. The measure would help curb an oversupply of allowances and could bolster prices by delaying sales of some permits to companies in the EU emissions trading system.
Green economy worth £ 24 bn pounds by 2020
April 24, 2012. Britain's renewable energy market is expected to turn over 24 billion pounds by 2020, more than double what British green energy companies made in 2010/11. This growth will be accompanied by a fourfold rise in employment in the sector, expected to soar to 400,000 by 2020, provided Britain meets its legally binding target of sourcing 15 percent of energy demand from renewables by the same year.
California wins temporary reinstatement of carbon fuel standard
April 24, 2012. California won temporary reinstatement of its low-carbon fuel standard, which was blocked by a federal judge. The U.S. Court of Appeals in San Francisco granted a request by California officials to put on hold the Dec. 29 ruling that the standard is unconstitutional while the case is on appeal. The rule was to have taken effect Jan. 1, 2012. U.S. District Judge ruled Dec. 29 that California’s method of assigning a higher so- called carbon intensity score to ethanol produced in the Midwest, which is otherwise chemically and physically identical to that produced in California, discriminates against interstate commerce. The judge sided with agriculture and oil-industry groups that sued to overturn the standards.
Saudi’s National Water to spend $66.4 bn on projects
April 23, 2012. National Water Co., Saudi Arabia’s state-owned utility, plans to spend $66.4 billion on plants and repairs over the next 10 years. The spending plan includes wastewater facilities, an airport water-treatment plant at the Red Sea port of Jeddah and repairs to leaking pipes. The company has a project in the Saudi capital of Riyadh to generate 5 megawatts of electricity turning wastewater into methane gas. National Water plans to build a similar plant in Jeddah to produce about 7.5 megawatts of power. It will announce bids soon for this plant and the facility may be ready in two to three years. The state-run utility has repaired leaks in Saudi Arabia’s water transmission network, saving 67 million cubic meters of water since 2008. The value of water saved is about 402 million riyals ($107 million).
Japan may announce preferential rates for clean energy in April
April 23, 2012. Japan may announce preferential price rates this month for electricity generated from renewable energy in a program that will start in July to encourage investment in non-fossil fuel power plants. A five-person panel have been discussing the preferential rates, known as feed-in tariffs, since March 6 and will hold their sixth meeting on April 25. Japan’s Ministry of Economy, Trade and Industry hopes to receive the recommended rates by April 27, which will then need government approval. The feed-in tariff guarantees above-market rates for solar, wind, geothermal, biomass and hydroelectric power. The Japan Photovoltaic Energy Association proposed 42 yen (52 cents) a kilowatt-hour for 20 years for solar power. For wind, the Japan Wind Power Association suggested as much as 25 yen a kilowatt- hour for the same period.
Floating offshore wind kit gets spur from U.S., Britain
April 23, 2012. Britain and the U.S. said they’d fund work on offshore wind generation technologies that work in waters as much as 500 feet deep, a measure aimed at opening vast new areas of ocean to development. U.S. Energy Secretary Steven Chu and his U.K. counterpart Edward Davey said their departments will collaborate on ways to spur development of floating platforms for offshore wind turbines that can be stationed in depths beyond 60 meters (200 feet), the limit for traditional structures fixed to the seabed.
U.K. needs ‘bolder, broader’ renewable energy policy
April 23, 2012. The U.K. needs “much bolder and broader” renewable energy policies to encourage technologies ranging from solar thermal power to liquid biofuels, said the Renewable Energy Association (RWE), an industry lobby group. Wind, solar, other renewables and their supply chains were worth £ 12.5 billion ($20 billion) to the economy in 2011, a figure projected to rise to £ 24 billion in 2020, the REA said. For Britain to meet its binding European Union target of deriving 15 percent of energy from renewables by 2020, sales from the industry would need to be closer to £ 50 billion, it said. The REA said the renewable industry employs about 110,000 people in the U.K., a number that needs to reach more than 400,000 in 2020.
Trading firm sues US EPA over biofuel credit scam
April 23, 2012. A trading company ensnared in the fallout from massive fraud uncovered in the U.S. renewable fuel mandate has filed a lawsuit against the U.S. government for its handling of the scandal. OceanConnect, a firm that facilitates trades of renewable energy credits, said in a complaint filed in federal court that the Environmental Protection Agency's response to the fraud has undermined the government's goal to encourage growth and innovations in the biofuel industry. The EPA has refused to honor credits bought from a company registered with the agency as a biofuel producer that turned out to be fake, leaving OceanConnect and other companies on the hook for millions of dollars.
GE, Arista join to sell battery system to cut power bills
April 23, 2012. General Electric Co. (GE), the biggest maker of power-generation equipment, will join with Arista Power Inc. to sell systems that store electricity for commercial customers and release it when demand is highest, helping to cut bills. The system, which will use GE’s Durathon batteries, can store power from on-site wind or solar sources or from the grid and deliver it during peak periods, when commercial customers are subject to “demand charges”. The charges can account for as much as 70 percent of an electric bill for commercial customers, which include shopping centers and office buildings.
Iceland rolls out red lava for Wen in China power talks
April 21, 2012. Iceland will show off its volcanic power in a bid to increase trade with the fastest growing major economy as Chinese Premier Wen Jiabao visits the island. Wen, will tour Hellisheidi, Iceland’s largest geothermal power plant, and meet with President Olafur R. Grimsson and Prime Minister Johanna Sigurdardottir. It’s the first visit by a Chinese premier since diplomatic relations were established 41 years ago, according to the Foreign Ministry in Beijing. For Iceland, the visit will be a chance to deepen ties with China and speed up efforts to emerge from its 2008 economic collapse when its three-largest banks defaulted. After its failed foray into high-finance, the north Atlantic island is seeking to revive its $13 billion economy by returning to the industries it once relied on for growth such as tourism, fishing and energy. The volcanic island gets about 25 percent of its power from geothermal sources and the rest from hydropower. Iceland started a feasibility study into building a 1,170-kilometer (727-mile) power cable to Scotland to send some of its untapped potential of geothermal and hydropower power to Europe.
Vestas valuation tempting buyers
April 20, 2012. For companies prepared to buy into the future of wind power, Vestas Wind Systems A/S offers the chance to grab the world’s largest turbine maker for less than it would be valued at in a fire sale. Vestas traded at a record low of 0.52 times net assets, before speculation emerged that its two biggest Chinese rivals, Sinovel Wind Group Co. and Xinjiang Goldwind Science & Technology Co., are considering a bid. While Vestas lost money on each dollar of sales as turbine prices fell and is now grappling with the loss of wind-project subsidies in the U.S., Spain and India, the Aarhus, Denmark-based company could still lure buyers with its technological expertise and market position, Sydbank A/S said. Sinovel and Goldwind, which get almost all their sales in China, could expand in the U.S. and Europe by acquiring Vestas, while industrial companies in South Korea may want Vestas to gain a foothold in wind energy, Sydbank and Danske Markets said.
GE to seek $6 bn in Australian contracts amid resource boom
April 20, 2012. General Electric Co. (GE) is seeking $6 billion in contracts out of Australia by the end of the decade as it taps the country’s growing role as a supplier of liquefied natural gas, iron ore and wind power. Growth areas such as Australia may account for half of GE’s industrial revenue by 2020, up from 37 percent of its $94 billion in industrial sales, the company has said. GE’s sales in Australia of equipment for customers ranging from energy producers to mining companies rose 67 percent to almost $3 billion last year, outpacing China and Latin America. The Fairfield, Connecticut-based company is involved in all the LNG projects being built in Australia and will bid for more contracts as the industry expands. With $180 billion of LNG projects advancing, Australia is set to surpass Qatar as the largest exporter of the fuel by the end of the decade. BG Group Plc, ConocoPhillips and Santos Ltd. are going ahead with more than $50 billion of LNG developments on the coast of central Queensland in Australia’s northeast for fuel exports to Asia. Those projects may expand.
Solar will dominate clean-energy mergers
April 19, 2012. Solar manufacturers will lead consolidation in the clean-energy sector because of overcapacity and declining government incentives, according to a survey. Mergers and acquisitions of solar companies will top those of wind-turbine makers, biofuels, energy-storage and smart-grid companies. Solar-panel production capacity may exceed 38 gigawatts, 53 percent more than the median demand forecast. Prices fell by half last year, contributing to eight solar bankruptcies in the U.S. and Germany since August. Falling panel prices are also pulling down shares for manufacturers, making solar the clean-tech segment investors are most likely to avoid this year, according to the poll. Cheap panels also make sun-powered plants more affordable, which is why the poll also found that solar development is the area most likely to attract investment. Almost half the respondents said offshore wind turbines won’t become a significant component of global energy sources until at least 2017 and one-quarter said they never will.
Germany solar installations may have tripled in first quarter
April 19, 2012. German solar installations may have more than tripled in the first quarter from a year ago, the country’s deputy environment minister said. Germany added 513 megawatts in the same period, according to the Bundesnetzagentur grid regulator. Chancellor Angela Merkel seeks to cut by half the pace of annual solar installations after incentives for the industry pushed new projects to a record 7.5 gigawatts, more than double a target. Subsidy cuts, still going through parliament, would take effect April 1, about a year after Merkel decided to exit nuclear generation and replace reactors with a mix of renewable and more efficient fossil-fuel plants. Germany’s BSW-Solar lobby has said the government’s subsidy reduction plans are too harsh and will worsen a shakeout that led to the insolvencies of at least four German solar companies since December. First Solar Inc., the biggest maker of thin-film panels, said it would cut 30 percent of its workforce and close a factory in Germany partly due to subsidy reductions in Germany and Italy.
First Solar latest casualty in renewable energy shakeout
April 19, 2012. First Solar Inc.’s decision to fire 30 percent of its staff and reduce production shows that even the biggest solar panel makers aren’t immune from the shakeout that’s bankrupted at least eight companies on two continents in the past year. The largest thin-film solar producer said it will cut 2,000 jobs by the end of the year at a cost of as much as $370 million. It marks the biggest staff reduction for the industry since bankrupt Solyndra LLC, backed by U.S. government loans, dismissed its 1,100 employees on Aug. 31. Solar manufacturers, which expanded rapidly to meet double- digit demand growth in the past decade, are struggling with subsidy cuts in Europe and plunging natural-gas prices that make renewable energy less competitive. The largest producers in China say their profits will slump this year as shipments grow. Solar panel prices have fallen 46 percent in the past year as manufacturers led by First Solar and Suntech Power Holdings Co., the world’s largest solar company, boosted output. Germany and Italy, the two biggest markets, are cutting rates paid for solar power to curb an uncontrolled installation boom.
EU needs stronger CO2 market, Germany’s Reiche says
April 19, 2012. Europe needs to strengthen its carbon program to stimulate investment in low-emission technologies after an oversupply of permits pushed prices to a record low, Germany’s deputy environment minister Katherina Reiche said. Options to fix the European Union’s emissions trading system floated by ministers at an informal meeting this week include a move to a more ambitious carbon-reduction target for 2020 and withholding permits from the market, Katherina Reiche said. EU carbon-dioxide permits for December have declined 58 percent in the past year as an economic slowdown cut into industrial output, leading to an oversupply of allowances. The emissions caps that the ETS imposes on more than 12,000 facilities were set before the debt crisis and economic slump. The ETS will be oversupplied by permits covering around 1.1 billion tons of CO2 by 2012. This surplus may be transferred into the next trading phase from 2013 to 2020.
Fracking wastewater tied to earthquakes
April 19, 2012. Government scientists are focusing on the disposal of wastewater from oil and gas drilling as the possible cause of scores of earthquakes that have shaken the central part of the U.S. since 2000. Researchers think the increased seismic activity may be linked to wastewater injected into the ground by oil and gas drilling operators. U.S. Geological Survey researchers found that for three decades prior to 2000, seismic events in the nation’s midsection averaged 21 a year. They jumped to 50 in 2009, 87 in 2010 and 134 in 2011. The findings add to pressure on the industry over a drilling process known as hydraulic fracturing -- or fracking -- that has sparked concerns the method may provoke earthquakes and taint drinking water. The study was discussed the same day that the U.S. Environmental Protection Agency released the first regulations to combat air pollution from gas wells.
Areva set for ‘strong play’ supplying U.K. offshore wind market
April 18, 2012. Areva SA, the supplier of turbines for three offshore wind-power projects in Germany, said it’s set to grab a share of the U.K. market, the world’s biggest, as developers move into deeper waters further from shore. The Paris-based company, whose main business is nuclear power equipment and services, is talking with “many customers” across Europe and has “more projects in the pipeline” in addition to those announced in Germany and France. Britain in January 2010 awarded licenses for 32 gigawatts of projects in its third round of offshore wind farm tenders. The country is betting on the technology to help meet its European Union carbon emissions and renewable energy goals. Energy Minister Charles Hendry said that Britain is planning to develop 18 gigawatts of offshore wind by 2020.
Brazil rules let consumers trade renewable power to utilities
April 18, 2012. Brazil issued rules allowing homes and businesses to offset the energy they consume with power generated by rooftop solar systems and other renewable energy sources. Utility customers will generate credits from wind, solar, biomass and hydroelectric power plants that may be traded for electricity. Operators of solar plants with capacities of as much as 30 megawatts will also receive a discount on fees for using power distribution and transmission infrastructure.
Bunge seeks CO2 credits for California, China after drop
April 18, 2012. Bunge Ltd. (BG) is seeking to buy carbon credits for new markets from California to China after prices plunged to a record and it bought London-based Climate Change Capital Ltd. Bunge, the food and agriculture company, is betting there will still be markets for credits in some North American states and Australia, even in the absence of a global market. Bunge, based in White Plains, New York, bought Climate Change Capital for an undisclosed sum in an accord that closed and now owns the world’s largest private carbon fund. The climate-protection business has committed more than 850 million euros ($1.1 billion) since 2005 to emissions-cutting projects in developing nations.
Apple reacts to ‘dirtiest tech giant’ claims
April 18, 2012. Apple has responded to environmental campaign group Greenpeace’s claims that it is the “dirtiest” of the technology giants for the second year in a row because of the way it powers its cloud-based services. Greenpeace, in its annual report on Internet firms, said that Apple relied on coal power for services such as iCloud and the voice-controlled “personal assistant”, Siri, more than its rivals like Facebook and Google. Apple, however, responded before the report was published, highlighting the green credentials of its enormous billion-dollar data centre in Maiden, North Carolina, and a second it plans to build in Oregon. Greenpeace claimed that the North Carolina facility, which opened last year to support the launch of iCloud, Apple’s suite of online backup services, would need up to 100MW in power and that renewable energy would meet for only ten per cent of demand. Apple, however, responded that the data centre would in fact consume a peak of only 20MW, of which 60 per cent would come from renewable sources such as a 171-acre solar array it is building nearby. Greenpece’s report, which praised Google and Facebook for their heavy investments in renewable energy, accused Apple of being highly reluctant to disclose anything about their data centre operations.
California bill may put utilities on verge of green goal
April 18, 2012. California’s three investor-owned utilities would immediately be on the verge of meeting a state requirement to expand use of renewable energy if lawmakers approve a bill crediting them for large hydroelectric sources. PG&E Corp.’s Pacific Gas & Electric, Edison International’s Southern California Edison unit and Sempra Energy’s San Diego Gas & Electric must get 33 percent of their power from wind, solar and other so-called green sources by 2020 under state law. The bill would permit them to count hydropower plants over 30 megawatts, which are now excluded.
Canadian Solar, SkyPower in $187 mn solar farm deal
April 18, 2012. Canadian Solar Inc., a producer of solar cells and panels, formed a joint venture with the renewable-energy project developer SkyPower Ltd. that will provide an outlet for its products in North America and emerging markets. Under the agreement, Canadian Solar will pay C$185 million ($187 million) for majority stakes in 16 projects that SkyPower is planning in Ontario, and the two companies will each own half of a venture that will develop solar farms in other countries. By taking a more active role in developing energy projects, Canadian Solar will have more control over sales of its panels, a strategy that First Solar Inc. and other rivals have used for years. The projects Canadian Solar is buying into in Ontario have total capacity of 190 megawatts to 200 megawatts and will sell their power to the Ontario Power Authority under 20-year contracts. They are expected to go into operation in 2014 and will generate more than C$800 million in revenue for the company. Fifteen of those contracts were issued under the province’s feed-in tariff program, which offers premium rates for electricity generated from renewable sources. Canadian Solar, based in Kitchener, Ontario, manufactures solar cells in China and has a plant in the province that assembles them into panels, meeting the feed-in tariff program’s domestic-content requirement. The development joint venture will focus on solar farms in emerging markets and may generate revenue within three years. SkyPower, based in Toronto, will also get warrants to purchase as much as 9.9 percent of Canadian Solar’s outstanding shares for $5 each. The agreement will help Canadian Solar meet a goal of getting 40 percent of its revenue from solar power plants in 2013. LDK Solar Co. Ltd., a Chinese maker of solar panels, acquired 70 percent of the California energy developer Solar Power Inc. in January 2011. Other solar manufacturers including SunPower Corp. and First Solar use development units to initiate power projects that will use their products. Sharp Corp., Japan’s largest solar company, purchased San Francisco-based Recurrent Energy in November 2010 for $305 million.
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