MonitorsPublished on May 01, 2012
Energy News Monitor I Volume VIII, Issue 46
The China Factor in the Global Coal Market

Lydia Powell, Observer Research Foundation


oal is far from being written off as a source of energy in the future. In 1971 coal contributed 1440 mtoe of energy accounting for 25.5 percent of the global energy pie. In 2009 coal contributed 3684 mtoe of energy accounting for 28.8 percent of the global energy pie.  In contrast, oil which contributed 2552 mtoe of energy in 1971 accounting for 45.1 percent of the global energy pie contributed 4066 mtoe of energy accounting for only 31.8 percent of the global energy pie by 2009.  In the last four decades coal’s contribution to the global energy pie has grown by nearly 79 percent compared to 59 percent for oil.

In 2009 China became a net importer of coal for the first time with a record breaking 126 million tonne (mt) import accounting for over 15 percent of all globally traded coal. By the first quarter of 2010 even Columbia and USA were exporting coal to China. In 2011 China sourced more than 182 mt of coal from overseas suppliers and overtook Japan as the world’s top importer. Has the ‘china factor’ contributed to a structural shift in the global coal market? Most the world seems to think so.

The idea of energy security which was hitherto rooted in the supply and price of oil has now been expanded to include concerns over the availability and trade of coal. The key concern is the growth of coal demand from China and its impact on the price and availability of globally traded coal given the level of concentration in sources of supply. The IEA which chides itself for having taken so long to bring out a report on coal notes, in its Coal Market Report 2011 that more than 80 percent of global coal exports come from just six countries, Australia, Indonesia, Russia, USA, South Africa and Columbia with 40 percent of total exports controlled by just 9 companies.

China’s presence in the coal market is bigger than that of any other country for any other fuel. China was responsible for nearly half the global coal production and consumption in 2009 and China is projected to account for over half the global coal demand growth even if China implements is ambitious 12th Five Year Plan that aims to reduce energy and carbon emission intensity through enhanced energy efficiency measures. India, the second largest coal consumer is expected double its coal use by 2035 and overtake the United States as the world’s second largest coal consumer by 2025 and become the largest coal importer by 2020.  Over 60 percent of India’s increase in coal demand is expected to come from power generation.

The coal market is increasingly global in the sense that South African, Russian or Columbian coal producers can change their export destinations from the Atlantic to the Pacific basin depending on which is more attractive.  When Chinese utilities emerge with the largest premiums, coal will flow towards China from around the world.  Paper trade based on API 2 the benchmark price reference for imported coal in North-west Europe and the primary reference for coal trading in Europe is now ten times the value of physical trading which gives rise to the possibility of financial speculation driving prices rather than fundaments which makes the global goal market similar to the oil market.

Though there is broad consensus on the fact that China will remain a net importer, a model based study by MIT concluded that China will remain a ‘cost-minimiser’ and could be both a buyer and seller in the global market as key price relationships fluctuate. China’s coal reserves are concentrated in the North and West of China while demand is concentrated in Northern and Southern costal markets. Northern coastal markets are served by a network of truck and rail routes but the rail and truck capacity to serve the Southeastern markets are prohibitively expensive. Therefore coal supply for Southeast China is supplemented with costal shipping routes from Eastern ports. Coal buyers from Southeast China can therefore choose between domestic coal delivered by sea or buy international coal depending on which is cheaper. This arbitrage opportunity allows Chinese coal buyers to take advantage of price differentials between domestic Chinese and international coal prices.  Though the MIT model did not differentiate between thermal and coking coal and also did not factor in technical limitations such as boiler design that set limitations on how much imported coal can be used in the domestic market, the conclusions of the study are in broad agreement with reality.

Until 2009, the price differentials between domestic and imported coal in China favoured domestic coal. In 2008, CIF price for Australian and Russian coal was higher by about $ 65 / tonne compared to Chinese domestic coal.  With the onset of the global recession by the end of 2008, Indonesian coal was cheaper than Chinese coal by $ 40/tonne and Australian coal was cheaper by $ 29/tonne. Even Russian was coal was cheaper than Chinese domestic coal in coastal markets despite the huge distance disadvantage. This huge arbitrage opportunity arose because the macroeconomic impact of the global financial crisis was comparatively smaller on China and other developing countries. Moreover, a series of regulatory measures such as mine consolidation, implementation of safety standards along with a simultaneous break down in agreement between coal producers and power generators over prices drove up prices. China also has in place a policy of ‘Two Markets, Two Resources’ that encourages coal users to import coal when economics justifies it.

Chinese trade behavior is thus fundamentally different from that of India which is structurally short of coal. The ‘China Factor’ has not essentially contributed to a structural shift in the market with China emerging as net importer.  Instead it has introduced a large element of uncertainty in the market with China acting as the world’s largest coal arbitrager. The international market for coal is now more sensitive to developments in the margin such as variations in China’s very large volumes of coal production and demand which will determine its net trade position. Sadly, India which is already battling multiple forces that threaten its energy security has to come to terms with the fact that the price of coal it buys in the international market and the price of power paid by an average customer in India is likely to be inextricably linked to what happens in the coal mines of inner China.


Bilateral Agreements are a must for Importing Coal

Ashish Gupta, Observer Research Foundation


ndia is expecting to add 1,00,000 MW capacity in the XIIth Plan Period and out of that 60,000 MW is dependent only on coal. Under these circumstances the demand for coal is likely to be very high. Going by current production trends, it would be nearly impossible for domestic coal to meet growing demand. So apart from increasing indigenous supply we need to import coal for filling the widening gap. 

As we are aware, around 117 coal blocks were allocated for power sector for captive development but very few are in operation. On the other hand many companies sought to decrease dependence on domestic coal and went for acquiring the coal properties abroad. But overseas coal acquition offers as much a challenge or a bigger challenge as acquiring Indian coal except that it is better in quality. Most countries have unique policies for mining which are subject to change without notice. This exposes owners of ‘equity coal’ to unforeseen risks. Most of the companies including the PSU’s that have approached prospective countries have found themselves wanting in bargaining power and end up with less lucrative deals.

Most of the countries in which Indian companies have shown interest have issues and problems similar to those in India including that of the inadequacy or the lack of infrastructure for transport and export. The cost of developing support infrastructure is to be borne by the miner. The investment requirement for this is huge and it would be an unfair burden on individual companies. Other challenges which needs to be taken into account before acquiring overseas coal properties are political stability, tax regime, law and regulatory framework which will simply make the project unviable for the companies concerned when they changes arbitrarily. We have seen this last year when Indonesia has changed their mining laws because of which Indonesian coal becomes 3-4 times costly and many of the countries are looking forward to amendments in their mining laws. Caution is therefore required in securing overseas deals. 

Having said that, despite having problems overseas acquition need not become the answer to problems in developing domestic coal.  Domestic issues must be addressed at war footing but in the mean time, imports can serve as a temporary solution. To take advantage of imports companies should form a consortium for grabbing the deal rather than approaching the targets individually but that may be difficult without government involvement in coordinating the formation of a consortium. Given the situation where India is now where imports of coal have become inevitable, government involvement is absolutely necessary to improve probability of success and minimize policy risks. The best approach in this regard is to have bilateral Government to Government agreements that can ensure a level of certainty for both the buyer and the seller. 

Countries like South Africa, Mozambique even Indonesia are in need of infrastructure development and a G2G strategy which offers investment in soft or hard infrastructure in return for long term reliable supply agreements must be investigated. Mozambique, Mongolia, Vietnam etc are emerging as new potential suppliers but are short in infrastructure. The Indian Government must take leadership in tapping emerging opportunities in these countries with offers of mutually beneficial agreements and not leave the matter entirely to PSU and private companies. India has strengths in developing infrastructure like railway tracks, schools, hospitals etc which would make a coal supply agreement with India more attractive. A G2G strategy will not only ease our coal requirement but also open up business opportunities for Indian companies and improve India’s diplomatic presence abroad. 



State at the Apex of Renewable Development

Sonali Mittra, Observer Research Foundation


espite solar energy development being a National Mission, electricity is a concurrent subject under the Indian constitution with States dominating pricing policy and distribution. So far, majority of solar development has taken place in Gujarat, whereas the other states have been far lagging behind in their approaches and thereby the installed capacity. If it is the state-policies that ultimately provide the thrust for solar power development or other renewable energy resources, then why do we necessarily need a national mission separately? Moreover, if anything, shouldn’t the national missions be facilitating the state’s policies and be supplementary to the approaches which would lead to growth and development of the renewable industry?

While the Central Regulatory Authority sets guidelines for tariffs and terms for trading, transmission and distribution, licenses etc., it lacks the authority to make it mandatory, therefore leaving the state in control of regulating the development of electricity market. The renewable purchase obligations (RPOs) are in fact obligatory but the percentage allocated is under state’s discretion. This is not to say that the approach is ineffective, in fact, it is one of the better ways to push renewable sector towards positive growth. However, unless RPOs are implemented strictly supported by stringent policies, it won’t make a significant breakthrough in the renewable industry.

Some states have taken a parallel methodology and have tried to create hybrid participations. States like Gujarat, Rajasthan, Tamil Nadu have allowed a simultaneous involvement of direct ownerships and participations from public and private sector, thus, are accruing the benefits of subsidies under JNNSM. Other states however, have been either complacent in their approaches or lack the systematic and strategic decision making to utilize their resources in an optimal manner.

Besides the divergence in State’s policies towards renewable energy, the over-all focus on research and development has been struggling to catch up with the global momentum. Traditionally, the relation between India’s states and university science has been distant; it therefore, at times deviates from the requirements of the industry. Although, in a recent effort to bridge the gap, top three Indian institutions have signed a deal with three US institutions to form a $125 million US-INDIA Joint Clean Energy Research and Development Centre (JCERDC).

Nevertheless, within India, controlled and closed nature of technological innovations curbs its development. Furthermore, age-old intellectual property processes and lack of networking of supportive infrastructure attributes to deference of growth in the sector. What is the role of the state in this area? How can states design their policies to compliment R&D approaches and associate them to the industry requirements should be given more attention.

Another factor that has been over-looked intentionally or unintentionally is the dominance and influence of the conventional energy sources in the development policies of renewable energy sources. As predicted by the energy analysts, renewable energy would be able to contribute only a fractional amount to the energy mix, even in the coming decade. Moreover, a technologically sensitive industry like solar, would is highly dependent on the research and development, which as explained above, fails efficient recognition at the moment, thus, making it stand loosely on the ground in terms of dependability as compared to fossil fuels.

However, this is not to compare conventional and non-conventional energy sources but to underline a basic difference that lies in the economic, social and political clout of both. Lest it undergoes a moral change in lieu of environmental consideration or more specifically climate change, the fate of renewable energy in India would highly depend on the state’s strength and control over electricity pricing and distribution policy.



Share of Natural Gas in Primary Energy Mix: Country Comparisons

Akhilesh Sati, Observer Research Foundation

Million tonnes oil equivalent

Natural Gas Consumption





















United Kingdom





















Primary Energy Consumption















United Kingdom





















% Share of Natural Gas in Primary Energy















United Kingdom





















Source: BP Statistical Review of World Energy






Oil India joins consortium bidding for British Gas' stake in GGCL

April 30, 2012. Oil India will now be a part of a consortium, including Gujarat State Petroleum Corp, ONGC, and BPCL, that had jointly bid for British Gas Group's stake in Gujarat Gas Co Ltd. ONGC and BPCL will transfer 5% stake each to Oil India that is keen to join the consortium, said ONGC. Currently, GSPC holds 50% stake in the consortium, while ONGC and BPCL have 25% share each. The consortium, which is the only bidder for BG Group's 65% stake in the country's largest private sector city gas distribution venture GGCL, is negotiating on the valuation, which BG Group feels is low. Meanwhile, BG Group has indicated that it is open to talk to any other prospective bidder if GSPC and its consortium partners do not offer the desired value for controlling stake in GGCL.

RIL's gas production from KG-D6 fields below 34 mmscmd/day

April 27, 2012. Reliance Industries has reported natural gas production from its eastern offshore KG-D6 fields dropping to less than 34 million standard cubic meters a day. Gas output from KG-D6 in the week ended April 1 dropped to 33.89 mmscmd (million standard cubic meters) from 34.09 mmscmd in the previous week, according to a status report filed by the company with the Oil Ministry. KG-D6, where water and sand ingress coupled with drop in pressure has led a drastic fall in per-well output, had produced 34.62 mmscmd in the begging of March. Production from Dhirubhai-1 and 3, the largest among the 19 oil and gas finds RIL has made in the KG-D6 block, slipped to 27.52 mmscmd during March 26 and April 1. The twin fields had produced 27.64 mmscmd during March 19-25 and 28.16 mmscmd in the week ending March 4. Together with 6.37 mmscmd output from MA oilfield in the same block, KG-D6 produced 33.89 mmsmcd during the week ending April 1. The KG-D6 output has fallen since hitting peak of 61.5 mmscmd in March 2010 as RIL shut wells after wells on water and sand ingress. The output from KG-D6 is short of the 70.39 mmscmd-level (61.88 mmscmd from D1 and D3 and 8.5 mmscmd from the MA field) envisaged by now as per the field development plan approved in 2006. While Reliance holds 60 per cent interest in KG-D6, UK's BP Plc holds 30 per cent and Niko Resources of Canada the remaining 10 per cent. The report said one out of the six well on MA field had to be shut due to water loading. The field produced an average of 11,071 barrels per day of oil in the week and 1,627 barrels per day of condensate. Of the 33.89 mmscmd of production, 12.71 mmscmd was sold to fertiliser plants at government approved rate of USD 4.20 per million British thermal unit. Another 18.10 mmscmd was sold to power plants and the remaining 3.08 mmscmd was consumed sectors such as LPG. RIL projected an output of 33.7 mmscmd during the month.

ONGC to invest ` 6 bn to develop Mumbai High South Field

April 27, 2012. Oil and Natural Gas Corporation has approved a proposal to invest ` 600 crore for development of the Western Periphery as a part of the Mumbai High South Field, Phase III Redevelopment. The project, scheduled to be completed by December 2014, is expected to result in incremental production of 1.031 million metric tonne of oil by March 2030. The project envisages installation of one 12 slot four-legged unmanned platform, drilling of 10 wells and associated modifications and pipelines for well fluid, gas lift and water injection. Phase-I of the Redevelopment project which was completed in 2007 helped significantly arrest the decline in production and increased it from level of 131,400 bopd in June 2001 to 173,000 bopd by beginning of 2007. The phase -II which was launched after the completion of Phase-I to further improve the recovery factor is in advance stage of completion and is expected to improve oil recovery to 34.5% by March 2030.

Hardy O&G to give up deepwater block in KG basin

April 25, 2012. Hardy Oil & Gas has agreed to relinquish a deepwater block in the Krishna-Godavari basin after its Indian partner and operator, Reliance Industries, said that the block was not viable. Reliance announced that it was surrendering 10 blocks, including D9, bringing down its oil and gas portfolio to 17 exploration blocks. The company continues to supply gas from its D6 and Panna-Mukta & Tapti fields. Reliance had discovered gas in the D9 block last year, but after drilling three exploration wells and analysing geo-scientific data the company found that the block's hydrocarbon potential was low. Block D9 is located in the same basin as D6, India's biggest gas field. Of the 10 blocks relinquished by Reliance, BP is partner in three. Reliance had sold 30% stakes in 21 oil and gas blocks to the British energy major for $7.2 billion.


RIL announces several large-scale projects in refining and petrochemical space

April 30, 2012. Reliance Industries has announced several new large-scale projects for next 4-5 years in refining and petrochemical space, which shows the company has begun its next big capex cycle. This will put to rest the uncertainties involving the company's plans for its growing pile of cash. Nevertheless, the projects are all long-term, and unless business environment improves, investors may not have anything exciting in the short term. RIL will be investing over $12 billion over next 4-5 years in the refining and petrochemical industries, which may go up due to its investments in retail, E&P or telecom segments. Still this will not necessitate any significant increase in the company's debt level, since its operating cashflows will be sufficient. RIL will set up a $4 billion petroleum coke gasification project that will produce syngas - a combination of hydrogen and nitrogen - that will replace expensive LNG as fuel. Once implemented over next 3 years, this will add $3 per barrel to RIL's refining margins. Similarly, it will spend $8 billion on adding capacities of PFY, PET, polyester and intermediate chemicals such as PTA and paraxylene, besides adding new products such as carbon black and rubber.

IPO, Bhatinda refinery expansion on cards: Lakshmi N Mittal

April 29, 2012. Steel tycoon Lakshmi N Mittal may in future go for an initial public offering (IPO) of the just commissioned Bhatinda refinery, where a low-cost expansion is planned to raise capacity from 9 million tonnes to 11.2 million tonnes. Mittal, whose diversification into the energy space with Oil and Natural Gas Corp (ONGC) had a patchy record, wants to use his joint venture with Hindustan Petroleum Corp Ltd (HPCL) as the platform for growth in oil sector. But his focus currently is to stabilise production at the 9 million tonnes Bhatinda refinery that was dedicated to the nation by Prime Minister Manmohan Singh. Once the refinery, built by HMEL -- the equal joint venture of HPCL and Mittal Energy Investment -- stabilises and starts making money, he would think of the next steps like doubling the capacity to 18 million tonnes, foraying into oil and gas exploration and investing in raising complexity of the refinery to improve margins. Mittal had in 2005 teamed up with ONGC for his big energy splash and formed two companies -- one for exploration and production of oil and gas, and other for oil trading. But the joint ventures lost sheen first because ONGC was not interested in trading business and then the 2008 economic downturn forced Mittal to restrict himself to his core business of steel making. Mittal, after the inauguration of the refinery, had stated that listing of HEML was a desirable objective. HPCL-Mittal Energy Limited (HMEL), a joint venture between state-owned HPCL and Mittal Energy Investment Pte Ltd, Singapore, an L N Mittal Group Company, built the ` 21,500 crore Guru Govind Singh refinery. The two hold a 49 per cent stake each in HMEL, while the remaining 2 per cent is with financial institutions. Mittal said public listed companies are a more desirable model. The two promoters may sell 10 per cent stake each in the IPO that may happen not before next year. The refinery close to Pakistan border may double capacity to 360,000 barrels per day, ArcelorMittal Chairman Lakshmi Mittal said at the opening of the plant that could help trade ties between the nuclear-armed neighbours. The $4 billion plant is located 100 km from the border with Pakistan and 175 km from the city of Lahore.

IOC expresses interest in Sri Lanka refinery

April 27, 2012. The Indian Oil Corporation (IOC) has expressed interest in the Sri Lankan government's plans to refurbish the island's only refinery that will cost USD two billion. Lankan IOC have had several rounds of correspondence with the government's petroleum officials. Sri Lanka has said that USD 2 billion would be needed to modernise the refinery at Sapugaskanda, a north Colombo suburb. The refinery, built in 1960s was able to handle only Iranian and Saudi light crude. The 50,000 barrels per day refinery needs modification and Sri Lanka was talking to Iran in this regard in 2008. Sri Lanka said that it was seeking alternative crude oil suppliers in view of the US sanctions on Iran coming into force around June this year. Over 90 per cent of Sri Lanka's crude oil requirements come from Iran.

MRPL to restart one crude unit

April 26, 2012. Mangalore Refinery and Petrochemicals Ltd (MRPL) will restart one of the three crude units at its 300,000 barrels per day (bpd) southern India refinery, which was shut due to water shortages. A regional court directed local authorities to supply 2 million gallons per day of water to MRPL. The authorities have assured restoration of full water supplies in "days to come". MRPL has delayed oil product shipments due to the refinery shutdown. The hydrogen unit and one hydrocracker are under commissioning and would be started in 2 days followed by a diesel hydro-desulphurisation unit. MRPL has three crude units -- Phase I of about 93,600 bpd, Phase II of about 142,800 bpd and Phase III of about 60,000 bpd -- and supplies oil products mostly in southern India.

Transportation / Trade

GSPL signs JVAs with IOCL, BPCL, HPCLto lay cross country pipeline

May 1, 2012. Gujarat State Petronet Limited (GSPL) and three PSU oil majors-Indian Oil Corp Ltd (IOCL), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL)- have executed joint venture agreements(JVA's) for developing three cross country natural gas transmission pipeline projects. The signing of JVAs with-IOCL, BPCL and HPCL marks completion of equity tie-up for the three cross country pipeline projects-Mallavaram-Bhilwara, Mehsana-Bhatinda and Bhatinda-Jammu-Srinagar. The pipelines would criss cross seven states such as Andhra Pradesh, Madhya Pradesh, Maharasthra, Haryana, Punjab, Rajasthan and Jammu and Kashmir.

Oil marketing firms losing ` 5.1 bn per day

May 1, 2012. Oil marketing companies are losing Rs.518 crore per day on sale of diesel, kerosene and domestic liquefied petroleum gas (LPG). Oil retailers are expected to lose Rs.13.91 on sale of each litre of diesel in the first fortnight of May, while under recoveries on domestic LPG are pegged at ` 480.50 per cylinder. Marketing firms are losing ` 31.49 on the sale of every litre of kerosene through the public distribution system.

India ships in 10 pc less Iran oil in March vs Feb-trade

April 30, 2012. India shipped in about 10 per cent less oil from Iran in March from the previous month, its second straight cut since the United States urged consumers to rein in purchases to pressure Tehran over its nuclear programme. India's imports from Iran were up a hefty 89 per cent in the month from a year ago, however, contrary to deep cuts effected by China and Korea, as refiners made up annual term purchases that were disrupted last year by payment problems.

Fuel supply to improve soon in four southern states: Indian Oil

April 27, 2012. Indian Oil Corp said restricted availability of fuel in four southern states was "temporary" due to partial shutdown of Mangalore Refinery Petrochemicals Ltd (MRPL) and supply would resume soon. To improve supplies, Hindustan Petroleum Corp (HPCL) is moving a tanker to be berthed in Chennai, the company said. It is also planning to import diesel from Singapore which is expected to be berthed in Chennai shortly. The products from MRPL are mainly consumed in Karnataka by all oil companies and HPCL is moving products from MRPL to part of Kerala, Tamil Nadu and Andhra Pradesh whereas Indian Oil and Bharat Petroleum Corp predominantly draw supplies from their subsidiary companies at Chennai and Kochi.

GAIL resumes cargo operations at Dabhol

April 27, 2012. GAIL India Ltd has resumed cargo operations at the nation's third liquefied natural gas (LNG) terminal at Dabhol after it repaired fenders at the port that were damaged by rough sea. A ship carrying maiden or the so called commissioning cargo, which will be used to prepare the site for commercial operations, had to move to high seas after the fenders lining the jetty got damaged. Fenders are bumpers used to absorb the kinetic energy of a berthing boat or vessel against the jetty. The fenders have been repaired and the ship has started discharging the cargo. The LNG carrier, called Excelerate, at the end of March brought a cargo from Statoil ASA Snohvit LNG plant in the Barents Sea off Norway. It had offloaded barely 5-10 per cent of the cargo when operations had to be suspended and the vessel shifted to anchor. GAIL owns 31.52 per cent stake in Ratnagiri Gas and Power Co Ltd -- the firm that owns the 1967 MW power plant and adjacent 5 million tons a year LNG import terminal at Dabhol in Maharashtra. The power plant and LNG terminal were built by now bankrupt US energy major Enron Corp about a decade back. Since it had been shut for so long, GAIL is taking all precautions in commissioning the terminal. The Belgian ship brought the commissioning cargo of 138,000 cubic metres around March 25 and was to start offloading from March 28.

Essar oil renews sales agreement with BPCL

April 27, 2012. Essar Oil Limited (EOL) has renewed a major product sale and purchase agreement with Bharat Petroleum Corporation Limited. The renewed four year agreement, running upto 2016 is for supply of diesel, petrol, kerosene and ATF (aviation turbine fuel) to BPCL from its Vadinar Refinery. EOL has similar product sale and purchase agreements with two other leading oil marketing companies from the public sector, namely Indian Oil Corporation Limited and Hindustan Petroleum Corporation.

Energy companies operating in Mozambique plan to ship Mozambique Gas to India

April 27, 2012. Energy companies operating in Mozambique, which reported one of the world's biggest natural gas discoveries in recent years, are eyeing the vast Indian market and have started discussions with state energy firms, hoping that the African nation will follow Qatar's footsteps in shipping vast quantities of gas to India. Videocon International and public sector Bharat Petroleum Corp Ltd (BPCL), which hold 10% each in six blocks in the deep-water Rovuma Basin, off the Mozambique coast in Africa, are interested in selling gas in India. The basin may hold 30 trillion cubic feet of gas, which can be liquefied and transported to Asia.

Policy / Performance

Govt appoints ministerial panel as RIL, Essar CBM price differ

May 1, 2012. The oil ministry plans to take coal bed methane (CBM) pricing matters to a ministerial panel as it sees a wide gap between prices offered by customers to Reliance Industries and Essar, a move that can further delay approvals. The prices from two different producers can vary because CBM quantities are relatively small compared to natural gas produced from NELP blocks such as Reliance-operated D6. Essar, following an open bidding process in August last year, discovered that price for bulk of its Raniganj (East) CBM was $4.2 per mmBtu, while Reliance's followed a similar exercise in February for its two blocks in Madhya Pradesh and discovered CBM price in range of over $10 per mmBtu. According to CBM contracts between energy firms and the government, the oil ministry is expected to approve CBM pricing in 60 days of application, but it could not take any decision despite within the deadline. Even in the case of Essar, some potential customers offered a price as high as $14 per unit, but their requirement was negligible compared to Gail India's bid, which offered $4.2 per unit rate for almost entire output.

Parliamentary panel asks Oil Ministry, DGH to monitor RIL's KG-D6 fields

May 1, 2012. A Parliamentary panel has asked oil ministry and DGH to closely monitor Reliance Industries' flagging KG-D6 gas fields saying any production decline should be supported by proper evaluation. RIL's KG-D6 fields have seen output drop by about 45% to less than 34 million standard cubic meters per day in the past two years. The Standing Committee on Petroleum and Natural Gas in its report on Demands for Grants for the ministry, stated that the production from KG-D6 fields should be in line with the target set. The current production is less than half of the output estimated for this time of the year in RIL's $8.8 billion investment plan for the block.

New refinery in India could boost trade with Pakistan

April 30, 2012. A new Indian oil refinery near its border with Pakistan could boost trade between the two countries through fuel sales. The $4 billion refinery near Bhatinda in India’s northern Punjab state can process nine million tons of crude oil a year. Islamabad has said it is close to removing petrol from a list of items banned for trade with India and India’s oil minister says New Delhi is prepared to export petroleum products and gasoline to Pakistan. Pakistan suffers from energy shortages. India imports nearly three quarters of its crude requirement, but it has huge refining capacity and can export petroleum products. Analyst Wilson John of the Observer Research Foundation in New Delhi says the move to open trade in fuel is part of recent efforts by the two countries to boost trade. 

ATF prices cut by ` 312 per kl

April 30, 2012. Oil companies reduced jet fuel prices by a marginal ` 312 per kilolitre or kl, the second reduction in rates this month. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was reduced by ` 311.74 per kl, or 0.46 per cent, to ` 67,319.71, Indian Oil Corp, making the announcement on behalf of the industry, said. The reduction comes on back of a ` 169.3 per kl cut in rates effected from April 16. But these reduction are dwarfed by the steep increases effected in March and early April. ATF rates were increased by 3.2 per cent on March 1, ` 1,298.88 per kl on March 16 and by another 2.8 per cent on April 1. Jet fuel was priced at ` 62,557.12 per kl before the three price increases. In Mumbai, jet fuel will cost ` 68,306.21 per kl against ` 68,630.93 per kl now. Jet fuel constitutes over 40 per cent of an airline's operating cost and the marginal reduction in prices will somewhat ease the burden of the cash-strapped airlines.

Oil Ministry extends deadline for receiving comments on regulations for LNG infrastructure

April 30, 2012. The oil ministry has issued a fresh notice to industry inviting its comments on regulating setting up of new liquefied natural gas terminals after energy firms challenged government's power when it issued a similar notice. The ministry said that the downstream regulator is competent to frame regulations for minimum capacity, open access commitment and physical specifications. The ministry asked industry to send their comments on the proposed regulation by May 6, extending the Apr 24 deadline, set up earlier. Energy firms such as Reliance Industries, BP, Shell, Gail and Petronet LNG have plans to either expand existing LNG infrastructure or set up new terminals to meet growing energy demands.

PM inaugurates ` 215 bn Bathinda refinery

April 28, 2012. Prime Minister Manmohan Singh inaugurated the ` 21,500 crore Guru Gobind Singh Refinery in Punjab's Bathinda district. Considered one the biggest investments in Punjab since independence, the refinery is located at Phullokari village near Bathinda town in southwest Punjab. Mittal also said that it had been made operational in record time. Punjab Chief Minister Parkash Singh Badal said that the setting up of the refinery was a "historic day for Punjab". The project's foundation stone was laid by the then prime minister Atal Bihari Vajpayee in 1998. However, it was stalled when the Congress government led by Amarinder Singh came to power in Punjab in 2002 and objected to the terms and conditions of the project. The project was revived in 2008 after the Parkash Singh Badal government returned to power in Punjab in 2007. The refinery, construction of which began in 2008, had started refining mineral oil in August 2011. A crude oil terminal and a 1,117-km cross-country pipeline were set up in a record time of 27 months to make the refinery operational.

PM says fuel prices need to be appropriate

April 28, 2012. India needs to set appropriate retail prices for refined fuels, the PM said, after retailers threatened to hike petrol prices unless the government compensates them for losses incurred for selling below cost. India's refiners sell cooking gas, kerosene and diesel at below-market prices set by the government to assist the country's poor and control inflation. But retailers who sell refined fuels threatened to hike gasoline prices this month in the face of mounting losses. Refiners were given freedom to fix their own gasoline prices in June 2010, but have not raised the price of the fuel since December 2011 despite sharp increases in global oil prices. India imports about 80 percent of its oil needs.

Govt accepts Oman's proposal of hike in gas prices

April 27, 2012. The government has accepted the proposal seeking hike in prices of gas supplied by Oman to an Indian fertiliser plant in the Gulf nation to $ 1.5 per mmBtu for this year, a move that will ensure uninterrupted supply of urea to the Indian market. The government's approving the hike in gas prices means that it has dropped the earlier proposal of challenging the move by Oman at the International Tribunal in London. The Cabinet has accepted Oman government's condition that it would increase gas prices by $ 0.5 per mmBtu every year up to $ 3 per mmBtu. The proposal was moved by the Fertiliser Ministry as it required Cabinet's approval for a change in the agreement between the two countries. This also states that government has dropped the idea of challenging the rise in gas prices at the International Tribunal in London.

Reduce petrol tax by ` 6 per litre: Oil Ministry

April 27, 2012. The oil ministry has asked for a tax cut of ` 6 per litre on petrol to help avoid a sharp rise in retail price of the fuel, but the finance ministry, which has already surrendered ` 49,000 crore by reducing various levies of fuels last year, is reluctant to forgo more revenue. The oil ministry's request follows demands by oil marketing companies to either cut taxes or allow them raise petrol prices by ` 8 per litre. The finance ministry is reluctant to cut duties that would reduce its revenues and jeopardize its fiscal consolidation plans. The finance ministry had already sacrificed ` 49,000 crore revenue through duties cuts on petroleum products in 2011-12.

ONGC wants Centre to offset additional cess on crude

April 26, 2012. Oil and Natural Gas Corp (ONGC), said that it has appealed the government to offset the additional cess on crude. Crude petroleum produced in India attracts a cess of ` 2,500 per tonne under the Oil Industries Development Act. As a measure of indexation, the Finance Ministry has proposed to increase the rate of cess to ` 4,500 per tonne in the Union Budget 2012-13, which impacts companies such as ONGC, and Oil India Ltd. This rate was last revised in Budget 2006-07. The subsidy burden on ONGC in first nine months of FY 2011-12 stood at ` 32,690 crore, compared to over ` 24,890 crore in FY 2010-11. The Ministry of Oil and Petroleum has taken up the issue with the Union Finance Ministry.

RIL told to sign GSPA with NTPC, 10 gas distribution companies

April 26, 2012. The government has ordered Reliance Industries (RIL) to sign agreements with NTPC and 10 city gas distribution firms for supply of natural gas from its eastern offshore KG-D6 fields. The Oil Ministry shot off three separate letters to RIL asking it to sign Gas Sales and Purchase Agreement (GSPA) with NPTC, city gas projects and Delhi's Bawana project. RIL has been ordered to supply of 2.16 million standard cubic meters (mmscmd) a day to NTPC and smaller quantities to city gas projects in Hyderabad, Kakinada, Delhi, Indore, Ujjain, Agra, Kota, Meerut, Dewas and Sonipat.

Oil ministry holds back nod to Arrow Energy for China links

April 26, 2012. Chinese equity in the new owner of Arrow Energy, that operates five coal bed methane (CBM) blocks in India, has prompted the oil ministry to hold back approval for the company's request to amend its CBM contracts to reflect the change in ownership. Arrow, an Australian company specialising in CBM and shale gas, was acquired by an equal joint venture of Shell and PetroChina in August 2010. Subsequently, its international assets, including Indian CBM blocks, were hived off to a new company Dart Energy. Dart Energy wants the CBM contract to reflect its name in place of Arrow, but the oil ministry has rejected its application four times in the past year, although on technical grounds that the request was not made in proper format.

Don't approve RIL's D6 costs before our audit: CAG to Centre

April 25, 2012. India's national auditor has again cautioned the government it should not rush to validate the entire expenditure of Reliance Industries in the D6 block because part of the money was spent after 2008, the period for which accounts have not been audited. The Comptroller and Auditor General of India, or CAG, Vinod Rai, told the Public Accounts Committee of Parliament at a meeting that in his view money spent by Reliance in developing the field should be reimbursed from gas sales only after D6 accounts up to 2011 are audited. The CAG's view could potentially escalate the row between regulatory authorities and Reliance Industries, which has initiated legal action over the issue of fully recovering its investment. RIL says its contract allows full, not partial, recovery of costs. RIL had proposed in 2004 to spend $2.47 billion and produce 40 mmscmd of gas. Two years later, it secured approval to spend $8.8 billion to produce 80 mmscmd, extend the field's life to 13 years from nine years, and raised estimates of gas reserves to 10 trillion cubic field from 3.8 tcf. Actual production has now fallen to 35 mmscmd, making authorities wonder if RIL should be reimbursed for building infrastructure appropriate for a much higher volume of gas. According to annual accounts of the D6 block, up to March 2011, RIL has spent $5.7 billion on the D1 and D3 gas fields and $1.73 billion on the MA oilfield in the block, the government said.



Madhucon Projects to build 300 MW power plant in Indonesia

May 1, 2012. Madhucon Projects Ltd has won a tender in Indonesia to build a 300-MW (2x150-MW) coal-fired steam power plant. PT Madhucon Sriwijaya Power, an Indonesian special purpose vehicle, has entered into a power purchase agreement with the Indonesian Government electricity body PTPLN (PERSERO), to generate and supply 300-MW gross capacity for 25 years. The total project cost is around $410 million. The plant will be located near to the existing Dawas coal mine of Madhucon Group’s company PT Madhucon Indonesia. Madhucon Projects is an infrastructure company with interests in highways, road, power, coal, dams, irrigation and railways.

SGS to inspect Lanco's 250 MW gas power plant in Iraq

May 1, 2012. India-based Lanco Group has selected SGS to provide equipment and material inspection services and to manage on-site quality control for the construction of its new gas power plant, AKAZ, in Al-Anbar province, Iraq. SGS has started performing quality assurance and quality control services which will continue through the three-year agreement to reduce the construction risk. The AKAZ power plant will have a capacity of 2x125MW, and construction is expected to be complete in three years.

33 power plants have coal stocks of less than 7 days

April 30, 2012. As many as 33 power plants of the total 89 have coal stocks barely enough to generate power for 7 days according to Central Electricity Authority (CEA). Of these 33, some 18 power stations have coal stocks less than enough to generate power for four days. Although Coal India, the monopoly supplier of coal, is located in Eastern India, this region has the highest number of stations with super critical stock position. Eastern India 9 stations with super critical stock position as of April 26. Super critical stock position refers to coal stocks enough to generate power for four days and critical stock position refers to stock position The highest number of critical stock position was from North India at 14 stations. This region had only 7 stations with super critical stock position. According to CEA, most of the plants that have super critical or critical stock positions are because of less receipt of coal from Coal India. These includes plants like Badarpur Thermal Power Stations (TPS), Unchahar TPS, Ukai TPS, Bhusawal TPS and Talcher TPS. About 17 power stations are suffering from near depleted stock due to less imports.

PFC sets up SPV for 4 GW power project in Jharkhand

April 27, 2012. Power Finance Corp (PFC) said it has formed special purpose vehicle (SPV), Deoghar Mega Power Ltd, for developing a 4,000 MW ultra mega power project in Jharkhand. Deoghar would be the second ultra mega power project (UMPP) in the state after Tilaiya, which is being executed by Reliance Power, the company informed the BSE. Power Finance Corporation, the nodal agency for UMPPs in the country, has awarded four such projects so far. Three UMPPs -- Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaya (Jharkhand) were bagged by Reliance Power and one at Mundra in Gujarat is being developed by Tata Power.

Bihar proposes to set up 25 hydel power projects

April 26, 2012. Facing acute power shortage, Bihar has taken steps for setting up 25 hydel power projects for generating about 800 MW with the proposals at various stages of approval. It has 54 MW capacity hydel power plant and work is on at various stages for construction of different hydel power projects with generation capacity of 33 MW, Bihar State Hydel Power Coporation Ltd said. The state government has sent a proposal to the Centre with Detailed Project Report (DPR) for the long-cherished 130 MW Dagmara Hydel Power Project over River Kosi in Bihar's flood-prone Supaul district. The Dagmara project's fate hung in balance previously as the Central Electricity Authority had not given nod to it in view of submergence of vast areas in bordering Nepal. The World Bank and Asian Development Bank and Japanese financial institution JAICA too have evinced interest in the project.

Transmission / Distribution / Trade

JK govt appoints PwC for corporatisation of its T&D sector

May 1, 2012. In a major step to bring down transmission and distribution losses and put in place a better power setup, Jammu and Kashmir government has appointed international consultant, PricewaterhouseCoopers (PwC), to suggest ways for corporatisation of the sector in the state. PwC has been engaged as consultant to assist the State government for improving the transmission and Distribution sector in Jammu and Kashmir, State Power Ministry said. The State cabinet has accorded in-principle approval for corporatisation of T&D sector. The Comptroller & Auditor General of India (CAG), in its report, has rapped Jammu and Kashmir government for failure to implement High Voltage Distribution System (HVDS) and Accelerated Power Development reform Programme, resulting in T&D loses rising to 62 percent. Despite spending ` 491.84 crore on six projects during 2006-11 with progressive expenditure of ` 812.90 crore ending March 2011, the envisaged benefits could not accrue, the CAG report said. PwC has furnished a preliminary report regarding unbundling of various costs of the T&D utility. The consultants have also set a target for giving the final report on the unbundling during 2012-13.

Koodankulam nuclear project: 2,000 engineers work overtime to meet deadline

April 30, 2012. A team of nearly 2,000 Indian and Russian engineers are working round-the-clock to commission the Koodankulam nuclear project’s first 1,000 MWe reactor unit in a tightly compressed time schedule of slightly over a month. The final inspection of the equipment at the first unit is in advanced stages and the process of obtaining clearances from the Atomic Energy Regulatory Board of India (AERB) for fuel loading is underway. The first unit is expected to start generating power after a trial run of about 15 days. Under the intergovernmental agreement, Russian state-owned nuclear engineering company JSC Atomstroyexport is helping build the 2,000 MWe first phase of the Koodankulam project in Tamil Nadu.

Alstom T&D bags ` 840 mn substation contract

April 30, 2012. Alstom T&D India said it bagged a ` 84 crore contract from Chattisgarh State Power Transmission Co Ltd for commissioning of a 400 kV substation at Jagdalpur in Chattisgarh. Under the terms of the contract, Alstom will provide three-phase auto transformers and shunt reactors, as well as the entire substation automation system and associated equipment, including diameters, feeder bays.

Power Grid completes 40 MW transmission project to Nepal

April 29 2012. With three key projects aimed at beefing up the power transmission capacity between India and Nepal achieving completion, an additional 40 MW of electricity transfer from India to the Himalyan nation is expected to commence over the next couple of months. The wrapping up of the projects by the Indian side — executed on the ground by state-owned transmission major Power Grid Corporation — comes at a time when the country is working hard to set the ball rolling on its strategic initiative of putting in place a multilateral SAARC Market for Electricity (SAME) on the lines of the Nord Pool in the Scandinavian countries and the West African Power Pool. Nepal, which is facing an electricity deficit of around 300 MW, currently draws around 50 MW from Bihar currently under a bilateral pact, along with some additional transfers from NHPC’s Tanakpur hydro station in Uttarakhand. Extra power transfers from India would help Nepal in a big way to bridge the continuing electricity shortages back home. Nepal has already, in pinciple, agreed to substantially ramp up power buys from India, with plans already underway to increase the power exchange volume to 200 MW by ramping up capacity between the two countries.

NTPC won't sign separate fuel supply agreements for new and old units

April 27, 2012. NTPC will not sign separate fuel supply agreements (FSAs) for new units and old units at the same power station as is now required by Coal India. It intends to sign the same set of contracts - the one it has already signed for some of its units. The company will be consuming almost 50% of the incremental coal that will be supplied by Coal India Ltd (CIL) under the new draft agreement.

Industries can now purchase power from open market

April 26, 2012. The government has invoked special powers under the Electricity Act and directed the central and state regulators to implement a long-pending reform to allow industrial consumers to buy cheaper power from the open market. The move will help 15,000 large consumers particularly the sick textile, cement and steel industrial units in states like Punjab and Tamil Nadu by ensuring regular supply of electricity at competitive rates and boost business of power bourses and 52 power traders including NTPC, PTC India, Tata Power, Reliance Infrastructure, Jindal Steel, Essar Power, JSW Energy, GMR Energy and Indiabulls.

Shortfall of 600 MW; lignite output down 80 pc: NLC

April 26, 2012. Strike by around 14,000 contract workers of Neyveli Lignite Corporation (NLC) has led to a 600-MW shortfall in power generation and affected lignite production. NLC said 1,890 MW was generated out of NLC's total capacity of 2,490 MW. Over 80 per cent of Lignite production in Mine 1 and 1A had been affected. Lignite production was 9,000 tonnes against the daily production of 45,000 tonnes.

Haryana electricity bills recovery crosses ` 36 bn mark

AprIL 25, 2012. The Uttar Haryana Bijli Vitran Nigam has recovered ` 3682.74 crore from the electricity consumers upto March during the last financial year, which is ` 434.20 crore more as compared to the amount recovered during corresponding period of 2010-11. The maximum amount of ` 586.84 crore was recovered in operation circle Ambala comprising districts Ambala and Panchkula followed by ` 568.72 crore in operation circle Panipat, ` 565.04 crore in Sonepat, ` 406.24 crore in Karnal, ` 385.60 crore in Yamuna nagar, ` 313.83 crore in Rohtak, ` 293.31 crore in Jhajjar, ` 222.62 crore in Kurukshetra, ` 172.03 crore in Kaithal and ` 168.51 crore in operation circle Jind. There was an increase of 13.37 per cent in remittance Into banks (RIB) in 2011-12. On an average, the Nigam had supplied more than the scheduled electricity to consumers daily to achieve ‘full consumer satisfaction’.

BEST to sign 25 year power purchase deal with Indiabulls

April 25, 2012. Expecting an exponential increase in power demand in the island city over the next four years, the Brihanmumbai Electric Supply & Transport (BEST) undertaking has decided to sign another long-term power purchase agreement like the one it has with Tata Power Co. The BEST committee approved the signing of a power purchase agreement with Indiabulls Power for 300 megawatt. The firm will start supplying power from 2016. The state government’s proposed Dharavi redevelopment plan and the construction of a business district in Wadala by the Mumbai Metropolitan Region Development Authority are likely to drive this growth in the demand for electricity. As per the agreement with Indiabulls, the company will supply power at ` 3.42 per unit as the base price for 25 years. The current agreement with Tata Power — which will expire in 2016 — is for 932 MW at ` 3.54 per unit. BEST will start a fresh bidding process in 2013-end for a long-term supply of 1,000 megawatts, so that it has the capacity to cater to 1,300 megawatts by 2016.

Policy / Performance

Uttarakhand High Court cancels 2 GVK-L&T deals, awards 1 to Reliance Infrastructure

May 1, 2012. The Uttarakhand High Court has ordered cancellation of two hydropower project contracts of the GVK-L&T consortium and awarded one of them to Reliance Infrastructure Ltd. The High Court said awarding of the 200-MW Mapang Bogudiyar and 170-MW Bogudiyar Sirkari Bhyol projects in favour of GVK-L&T "was utterly mala fide." GVK Power & Infrastructure said the company would study the court judgment and seek review at an appropriate forum.

UPPCL ready with hawk eye to check power pilferage

April 30, 2012. Power pilferers beware! The state government will keep vigil on every unit of power used by consumers. Ushering in a new format of power distribution system, the UP Power Corporation Limited (UPPCL) is set to install meters in every transformer through which electricity is supplied to consumers. The UPPCL move is part of the 'energy accounting process' initiated under the Centre's flagship scheme, Accelerated Power Development and Reform Programme. The meters installed in the transformers will be connected to the main data centre at UPPCL headquarters in Shakti Bhawan through a modem that will help in monitoring almost every unit of power passing through the transformers. This will then be equated with the energy for which revenue has been received. Till now, such meters were installed only in high capacity power transformers. But, this failed to check power pilferage. The detailed proposal drawn by UPPCL envisages installation of smaller transformers through which only limited consumers will be provided electricity. These smaller transformers will have meters that will measure energy movement through them.

CIL signs fuel supply pacts with 10 power firms, says Zohra Chatterjee

April 30, 2012. Coal India Ltd (CIL) has entered into fuel supply agreements (FSAs) with ten power firms for supplying a minimum assured quantity of fuel to power producers as per the government directive. Zohra Chatterjee, Additional Secretary, Ministry of Coal was also handling the additional charge of CIL CMD till recently. The coal producer has signed agreements with companies which include Lanco Anpara Power and Bajaj Hindustan. The government issued a Presidential directive to Coal India to sign fuel supply agreements (FSAs) with the power producers assuring them of at least 80 per cent of the committed coal delivery.

24 hydro power projects pending due to environmental clearance: K C Venugopal

April 30, 2012. As many as 24 hydro power projects, having capacity above 25 MW, are pending for want of environmental and forest clearances, Minister of State for Power K C Venugopal said. Venugopal said the Power Ministry is also regularly reviewing the status of environment and forest clearances for power projects and are taking up the matter with the Ministry of Environment & Forests for expeditious clearances. The Minister said 51 hydro electric projects -- having capacity above 25 MW -- aggregating to 13,332 MW capacity have been taken up (under execution) in different states of the country. Venugopal said the Karnataka government has submitted a Detailed Project Report (DPR) for a ` 1,522.82 hydro power plant in the state. The DPR is under preliminary scrutiny of Central Electricity Authority, Central Water Commission and Geological Survey of India.

Power Min plans review of electricity regulators

April 29, 2012. The Power Ministry has set up a panel to look into various proposals including introduction of appraisal system for central and state electricity regulators. The mandate of the committee is to examine and make recommendations on proposed amendments in the Electricity Act 2003. The panel, chaired by Central Electricity Authority (CEA), would look into the proposal of reviewing the performance of regulatory commissions, among others. However, the Forum of Regulators -- comprising chairperson of Central Electricity Regulatory Commission (CERC) as well as chairpersons of State Electricity Regulatory Commissions (SERCs) -- is not in favour of such a system.

Rajasthan scraps ` 120 bn power project tenders won by BHEL

April 29, 2012. The Rajasthan government has scrapped tenders worth ` 12,000 crore that were bagged by Bharat Heavy Electricals (BHEL) more than a year ago for two separate thermal power projects in the state. Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RVUN), a state government company, has scrapped EPC (Engineering, Procurement and Construction) tenders for upcoming new super critical units of Suratgarh and Chhabra thermal power stations. RVUN cancelled the separate tenders floated for two 660 MW units -- each for Suratgarh and Chhabra, respectively, without specifying any particular reasons.

EGoM supports surplus coal for Reliance Power

April 28, 2012. A panel of ministers has endorsed the government's move to allow Reliance Power to use surplus coal from the mines attached to the Sasan ultra mega power project to generate electricity in another plant, Law Minister Salman Khurshid said. The Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, also suggested that the government should formulate policies to prevent any ambiguity about such issues in the future, he said.




Iran to develop Forouzan oil field in Persian Gulf

April 30, 2012. Iran announced plans to develop Forouzan oil field, the biggest joint oil field with Saudi Arabia in the Persian Gulf. The National Iranian Oil Company (NIOC) started developing Iran's biggest offshore oil field in the Persian Gulf which is shared with Saudi Arabia. The operation has begun by sending the first jacket related to the development of Forouzan oil field to the Persian Gulf. The huge structure made by a special jacket manufacturing yard in Iran's southwestern port city of Khorramshahr, weighs about 4,000 tons and is carried by a special vessel. If climatic conditions are good, it will be installed by late May. The second jacket related to the Forouzan oil field development project will be sent to the offshore field. The main goal of the Forouzan oil field development project is to extract more than 300 million barrels of crude oil in the next 25 years. The field will also yield about 250 million cubic feet per day of natural gas which will be transferred to Kharg Island via an undersea pipeline. Forouzan oil field, in the Persian Gulf, is shared with Saudi Arabia. Extraction of oil from the field started in the early 1970s and the field produced about 550 million barrels of oil by the end of 2002.

PetroChina profit unexpectedly rises on higher oil output

April 27, 2012. PetroChina Co.’s first-quarter profit rose unexpectedly after it ramped up oil and gas production, while China Petroleum & Chemical Corp.’s earnings slumped on losses from selling fuels at state-controlled prices. China, which controls fuel prices to curb inflation, raised them by as much as 11 percent in the first quarter, while Brent oil rose 12 percent from a year earlier to $118.45 a barrel in the period. The government raised prices as much as 7.1 percent while crude gained 13 percent. Gas production rose 11.2 percent to 710.9 billion cubic feet, with the average realized price climbing 9.9 percent to $4.87 per thousand cubic feet. Overseas production rose 17.1 percent to 31.2 million barrels of oil equivalent in the first quarter, the company said. PetroChina still has “huge” potential to expand its oil output. Overseas oil and gas output will count for 50 percent of PetroChina’s production before 2020. Production of oil and gas abroad reached 120.8 million barrels, less than a 10th of the total of 1.3 billion barrels, or 3.5 million barrels a day.

Norway’s Arctic oil bonanza gets reality check in pipe limbo

April 26, 2012. Norway is grappling with how to turn last year’s oil and gas finds in the Arctic Circle into real money as the world’s seventh-largest crude exporter seeks to sustain output after more than 40 years of extraction. Norway, whose oil finds in the North Sea starting in 1969 helped turn it into the world’s second-richest nation per capita after Luxembourg, can’t waste time in deciding on how to transport what it finds off its northern tip down south to the rest of Europe, Petroleum and Energy Ministry said.

Mexico oil opening first time since 1938 shows revival

April 26, 2012. For the first time in 74 years, Mexico may allow private investment in its oil and gas, the third-largest reserves in Latin America. Enrique Pena Nieto, the leader in all major polls to win the July 1 presidential election and a member of the party that nationalized the industry in 1938, said April 12 that Mexico’s oil production “can outperform and grow” through private investment. The same day, his closest rival, Josefina Vazquez Mota, proposed to list “a minority stake” in state oil monopoly Petroleos Mexicanos, which has $126 billion in revenue.


Delta to buy ConocoPhillips refinery for $180 mn

May 1, 2012. Delta Air Lines Inc. is bringing some jet-fuel production in house, breaking with U.S. carriers’ reliance on outside providers, by acquiring a refinery that Phillips 66 had targeted for shutdown. The world’s second-biggest airline will pay $180 million for the complex in suburban Philadelphia. Pennsylvania’s state government is putting up $30 million in assistance to defray the expense. An airline-owned refinery is an experiment in the U.S. industry. Atlanta-based Delta estimated the accord will save $300 million on its annual fuel bill, which was $11.8 billion, or about $32 million a day.

Record-high gasoline further burdens consumers in Europe

April 30, 2012. The average retail price in the European Union’s 27 member nations surged to a peak of 1.69 euros a liter ($8.44 a gallon) on April 20 with Germany, France, the U.K., Greece, Italy and Spain all at records. The cost of gasoline at the pump in the continent, more than double U.S. levels, had made a fresh high every week since Jan. 13. U.K. gasoline advanced to a new all-time high.

Sinopec unit sues BNP Paribas for $47 mn

April 29, 2012. A unit of China Chemical & Petroleum Corp, also known as Sinopec, has sued French bank BNP Paribas SA in a Hong Kong court to recover $46.6 million for breach of a contract. Sinopec's unit Unipec Asia Co Ltd, alleged that BNP Paribas breached a stand-by letter of credit. The oil company can also pursue damages in relation to the breach of contract. Sinopec, Asia's largest refiner, owns Unipec Asia through its oil-trading unit China International United Petroleum & Chemicals Co, also known as Unipec.

Gabon signs deal to build new refinery

April 25, 2012. An adviser to Gabon's President, Ali Ben Bongo Ondimba, said the government has signed a Memorandum of Understanding with Samsung, a South Korea-based company, to build a new oil refinery in the Central African nation. The refinery is expected to be the constructed in the oil hub of Port-Gentil. The new refinery would replace SOGARA, the Gabonese Refining Company, which is too old and incapable of processing the quantities required by Ondimba's policy on developing the country's raw materials. The old refinery, which was built in 1967, currently produces about 21,000 barrels per day. The construction of the new refinery is scheduled to be completed before the end of 2016. Experts from South Korea are currently in Gabon to begin feasibility studies about the refinery project.

Transportation / Trade

Canada's Northwest Territories open to LNG option

May 1, 2012. The government of Canada's Northwest Territories, hit by persistent delays in development of a C$16.2 billion ($16.5 billion) natural gas pipeline, could support a liquefied natural gas alternative for vast reserves in the region's Mackenzie Delta. A month after proponents of the Mackenzie Valley gas pipeline said they had chopped spending on the project, LNG has to be looked at as an option. Holders of gas reserves in Canada's Far North have discussed a pipeline to southern markets since the 1970s, and Imperial Oil Ltd has led efforts over the past decade to move the project forward with support from aboriginal groups who seek economic development in their communities.

Energy Transfer to buy Sunoco to add oil, gas logistics

May 1, 2012. Energy Transfer Partners LP is discussing a pipeline project with its counterpart at Sunoco Inc. Before the talks were over, it decided to buy the whole company for $5.3 billion. The agreement to purchase Sunoco is the third time it is swept up a rival pipeline operator in the past 13 months, paying a total $12.6 billion in cash and shares. Each deal has been calculated to expand Dallas-based Energy Transfer’s footprint and business mix, transforming it from a regional natural-gas pipeline operator to a national shipper of gas, crude and refined fuels.

Weir sees international fracking market doubling in three yrs

May 1, 2012. Weir Group Plc., the world’s largest provider of hydraulic fracturing equipment in the oil industry, expects the international market for the pressure-pumping gear to roughly double over the next three years. The amount of equipment used to shoot jets of water and sand underground to blast open oil- and natural-gas-bearing rock should grow to about 2 million horsepower in places outside the U.S. and Canada, up from about 1 million horsepower.

GE O&G to supply subsea systems to ATP Cheviot field

April 30, 2012. GE Oil & Gas will supply ATP Oil & Gas Limited with subsea production equipment, ancillary systems and related services for ATP's signature Cheviot field project in the North Sea, under the terms of an $80 million contract. ATP is a unit of Houston, Texas-based ATP Oil & Gas Corporation. The Cheviot field lies approximately 62 miles (100 kilometers) east of the Shetland Isles in the northern part of the North Sea and is a redevelopment of a previous field with still significant reserves that ATP can recover economically and with modern technology.

BG to sell stake in Chilean LNG terminal

April 27, 2012. BG Group announced that it has reached agreements with Enagas S.A. of Spain for the sale of its 40% equity interest in GNL Quintero S.A. for up to $352 million. The Stock Purchase Agreement (SPA) is structured in two tranches. The first tranche refers to the sale of 20% equity in GNLQ for a consideration of $176 million and is subject to a standard regulatory consent and pre-emption. The second tranche refers to the sale of the remaining 20%, for an additional $176 million and is also subject to partner and lender consents. The transactions are expected to complete by the end of 2012.

Mercuria’s CEO says energy trader in talks to sell 20 pc

April 27, 2012. Mercuria Energy Trading SA, a closely held commodities trader, is in talks with potential investors to sell a stake of much as 20 percent of the company, its chief executive officer (CEO) said. The eight-year-old company, based in Geneva, is seeking to expand and buy assets as it enters metals and agriculture markets and enlarges operations in China and the U.K. Mercuria is in early discussions with several parties and hopes to reach a deal within 18 months.

Policy / Performance

Drillers may frack first, disclose later under draft plan

May 1, 2012. Natural-gas companies drilling on U.S. land would be permitted to wait until after hydraulic fracturing is completed to disclose what chemicals they used, under a draft rule being considered by the Interior Department. A version in February required companies to file a complete chemical makeup at least 30 days before work began, a mandate that drew complaints from energy trade groups, including the Washington-based American Exploration and Production Council. The rule might slow energy production, they said. President Barack Obama has pledged to increase U.S. natural-gas output in a way that doesn’t hurt the environment. Delaying disclosure will make it harder for homeowners to prove that drilling was responsible for tainted water. Disclosure before fracking would let landowners test for the specific chemicals drillers plan to use. Otherwise, pre-drilling tests may not detect all fracking chemicals.

Iraq prepares 5 year O&G development program

April 30, 2012. The Iraqi Oil Ministry and the Planning Ministry have prepared a five-year program of development of oil and gas sector in the country. Under this plan, from 2013 to 2017, the country will vigorously develop the oil and gas sector, involving a large investment and foreign companies. Thus, from the beginning of 2013 the country plans to increase oil production from 2.9 million barrels of oil per day to six million barrels by the end of 2017. Thus, Iraq is going to get the total income (including income from oil sales) of $ 8 trillion by the end of 2013 at an average cost of an oil barrel of $85. According to BP, Iraq's proven oil reserves as of early 2011 amounted to 115 billion barrels. The country ranks in third after Saudi Arabia and Iran. The major oil fields of Iraq are Rumaila, Zubair, Nahr Umr, Majnoon and West Qurna in south of the country. Some 80 per cent of oil produced in the country is exported.

Aurora Oil seeks more shale deals as U.S. gas declines

April 30, 2012. Aurora Oil & Gas Ltd., an Australian company developing shale holdings in Texas, said the lowest U.S. natural-gas prices in a decade have created opportunities for further deals in the Eagle Ford region. Aurora is interested in more purchases and partnerships after a A$104 million ($109 million) bid announced to acquire Eureka Energy Ltd., another Australian explorer active in the Eagle Ford. A drop in U.S. natural-gas prices has led some shale producers to consider asset sales to cut debt or seek partners to develop oil assets.

Libya’s former oil head Ghanem found dead in Vienna River

April 30, 2012. Shokri Ghanem, Libya’s former prime minister and top oil official who defected to the rebels in June, was found dead in the Danube River in Vienna, Austrian police said. Ghanem’s body was discovered floating in the river, a few hundred meters from where he lived. Initial signs show death by drowning. Ghanem, was previously chairman of Libya’s National Oil Corp. The uprising against former Libyan leader Muammar Qaddafi broke out in February 2011, and Ghanem left the government about four months later. He didn’t join the post-Qaddafi administration, and the rebel council picked Nuri Berruien to head the NOC last September. Libya has the largest oil reserves in Africa, according to BP Plc, and is the continent’s third-biggest producer. The nation pumped about 1.35 million barrels a day this month, approaching its pre-war output of 1.6 million barrels. Ghanem said in February that he was living in Austria, working as a consultant, and that he would like to return to his home country.

Nigeria seeks 4 million-barrel per day crude oil capacity

April 29, 2012. Nigeria plans to increase oil production capacity to 4 million barrels a day by 2020 and expand its crude reserves to 40 billion barrels, Petroleum Minister Diezani Alison-Madueke said. Africa’s largest oil producer also aims “in the years ahead” to boost output of liquefied natural gas by an additional 20 million metric tons a year from the current level of 26 million tons. Nigeria pumped an average of 2.1 million barrels a day of oil this month. The country estimates its current crude reserves at 37 billion barrels and its gas reserves at 187 trillion cubic feet.

Iran to tap local banks for petrochemical projects

April 29, 2012. Iran’s National Petrochemical Co. plans to borrow from local banks some of the $50 billion it needs to develop 60 projects by the end of 2015. The company seeks to broaden its output to 85 products from the current 25 and wants to build production hubs in the northeastern city of Sarakhs, the port of Chabahar, and the Persian Gulf islands of Lavan, Qeshm and Kish. Iran is trying to expand petrochemicals-making capacity to 51 million metric tons a year in 2015.

CNPC, ICBC to join Ecuador-Venezuela refinery project

April 28, 2012. China's biggest oil producer China National Petroleum Corp. (CNPC) and the country’s largest commercial bank by assets Industrial & Commercial Bank of China Ltd. (ICBC) have been in talks to join an Ecuador-Venezuela oil refinery project. CNPC and ICBC have already signed a letter of invent to joint the project, and will hold follow-up talks in the Ecuadorian capital Quito in June, Minister Coordinator of Strategic Sectors Jorge Glas said. The $13 billion Refineria del Pacifico, which is a 300,000-barrel-a-day refinery and petrochemical complex is due to be built by Ecuador and Venezuela by 2016. Ecuador's state-owned group Petroecuador holds 51 percent stake in the project, while Venezuela's Petroleos de Venezeula owns the remaining 49 percent. Glas said there has been interest from other countries in the project. Ecuador president Rafael Correa said the two Chinese companies have expressed a strong interest in taking complete control of the project.

Ex-BP worker accused of destroying 2010 Gulf spill texts

April 25, 2012. A former BP Plc engineer was arrested on charges of intentionally destroying evidence requested by the U.S. about the size of the 2010 Gulf of Mexico oil spill, in the first criminal case arising from the incident. The U.S. said Kurt Mix, who worked on internal BP efforts to estimate the amount of oil leaking from the well, deleted text messages between him and a supervisor. Mix, was charged with two counts of obstruction of justice in a criminal complaint unsealed in federal court in New Orleans.



First Gen may expand Pagbilao coal power plant

May 1, 2012. First Gen Corp. has renewed its interest in buying into the planned expansion of TeaM Energy Corp.’s 735-megawatt Pagbilao coal-fired power plant. In 2007, First Gen agreed with TeaM Energy Corp. to take one-third of the Pagbilao coal-fired power plant expansion project. TeaM Energy agreed to give First Gen rights if they decide to expand. TeaM Energy Corp. - the joint venture between Tokyo Electric Power Corp. and Marubeni Corp. - earlier said it was preparing to expand by another 400-megawatt the 735-MW Pagbilao coal-fired power plant. TeaM Energy said they have agreed to have a 50-50 joint venture with AboitizPower Corp. - the independent power producer administrator - for the contracted capacity of the Pagbilao power plant.

Iran nuclear power plant works at near full capacity, IRNA says

April 30, 2012. Iran’s first nuclear power plant was connected at almost full capacity to the national power grid on April 28, the Islamic Republic News Agency (IRNA) reported. The 1,000-megawatt Bushehr plant is generating 940 megawatts.

Siemens partners Nigeria to support financing of power plants

April 30, 2012. Siemens, a global powerhouse operating in energy electronics and electrical engineering sectors has announced that it has set plans in motion to strengthen its partnership with Nigeria by way of support in the financing of power plants projects in Nigeria. The company disclosed this when  President Goodluck Jonathanthe Federal Republic of Nigeria, Goodluck Jonathan and  industrial delegation, visited the Siemens gas turbine factory in Berlin, Germany on April 20, 2012.  In the course of the visit, an agreement was signed between the company and the Nigerian Federal Ministry of Power to strengthen their strategic partnership.

New 210 MW hydro power station to be built in Georgia

April 25, 2012. President Mikheil Saakashvili marked the start of construction work for a new hydro power station in a mountainous region in Western Georgia. The Nenskra power station in the village Chuberi will deliver 210 megawatt when finished. According to Georgia’s Energy Ministry, the Chinese Company ShinoHydro will build Nenskra HPP. USD 630 million will be invested. Constructions will be managed by Georgian Railway’s subsidiary Company Nenskra. Until constructions begin road to the location will be rehabilitated. According to Energy Ministry, works will probably end by 2017. Annual of the new station will be 1, 2 billion kilowatt an hour. In winter it will be 260 million kilowatt an hour.

Korean thermal plant breaks records in power generation

April 25, 2012. ABB has delivered in record time a new Symphony plant automation system for a 500 MW supercritical unit at South Korea’s largest thermal power plant, enabling the unit to start production 11 days ahead of schedule. The unit holds the world record for running without unscheduled downtime. The solution is the first of four new plant automation systems that ABB is contracted to deliver for units 3-6 at the Boryeong Thermal Power Plant in South Korea. All four units have been operating since 1994 and were the first super critical coal-fired units to be built in South Korea.

Transmission / Distribution / Trade

Kazakhstan to invest about $700 mn in transmission line construction

May 1, 2012. Kazakhstan will invest about 700 million US dollars in the construction of the «Eastern Transit» power transmission line. The transmission line is assumed to start from the northern sources of energy, which are Ekibastuz through Semei to Ust-Kamenogorsk, then connect to Taldykorgan and Almaty. The Eastern Transit will solve a number of associated problems, including the development of the mining industry in the Aktogai district and the development of transport infrastructure in power supply of the railroads. The total length of transmission line will be almost 1,500 kilometers and the estimated cost of the project is approximately 700 million US dollars.

Uganda: Govt, Norway sign $54 mn power grant

April 29, 2012. Uganda and the Norwegian government have signed a $54 million (Norwegian Kroner 300 million) financing agreement for the construction of the Nkenda -Hoima transmission line. The five year financing development cooperation that is set to take off 2012 will see the construction of a 227.7 km, 220kv double circuit transmission line to the Albertine Graben and facilitate the evacuation of power from the local mini hydros undertaken in the region. The project will be implemented by Uganda Electricity Transmission Company under the auspices of the Ministry of Energy and Mineral Development. The transmission line will transform the communities in the western part of Uganda.

'Huge Fault' shuts Zimbabwe power station, causes more load-shedding

April 27, 2012. Zimbabwe's power utility, ZESA, says massive power cuts currently affecting the nation are a direct result of a huge technical fault at its Hwange thermal power plant. ZESA says repairs are underway and is expecting the power plant to be up and running again. Load shedding worsened mid-week following the fault at Hwange, plunging the country into darkness. This follows a recent decision by Mozambique's power utility, Cahora Bassa, to cut the amount of electricity it gives Harare dues to a huge unpaid debt.

Policy / Performance

Malaysian firm buys stake in power plant

May 1, 2012. Investment agreements involving a new strategic partner in Hidd Power Company (HPC) were signed at the Finance Ministry premises between the Bahrain government and Malaysian independent power producer Malakoff Corporation Berhad (MCB). Through its subsidiary Malakoff International Limited, MCB has purchased 40 per cent of HPC, Bahrain's power and water generation facility which emerged after the acquisition of Al Hidd Power and Water Station by an international consortium in 2006.

Kenya electricity set for biggest gain in 5 yrs

April 30, 2012. Kenya Electricity Generating Co., the East African nation’s largest power producer, headed for its biggest gain in five years on bets rainfall across the country will increase the amount of energy generated. Hydroelectric plants provide about 65 percent of KenGen’s power generation, according to the company.

Japan to seize Tepco on same terms as 2003 Resona rescue

April 29, 2012. Japan plans to seize control of its biggest utility on the same terms it applied to a bailout of the nation’s fifth-biggest bank nine years ago. The government will inject 1 trillion yen ($12 billion) capital into beleaguered Tokyo Electric Power Co. as early as July, taking more than 50 percent of voting rights in return. It will have an option to boost to two-thirds its voting rights in the utility known as Tepco. Trade and Industry Minister Yukio Edano has said Japan will adopt the model used to rescue Resona Holdings Inc. in 2003, when it pumped almost 2 trillion yen into the bank for 70 percent control. Tepco has been on government life-support since last year’s earthquake and tsunami wrecked its Fukushima Dai- Ichi nuclear station, causing reactor meltdowns and forcing about 160,000 people to evacuate from nearby areas.

Iran says it may halt nuclear program over sanctions

April 26, 2012. Iran is considering a Russian proposal to halt the expansion of its nuclear program in order to avert new sanctions. The Russian plan would let Iran avoid a European Union ban on its crude that is scheduled to come into force in July. Iran will ensure it maintains its right to produce nuclear energy. The U.S. and European Union allege Iran is seeking to build a bomb, not just make fuel for electricity production and medical research, as the country maintains.



National Solar Mission completes 89 pc of allotted capacity

April 30, 2012. The National Solar Mission, which aims to install 20,000 MW capacity of solar energy by 2020, has commissioned 89% of its allotted capacity in its first stage, government said. The government had signed power purchase agreements (PPA) with 28 solar power developers for 140-MW solar photo voltaic (PV) projects in January 2011, out of which 125-MW of capacity stands commissioned currently. For solar thermal sector, power purchase agreements were signed for 27 projects for a capacity of 470 MW in batch 1. They would be commissioned by May 2013.

Tata BP Solar CEO resigns as Chinese rivals hurt Indian manufacturers

April 30, 2012. The chief executive officer (CEO) K. Subramanya of Tata BP Solar Ltd. resigned, exiting India’s third-largest panel maker as the industry struggles to cope with oversupply from Chinese competitors that’s crushed prices. Indian panel makers such as Tata BP, Indosolar Ltd. and Moser Baer India Ltd. are struggling along with counterparts in the U.S. and Europe after lower-cost Chinese manufacturers boosted supply. Germany and Italy, the two biggest markets for the technology, have scaled back subsidies for renewable energy. Indian manufacturers received almost no orders for the more than 700 megawatts of sun-powered capacity under construction in the nation and have idled their factories, Subramanya said.

India and Brazil to drive the global wind energy capacity addition

April 27, 2012. The global wind industry will install more than 46 GW of new wind energy capacity in 2012, according to a five-year industry forecast published by the Global Wind Energy Council (GWEC). By the end of 2016, total global wind power capacity will be just under 500 GW, with an annual market in that year of about 60 GW, the report said. Overall, GWEC projects average annual market growth rates of about 8% for the next five years, but with a strong 2012 and a substantial dip in 2013. Total installation during 2012-2016 is expected to touch 255 GW, with cumulative market growth averaging just under 16%.

Suzlon bags wind power project from UK's Eoxis

April 27, 2012. Wind turbine maker Suzlon Group said it has bagged a contract to set up a wind power project in Rajasthan from UK-based Eoxis group. The project will be set up in Rajasthan and is scheduled to be commissioned by January, 2013. Suzlon will execute the contract under its end-to-end business model, it said. Eoxis is an investee company of Platina Energy Partners, an independent European investment firm focusing on renewable energy. It has invested in solar projects in Europe, and also recently completed its first 15 MW solar project in Gujarat. This 50.4 MW order is the group's first investment in the Indian wind energy sector.

R-Power's Dahanu solar plant starts supply to Maharashtra

April 27, 2012. Reliance Power's photovoltaic solar power plant in Jaisalmer district, Rajasthan, has started commercial operations to provide electricity to thousands of households and businesses in Maharashtra. Under the power purchase agreement, the entire power generated by this plant would be supplied to Maharashtra. The plant is located, 180 km in the West of Jodhpur, and has one of the highest levels of solar irradiation in the country. The $ 147.5 million Dahanu plant, near the village of Dhursar in the Jaisalmer district, is one of the largest such units in the country. ADB has provided $ 48 million loan for this project. It is also lending $ 103 million to Reliance Power to help build the Rajasthan Concentrating Solar Power Project, which will be located adjacent to the Dahanu plant.

Govt may re-introduce sops for wind farms

April 26, 2012. The renewable energy ministry is planning to re-introduce incentives for the wind energy sector to allay fears that capacity addition could fall after the sops were withdrawn from April 1. The government rolled back two key incentives for the sector this year: accelerated depreciation and generation-based incentive. Industry players say the withdrawal of these sops will keep power producers at bay and could reduce annual capacity addition to less than 1,000 MW in 2012-13, against the target of 3,000 MW.

SECI to be fully functional by June

April 25, 2012. Solar Energy Corporation of India (SECI), formed primarily for executing the Jawaharlal Nehru National Solar Mission (JNNSM), will be fully functional by June. Under the JNNSM launched in 2010, the government intends to commission 20,000 MW in grid-connected solar power by 2022. In the first phase, solar power generation capacity of around 1,100 MW will be created by 2013, which will be further increased to 10,000 MW by 2017 in the second phase of the programme.

Moser Baer Solar enters CDR cell

April 25, 2012. India's solar power ambitions may get a jolt with the first major company in the industry Moser Baer Solar headed to the corporate debt restructuring cell with ` 739 crore in restructuring. Moser Baer Solar is a subsidiary of Moser Baer India. Another subsidiary company Moser Baer Photo Voltaic with a debt of ` 823.63 crore was admitted to CDR in January. Firms operating in the solar energy space have been under strain following developments in European markets.


LDK solar cuts 5,554 workers amid clean-energy shakeout

May 1, 2012. LDK Solar Co., the world’s second- largest maker of wafers, cut 5,554 workers this year after plunging prices cut margins to record lows amid a shakeout that’s claimed thousands of renewable-energy jobs. LDK, which reported the lowest margins among its publicly traded peers, has cut its staff about 22 percent to 19,195 workers since the end of 2011. The Chinese maker of polysilicon, wafers and solar panels has pared a third of its workforce since July, when it peaked at more than 28,000, in reaction to the “highly competitive” solar market. Solar manufacturers from China to the U.S., such as First Solar Inc., are under pressure after oversupply in all parts of the supply chain depressed prices. Since September, the spot price of polysilicon has fallen by a third, wafers are 35 percent lower and silicon-based solar panels are 25 percent cheaper.

Green targets being watered down for UN summit - observers

May 1, 2012. Some of the main proposals in a draft text for negotiation at a U.N. sustainable development conference next month are being watered down at informal talks in New York, observers said, heightening fears the summit will fail to deliver. The Rio+20 summit in Brazil from June 20-22 is expected to draw more than 50,000 participants from governments, companies and environmental and lobby groups. It will try to hammer out sustainable development goals across seven core themes including food security, water and energy but is not expected to produce mandatory targets.

Merkel’s green jobs ambition stalls with cuts for solar

April 30, 2012. German Chancellor Angela Merkel’s effort to create jobs in renewable energy is faltering as subsidy cuts and competition from Chinese manufacturers forces the industry to stop hiring for the first time in eight years. Employment in Germany’s clean energy industry probably will “stagnate” this year after creating about 31,600 jobs a year since 2004. Four German solar companies filed for protection from creditors since December including Q- Cells SE, once the world’s biggest cell maker.

German solar installs almost double last year’s, regulator says

April 30, 2012. Germany installed about 650 megawatts of solar panels in the first two months of the year, almost double the amount compared with the same period of 2011, the Bundesnetzagentur grid regulator said. Installations rose to about 450 megawatts in January and about 200 megawatts in February, the regulator said. Germany, the world’s second-biggest solar market last year, added about 266 megawatts and 100 megawatts in the same period of 2011.

World Bank arm considers funding Sri Lanka waste-to-energy plant

April 30, 2012. The World Bank’s private-sector financing arm is considering $9 million in debt and equity funding for a project in Sri Lanka that will sell electricity produced from burning municipal waste. RenewGen Enviro Ventures India Pvt. won a 25-year contract to build and operate a 10-megawatt plant in Sri Lanka’s Western Province. The $29 million project will be able to incinerate as much as 580 metric tons a day of solid municipal waste. Japan’s Hitachi Zosen Corp. will provide the technology and the electricity will be sold to the Ceylon Electricity Board.

China New Energy building waste-to-biofuel plant in China

April 30, 2012. China New Energy Ltd., a maker of biofuel technology, signed a letter of intent to develop a facility in northeastern China that will use non-edible plant waste to produce clean fuel. China New Energy won the 20 million-pound ($32.5 million) contract from a unit of state-owned Jilin Ethanol Industrial Company Ltd. to convert an existing plant to a more efficient version. It will produce about 50,000 tons of biofuel a year. China is seeking to cut carbon-dioxide emissions by as much as 17 percent per unit of gross domestic product in its five- year plan through 2015. China aims to derive 15 percent of its energy from non-fossil fuels by 2020. The facility should start working by the end of next year, and China New Energy expects it to generate as much as 20 million pounds of revenue by late 2013.

TransAlta abandoning Canada carbon-capture project

April 28, 2012. TransAlta Corp., Canada’s largest publicly traded electricity producer, abandoned a project to trap and store emissions from an Alberta coal-fired power plant, delaying global efforts to foster a carbon dioxide capture and storage industry. TransAlta said the potential revenue from selling carbon didn’t justify the cost of completing the project. Carbon-capture and storage projects in at least five countries have been delayed or canceled in the last year over environmental concerns and questions about the technology’s economics that thwarted TransAlta.

China carbon blockage begins to ease

April 27, 2012. China is starting to approve emission credits after a seven-month freeze, stoking speculation a glut that’s contributed to an unprecedented decline in European carbon prices will keep growing. The world’s second-biggest economy began issuing letters approving credits in the three years starting 2013, according to Tricorona, a unit of Barclays Plc. The Project Developer Forum, a lobby group whose members have received credits worth about 3.7 billion euros ($4.9 billion), said China, which doesn’t publish carbon-governance rules, halted the approvals in August last year.

Carbon price needed to halt warming, NASA chief says

April 27, 2012. Putting a price on carbon is the world’s best hope at staving off runaway global warming, said James Hansen, the top climate-change scientist at the U.S. National Aeronautics and Space Administration (NASA). Carbon emitted from cars and factories will have to be reduced by an average of 6 percent a year to stabilize Earth’s climate by the end of the century, Hansen said. Government subsidies to oil, gas and coal companies, worth up to $500 billion worldwide each year, have impeded the transition to alternative technologies, he said.

Japan to boost clean-energy capacity 13 pc using price incentives

April 27, 2012. Japan will boost renewable-energy capacity by about 13 percent through the year ending March 2013 after it begins a price incentive program for generators this July, the Ministry of Economy, Trade and Industry said. Japan will add 2,500 megawatts of clean energy including solar and wind in the fiscal year, the ministry said. The country currently has a capacity of 18,750 megawatts. Utilities must pay above-normal rates to renewable energy producers under the incentive program. Costs will be passed onto power users as a surcharge of as much as 0.4 yen (0.5 cent) a kilowatt-hour, the ministry said. An average household will pay as much as 100 yen a month for the surcharge, it said.

UK's Cameron sees North Sea as green energy hub

April 26, 2012. Britain's North Sea has the potential to lead the world in offshore wind and carbon capture and storage technology, British Prime Minister David Cameron said as over 20 companies signed a deal to turn the region into a major renewable energy hub. Major utilities such as Britain's Scottish Power and Norway's Statoil, manufacturers ranging from Siemens to Gamesa and supply chain companies are supporting a plan to develop the offshore wind potential of the North Sea, provisionally named Norstec.

Koch-backed group hits Obama on green energy waste

April 26, 2012. A conservative group backed by the billionaire Koch brothers unveiled a $6.1 million advertising blitz in eight election swing states that accuses President Barack Obama of wasting billions of dollars on green energy. The 60-second ad from the Americans for Prosperity group accuses Obama of spending on green energy initiatives that have led to little job creation and says that some of that money has instead gone abroad.

London Olympics carbon footprint is 20 pc lower as venue sizes cut

April 26, 2012. The London Olympic organizers cut their carbon-emission forecast for staging the event by a fifth after scaling back the size of venues and renting rather than building seats, tents and crowd barriers. The so-called carbon footprint of the games, which begin on July 27, will be equivalent to 315,000 metric tons of carbon dioxide, the London Organizing Committee of the Olympic Games said. That’s a decline of more than 20 percent from the 400,000 tons estimated in March 2010.

Climate goals require $5 tn investment by 2020

April 25, 2012. Five trillion dollars of investment is needed worldwide by 2020 in renewable power, energy efficiency and cleaner transportation to contain rising global temperatures, the International Energy Agency said. After fuel savings of $4 trillion are taken into account, the net investment required by 2020 is about $1 trillion to ensure the temperature gains since industrialization don’t exceed 2 degrees Celsius (3.6 Fahrenheit). While renewable energy is on track to deliver its share of the savings, other industries are falling behind in efforts to build projects employing nuclear power, carbon capture and storage, biofuels, efficiency measures and technology that cuts emissions from coal plants.

REC closing Norway solar wafer plant on China competition

April 25, 2012. Renewable Energy Corp ASA (REC), Europe’s second-largest polysilicon producer, is closing its second wafer factory in five weeks after competition from Chinese rivals drove down prices by more than two-thirds for the material used in solar panels. REC will cease production at the plant in Heroya, Norway, in the second quarter, eliminating 460 jobs, REC said. Polysilicon spot prices fell to a record low of $24.27 a kilogram, down from $78.46 a year ago and $475 in 2008. Manufacturers have expanded production capacity, especially in Asia, leading to a glut. REC announced plans in March to close its other Norway wafer factory, in Glomfjord, which has annual production capacity of 300 megawatts. The Heroya plant makes enough polysilicon wafers to produce 650 megawatts of solar cells a year. When the Norway factories close, REC will produce wafers at a Singapore factory that has 700 megawatts of wafer capacity and also make solar cells and panels. The company produces polysilicon, which it turns into wafers that are cut into individual solar cells and assembled into panels.

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.