MonitorsPublished on May 08, 2012
Energy News Monitor I Volume VIII, Issue 47
Imported Coal Power Purchase Obligation (ICPPO) can bring uniformity in tariffs

Ashish Gupta, Observer Research Foundation


nderstanding the situation that it is a necessity for India to import coal for fueling its power plants we have brought out the urgency for bilateral agreements between India and coal rich potential countries in the last issue.  It is important for the Government to look into the issue of bilateral agreements with the countries where coal resources exist. This is one part of the solution and it will take time for becoming a reality.  Till then the power sector must import coal on its own.  Though we cannot make an argument against coal imports, the major question is how the imported coal prices will be absorbed by the power producers and then the end consumers.  This is a critical issue as power producers are under pressure to provide power at reasonable price to the consumers which is very difficult task when they are using imported coal.

As we are aware that around 43,000 MW worth of power projects are awarded under competitive bidding route in which 13,000 MW are based on imported coal. These imported coal projects will be major sufferer as prices of coal rises significantly in the international market but the increment cannot be passed on to the consumers because under the competitive bidding route, power producers have to abide by the tariff quoted by them. Given India’s power expansion plan there is bound to be a shortage of coal which will be bridged only through imported coal.  Its impact on price of power is very critical as it will not be possible for individual projects or state governments to absorb those prices. If distribution companies are allowed fully to pass on the hike to the consumers then the retail tariffs may increase many fold. Already power distribution companies are seeing strong opposition from the domestic consumers for another tariff hike as their bills have already been increased by 22 – 30% in various states and may be industrial consumers will join them soon. Therefore, the question is by what mechanism we can rationalize prices so that the interests of both the consumers and as well as producers will be taken care off. Is there a solution for this?

Yes, there is solution and it is working well for the renewable sector through Renewable Purchase Obligation (RPO) which is the minimum amount of energy to be purchase by the state utilities in order to meet the renewable targets and utilities are bound that portion of the electricity that they are supplying should be through renewable plants.

The prevailing situation demands for imported coal not only for projects based on imported coal but for other power plants as well. Seeing India’s requirement for coal imports, the above obligation for renewable energy may be replicated for imported coal in the form of Imported Coal Power Purchase Obligation (ICPPO) where in all utilities are mandated to procure some percentage of imported coal based power. The idea is to provide a level playing field for all the power plants and just not to provide cushion for imported coal based plants. The obligation could be removed in the future when domestic production increases. But the major hurdle is to get consensus as many states that have got cheap coal linkage will not be willing to take up additional obligations. Another hurdle is investment which will be required by the power plants for installing equipments which can accommodate imported coal as many of the power plants having technology for indigenous coal only.

Having said this, leaving behind the problems, implementing such kind of obligation will not only help in rationalizing the prices but also bring uniformity in tariffs across the country. The adoption of approach while implementing such obligation should be done in a manner where the interests of small & medium power projects will not be hampered and every one in the chain can achieve economies of scale.



Will a Trillion Dollars meet a Billion aspirations?

Lydia Powell, Observer Research Foundation


he 12th Five Year plan estimates for infrastructure investment to sustain a growth of 9-9.5 percent in the next five years is about a trillion dollars, double that of the 11th plan period. The target for the 11th plan is said to have been met barring a few billion dollars with about 36 percent of the investment coming from the private sector. In the 12th Plan period, over 50 percent of investment in infrastructure is expected to come from the private sector in what has come to be called Public Private Partnerships (PPP). Even if anticipated investment materializes during the 12th Plan period, will it actually meet the aspirations for energy, transportation, housing and education of over billion people?

Public Private Partnerships are often seen as the best mix of public provision and privatization.  In India it is seen primarily as a means to finance infrastructure without adding to public debt. As a softer alternative to privatization, it is seen as a way to get a private company to borrow money to build a power plant, road or a transportation service, operate it over a number of years and recoup investment from revenue. Although the term PPP was hardly used before the 1990s, Governments across the world have offered concession contracts to the private sector to develop electricity, gas and water systems for centuries. The basic idea is that the private company will invest its own money in return for a Government guaranteed monopoly over providing the service in a specified area. 

As a recent paper points out, one of the arguments put forward to promote the case for PPPs is that ‘there is no alternative’. It is said that financial constraints on borrowing by the Government and a reluctance to increase user charges or taxes means that power projects or roads will not be built without PPPs. This argument is not necessarily true especially after the financial crisis which requires Governments to increase public spending and borrowing to support the financial sector and the economy. A serious problem with this argument is that it is used to dismiss the need to show value for money. If there is no alternative then it cannot be compared with anything to demonstrate that it is not offering value for money. 

The second argument is that PPPs are better because they do not cost the public or the public sector anything.  It is believed that the Government does not have to pay anything for public infrastructure projects built through the PPP mechanism and therefore the Government can spend on other worthy causes such as rural economic revival programmes. This is also untrue as construction of projects is financed with public funds or user revenue.  Money is borrowed from the same financial institutions as PPPs do not access some special new source of finance. Over the life of a project it is very likely that PPPs will involve higher public spending than a conventional project because of higher cost of capital.

Then there is the notion that PPPs allow for risk transfer or risk sharing. In PPPs risk is said to be transferred to the private sector but what is not said is that this ‘risk transfer’ is not free. Contracts which transfer risks to the private partner such as delay in construction to the private partner typically cost 25 percent more than conventional contracts. Risk transfer may not always be the best solution for a delay in execution may cost the public sector more than what it paid for ‘risk transfer’. The IMF has cautioned that Governments may overprice risks and over compensate the private sector which would raise the cost of PPPs relative to direct public investment. 

There is also the oft repeated argument that the private sector is more efficient than the Government and that they can finance projects cheaply and easily and operate services more efficiently. The first claim is clearly untrue as most Governments around the world can borrow more cheaply than private companies.  The second claim has been disproved by a number of empirical studies. A study on electricity utilities in the USA showed that private utilities consistently had higher costs and higher charges compared to public utilities. A study of cities with different types of bus services found that efficiency did not depend on ownership. Even in the telecommunications sector where the private sector is presumed to be far more efficient than the public sector studies show that efficiency gains in the private sector were smaller than efficiency gains in the public sector. 

It must be kept in mind that PPPs do not come out of vacuum. They need to be created and this involves a significant transaction cost. Often these transaction costs make PPP projects far more expensive than public projects. Private companies have a vested interest in exaggerating the expected demand for a service and for projecting lower cost for setting up the service to get the project approved. A global study found that 90 percent of all rail and road projects had underestimated cost and overestimated demand. Renegotiations which are so common in PPP projects always favour of the private sector. Take the case of the Delhi Airport, a flagship PPP project. The project cost has gone up from ` 3500 crore in the initial bid to ` 6000 crore in 2007 and to ` 9000 crore in 2008. The current cost is estimated to be ` 12,500 crore. Many of the Ultra Mega Power Projects which were secured with low cost estimates are now up for renegotiation. 

Governments speak about progressive ‘Partnerships’ between the ‘Public’ and ‘Private’ sector that will bring roads, energy and water but in reality Governments are abdicating their responsibility in providing basic services and giving away market share in public service provision to private companies at a discount. When PPPs boost cost and increase charges to make profits what they are essentially doing is pricing common people out of access to public services. 

Globally, the concept of PPP has opened a large market for many companies. The shares of the 75 largest companies providing infrastructure services which account for the largest proportion of PPPs in a global index increased by over 250 percent over six years from 2001 compared to global average of 100 percent increase for all major companies. Financial institutions including specialist private equity firms operating so called infrastructure funds are actively buying into infrastructure PPPs. The largest of these is said to be the Australian Bank Macquarie. The underlying attraction of the investment is a reliable cash flow from essential services or government guaranteed payments. At the end of five years the Government may proudly say that a trillion dollars was invested in infrastructure but that may not mean that a billion aspirations have been met.


Absorbing Latest Technologies and Repowering Wind Energy

Sonali Mittra, Observer Research Foundation


ind energy is the fastest growing renewable sector in the country. With a cumulative deployment of over 13,000 MW capacity, it nearly accounts for 70% of the renewable energy installed capacity. The Ministry of New and Renewable Energy has been at the forefront of providing the support for accelerated development of wind energy through proactive and regulatory interventions so far, but there is definitely a need to revise the policies and introduce new innovative measures for optimal potential utilization of wind energy resource.

In the latest information released by the Ministry of New and Renewable Energy (MNRE), wind energy potential stands at 49, 130 MW at a height of 50m, as compared to earlier estimates of 45,000 MW. The Ministry has established 653 wind monitoring stations in the country through Centre for Wind Energy Technology (C-WET), Chennai for carrying out wind resource assessment. A second phase has already been initiated to assess potential of wind energy at a height of 100 m in 75 locations and at 120 m height in 4 locations. To harness this vast potential being explored with new assessment studies, it is being inherently realized that planning needs to done for developing the wind technology.

Technologies of megawatt class wind turbine have been changing all over the world. According to Dr. S. Gomathinayagam, executive director C-WET, wind power assessments have been extended to match the latest technologies available, for instance, taller towers with larger diameter rotors suitable for the Indian market. This is further pushed by the fact that the Indian market has matured over the past few years as a result of improvement in infrastructure available to handle bigger turbines and economics of the sector. The multi-megawatt turbines installed at a greater sub-height have allowed a single power generator to capture more energy per tower. Subsequently, larger machines have resulted in a steady increase in the capacity factor on average from 10-12% to 20-22%. Currently, megawatt-scale turbines account for over half the new wind power capacity installed in India.

The technological advancement and the new found result of the assessment studies in the sector demands for policy interventions for two main areas. One, given finding sites and establishing transmission corridors is a significant investment, government needs to make sure that the developers maximize the use of available sites for wind power generation, utilizing the latest technology available. Installing fewer higher capacity turbines versus installing a greater number of smaller turbines reduces overall capital investment by lowering installation, maintenance and potentially real estate cots, thereby being most cost-effective and energy efficient. Two, government should encourage repowering of old wind farm on a large scale. Replacing old turbines with new designs would bring considerable benefits to states which face power shortages and also are host to sites with good wind power potential, which is not being used efficiently at the moment. Currently, neither the states nor the central government provides dedicated policy support or incentives to bolster Indian wind power developers or investors to repower their old projects.

Therefore, a new policy package should be developed to address repowering incentives as well as providing appropriate buoyancy to the latest technologies available in the market at the new sites, for overall improvement in the capacity utilization of wind energy resource.



Region-wise Hydro Electric Potential & Achievement

As on March 31, 2012

Akhilesh Sati, Observer Research Foundation



Identified Capacity

Capacity Developed

Total (MW)

Above 25 MW

in MW

in %

(of above 25 MW)


Jammu & Kashmir





Himachal Pradesh

























Uttar Pradesh





Sub Total (NR)






Madhya Pradesh

























Sub Total (WR)










Andhra Pradesh




















Sub Total (SR)

























West Bengal










A & Nicobar





Sub Total (ER)



































Arunachal Pradesh










Sub Total (NER)











Source: Central Electricity Authority







Reliance cuts India gas reserves estimate by 7 pc

May 8, 2012. Indian energy conglomerate Reliance Industries has cut estimates for proven gas reserves in its Indian blocks by 6.7 percent to 3.67 trillion cubic feet, it said. Reliance's growth outlook has been marred by falling gas output from its huge gas fields, with production less than half of what was originally estimated. India's oil minister said gas output at Reliance's D6 block, off India's east coast, is projected to decline to 20 million standard cubic metres a day (mscmd) in 2014/15 from an estimated 28 mscmd in this fiscal year. Earlier this year, Canadian oil and gas producer Niko Resources Ltd, which owns a 10 percent stake in the D6 block, said it expects lower natural gas reserves at the block and the area's geological model may need to be revised.

Oil drilling firms such as RIL, ONGC, SGPC face sea of troubles in KG Basin

May 7, 2012. Once seen as the solution to India's energy problems, the Krishna-Godavari Basin's gas reserves, and the companies that have drilled there, are in a sea of troubles with mounting uncertainty over government policy and question marks about how much gas can be extracted. Apart from Reliance Industries Ltd, which has surrendered a block in KG Basin and has seen output from the prolific KG-D6 block almost halve in two years to 35 mmscmd, state-run firms Oil and Natural Gas Corp (ONGC) and Gujarat State Petroleum Corp (GSPC) have also struggled to deliver in the deep-sea region, which requires specialised technology and equipment. Reliance's output has fallen to about 34 mmscmd instead of rising to 80 mmscmd, and the company has been sternly treated by the Director General of Hydrocarbons and the oil ministry, but other companies have either not started production or are pumping tiny quantities of oil and gas, much behind schedule. ONGC's GS-15 field in the KG Basin is producing barely 0.19 mmscmd of gas and 9,400 barrels of crude oil per day. ONGC was slated to start production from the GI block by July 2012, but now that could be delayed. In 2004, ONGC had declared that G1 and GS15 would be India's first "digital fields" with "smart wells" and contracts had been awarded to develop them.

DGH rejects commerciality of RIL gas finds

May 7, 2012. DGH has refused to recognise two significant natural gas discoveries that Reliance Industries had made in a Mahanadi basin block, because the company failed to conduct its prescribed test to ascertain the find. The Directorate General of Hydrocarbons (DGH) said RIL that Dhirubhai 32 and 40 gas finds in the Mahanadi basin block NEC-25 cannot be recognised as a discovery because RIL had not carried out drill stem tests (DSTs) on them. RIL says the two finds, on which it had conducted other tests, may hold 663 billion cubic feet of gas reserves and can produce 170 million standard cubic feet per day from six wells. It had proposed an investment of USD 1.17 billion in developing the finds and another USD 23.5 million annual operative expenditure in producing 476 billion cubic feet of gas over the life of the field.

Cairn-Vedanta deal: Ex-ONGC Chairman RS Sharma denies foul play

May 5, 2012. Former chairman of ONGC RS Sharma stoutly denied any foul play or lapses by the state-owned company while approving the recently concluded $8.5 billion Cairn-Vedanta deal. This comes after the Supreme Court, taking cognizance of a public interest suit that sought criminal investigation as well as scrapping of the Cairn-Vedanta deal, issued notices to the government, Cairn Energy, Vedanta and ONGC.

ONGC undertakes massive exploration campaign in Chambal Valley

May 3, 2012. State-run energy explorer has taken up a massive exploration campaign in the Chambal Valley of Rajasthan. In that area, ONGC is operating in three NELP Blocks - VN-ONN-2003/1, VN-ONN-2004/1 and VN-ONN-2004/2 awarded by the Government of India and the blocks encompass districts of Kota, Bhilwara and Baran. Apart from these blocks, ONGC is the licensee and holds 30% participating interest in the RJ-ON 90/1 block of Barmer Basin, which is the largest onshore discovery in India recently. Exploration activities currently underway in Chambal Valley area comprise a massive seismic survey campaign followed by drilling of exploratory wells. Two wells are under drilling presently; one each at Chechat and Palaita. One well at Suket area is to be drilled shortly and preparation for the same is in progress. Based on the outcome of these wells, few more prospects have been identified for drilling for hydrocarbon probing and its commerciality, said the company.


MRPL restarts 2 of 3 crude units

May 7, 2012. Mangalore Refinery and Petrochemicals Ltd (MRPL) has restarted two of three crude distillation units (CDUs) at a 300,000 barrels-per-day (bpd) plant that was closed more than a week ago following water shortages. The last of the CDUs is undergoing maintenance and is expected to restart in the second-half of May.

Numaligarh refinery extends shutdown to end-May

May 7, 2012. India's fire-damaged 60,000 barrel-per-day (bpd) Numaligarh refinery will extend its shutdown by about 25 days to the end of May. The start of the planned maintenance was brought forward from end of April to mid-April after a fire broke out at a 22,000 bpd hydrocracker unit at the refinery in Assam on April 7. The shutdown was initially expected to last about 20 days, but will now take about 45 days to complete.

Hindustan Petroleum delays Vizag plant maintenance

May 3, 2012. Hindustan Petroleum Corp has delayed maintenance plans at a crude unit and a secondary unit at its Vizag refinery in south India by at least six weeks to the earliest in the second week of May. The company had planned to shut a 60,000 barrels per day (bpd) crude unit and a fluid catalytic cracker at the 166,000 bpd Vizag refinery from April to May for 45 days. But this has now been delayed to May-June.

BPCL arm Bharat Oman Refineries to raise $140 mn ECB for Bina refinery

May 2, 2012. Bharat Oman Refineries, a company promoted by state-run Bharat Petroleum Corporation with equity participation from Oman Oil Company, is raising $140 million (` 737 crore) of external commercial borrowing for its refinery project at Bina in Madhya Pradesh. BORL will raise the US-dollar term loan at an annual interest rate of 3.45% above Libor, or London inter-bank offered rate. Bankers said that the company was able to get an attractive rate since the ECB has irrevocable and unconditional guarantee from BPCL. Deutsche Bank AG is the mandated lead arranger for the ECB. The consortium of banks financing the 8-year term loan includes Deutsche Bank, DBS, BNP Paribas, and Societe Generale.

Transportation / Trade

Diesel pipeline of Mathura refinery bursts

May 4, 2012. An Indian oil Corporation (IOC) diesel pipeline, connected from the Mathura refinery to Jalandhar, burst near Umrala village at Kosi kala town in Mathura. Several persons in the village tried filling up their vessels with the leaked diesel. Several litres of diesel were lost in the alleged pilferage attempt. Such attempts were made earlier too when poeple tried stealing diesel. Immediately after the incident, hundreds of villagers gathered around the pipeline and filled up their buckets, matkas and glasses with diesel. Reportedly, the leakage went on for at least an hour, resulting in a loss of several hundred litres of diesel.

Pak to cap oil imports from India at 5 pc

May 3, 2012. Pakistan is considering a proposal to limit oil imports from India to 5-10 per cent of the total requirement till confidence-building measures between the two countries take root. Pakistan's total oil imports currently stand at around USD 14.5 billion and annual imports of petroleum products from India will not be allowed to exceed USD 1.5 billion at the initial stage. The two countries are in discussions on the issue of import of petroleum products, including liquefied natural gas, from India. The two sides are exploring the possibility of LNG supplies from India that could be transported through bowsers and tankers via land route as this could provide relief to bulk consumers in Pakistan's Punjab province, particularly around Lahore and Faisalabad.

Policy / Performance

IGL-PNGRB case adjourned again to May 22, 2012

May 8, 2012. IGL's (Indraprastha gas limited) hearing in the high court against the petroleum and natural gas regulatory board (PNGRB) has been adjourned to May 22, 2012. The sole supplier of compressed natural gas in Delhi/NCR has appealed in the court against the regulatory board's decision to regulate its network tariff and selling price. PNGRB in its order dated April 9, 2012 has asked IGL to cut down its network tariff by 63%. In a retrospective decision, it also asked the company to refund the difference to its customers for the period from April 1, 2008 till the date of issuance of order. IGL in its petition has however alleged that PNGRB is not entitled to regulate the price of gas sold by the company and the variables taken into account by the board to calculate the network tariff are misleading.

Gas consumption to jump to 356.16 mmscmd by 2014-15, says Jaipal Reddy

May 8, 2012. Oil minister Jaipal Reddy has said natural gas output from Reliance Industries' D6 block would drop to 20 million standard cubic meters per day in 2014-15 but output of coal bed methane would raise domestic gas production marginally.

The minister projected a wide gap between gas demand and supply of domestic output, which would be met by importing liquefied natural gas (LNG). India, which is currently consuming 166 mmscmd gas, will see demand rising to 356.16 mmscmd by 2014-15, Reddy said.

Domestic production of natural gas has fallen sharply because output from Reliance-operated D6 block, which started falling since March 2010 after achieving a peak of 61.8 mmscmd. The block's current output is about 34 mmscmd and according to Reddy it will average at 28 mmscmd in the current financial year. The output from D6 is expected to be around 24 mmscmd in 2013-14, Reddy said.

Reliance says that the block's output is on a decline because of geological complexities. But the oil ministry did not agree with RIL and on May 2 it slapped a notice to the company disallowing about $1 billion cost recovery. The government wants to deduct the amount from Reliance's share of profit from the field as it feels the company should be punished for building excessive infrastructure, which is now idling. RIL executives say the same facilities will be fully utilised and help cut costs drastically when it develops 16 new discoveries in the same block.

The oil ministry said, India's natural gas consumption would rise to 254.2 mmscmd in the current fiscal year and it would jump to 284.27 mmscmd in 2013-14. According to Reddy, gas output from blocks operated by state-run ONGC and Oil India would remain stagnant around 58 mmscmd and 10 mmscmd respectively till 2014-15.

India vows cuts in Iranian-oil imports as Clinton visits

May 8, 2012. India will curtail its imports of Iranian oil by 20 percent, as U.S. Secretary of State Hillary Clinton held talks in New Delhi to enlist India’s help with sanctions aimed at pressuring Iran over its nuclear program. Asia’s third-biggest oil importer will cut purchases of crude from Iran to 14 million tons from 17.5 million tons in the 12 months ending March 31. Iranian crude would account for 7 percent of India’s imports in fiscal year 2013, down from 10 percent currently.

India is “certainly working toward lowering their purchase of Iranian oil” and “we hope they will do even more,” Clinton told a gathering of students and civic leaders in the eastern Indian city of Kolkata, before flying to New Delhi for government meetings. The U.S. believes that there is sufficient production from Saudi Arabia, Iraq and other Persian Gulf nations for Iran’s customers to find alternate suppliers, she said.

RIL says unexpected geology shrank KG-D6 output; oil ministry unconvinced

May 8, 2012. Mounting mistrust between the oil ministry and Reliance Industries has cast a cloud on the future of the prized D6 block as the government continues to maintain a stern posture toward the company while RIL struggles to justify further expenditure on the deep-sea block it operates.

Matters came to a head when the ministry issued a notice to RIL saying it will disallow reimbursement of $1 billion from RIL's field-development costs as gas output has fallen sharply, leaving many facilities unutilised. RIL will be allowed to recover all its costs if gas output rises to previously projected levels, but the uncertainty, company say, is making operations difficult. RIL says gas output fell because of unexpected geology, and it plans to use the currently surplus infrastructure to pump gas from other fields in the region, but the government is unconvinced.

The oil ministry is contemplating further restrictions on recovery of development costs in the next two years, when output is projected to fall further, and it has no immediate plans to approve the block's budgets for the past two fiscal years unless the company accepts the deduction in the costs it can recover, oil ministry said.

India said to deny local branch for Iran bank on U.S. pressure

May 7, 2012. India barred an Iranian bank from opening a branch in the country because of U.S. pressure, making it harder for the Persian Gulf state to settle oil trades with its second-biggest crude customer. Parsian Bank, based in Tehran, had sought approval for a Mumbai office to facilitate trade transactions in rupees. U.S. Secretary of State Hillary Clinton will meet Indian leaders in New Delhi where she will discuss assurances from the South Asian nation that it is curtailing Iranian crude imports. The U.S. and its allies are seeking international support for a campaign to pressure the Islamic Republic over its nuclear program which they say is a cover for building atomic weapons and Iran says is for civilian purposes. India, which relies on imports for almost 80 percent of its oil requirements, has faced difficulties finding banks willing to transfer payments to Iran since the Reserve Bank of India in December 2010 dismantled a mechanism to settle trade in euros and dollars. Transactions are now routed through Ankara-based Turkiye Halk Bankasi AS, which has told Indian refiners it may no longer be able to act as an intermediary when European Union sanctions take effect in July. India’s government-run UCO Bank has been approved to be used by Indian refiners to deposit as much as 45 percent of crude payments in rupees, which will then be transferred to Iran. A Mumbai branch for Parsian would have made such transactions easier and may have helped skirt U.S. sanctions.

Assocham calls for variable diesel price hike

May 7, 2012. Industry body Assocham has called for variable pricing of diesel linked to end-consumers and early creation of fuel-pipeline-grid. Graduated steps should be taken towards market determined prices for diesel rather than de-regulation of the pricing system in one go, Assocham said. As for the pricing, the full market price should be charged for diesel used for moving large cars and luxury buses, while the increase should be very moderate for others to begin with, Assocham said. Smaller farmers should be exempt for sometime and in phases should be increased. Assocham has also suggested that the government should encourage replacing old vehicles, especially trucks, modern trailers with high efficiency engines.

'Petro sector contributed ` 1.88 tn to exchequer'

May 4, 2012. The petroleum sector contributed about ` 1,88,909 crore in the last two fiscals to the central exchequer. The contribution of petroleum sector to the central exchequer is ` 1,02,827 crore in the financial year 2010-11 and ` 86,082 crore in the year 2011-12 (up to February 2012), Minister of State for Finance S S Palanimanickam said. He said while in 2010-11, a total of ` 1,02,827 crore was collected in revenues from customs and cess on crude oil and petroleum products, in the 2011-12 fiscal, up to February this year, as much as ` 86,082 crore was collected through the same. The central government has from time to time impressed upon the states to reduce the state levies in line with the duty cuts undertaken by the central government, he said. Replying to another query, Palanimanickam said central excise duty comprises 22.5 per cent in the price of petrol, which costs ` 65.64 per litre in Delhi, while its proportion in diesel (` 40.91 per litre) is five per cent.

DGH drafts new policy on exploitation of shale gas

May 4, 2012. In the wake of the CAG’s strictures against the Directorate General of Hydrocarbons (DGH) and the Petroleum Ministry on violations in the KG-D6 contract the DGH has now drafted a safe but encouraging policy on exploitation of shale gas. Shale gas is seen as the new hope for fuelling India’s burgeoning appetite for hydrocarbons. The draft policy, submitted to the ministry, does not permit cost recovery and hence profit sharing — the two features that came under criticism by the CAG in its audit report. Instead, it banks on production-linked payment (PLP) as the Centre’s share from the discovery. The PLP quoted at the time of the bidding for blocks assumes significance as it would carry the maximum 60 per cent weight for deciding the award of the block. The total investment quoted for completing the promised minimum work programme would get 40 per cent weightage. As a fiscal incentive, the contractor will be exempt from PLP payment for the first five years from the start of commercial production or from the date of entering the development and production phase, whichever is earlier. A study by US Energy International Agency estimates India’s shale gas reserves at about 290 trillion cubic feet (TCF), of which 63 TCF could be recovered. This volume would help bridge the domestic gas demand, tagged at 391 million standard cubic metres per day by 2025-26.

Oil Ministry hikes penalty on RIL by 18 pc to $1.4 bn

May 4, 2012. The Oil Ministry has hiked the penalty it wants to impose on Reliance Industries and its British partner BP plc for falling natural gas output from KG-D6 fields, by 18 per cent to $1.46 billion. The Ministry had previously wanted to disallow $1.235 billion expenditure that RIL had incurred on putting production facilities at the Bay of Bengal gas fields but in the 7-page notice it sent to the company on May 2, the cost to be disallowed was put at $1.462 billion. The drop in reservoir pressure coupled with increased water and sand ingress has seen output from Dhirubhai-1 and 3 gas fields in the deepsea KG-DWN-98/3 or KG-D6 block fall from 53-54 million standard cubic meters per day achieved in March 2010 to 27.5 mmscmd, instead of rising to projected 80 mmscmd for current year. The Ministry feels the drop in pressure had resulted in under-utilisation or creation of excess capacity and wants to disallow cost recovery in proportion to that. The Production Sharing Contract (PSC) allows an operator to deduct all capital and operating expenses from the revenue it earns from sale of hydrocarbons -- called cost recovery -- before sharing profits with the government. The notice signed by A Giridhar, Joint Secretary (Exploration) in the Ministry of Petroleum and Natural Gas, says $457 million expenditure in 2010-11 and another $1.005 billion in 2011-12 will be disallowed for cost recovery on account of excess capacity and under-utilisation of facilities. The ministry had previously wanted to disallow $457 million of cost recovery for 2010-11 and $778 million of cost recovery in 2011-12. The Ministry and its technical arm, the Directorate General of Hydrocarbons (DGH) is to approve accounts for the two fiscal. Anticipating such a move, RIL has in November last year slapped an arbitration notice on the ministry saying the PSC allows operators to recover 100 per cent of the capital and operating expenditure and does not in anyway link the cost recovery to production. The ministry has thus far tried to brow-beat RIL into withdrawing the arbitration notice, saying that no dispute has arisen as yet but its notice of May 2 establishes there is a dispute over how much of cost can be recovered. With the ministry refusing to appoint arbitrator to resolve the issue, RIL had moved Supreme Court requesting for appointment of arbitrators on behalf of the government.

Indian petroleum industry continues to bleed heavily on under-recoveries

May 3, 2012. A marginal fall in Brent crude oil prices is not helping India as the rupee depreciates. Indian crude oil basket price stood at $116.97 per barrel on 2nd May 2012 as against an average of $118.39 in the month of April. Although the crude prices have fallen in dollar terms, in rupee terms the cost of crude oil is actually 1.2% higher at ` 6191.22 per barrel. This means the country's under-recoveries that appear lower in the first half of May 2012 than the previous month, are likely to move up in the second half. The three oil marketing companies Indian Oil, BPCL and HPCL put together are losing ` 518 crore every day on sale of diesel, PDS Kerosene and Domestic LPG compared to ` 563 crore lost daily in April 2012.

Indian Govt in a bind over Cairn plea to sell crude to RIL refinery

May 2, 2012. Cairn India has sought government's permission to sell crude oil to Reliance Industries' refinery in the special economic zone (SEZ), putting the oil ministry in a fix because such supplies are regarded as deemed exports, which are forbidden by the production sharing contract. The oil ministry has recently allowed Cairn to raise crude oil output from its Rajasthan block by 17% to 8.785 million tonne in 2012-13 from 7.5 million tonnes. It plans to sell 3.25 million tonnes to Essar, 3.96 million tonnes to the other refinery of Reliance Industries, which sells products in the domestic market, and the balance to state-run MRPL and IOC.

Oil Ministry seeks clarifications from RIL on CBM gas price

May 2, 2012. Days ahead of the 60-day deadline for approving its gas sale price expired, the Oil Ministry has sought some clarifications from Reliance Industries on the gas it plans to produce from coal seams (CBM), thereby pushing back the approval clock by another two months. The Ministry had said that the contract with firms like RIL and Essar Oil, for producing coal bed methane (CBM) or gas from coal seams, provides for approval of the sale price formula within 60 business days "from the date of receipt of proposal or from the date of receipt of clarifications/additional information". RIL had submitted a proposal seeking a price of equivalent to 12.67 per cent of price of JCC, or Japan Customs-Cleared Crude oil, plus USD 0.26 per million British thermal unit (mmBtu), for the CBM it plans to produce from Madhya Pradesh blocks from end-2014.

Petronet to build LNG plant in India's east coast by 2016

May 2, 2012. Petronet LNG Ltd. will invest ` 45 billion ($853.89 million) to build a liquefied natural gas (LNG) terminal on the country's east coast by 2016 to help meet the growing demand of the energy-hungry nation. Companies are building LNG import and regasification facilities on the east coast to meet demand of eastern and central part of India as plants are located only on the west coast. Petronet, partly owned by GAIL (India), Indian Oil Corp and refiner Bharat Petroleum Corp, has signed an agreement with Gangavaram Port Ltd. to build the 5-million-tonne-a-year plant in southern Andhra Pradesh state. Problems at the D6 block, off India's east coast operated by Reliance Industries, have curtailed domestic output while ONGC struggles to arrest declining production from its ageing field. Asia's third-largest economy is scouting for long-term LNG contracts to help power electricity generation, fertiliser production, city gas distribution and industries. Gas accounts for about 10 per cent of India's primary energy basket versus the world average of 24 per cent, and the country's gas demand is expected to grow at 14 per cent in the next five years, Prime Minister Manmohan Singh said. India aims to increase its LNG handling capacity to 50 million tonnes a year by 2017 from 13.5 million tonnes now, Oil Minister Jaipal Reddy said. Petronet buys 7.5 million tonnes of LNG under a long-term deal with Qatar at Dahej and has tied up 1.5 million tonnes of LNG annually from Australia's Gorgon project from 2014 for its Kochi plant. India aims to double its LNG imports from Qatar and has sought 3 million tonnes of LNG for immediate requirement in the country. Petronet operates a 10 million tonnes a year LNG terminal at Dahej in western Gujarat state and plans to commission a 5-million-tonne-a-year terminal by December on the west coast at Kochi, in southern Kerala state. India has an LNG terminal on the west coast at Hazira in Gujarat, while commissioning of Dabhol LNG plant on the west coast is imminent. French utility GDF Suez signed a deal with Andhra Pradesh Gas Distribution Corporation for developing India's first floating LNG terminal. State-run Indian Oil Corp is also building a 5 million tonnes per year LNG terminal at Ennore in southern India, which is expected to come online by 2014.

Oil companies asked to remove backlog of cylinders in Bihar

May 2, 2012. Bihar government urged oil companies to remove the backlog of 4.67 lakh cylinders in view of acute shortage of cooking gas cylinders in the state. Presiding over a meeting with the Indian Oil Corporation and Hindustan Petroleum Corporation officials, Food and Consumer Protection Minister Shayam Rajak asked them to prepare an action plan within three days to remove the backlog of 4.67 lakh cylinders booked by consumers. If the oil companies failed to remove the backlog of the LPG consumers of the state, the minister would write to the Centre in this regard, he said. He also asked the oil companies to prepare a data base of 23.56 lakh consumers detailing their name, address and other information.



Coal position at thermal power plants continue to be critical

May 8, 2012. Coal stock position at the thermal power stations in the country continue to be critical with as many as 29 plants receiving less fuel, leaving them with stocks for less than a week. As per latest CEA ( Central Electricity Authority) data (May 6), 29 power plants across the country have less than seven days of fuel stock including 14 stations that have only less than four days of stock. Of the 29 stations, 10 received less fuel while another two are reeling under inadequate fuel linkages. However, the reasons for this situation have not been mentioned in the report. State-run NTPC's thermal plants at Kahalgaon (Bihar) and Farakka (West Bengal) continue to witness inadequate coal linkage as expansion of mining capacity of Rajmahal mines in Jharkhand, which feed these plants, is still underway. Over 30 thermal power stations faced critical fuel stocks position. NTPC which currently generates over 37,000 MW plans to augment its capacity to about 70,000 MW in the next five years. The government has also proposed to add 1 lakh MW of electricity in the next five years, from all sources of energy. According to Planning Commission estimates, the country's energy supply needs to grow at 6.5 per cent annually if the nation has to achieve annual economic growth of 9 per cent during the current plan period (2012-17).

Hydel power generators missed their generation target by about 4 pc during Apr 2012

May 7, 2012. Hydel power generators missed their generation target by about 4% during April 2012 against an excess generation of 18% during the previous corresponding period. According to figures released by the Central Electricity Authority, the hydel power units were to generate 8368 million units of electricity during April 2012. However, they managed to generate about 8041 million units during the period - a shortfall of 326 million units. During the previous corresponding period, the target for the month was set at 7521 million units and they generated 8874 million units, which was 1353 million units more than the target. Hydel units in southern India saw a large decline in generation. They missed the target for power generation by about 15%. The target for the period was set at 2539 million units while, they managed to generate 2159 million units and was short by 379 million units. In contrast, during April 2011, these units generated 4.6% more than the target which was set at 2346 million units. They generated 2454 million units.

80 GW power generation capacity under construction: Govt

May 7, 2012. A mammoth 80,000 MW power generation capacity is under construction during the 12th Five Year Plan period ending March 31, 2017, Power Minister Sushilkumar Shinde said. He said that 21,000 MW of electricity generation capacity was added during 10th Plan period against the target of 42,000 MW. For the 11th Five Year Plan (2007-12), a target of 78,775 MW was set which was revised to 62,000 MW during mid-term appraisal. The actual capacity addition was 55,000 MW. Shinde said that in 2011-12 20,400 MW power generation capacity was added, which was much higher than the projection of 17,000 MW.

Madhucon Projects' first power project takes off

May 5, 2012. Infrastructure firm Madhucon Projects announced that its first coal-fired power project with a capacity of 150MW has commenced commercial operations. The power project, with a total capacity of 1,920MW to come up in three phases near Krishnapatnam in Andhra Pradesh, is being implemented by special purpose vehicle Simhapuri Energy Pvt Ltd. The first phase of the project will have two units of 150MW each and second phase will have similar capacities. In the third phase, the company plans to have two units of 660MW each. The company said the second unit of 150MW is expected to be operational by June, while two units of 150MW each in second phase are expected to begin operations before the year-end.

Mundra UMPP next unit to begin operations in August: Tata Power

May 4, 2012. Tata Power said it expects to commission the second 800-MW unit of its Mundra ultra mega power project (UMPP) in Gujarat in August this year. The company will import about 15 million tonnes of imported coal to run the Mundra and Trombay power plants. First unit of the 4,000-MW Mundra plant, country's first UMPP, was commissioned in March this year. The Mundra project has been successful in blending 50% poor grade coal with normal grade coal to lower costs. Tata Power bagged the Mundra project in 2007 on the basis of a tariff bid of ` 2.26 a unit, but a change in the coal pricing policy in Indonesia has upset the cost structure of the project. The company owns coalmines in Indonesia. It imported about 5.5 million tonnes coal in 2011-12 for the Trombay project.

Transmission / Distribution / Trade

Mafia using luxury coaches to transport coal

May 8, 2012. The police warned owners of luxury buses against colluding with the coal mafia to transport illegally-mined coal through NH-33 in Hazaribag and Ramgarh districts. Luxury buses carrying passengers have allegedly been carrying illegally-mined coal on the roofs of their vehicles and unloading it at specified spots. So long the police had focussed on trucks, tri-cycles and bi-cycles which are engaged in the transport of illegally-mined coal. Only last month the police seized tons of it.

Power distribution cos' losses cross ` 2k bn, says Crisil

May 7, 2012. The losses of power distribution companies crossed ` 2 lakh crore at the end of March this year, as lower consumer tariffs and higher fuel costs continued to hurt their bottom lines, according to Crisil. Analytical firm Crisil also said there should be about 6.5 per cent hike in electricity tariff per annum in the next five years, which would help in improving the health of distribution companies (discoms). There are about 89 discoms in the country. The estimates come against the backdrop of precarious financial health of discoms raising concerns of default in the banking system. The overall exposure of discoms to financial institutions is estimated to be ` 2.6 lakh crore. As per Crisil, power tariffs in India rose just under five per cent per annum in the five years ended FY'10. During the same time, per capita income grew by 13.4 per cent every year while household expenditure increased by 10.6 per cent per annum.

Vadodara saves ` 35 mn in street light consumption

May 6, 2012. The Vadodara Municipal Corporation (VMC) has taken action for energy efficiency in street light services and has been able to save energy worth ` 3.5 crore in a year. VMC said by implementing the international level lighting and intelligent street light controllers with GSM monitoring the yearly energy bill of the VMC is reduced to ` 10 crore from ` 13.50 crore. VMC got the national award for 'Energy Conservation in Street Lighting' by the Bureau of Energy Efficiency (BEE). Total area of coverage of VMC is 160 sq km and its total population is over 16 Lakh for which 1,691 km of street lighting is covered in Vadodara.

Power bills under BSES to go up, decline for Tata consumers

May 2, 2012. People getting power supply from BSES discoms will have to shell out more on electricity bills while consumers under Tata Power distribition limited will benefit from a marginal drop in the rates. Power regulator Delhi Electricity Regulatory Commission (DERC) increased power tariff by two per cent for consumers under BSES Yamuna Power Ltd while one per cent hike has been effected for consumers under BSES Rajdhani Power Ltd. The tariff has been brought down by one per cent for consumers getting supply from Tata Power Delhi Distribution Limited. The regulator adjusted the tariff-based power purchase cost of the distribution companies and the new tariff will be effective from May 1 for three months, DERC said.

Policy / Performance

CEA to meet power firms over CIL penalty clause

May 8, 2012. Power companies that have not signed the fuel supply pact with Coal India contesting its minimum penalty clause are meeting the Central Electricity Authority to find a resolution to the issue. CEA, the power sector planning body, has convened a meeting of power utilities who have not signed the Fuel Supply Agreement (FSA) with CIL opposing the minimum penalty clause. According to a government directive, in case state-owned CIL fails to supply 80 per cent of the contracted coal with the firms, it will have to pay penalty. As per the FSA, the rate of compensation or minimum penalty for the "Failed Quantity" is 0.01 per cent and would be applicable after three years, which the power companies say is an inadequate safeguard. CEA is of the view that CIL has placed an entirely different FSA which is detrimental to the interests of the power sector. The body communicated its opposition to the Power Ministry. It has also requested the government to re-look some of the other clauses of the FSA. So far, 13 power companies have signed the fuel supply pact with Coal India. The government directive on the fuel supply pact was issued following a meeting between the power sector honchos and the Prime Minister's Office. The model FSA format includes clauses like suspension of supply of coal to power firms if they were found diverting the fuel for any purpose other than the specified end-use plant.

India’s dependency on imported coal forcing changes in power plants

May 8, 2012. India’s rising dependency on imported thermal grade coal and Coal India Limited’s (CIL) new fuel supply agreements (FSAs) based on imports have forced drastic technical changes on power generating companies, project developers and power equipment manufacturers. With the Coal Ministry projecting coal imports of 250-million tons by 2017, technical specifications of existing and planned thermal power plants have to be modified to accept a blend of domestic and imported coal of higher gross calorific value (GCV) with the latter not constituting less than 30%. Current Indian thermal power plants were designed to use blended feedstock with a maximum 15% import content of higher GCV.

Coal at cheaper rates to meet power requirements: Govt

May 7, 2012. Defending the move to force Coal India to sign agreements to supply coal to power companies, Coal Minister Sriprakash Jaiswal said the government's priority was to ensure availability of electricity at cheaper rate and it will not be cowed down by threats of legal action by minority shareholder TCI. In face of opposition from the company board, the government had issued Presidential Directive to CIL asking it to sign Fuel Supply Agreements (FSAs) with power companies, committing to supply 80 per cent of the quantities for which the contract has been signed.

Reliance Power's Krishnapatnam UMPP may not be figure in 12th Plan projects

May 7, 2012. The government may not include Reliance Power's 4,000 MW ultra mega power project, at Krishnapatnam in Andhra Pradesh, in its proposal for additional 1 lakh MW power generation in the next five years. The firm, which is setting up the project, has filed a petition in the Delhi High Court after its principal coal supplier, Indonesia, more than doubled the fuel price to $60 per tonne. Coastal Andhra Power Ltd, a special purpose vehicle (SPV) set up for implementing this UMPP, signed the power purchase agreements (PPAs) with the beneficiary states - Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra.

Rajasthan villages may get 24 hour power supply

May 6, 2012. All villages in Rajasthan are likely to get 24-hour power supply by March next year with the installation of 550 KV Grid stations across the State. For every three village panchayats, a 33 KV sub-station is being constructed, while 132 KV sub-stations would be established wherever needed. State Energy Minister Jitendra Singh said over the weekend that these would be the “encouraging results” of multi-pronged power sector reforms in production, transmission and distribution. Rajasthan had emerged as a leading State in the power sector.

Tata Power plans 15 mt coal import in FY13

May 4, 2012. Tata Power plans to import 15 million tonnes (mt) of coal during the year to March 2013. Coal accounts for more than half of India's power generation and will be required for 85 percent of the 76,000 megawatts additional capacity targeted in the next five years.

Power tariffs to be linked to fuel costs; move would hurt consumers but help new UMPPs

May 3, 2012. The power ministry will allow producers to raise tariffs if fuel costs of new projects rise, and will not oppose a hike in domestic gas prices. The move would hurt consumers but rescue large private investments that are threatened by uncertainty over fuel and tariffs. Linking tariffs to fuel costs will help new power projects, such as the next set of ultra mega power plants (UMPPs) yet to be awarded, and gas-fired electricity plants with a capacity of over 7,000 MW that have been built but are idling because of fuel scarcity, Power Minister Sushilkumar Shinde said.




Rosneft, Statoil sign deal on developing fields in Arctic

May 7, 2012. Norway's Statoil ASA signed a potential $100 billion cooperation agreement with Russian state oil company Rosneft to develop Russia's mostly untapped offshore energy resources in the Arctic. Statoil joined Exxon Mobil Corp. and Italy's Eni SpA, which signed similar deals earlier 2011, in a so-called "scramble for the Russian Arctic" following Russia's approval of long-awaited tax breaks for the potentially rich offshore fields. Russia faces declining oil production from its traditional oil regions and is eager to attract Western energy companies with money and expertise to develop the Arctic shelf.

Petrobras announces O&G production in March 2012

May 7, 2012. Petrobras announces that its average oil and natural gas output in March, in Brazil and overseas, was 2,599,969 barrels of oil equivalent per day (boed). On average, domestic output was 2,346,477 boed while overseas it was 253,492 boed. Domestic output was 1,993,222 barrels/day of only oil. Average natural gas output was 56,163,000 cubic meters/day. Overseas, average oil output was 151,077 barrels per day and natural gas was 17,400,000 cubic meters/day. The maintenance shutdown of platforms P-51, in Marlim Sul field, P-57 and FPSO Brasil, in Jubarte field, and the interruption of production in Frade field, operated by Chevron, all in Campos Basin, led to a decrease of 105,000 bopd (5%) in domestic output against the previous month, whose output was 2,455,636 boed.

Libya’s NOC says Agoco hasn’t cut crude output

May 6, 2012. Libya’s Arabian Gulf Oil Co. (Agoco) has not reduced crude production, its parent National Oil Corp. (NOC) said. The company had reduced output by 30,000 barrels a day to about 340,000 barrels a day because protesters had been blocking the entrance to its headquarters for more than a week. National Oil denied that Agoco has decreased production.

Freedom from Gazprom tempts Ukraine as Exxon hunts shale

May 2, 2012. For the first time in more than two centuries, Ukraine sees its way to independence from Moscow. That path tracks through a patch of sealed Soviet-era natural gas wells that are ready to be tapped once again and fields of shale rocks that the U.S. Geological Survey estimates will hold enough gas to fire eastern Europe’s largest nation for 100 years or more. Royal Dutch Shell Plc, Exxon Mobil Corp., and Chevron Corp. -- three of the world’s four largest oil companies -- bid for Ukrainian exploration rights.

Sudan has restarted oil production from Heglig

May 2, 2012. Sudan has restarted half of its production from a key oil hub, after heavy aerial bombing disrupted output. The resumption at Heglig oil field, in the border region disputed by Sudan and South Sudan, comes as many exports from the oil-rich territory are still shut in--a factor that's helped to support persistently high oil prices in 2012. South Sudan in January halted its roughly 350,000 barrels-a-day production, effectively cutting itself off from 98% of its government revenue. South Sudan, which gained independence from Sudan, said Sudan had stolen millions of barrels of southern oil. Sudan denies this. Sudanese government said oil was prepared for export. The Heglig is a key distribution point with facilities including a major oil refinery. It was producing about 60,000 barrels a day before the heavy bombardment began. Sudan produces about 110,000 barrels a day. South Sudan occupied the Heglig oil field in April, but has since retreated in line with requests by the African Union and United Nations.

Wien bearish on oil for first time as production swells

May 2, 2012. Byron Wien, the chairman of Blackstone Group LP’s advisory services unit, is forecasting an annual drop in oil prices for the first time in his career as swelling production pushes global inventories higher. Wien said the U.S. will extract more crude by fracking rocks and expects the furor over a potential conflict with Iran to dissipate. Brent crude lost 2.8 percent after surging 14 percent in the first quarter on concern Iran may disrupt Middle East exports in retaliation for a European oil embargo. Russia and Saudi Arabia, the biggest crude producers, are pumping near record levels, helping push February inventories in developed nations to the equivalent of 59.6 days of demand, the most since 2009, according to the International Energy Agency.

Transportation / Trade

Fuel-oil shipments to Singapore rebound in June; 16 ships booked

May 7, 2012. Fuel-oil shipments to Singapore rebounded from May, with 16 tankers carrying 3.38 million metric tons scheduled to arrive in Singapore from outside Asia in June. The tankers, including 10 very large crude carriers, have been booked to collect the fuel for ships and power generators from ports in Europe and the Caribbean. The cargo volume compares with 2.68 million tons reported for June arrival. Nineteen vessels carrying 2.99 million tons will arrive in May at Singapore, Asia’s oil-trading hub and the region’s largest port for fuel-oil cargoes, Asia’s oil-trading hub and the region’s largest port for fuel-oil cargoes. That compares with 2.9 million booked. The volumes are below the 3.6 million tons in March and 4 million tons in February, the most since at least July.

TransCanada re-applies for Keystone XL pipeline permit

May 5, 2012. TransCanada Corp. has re-applied for a U.S. permit for the Keystone XL oil pipeline, seeking permission to build a $5.3 billion portion of the original project from the Canadian border to Steele City, Nebraska. The application uses already reviewed routes through Montana and South Dakota and will add an “alternative” path through Nebraska determined by the state’s Department of Environmental Quality. TransCanada’s prior application for the Keystone XL project, stretching from Alberta to the Gulf Coast, was rejected by President Barack Obama in part because of potential environmental risks in Nebraska.

Zhuhai Zhenrong books May fuel-oil shipment from Iran

May 4, 2012. Zhuhai Zhenrong Co., the Chinese company censured by the U.S. in January for trading with Iran, provisionally hired an oil tanker to carry fuel oil from the Persian Gulf nation. Tianbao, a unit of state-owned Zhuhai Zhenrong, chartered the Khorfakkan to load 80,000 metric tons on May 15 from the Iranian port of Bandar Mahshahr. China is the largest importer of Iran’s oil, buying 22 percent of the nation’s crude exports in the first half of 2011. Iran faces a European Union embargo on the transportation, purchase, financing and insurance of its oil starting July 1 because of its nuclear program.

Pakistan LNG import plan in jeopardy as companies miss deadline

May 4, 2012. The LNG import plan has been put in jeopardy as all three LNG importers - Turkish firm Global Energy, Pakistan Gas Port and Engro Corporation - have failed to complete the prerequisite requirements within the stipulated time of six months. The importers have not even found their global buyers as yet. Oil and Gas Regulatory Authority (Ogra) may now cancel the pipeline allocation given to the importers to transport 1.4 billion cubic feet gas per day to consumers.

Iran may lose 9.5 pc of oil contracts as Asian buyers cut imports

May 4, 2012. Iran is poised to lose at least 192,000 barrels a day of crude-supply contracts, or about 9.5 percent of its global exports, as Asian buyers curb purchases amid western sanctions targeting the nation’s oil trade. Mangalore Refinery & Petrochemicals Ltd. and Essar Oil Ltd., India’s biggest buyers of Iranian crude, and China International United Petroleum & Chemical Co. have reduced or plan to cut purchases from the Islamic Republic by as much as 15 percent. China and India are Iran’s largest customers.

Iran embargo impossible to meet as ships need its oil

May 3, 2012. Europe’s oil embargo on Iran is having unforeseen consequences in the shipping market, making it almost impossible to determine if vessels are using fuel that violates the sanctions. Supplies from Iran are a “vital blending component” to make ship fuel, known as bunkers. The nation accounted for about 8 percent of bunkers exported to Asia, the largest market, and about a third of the supply at Fujairah in the United Arab Emirates.

Trafigura following raffles into heart of Asian trade

May 3, 2012. Staff at Trafigura Group, the third- largest independent oil trader, are getting a real-time snapshot of demand in the top crude and metals-consuming region as they look from their new office onto lines of ships off Singapore. Trafigura joins companies from BHP Billiton Ltd. to Cargill Inc. and Anglo American Plc in adding to the more than 10,000 jobs already linked to offshore trade in commodities and energy in Singapore in 2010, a 40 percent increase from 2006, according to government data. More than 140,000 ships call every year at the port, which straddles trade routes to and from China and India, home to 36 percent of the global population.

MPC considering reversal of Capline pipeline

May 2, 2012. Marathon Petroleum Corp. (MPC) is exploring the possibility of reversing a major pipeline to bring oil from the Midwest to the Gulf Coast refining belt. Changing direction of the 1.2 million barrel-a-day Capline pipeline would be the second major pipeline reversal that could transport a glut of crude oil in the Midwest to the Gulf Coast, where it can be refined into petroleum products like gasoline or easily transported elsewhere. Enbridge Inc. and Enterprise Products Partners plan to reverse the 150,000 barrel-a-day Seaway pipeline within a month and expand its capacity to 400,000 barrels a day by 2013.

Supertankers delayed in china as nation fills strategic reserves

May 2, 2012. Delays emptying supertankers at ports in China are spiraling as the world’s biggest energy consumer scours the globe for alternatives to Iranian oil to fill its strategic reserves, driving up shipping costs. Very large crude carriers hauling 2 million-barrel cargoes are waiting as long as 10 days to discharge, compared with two normally. The increase took place in the past two months. Delays are nine days, compared with about two usually. China, which aims to more than double its reserve capacity, imported a record 23.5 million metric tons of crude a month in the first quarter. Purchases from Venezuela more than doubled from a year earlier and deliveries from Angola climbed 25 percent. Its imports from Iran slumped to the lowest level since 2010.

Policy / Performance

Putin return lifts futures: Russia overnight

May 8, 2012. Russian stock futures climbed as Vladimir Putin returned to Russia’s presidency for a third term promising to forge ahead with state asset sales and improve the nation’s investment climate. Futures expiring in June on Moscow’s dollar-denominated RTS Index added 0.6 percent to 143,745 in New York trading. American depositary receipts of OAO Gazprom, Russia’s biggest company and the world’s largest natural gas producer, rallied from their lowest level this year, while OAO Mobile TeleSystems, the nation’s biggest mobile-phone operator, gained the most in more than a week. Putin, whose first eight years in the Kremlin saw average economic growth of 7 percent as oil prices rose fivefold, signed at least a dozen decrees after being sworn and said the world’s biggest energy exporter was beginning a “new stage” in its development. Russia’s Micex Index has tumbled 20 percent since Putin passed on the presidency to Dmitry Medvedev in May 2008 because of term limits.

Record gas use by U.S. utilities fails to drive up price

May 7, 2012. U.S. utilities led by Southern Co. are burning a record amount of natural gas for generating electricity without triggering a forecasted boost to the fuel’s price from near 10-year lows. The power companies used 34 percent more gas in February than a year earlier. Even Atlanta- based Southern, historically one of the largest U.S. coal-plant operators, is on pace to consume more of the cleaner-burning fuel than coal in 2012 for the first time in its 100-year history. Utilities are the nation’s biggest gas consumers. The historic switch to gas is set to peak without fulfilling industry predictions that it would eat up inventory and drive up gas prices. That’s because unparalleled output from new shale fields is oversupplying the $95 billion U.S. gas market, postponing relief for hundreds of producers.

Kuwaiti Co to invest in O&G exploration

May 6, 2012. Chairman and Managing Director of Kuwait Foreign Petroleum Exploration Company (KUFPEC), Nizar M Al-Adsani has called on Federal Minister for Petroleum & Natural Resources Dr. Asim Hussain to discuss KUFPEC's continued involvement in the oil and gas sector of Pakistan. KUFPEC has several assets spread over 14 countries and Pakistan is one of its core areas. The company has plans to grow aggressively over the next decade in Pakistan as well as elsewhere. KUFPEC employs several Pakistani nationals at its head office in Kuwait and at the Pakistan Office.

Frack first, disclose chemicals later under U.S. rule

May 4, 2012. Oil and natural gas companies won’t be forced to disclose chemicals used in hydraulic fracturing until work is completed, under a proposed U.S. rule issued that drew opposition from environmental groups. The proposal lets gas producers exclude trade secrets and confidential information. It would add about $11,833 in costs per well in 2013. President Barack Obama has pledged to increase gas production without harming the environment. The U.S. industry argued for reporting after completing the fracking, which injects water, sand and chemicals underground to free trapped gas. Environmental groups had preferred an earlier draft of the standards that would have required disclosure before work began.

Chesapeake seen offering biggest gain in U.S. shale boom

May 4, 2012. Chesapeake Energy Corp., battered by a glut-driven collapse in natural-gas prices and growing investor distrust of its management, still is the cheapest way of buying into the U.S. shale revolution. Investors can lay hands on the equivalent of one barrel of oil reserves from Chesapeake for $3.58, compared with $9.07 a barrel at Devon Energy Corp. or $30.47 at Continental Resources Inc., the dominant player in North Dakota’s crude-rich Bakken Shale. On a price-to- cash flow basis, Chesapeake also is less expensive than any other major U.S. shale explorer. Chesapeake is the largest holder of onshore drilling leases with 15.6 million acres under its control, an area half the size of New York state. The company has amassed the biggest leaseholds in 11 of the 15 richest U.S. oil shale formations, and three of the four biggest gas shale regions. Chesapeake held proved reserves at the end of 2011 equivalent to 3.13 billion barrels of oil.

Price rise seen moderate in U.S. exports of liquefied gas

May 2, 2012. A prospective boom in U.S. exports of liquefied natural gas will have only a modest impact on domestic energy prices and the manufacturers using the fuel. Gas would rise as much as 50 cents per million British thermal units if exports reached 9 billion cubic feet a day by 2035. The U.S. has approved one terminal to export gas, and it isn’t scheduled to start operating until late 2015. Drilling techniques such as hydraulic fracturing have cut the cost of producing gas from shale, contributing to an increase in supply that outpaced forecasts, sending prices to the lowest in a decade. The surplus makes it feasible to eventually turn all U.S. gas import terminals into export hubs. Cheniere Energy Inc. won federal approval to build a $10 billion natural-gas export terminal in Louisiana. Dominion Resources Inc. is seeking to export gas from its Cove Point terminal in Maryland.



Govt mulls tapping other power generating plant in Mindanao

May 8, 2012. To institute immediate measures in addressing Mindanao’s power situation, the government is looking into tapping existing power plants in the island. Iligan City’s diesel-fired power plant, if tapped, can contribute around 96 MW. The upgrading and rehabilitation of the Agus Complex, particularly the Agus 6, Agus I, and II in Baloi, and the flood control will also result to an additional 200-MW capacity generation. The completed rehab of the Pulangi hydropower plant will likewise eased back the power curtailment scheduled. The critical stage on addressing the present power needs here in Mindanao will be until 2014. The coal-fired power plant of Aboitz with 300 MW, the Conal power plant, and the expansion of the geothermal power plant in Cotabato are expected to address the increasing power demand in Mindanao. The Department of Energy, according to Montenergro, is confident that Mindanao will have no power deficit by 2015.

New hydro power plant to be built in Georgia

May 6, 2012. Georgian President Mikheil Saakashvili recently marked the launch of construction work for the Nenskra power station in a mountainous region in Western Georgia. The new hydro power station in the village Chuberi will deliver on completion 210MW, requiring an investment of $630m. Annual of the new station will be 1.2bn kilowatt an hour. In winter it will be 260m kilowatt an hour. In addition, in winter Nenskra Hess will increase water resource of Engur Hess and accordingly it will give opportunity to produce more energy. The hydro power plant will be constructed by a Chinese company ShinoHydro and managed by Georgian Railway’s subsidiary Company Nenskra. Construction of the hydro power plant will complete by 2017. Until constructions begin road to the location will be rehabilitated. The construction of the hydro power plant would create jobs or 1200 people. On the launch of the project, Saakashvili said government plans to fully replace producing thermal electro energy by imported gas with hydro electric energy, which is about 93% of country’s energy producing. He predicted that in five years, Georgia will have the biggest hydro electric station, which was ever built after Enguri and the hydro electric energy power will increase two time s and more in Georgia. He also stressed that energy is pre-requisite for Georgia’s’ success. Saakashvili said that in two months constructions of NamaKhvan Hess starts and together with Nenskra Hess their capacity will in fact equal to Engur Hess capacity.

Aboitiz Power plans to spend P170 bn for generation projects

May 6, 2012. Aboitiz Power Corp. plans to spend up to P170 billion in the next five years to rehabilitate old plants as well as establish new facilities across the country. The company said the planned expenditure will likely go to hydroelectric and clean coal projects to take advantage of a shortage in the market. In Mindanao, P35 billion will be invested for an additional 354 megawatts (MW) that would come on stream by 2015, the company said. Part of this amount would be for the initial operation of the 300-MW, coal-fired power plant to be constructed in this city, while the remaining amount would be for small hydroelectric plants that would have a combined capacity of 54 MW. The company said it has also started identifying some smaller hydroelectric plants that might be included in the investments portfolio some in the Davao region.

Transmission / Distribution / Trade

Singapore Power said to seek $1.2 bn project facility

May 8, 2012. Singapore Power Ltd. hired six banks to help arrange a S$1.5 billion ($1.2 billion) 10-year project finance loan. The proceeds will help fund the construction of two tunnels to carry electricity cables under Singapore. The banks are Bank of Tokyo-Mitsubishi UFJ Ltd., DBS Bank Ltd., Mizuho Corporate Bank Ltd., Oversea-Chinese Banking Corp., Sumitomo Mitsui Banking Corp. and United Overseas Bank Ltd. Singapore Power started inviting engineering and building tenders for the project. The project involves construction of two tunnels running 18.5 kilometers (11.5 miles) north-south and 16.5 kilometers east-west across the island. Each tunnel will be about 6 meters wide.

AES agrees to sell ‘substantial majority’ of Chinese businesses

May 7, 2012. AES Corp. (AES) has signed two agreements to sell “a substantial majority” of its Chinese businesses for $134 million. The agreements include selling stakes in a coal-fired power plant and a windpower joint venture to Sembcorp Utilities and the previously announced sale of a stake in a development company to its joint venture partner, China Three Gorges New Energy Corp., the company said.

Policy / Performance

Nigeria needs 135 GW of electricity

May 8, 2012. The Federal Government (FG) said the nation requires about 135,000 MW of electricity to effectively power the economy. The Presidency said to achieve this, the country needs about 15 times of what was being presently generated. Minister of Power, Prof. Bath Nnaji said the country would exploit methods of fuel for power generation, gas, hydro, coal, wind and solar to achieve the target, adding that the current baseline of power generation was 3, 600 MW out of the 5, 700 MW available capacity.

Saudi targets 21 GW of nuclear power by 2032

May 8, 2012. Saudi Arabia should build 21 gigawatts (GW) of nuclear power plant capacity by 2032, enough to meet about a sixth of its expected peak demand, a senior official responsible for shaping the Saudi energy mix said. Khalid Al-Sulaiman, vice president for renewable energy at the King Abdullah City for Atomic and Renewable Energy (KACARE), said that peak-load power demand was expected to reach 121GW in 20 years time, of which 60.5GW would still be met by hydrocarbon-fuelled power plants.

Jordan expects agreement on shale-oil plant with Estonia’s Eesti

May 7, 2012. Jordan expects to sign a final agreement with Estonia’s Eesti Energia AS for the construction of a power plant that burns shale oil. The 700 MW plant in the central Attarat region is due to be ready for operation in 2016. Jordan says it holds the world’s fourth-largest reserves of shale oil, a sedimentary rock containing solid bituminous materials that are released as petroleum-like liquids when the rock is heated. The government is turning to shale oil along with nuclear, solar and wind power to help meet rising demand for electricity. The kingdom holds about 40 billion metric tons of shale-oil reserves and plans to increase the share of energy it generates from these deposits to 14 percent of the country’s total requirements. Jordan may attract $20 billion in investment in shale-oil development in coming years. A final agreement with companies from China, Jordan and the United Arab Emirates for a $1.25 billion shale-oil-fired 900 MW power plant is expected to be signed by the end of the year.



Suzlon bags ` 3 bn contract for wind power project in Gujarat

May 8, 2012. Wind turbine manufacturer Suzlon Group said it has bagged a ` 305 crore contract for setting up a 50 MW power project in Gujarat. Suzlon Group has signed a ` 305.32 crore contract for a 50 MW wind power project with Gujarat Mineral Development Corp (GMDC), the company said. The project that comprises 24 units wind turbines would be set up at Jamnagar in Gujarat, it said. Gujarat has immense wind potential and the company is contributing in harnessing it. GMDC has an installed base of 100.50 MW, of which the major part - over 60 MW - has been supplied by Suzlon and is operating in sites across Gujarat. The new order takes GMDC's total installed capacity to 150.50 MW.

India barely taps 2.5 pc of its renewable energy potential

May 7, 2012. India has achieved an installed renewable power capacity of 24,914 MW as of end March 2012, against its potential renewable power generating capacity of 10,76,160 MW – about 2.3 per cent of the potential. The 24,914 MW of renewable power capacity installed so far in India comprises 17,353 MW wind power, 3,395 MW small hydel power, 3,325 MW bio-power and 941 MW solar power, according to information provided by minister of new and renewable energy Dr Farooq Abdullah. He said various studies undertaken in the past have estimated a potential of about 90,000 MW for power generation from wind, small hydel and biomass sources in the country in the medium term (up to 2032). The potential for solar energy has been estimated for most parts of the country at around 30-50 MW per square km of open, shadow-free area covered with solar collectors. Even if we take one per cent of the 32,87,263 square km land mass of the country, it would be enough to generate 986160 MW of solar power.

ReNew Wind Power's 25.2 MW wind farm starts generation

May 7, 2012. Mumbai-headquartered ReNew Wind Power has commissioned its first wind power project of 25.2 megawatts near Rajkot in Gujarat. ReNew Power has plans of setting up 85 MW of wind energy capacity spread across Gujarat and Maharashtra. In September 2011, Goldman Sachs acquired majority stake in ReNew Wind Power for ` 1,000 crore. ReNew Wind Power bought 12 turbines of 2.1 MW each for the project from Suzlon Energy.

Focus should be on renewable energy, says APJ Abdul Kalam

May 6, 2012. Advocating the need for energy security, former president APJ Abdul Kalam said India's power requirement would increase to four lakh MW by 2030 and focus should be on renewable energy generation to meet the situation. With the growing population, by 2030 the country would have a population of 1.4 billion and the energy requirement would increase from 1,99,000 MW to 4,00,000 MW, he said inaugurating the Centre for Innovation in Energy Research at the Central Electro Chemical Research Institute (CECRI). In order to meet the same, one should look into possibility of energy security by minimizing energy utility and wastage, he said. Focus should be on the production of renewable energy in the form of wind, bio-fuel and solar energy, he said, adding that hydro drive model may be considered seriously by Indian scientists. Talking about Energy Mission 2030, he said affordability, minimisation of dependence on fossil fuel and energy Vs environment were to be considered seriously. Solar energy should be used for agricultural purpose. Desalination of sea water need to be thought of to meet the shortage of drinking and irrigation water.

Chandigarh to be developed as solar city

May 4, 2012. The Chandigarh Administration, the state governments of Punjab and Haryana have agreed to develop Chandigarh as a solar city. Punjab Chief Minister, Parkash Singh Badal and Haryana Chief Minister, Bhupinder Singh Hooda agreed that once Chandigarh is made a solar city, solar thermal and photovoltaic energy can be used by the governments and private persons in their buildings. The energy that is not drawn from the grid can be used by the industry. Besides, the proposal to promote Chandigarh as a solar city, other proposals that were agreed included the Metro Rail for Mohali, Chandigarh and Panchkula. A detailed presentation on the proposed plan on Metro was given. The Chief Minister of Punjab agreed to the proposal in principle while the Chief Minister of Haryana agreed to examine the proposal in detail. The points discussed in the meeting included Metro-rail, Planning for proper development of three cities, transport system used in Union Territory, Chandigarh, Cess to be levied on liquor, utilization of solar energy in the Union Territory and the two States, construction of office building and houses for those working in the government at higher level in the legislature and the Judiciary.

India violating WTO obligations: US solar industry

May 4, 2012. US solar industry is pushing the government to drag India to the World Trade Organization, alleging that the recent Indian regulation that certain things in solar panels be manufactured in the country is in violation of the WTO rules. Under the National Solar Mission, India requires that crystalline cells be manufactured in India. The first recommendation of the American solar mission is that the US increase its local content related enforcement activities, for example, formally challenge India's local content requirements.

MNRE may draft guidelines on offshore wind

May 4, 2012. The Ministry of New and Renewable Energy (MNRE) is likely to come out with draft guidelines for offshore wind energy in the next one month. Experts have bet big especially on Tamil Nadu's offshore wind potential. A pilot project off the coast of Dhanushkodi, in Tamil Nadu's southern tip, is set to come up. Offshore is said to be three times to five times costlier than wind onshore. At the same time, it's twice as efficient as onshore wind. Some of the issues being discussed by the panel include how to make seabeds available to private offshore wind players as also how to simplify the process of clearances, given that there are at least a dozen approvals required.

Tamil Nadu to set up solar parks to generate 1 GW

May 3, 2012. Tamil Nadu government proposed to set up solar powered parks with the aim of generating 1000 MW in the next five years in the public-private participation mode. Initially ` 1,000 crore will be invested in southern parts of the state over 500 acres to produce 100 MW, Industries minister P Thangamani said. Replying to the grants for his department for 2012-13, the minister said the Tamil Nadu Industries Development Corporation (TIDCO) will set up such solar parks. Thangamani recalled that Chief Minister Jayalalithaa had mentioned in her 'vision 2023' document the intention to produce 11000 MW of solar power in the next 11 years.

ReGen Powertech raises ` 520 mn from PEs for expansion

May 2, 2012. ReGen Powertech, the Chennai-based wind turbine maker has raised ` 52 crore from two large private equity firms, as it looks to upgrade the capacity at its manufacturing plant in Udaipur. TVS Capital, jointly promoted by the TVS and Shriram Groups, and Summit FVCI, a fund advised and managed by existing strategic investor, M Cap Fund Advisors, have invested ` 37 crore and ` 15 crore, respectively, in the company, a deal which values the company at ` 1,850 crore.


Canada set to miss modest emissions goals

May 8, 2012. Canada is acting too slowly to combat climate change and has little chance of achieving its modest 2020 target for cuts in greenhouse gas emissions. The report by Environment Commissioner Scott Vaughan is awkward for the right-of-center Conservative government, which green activists say is more interested in industrial development than in protecting the environment. The government, which pulled Canada out of the Kyoto Protocol on climate change, is promising to reduce emissions by 17 percent below 2005 levels by 2020. Vaughan said the government is not moving quickly enough to introduce the necessary regulations and noted that an official forecast in July 2011 showed emissions in 2020 would in fact be 7.4 percent above the 2005 level. Vaughan said the federal environment ministry has no plan to show how various departments and agencies would cooperate and has not provided estimates of how various sectors of the economy should cut emissions. In response to Vaughan's report, Environment Minister Peter Kent said the government was making "significant progress" on meeting its 2020 target. Kent, like other ministers, says he will not contemplate actions that might cut jobs or hurt the economy.

Italy's solar growth seen slowing sharply in 2012

May 8, 2012. Growth of solar power capacity in Italy, the world's second-biggest market, is expected to slow to 1,500-2,500 MW in 2012 after a 9,300 MW leap in 2011, due to a planned cut in incentives. The Italian government has announced a plan to scale back production incentives to the photovoltaic and other renewable energy to ease the burden on consumers, who pay for the industry support with their power bills.

Korean company to generate 300 MW through solar energy

May 8, 2012. Global R&BD Division of CX Korea has informed after completion of formalities of NEPRA, Ministry of Water and Power etc their company would initiate project of establishment of 10 MW solar energy plant, which would later be extended upto 300 MW power generation through solar energy.

Energy Conversion to fire 300 as Uni-Solar auction fails

May 8, 2012. Energy Conversion Devices Inc., a U.S. solar manufacturer that filed for bankruptcy protection in February, will fire 300 employees because it didn’t receive any acceptable bids for an auction of its United Solar Ovonic LLC unit. The cuts will start immediately and the company will retain a smaller staff to manage the bankruptcy process. The company canceled the auction for its thin-film photovoltaic panel unit and won’t continue a court-approved sale process. Energy Conversion is one of four U.S. solar companies to seek bankruptcy protection in the past year.

Norwegian Agency urges increased spill response in Barents Sea

May 7, 2012. Norway’s Climate and Pollution Agency urged increased spill response capability in the Barents Sea as the country opens up for more exploration and production. The agency also said that the seabed fauna on many of the areas proposed for exploration hasn’t been studied properly and urged operators to take heed of the bird populations on nearby Bjoernoeya.

China to construct more energy-efficient buildings

May 6, 2012. China wants energy-efficient buildings to account for 30 percent of all new construction projects by 2020 to bring its building energy consumption ratio closer to that of developed countries. In order to achieve that goal, the government will step up incentives for green buildings, improve industry standards and promote technological improvements and the development of related industries. The World Bank called on China to act urgently on multiple fronts to cut greenhouse gas emissions from its rapidly expanding cities, and meet government targets for curbing carbon intensity. The bank called for more energy-efficient buildings and industries, transport systems offering alternatives to cars, and better management of water and waste. China has set a goal of reducing the economy's carbon intensity by 40-45 percent in 2020 compared with 2005.

The global solar industry aims at Japan

May 4, 2012. Japan plans to close its last nuclear reactor this weekend, a move that will take nuclear power out of its energy supply for the first time since 1966. Among those who will celebrate the news will be solar companies as Japan gets ready to boost its renewable energy production and open up its market more to non-Japanese players. The Japanese government is set to start a major incentive program for clean power this July, roughly a year after it passed legislation to create the program. The incentives will come in the form of guaranteed, premium prices that utilities must pay for renewable energy such as solar, wind, geothermal. Under a proposal, solar electricity could fetch roughly twice the price that Japanese households currently pay for power.

Germany may fund more solar research amid subsidy cuts

May 4, 2012. Germany may fund more solar-energy research to soften the impact of subsidy cuts. The government is considering investing in projects to improve the integration of solar power into the country’s energy mix. Environment Minister Norbert Roettgen will present the plan to governors who are set to vote on the subsidy cuts on May 11 in the Bundesrat, the upper house of parliament.

Banned carbon credit supply may fall short

May 4, 2012. Supply of soon-to-be banned emission credits in the European Union’s carbon market may fall short of expectations, boosting this year’s prices relative to 2013. The EU has banned the use of United Nations credits from some hydrofluorocarbon 23-producing chemical factories and adipic-acid manufacturers from its trading system from next May, saying these credits generate excessive profits. Those credits make up more than half of supply in the Clean Development Mechanism, the world’s biggest offsetting market.

Carbon market lobbyist criticizes ‘whopping falsehoods’

May 4, 2012. The carbon market has been damaged by three “whopping falsehoods” that slowed its growth and caused European lawmakers to question their belief in the system, said the retiring head of a carbon market lobby group. The first lie is that climate science is exaggerated, boring and unimportant, Henry Derwent, chief executive of the International Emissions Trading Association said. The second is that nations shouldn’t protect the climate because others aren’t and the third is that markets are not the best solution, he said.

Solar Catamaran ends first sun-powered round-world voyage

May 4, 2012. A PlanetSolar SA catamaran covered with 38,000 solar cells completed the first round-the world voyage fueled only by the sun. The catamaran’s roof is covered with SunPower Corp. panels that extend like wings over its hulls, powering six blocks of lithium-ion batteries. The voyage demonstrates there are fossil fuel-free alternatives other than sails to power ships across the sea as governments try to fight climate change by lowering carbon emissions. Shipping accounts for about 3 percent of all greenhouse gases. Monaco’s Prince Albert II is scheduled to board the vessel during three days of celebrations including a solar light show powered by the boats’ batteries.

Brazil seeks biofuel exports to Spain as Argentina barred

May 4, 2012. Brazilian biodiesel producers are seeking export agreements with Spanish oil companies after the European country moved to cut off imports of the renewable fuel from Argentina. Erasmo Carlos Battistella, president of the biofuel trade group Associacao dos Produtores de Biodiesel do Brasil, will discuss the issue at a meeting with Spain’s ambassador in Brasilia. Spain is cutting trade ties with Argentina after the South American country said it would seize control of YPF SA from the Spanish energy company Repsol YPF SA. (REP) That’s creating a market for Brazil’s biofuels industry, Battistella said.

Peak oil move over - now solve CO2

May 3, 2012. Trends in global economic growth and rising CO2 emissions rule out optimism that climate targets can be met, even while the world gets to grip with energy security. The continuing financial crisis and record high oil prices in 2008 haven't driven a low-carbon revolution which green lobbyists and agencies including the United Nations urged three years ago. In fact, the opposite seems to be happening. The world may have found a sticking plaster, at least, to peak oil with rising production of offshore crude, onshore tight oil, shale gas and tar sands, but increased output of such fossil fuels conflicts with the goal of limiting climate change.

EU green goals depend on CO2 market-Acciona

May 3, 2012. The European Union could fail to hit its green goals unless it manages to drive carbon prices on its Emissions Trading Scheme (ETS) to around three times current levels, Spain's Acciona Energy said. Acciona is among a group of businesses - including Royal Dutch Shell, Unilever, Philips, Deutsche Telekom and Vodafone - whose leaders met European Commission President Jose Manuel Barroso and other senior officials from the EU executive. They reiterated demands for ambitious future targets on renewable energy and carbon emissions reduction, as well as to back urgent action to bolster carbon prices.

South Korean parliament approves carbon trading system

May 3, 2012. South Korea approved a cap-and-trade system to cut carbon emissions as President Lee Myung Bak seeks support from factories and power plants in the fastest-growing producer of greenhouse gases among industrialized democracies. The National Assembly passed a bill to establish a cap-and- trade system in the country by 2015 with the backing of both ruling and opposition parties. President Lee Myung Bak is struggling to sell the plan at home after pledging in December 2009 at the United Nations climate summit in Copenhagen to cut carbon emissions by 30 percent from forecast levels by 2020. The plan will hurt competitiveness. Korea’s decision follows an agreement at climate talks in December among about 200 countries including the U.S. and China to wait until 2015 to sign a global accord on emission reductions that would take effect as late as 2020.

U.S. Clean Energy bill may boost prices after 2025, EIA says

May 3, 2012. A U.S. bill that requires utilities to increase their use of power generated by clean sources may drive up power prices for consumers, though not for at least a decade, according to the Energy Information Administration (EIA). The Clean Energy Standard Act of 2012 would increase power prices by about 4 percent in 2025, compared with a reference price in a draft of the EIA’s Annual Energy Outlook 2012, the agency said.

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