Energy News Monitor I Volume VIII, Issue 52

Electricity: Is there a ‘Demand’ or is it only a ‘Need’?

Lydia Powell, Observer Research Foundation

ast week there was news of power projects with a combined capacity of 59 GW seeking a bail-out from the government as they face the prospect of default on supply contracts due to the developer’s inability to pass on increase on fuel cost to distribution companies. The Krishnapatnam and Mundra Ultra Mega Power Projects based on imported coal are said to be among companies affected. While the commercial set back for the companies is indeed deplorable what must be examined more closely is the broader idea that there is a huge unmet demand for power in India. Politicians, business leaders and analysts tirelessly speak about the power shortage in India and the need for investing in more and more power generating plants. The shortage of electricity is listed among the top reasons why India is unable to attract investment. If this is the case, then why are projects that were intended to address this ‘shortage’ becoming unviable? Clearly there is some inconsistency in the discourse of shortage.

The problem probably lies in the fact that the need for energy is being misread as the demand for energy. In economic terms, a need or desire becomes a ‘demand’ only when it is backed by the ability to pay. A need can be ignored by a commercial entity as it will involve no opportunity costs but ignoring a demand involves huge opportunity costs. There is a huge need for drinking water in rural India but that does not mean that Perrier has a huge market in India. The price of a bottle of Perrier ensures that the needs of many are translated into a ‘demand’ of a few who have the ability to pay. Visual images of the ‘water shortage’ in Delhi in the news papers and television channels bring out this distinction between a need and a demand. While media headlines always talk about the ‘water shortage’ in Delhi as if it is a general condition of the people in Delhi, images reveal that the shortage is limited to one section of the society. Most of the people queuing up with buckets in front of water tanks are neither the rich nor the middle class. They are the poor whose need is yet to be translated into a demand with the ability to pay.

The need for electricity of roughly 33 percent of the Indian population who lack access to electricity as per the latest census data is not necessarily a demand for electricity. While drinking water which can be bottled and sold to small targeted groups with ability to pay things are a little more complicated for electricity. But even then, those who demand electricity in India do not always go without electricity. The effective economic demand for electricity from private homes and commercial entities is met by storage systems or diesel generators. Even large manufacturing units meet their demand for electricity with captive power generating capacities. The much talked about Pune model which sought to supply 24 hour uninterrupted power to city residents using surplus captive diesel generating capacity of industrial units in the neighborhood is also an interesting example of a demand being met.

Discourses of shortage of electricity or water are designed to conceal this vital distinction between a need and a demand. The idea of a universal shortage and the need to conserve a resource or invest in improving supplies are essentially economic arguments to meet economic demands and not address biological and human needs. Scarcity arguments essentially divert attention from inequalities that are embedded in the society. The lack of water or electricity can be explained away as scarcity and not inaccessibility. For the economically disadvantaged, the structural inequalities embedded in local regional and world markets make the difference between surviving and starving. Only those who in the economic jargon have the income to translate their biological needs into effective demand get water or an electric light. There is a need to unpack the discourse to reveal what is short, for whom and why? This will not only expose some truths but perhaps also help companies in making the right commercial decisions. Why should they be wasting their money if there is no effective demand?

COAL

Can Indonesia be a reliable coal supplier for India in future?

Ashish Gupta, Observer Research Foundation

he Indonesian coal industry is very young as compared to USA, Australia, UK, South Africa, China and India. Infact Indonesia started their commercial coal production from mines commenced only after 1988. Indonesia’s coal mining industry got a boost after General Soeharto took over Mr. Sukarno regime in 1965. General Soeharto played a very important role in shaping the Indonesia’s crippling economy by implementing new laws and by reforming policies. This paved the way for foreign investment in the Indonesia. Initially coal mining in Indonesia was mostly export driven and it continues to be so.

The mining sector in Indonesia contributes 11% to the country’s GDP and coal is one of the major contributor. Most of the coal reserves are found in Sumatra (54%) followed by Kalimantan (44%) and the remaining reserves are found in the regions of Sulawesi, Papua, Java and Maluku. Production from Kalimantan is mostly exported because of its geographic location with emerging Asian market whereas in Sumatra coal is meant for domestic requirement. Coal quality is generally not very good - mainly sub-bituminous and lignite as compared to Australian coal - but its low sulphur and ash characteristic make it very desirable for the power generation and that is why it is very much in demand in India, China, Japan, Korea, Taiwan, Malaysia and some other markets. India is the leading importer of Indonesian coal from 2010 followed by China.

When coal mining was stared in Indonesia the major objective was to stabilize the economy. Given the undeveloped status of Indonesian legal framework designed in 1968, the Government of Indonesia (GoI) was forced to enter into bilateral agreements known as Coal Contract of Work (CCOW) with foreign mining companies in order to obtain their investments and expertise. Following this, after they established themselves in the major coal export markets, Indonesia then shifted focus to indigenizing the industry by amending old laws. The pioneering foreign coal miners were the most profitable though profitability reduced later on because of government policy which forced the companies to divest their shares in favour of local miners. But still at present they are at a stable position as far as the legal and regulatory framework is concerned and will be so till the CCOW lasts. In reality foreign companies were the ones who had written growth story for Indonesian coal industry until 1994 when GoI discontinued its successful 1^st Gen CCOW program by offering revised modal contracts, now known as 2^nd Gen CCOW to domestic companies. 2^nd Gen CCOW was only moderately successful. In 1997, GoI again announced its 3^rd Generation CCOW Program which was open for domestic and foreign investors; however the terms favored 100% domestic companies and was discontinued in 2000 after which all mining authorizations were issued locally in the form of Kuasa Pertambangan (KP) license which is meant for local investors. KP was also stared parallel with 1^st Gen CCOW but was not a success as most of the miners were in the mood of making quick money by transferring their KP’s to other local miners. Currently most of the coal companies are held by domestic owners. Ironically the success that is claimed by domestic owners now was actually belong to foreign companies but one can also not deny the fact that Indonesia against all odds has established itself in major export markets.

Having said that for Indonesia to maintain its position as a major steam coal exporter in the future is crucially dependant on the on the size and quality of coal resources and reserves it possess. According to official estimates Indonesia has 20.2 billion tones economical recoverable resource the accuracy of the figure is subject to controversy. The Government of Indonesia along with New Energy Development Organization did a joint study in 2007 on Indonesian coal reserves and interestingly the figures were dramatically higher from 2005 estimates. According to 2005 Indonesia has 60.51 Bt coal reserves in which 7 Bt was economically recoverable whereas 2007 study stated 93.4 Bt coal reserves with 18.7 Bt recoverable coal reserves. The study invited controversy as the Ministry of Energy & Mineral Resources, GoI has thus far refused to release the study in the public and so one cannot count on the estimates blindly.

Clear and transparent legal & regulatory framework is a major requirement for any country’s industrial growth but Indonesian legal framework is not very conducive for the industrial environment. One does not know what will happen next because GoI has the habit of changing mining laws very frequently. Recent announcement of imposing 25% export tax on coal and further increase it to 50% by 2013 will be a setback for the coal industry in Indonesia. Fortunately, the date for implementing is yet to be announced but the future is not very clear for the exporters. Another major hurdle is Domestic market Obligation (DMO) where every miner has to set aside certain percentage of the coal production for domestic requirement though it is assured by the GoI that percentage will not increase above 35% but every year percentage will be decided after consulting with indigenous industries. This is a major worry for the importing countries as it will be obvious that Indonesia will not be able to honour its commitment. Incompetent implementation of DMO will damage the country’s reputation as a reliable coal supplier and also increase the coal price volatility. Lastly, PT Perusahaan Listrik Negara’s (PLN) fast track program of adding coal fired power capacity will also impact the future prospects of exporting low grade coal from Indonesia.

Indonesia’s move to align its coal prices with the international prices was also not a very wise decision on the part of GoI as the move simply increased their low ranked coal prices substantially which international market can actually absorb. Price reference systems were instituted to increase the government’s revenue but unfortunately they were not implemented correctly. If the practice continues Indonesia will lose its price competitiveness in the export market.

After analyzing various aspects of the Indonesian coal industry, the facts reveal that India cannot be convinced of Indonesia’s reliability as a supplier. Almost 55% of our imported coal requirement is fulfilled by the Indonesia. Given Indonesia’s prevailing situation and uncertain legal & regulatory regime India must move very cautiously regarding investing in the Indonesian coal properties because companies have to divest 51% of shares to local miners in the 10^th Year after the 5^th Year of commercial production. Here the Government of India can play a vital role if they secure coal supply agreement through bilateral agreement which would be a more satisfying arrangement. No doubt Indonesia is a good option for India to import coal given its proximity to Indian ports and short voyage time compared to Australia but India must look for other low cost exporting countries by which long term coal supply will be assured.

HYDRO POWER

J&K - Power Status and Prospects

Sonali Mittra, Observer Research Foundation

he 7^th edition of the International hydropower conference held in Srinagar on 11^th June, 2012 emphasised on the hydropower development in the Himalayas, focussing on the challenges and opportunities in harnessing the potential available. From the conclusion of the conference it is evident Jammu and Kashmir hydropower potential was primarily the focal point of the deliberations. Minister of the State for Power Mr. Shabir Ahmad Khan shared a road map for massive capacity addition of about 8000 MW in the next ten years. Jammu and Kashmir government’s ambition to make the state self reliant in electricity and to provide hydro-energy to other states in the future might be a bit far fetched and unnecessary.

Currently, 90% of the J&K’s power requirements are imported, which resorts heavy curtailment during winters. According to Central Electricity Authority’s load balance sheet report 2011, anticipated power supply position in India has an average deficit of -12.9%. J&K was assumed to have -25.3% which is a fractional difference from the actual power supply of the year 2010-11. Its peak deficit as reported is one of the highest in the country, only after a few states like Bihar and Goa.

Table 1: COMPARISON OF THE CONTITUENT-WISE FORECAST VIS-A-VIS ACTUAL POWER SUPPLY POSITION (2010-11)
STATE	REQUIREMENT (MU)			AVAILABILITY (MU)			DEFICIT
STATE	LGBR	ACTUAL	% DEVIATION	LGBR	ACTUAL	% DEVIATION	%

Jammu & Kashmir	14050	13571	-3.4	11023	10181	-7.6	-25
Punjab	48978	44484	-9.2	41948	41799	-0.4	-6
Haryana	36390	34552	-5.1	27488	32626	18.7	-5.6
Himachal Pradesh	7794	7626	-2.2	9036	7364	-18.5	-3.4
Rajasthan	46612	45261	-2.9	46244	44836	-3	-0.9
Chandigarh	1657	1519	-8.3	1506	1519	0.9	-0.3

Source: CEA: Load Balance Record Sheet, 2011-12; (MU = Million Units; LGBR = Load Generation Balance Report)

While it may be seen in Table 1 that in the Northern Region Chandigarh and Rajasthan faced negligible energy shortage. Himachal Pradesh, Haryana and Punjab experienced energy shortages in the range of 3-6% whereas the shortage in Uttar Pradesh was 15%. The maximum energy shortage in Northern Region was in Jammu & Kashmir and was 25% due to lower energy availability. However, there could be other reasons for such high deficit of the technical, economic and political nature, which needs to be reviewed more in detail.

The power supply position of this northern region is important as it is comprised of the hydro-rich states having run of river schemes on the Himalayan rivers viz. Himachal Pradesh, Jammu & Kashmir, and Uttarakhand are surplus in energy during monsoon period, while they face severe shortage conditions during the winter low inflow months when the generation from hydro schemes dwindles to the minimum. J&K’s power deficit rises to the range of -35 to 38% in the months of Oct – Jan.

The Jammu and Kashmir State Power Development Cooperation (JKSPDC) has rolled up its sleeves to meet the power deficit in the state through hydropower. The current installed capacity of the projects in the state is 3077 MW and another 900 MW is under implementation by state and central sectors. However, there are many bottlenecks in the process and clearances from central agencies remain the biggest hurdle. Also, it is felt that state funding alone can’t substantiate the hydropower development, therefore, private investments have to be encouraged. Considerable emphasis is being given on the upgradation of power infrastructures – thickening of conductor of existing lines, construction and augmentation of grid stations and new transmission lines, under the Prime-Minister’s Re-Construction Program.

A 25% power deficit for a state which arouses the political sensitivities of the region is recipe for further conflicts and disagreements. Jammu and Kashmir sits uncomfortably at the crossroads of dominant international geopolitics and under-development. While it is asserted in government’s objectives that hydropower development is crucial to turn around the state’s economy and power situation, a more rigorous strategic planning needs to be in place treat it more as an issue of energy access than energy generation.

Can Nuclear –Free Japan Survive Energy Crisis?

R S Kalha*

hen the last nuclear reactor [Tomari /No.3] operated by the Hokkaido Electric Power Co shut down ostensibly for ‘repairs’ early this month, Japan became a nuclear-free country for the first time since 1970 in every sense of the term. With this all of Japan’s 54 nuclear reactors were ‘shut down’ either for ‘repairs’ or simply closed down. Japan's $5 trillion economy has relied heavily on nuclear power for decades, with its nuclear reactors providing almost 30% of its electricity power demand. However last year's massive Tsunami and the subsequent nuclear meltdown at the Fukushima nuclear plant spurred a public backlash against the use of atomic energy for Japan’s power needs. A Mainichi poll suggested that 74% of people in Japan wanted all nuclear plants to be phased out gradually.

Japanese government leaders are worried that if public sentiment against nuclear energy remains strong then it might endanger Japan’s budding economic recovery as the power shortages are expected to be more severe and widespread than last year, when many areas in Japan were still running nuclear reactors. Another worry that remains is of the long-term fallout as the rising cost of electricity, coupled with a strong yen, would hit production and could prompt several Japanese companies to shift their operations overseas. On 27^th April 2012 the Japanese Central Bank, in its twice-yearly report on the economy warned that lack of power [energy] could hurt Japan's medium- and long-term growth expectations. Japan managed to get through last year without any blackouts by imposing voluntary curbs on the use of power in the aftermath of the Tsunami that left utter devastation. Last year Japan’s manufacturing industry operated at night and during weekends to avoid putting too much stress on the country's power grids.

There is no doubt that the energy crisis is a very serious question for Japan. Some senior Japanese leaders have attributed this decision to shut down nuclear reactors to mass hysteria and one that can hurt Japan enormously. Some analysts have even gone so far as to say that this decision smacks of ‘mass suicide’. MITI calculates that a complete nuclear shut down would add about US $ 40 billion as extra costs and will reduce Japan’s GDP by 3.6% while at the same time about 200,000 jobs would be lost.

However the immediate upshot has been that Japan's liquefied natural gas [LNG] imports climbed 18 percent in volume and 52 percent in value to 5.4 trillion yen ($67 billion) in the year up to March this year. Renewable sources of energy are also not expected to be much of an immediate replacement. In Japan energy from renewable sources accounts for about 10 percent and is mostly from hydroelectric dams. Wind and solar together contribute only about 1 percent. The Japanese parliament [Diet] last week introduced a scheme that will subsidise electricity produced by five of green energy, but investors will have to wait for a panel to determine tariffs that apply to solar, wind and other sources of power. The hope is, although a forlorn one, that this might mitigate Japan’s energy problems. It is obvious that Japan has to take some very grim decisions about its future energy requirements, if it is to sustain its five trillion dollar economy without serious stress.

It was for this reason perhaps when Secretary of State Clinton visited Japan recently that the US thought it best to exempt Japan from the rigours of sanctions in spite of the fact that Japan continues to be one of Iran’s major oil markets. Japan’s energy needs based on fossil fuel are therefore likely to rise exponentially in case Japanese politicians are unable to resist public opinion and are not able to re-open its nuclear reactors. The US is Japan’s major ally and the anchor on which its national security policies are based. But as is obvious there are major differences as far as policies towards oil rich Iran are concerned. That being so it just might tempt Japan to foster closer links with Russia and particularly with the Russian Far East where extensive resources exist; waiting to be developed. A Russian oil pipeline is already operational which carries Siberian crude to the Pacific coast and there are extensive coal deposits in Siberia. The stumbling block in the two countries coming together is the fact that they locked in a territorial dispute over the four northern islands; captured by Soviet Russia at the end of the second World War but claimed by Japan as a part of its national territories.

The fact is that mainland Japan has no natural resources and therefore most of its energy needs have to be imported from overseas. It for this reason also that it is so sensitive to China’s drive to dominate the South China Sea. For Japan’s national security planners India represents a solid choice. It is democratic, stable and its economy is one of the fastest developing economies in the world. At the same time India is very strategically situated and it can dominate the sea lanes that carry the bulk of Japan’s energy needs from the Middle- East. The present predicament faced by the Japanese also represents a strategic opportunity for India. If India can take advantage of the need for some units of Japanese industry to move overseas; India can be the natural choice, but for which India would have to move with alacrity. Japanese investment capital can also be extremely useful in the present situation that India finds itself in. The question is, are India’s decision makers alert to the possibilities?

Concluded

Views are those of the author

* The author is a former Secretary, Ministry of External Affairs.

Author can be contacted at [email protected]

DATA INSIGHT

Trends in Energy Trade Balance: India

Akhilesh Sati, Observer Research Foundation

Million Tonnes

Year	Coal			Petroleum Crude			Petroleum Products
	Import	Export	Net Imports	Imports	Exports	Net Imports	Imports	Exports	Net Imports
1970-71	0	0.47	-0.47	11.68	0	11.68	1.08	0.33	0.75
1975-76	0	0.44	-0.44	13.62	0	13.62	2.22	0.17	2.05
1980-81	0.55	0.11	0.44	16.25	0	16.25	7.29	0.04	7.25
1985-86	2.03	0.21	1.82	15.14	0.53	14.62	3.87	1.96	1.9
1990-91	4.9	0.1	4.8	20.7	0	20.7	8.66	2.65	6.01
1995-96	8.87	0.09	8.78	27.34	0	27.34	20.34	3.44	16.9
2000-01	20.93	1.29	19.64	74.1	0	74.1	9.27	8.37	0.9
2005-06	38.59	1.99	36.6	99.41	0	99.41	13.44	23.46	-10.02
2006-07	43.08	1.55	41.53	111.5	0	111.5	17.76	33.62	-15.86
2007-08	49.79	1.63	48.17	121.67	0	121.67	22.46	40.78	-18.32
2008-09	59	2.17	56.83	132.78	0	132.78	18.52	38.9	-20.38
2009-10	73.26	2.45	70.8	159.26	0	159.26	14.66	50.97	-36.31
2010-11(p)	68.92	4.41	64.51	163.59	0	163.59	17.34	59.13	-41.8
2011-12(p)	50.46	0.62^#	49.84	171.32	0	171.32	14.91	60.12	-45.21

# for 2011-2012 (Apr-Sept)

Source: 1. Energy Statistics 2012 by MoSPI

2. Unstarred Question 4341, Lok Sabha

3. Deptt. of Commerce, MoC&I

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

BPCL, Videocon Mozambique gas discoveries hold huge reserves

June 11, 2012. Bharat Petroleum Corp Ltd (BPCL) and Videocon Industries' Mozambique gas discoveries may hold up to 100 trillion cubic feet of in-place reserves. US energy major Anadarko Petroleum Corp said the total estimated recoverable natural gas resource in Offshore Area 1 was between "30 and 60 Tcf, and the current upside for total gas in place for the discovered reservoirs on the block is approaching 100 Tcf". Bharat PetroResources Ltd, a wholly owned subsidiary of BPCL, and Videocon Hydrocarbon Holdings Ltd, a wholly owned subsidiary of Videocon Industries, hold 10 per cent stake each in Area--1. Anadarko, which holds 36.5 per cent interest in the block, plans to put up plants to liquefy the gas (liquefied natural gas or LNG) so that it can be shipped to consumption centres in cyrogenic ships. The two LNG trains will have the capacity to produce 5 million tonnes of liquid fuel each. First gas exports from an initial train is expected in 2018 and the second train in 2010. A final investment decision is scheduled for late 2013. The Atum discovery well, which encountered more than 300 net feet (92 meters) of natural gas pay, is connected to the recent Golfinho discovery located approximately 16.5-km to the northwest in the Offshore Area 1. The reserves are more than the 11 Tcf of resources in Reliance Industries' eastern offshore KG--D6 fields. RIL had in 2010 produced over 61 million standard cubic metres per day of gas from its KG--D6 gas discoveries before technical problems led to a drop in output. The output is enough to produce about 15 million tonnes of LNG per annum. Anadarko estimates that there is sufficient gas in place in Area-1 for up to 10 LNG trains for a total of 50 million tons a year of LNG capacity.

ONGC extends pact with Hinduja Group for sourcing LNG

June 11, 2012. ONGC has extended pact with Hinduja Group for sourcing of liquefied natural gas from Iran and other Middle East nations by one more year. ONGC had in November 2006 signed an MoU with Hinduja Group promoted Ashok Leyland Project Services Ltd (ALPS) to use the diversified group's influence in oil and gas rich nations to get a lucrative LNG deal. The MoU expired and ALPS and ONGC have mutually agreed to extend the MoU by another year. The pact calls for the two firms to form a company which would source LNG from Iran, Qatar, Kuwait, Libya, Oman, Saudi Arabia and UAE. ONGC is to hold 49.98 per cent stake in the venture with ALPS, which will get 48.02 per cent. The remaining two per cent would be held by banks and financial institutions. ONGC is keen to leverage the clout of Hindujas in Gulf region, particularly in Iran and Qatar, to source LNG for its proposed ` 25,000 crore Mangalore integrated project that includes an LNG import terminal, a 1,445 MW power plant and a basic petrochemical complex.

Adani weighs bid for some of Conocophillips Canadian oil sands assets

June 7, 2012. Adani Group is evaluating a possible bid for some of the Canadian oil sands assets being divested by ConocoPhillips. Adani has sought a memorandum of information from ConocoPhillips to study the assets but yet to take a decision if it will bid for them. A successful bid for the assets could cost the Adani Group in excess of $5 billion. Houston-based ConocoPhillips said that it is selling a stake in six Alberta properties that produce 12,000 barrels of oil a day from an estimated 30 billion barrels of bitumen. The company has appointed the investment banking arm of Bank of Nova Scotia to run the auction process for the sale of the assets. ConocoPhillips recently completed the spin-off of its refining activities into Phillips 66, a newly created independent U.S. company and has been looking to divest some of its non-core assets as part of a global restructuring exercise. Oil and Natural Gas Corporation Limited (ONGC) is also said to be in the fray to bid for Conoco's Canadian oil sands assets which are likely to attract interest from a number of international bidders including some large Chinese companies. The Adani Group has been evaluating an entry into the oil and gas business which it believes will provide it a strong hedge against some of the other more volatile businesses such as commodity trading that it is engaged in. Adani also evaluated a bid for Gujarat Gas but did not finally make a binding offer for the same.

Downstream

Indian Oil seeks 120,000 tonnes diesel on demand

June 7, 2012. Indian Oil Corp. has emerged in the spot market for the second time to seek diesel due to increased demand and refinery maintenance. The company's latest requirement brings its total diesel needs in the spot market to 180,000 tonnes for delivery in June and July. India's biggest refiner plans to shut a crude unit and a fluid catalytic cracking unit (FCCU) at its 150,000 barrels-per-day unit at Haldia plant in June for maintenance. IOC will also shut a vacuum distillation unit (VDU) at its 274,000 bpd Gujarat refinery during June-July for maintenance. The shutdowns are expected to increase the company's diesel needs as it tries to meet India's growing demand for diesel-powered vehicles, which accounted for more than 40 percent of new car sales in India in the year to March 2012. In its latest tender, Indian Oil is seeking two 60,000-tonne diesel cargoes with a sulphur content of 320 parts-per-million (ppm). The first cargo is for delivery into Chennai, Haldia and Paradip over June 28-30 while the second cargo is for delivery into Chennai, Vizag and Haldia over July 7-9. The tender closes on June 14. The company issued a tender seeking 60,000 tonnes of diesel for delivery into Chennai, Vizag and Paradip over June 19-21.

Karnataka sanctions special incentive package for MRPL

June 6, 2012. Karnataka has exempted Mangalore Refinery & Petrochemicals Ltd (MRPL), a subsidiary of ONGC, from paying certain local levies for its refinery expansion and upgradation projects. The state government has exempted MRPL from paying entry tax on plant and machinery and capital goods in the initial period of four years from the date of commencement of project implementation, the company said. The government has also exempted the company from paying entry tax on the crude oil in the third phase. MRPL has recently commissioned the primary crude processing unit, crude distillation & vacuum distillation unit along with required offsite facilities.

Ruias mull stake dilution in Essar Oil to increase liquidity

June 6, 2012. The promoters of Essar Oil plan to dilute their stake in the refiner to increase the liquidity of the company's stocks on the bourses. Ruias, the Mumbai-based promoters of Essar Group, hold 90% stake in Essar Oil, the country's secondlargest private refiner. The company commissioned its ` 24,000 crore, 20-MMTPA refining facility at Vadinar in Gujarat after completing its optimisation project.

Transportation / Trade

IOC buys nearly 4 mn barrels of West African crude for July

June 11, 2012. Indian Oil Corp (IOC), has bought nearly 4 million barrels of West African crude in a tender for loading in the second half of July. The refiner bought 1 million barrels each of Hungo and Agbami from Shell and 950,000 barrels of Kissanje from Sonangol and 950,000 barrels of Dalia from Mercuria. IOC last bought a Kissanje cargo from Sonangol.

Swan Energy may sell stake in Pipavav unit

June 7, 2012. Mumbai-headquartered Swan Energy is in talks with state-owned oil and gas companies for selling a small stake in its upcoming floating LNG unit in Pipavav, Gujarat. Bharat Petroleum Corporation, Hindustan Petroleum Corporation, and Gujarat State Petroleum Corporation have been sounded out.

GAIL says shale investments to hedge US LNG imports

June 7, 2012. GAIL (India) Ltd has around $1 billion to spend on shale gas assets in North America, which will act as a hedge against planned imports of U.S. liquefied natural gas, the company said. GAIL signed a deal with U.S.-based Cheniere Energy in December to buy 3.5 million tonnes of LNG a year under a 20-year contract starting from 2017.

India cuts May Iran oil imports by 38 pc

June 7, 2012. Indian refiners cut imports from Iran by 38 percent in May from a year ago, in a second month of steep reductions as they switch suppliers to cushion the impact of new U.S. sanctions on Tehran. The cutbacks raise New Delhi's chances of winning a waiver similar to that granted by the United States to Japan and some European countries after "substantial" reductions in their imports. India is discussing with Washington an exemption from the sanctions, which focus on banking and are being imposed over Iran's disputed nuclear programme.

Policy / Performance

India gets temporary relief from the US sanctions against Iran

June 12, 2012. Indian refiners need to further cut import of Iranian oil even though it has been exempted from US sanctions, oil industry executives said a day after Washington said it won't penalise countries that have cut purchases from Teheran. For the moment, Indian refiners are breathing easy as the threat of severe supply disruption from July has ebbed and the US decision helped Brent crude oil prices drop to $97.5 a barrel. But industry officials say US pressure to reduce the use of Iranian oil continues and the country needs to keep exploring alternative sources of oil. The US government said that it had exempted seven importers of Iranian oil including India from sanction to reward them for significant cuts in import of Iranian oil. Other countries are Turkey, Malaysia, South Korea, South Africa, Sri Lanka and Taiwan. China, a large importer has not been exempted.

RIL warns of further KG-D6 output drop if govt doesn’t approve budget

June 12, 2012. With KG-D6 output hitting an all- time low, Reliance Industries has warned that production will continue to decline as government is not approving investments needed to boost output. RIL also threatened it would seek damages for the drop in output which was a direct result of government not approving several of its investment plans for the flagging gas fields. While the government-controlled block oversight committee is supposed to approve spending before beginning of a fiscal, in case of KG-D6 budgets and work programmes for 2011-12 as well as 2012-13 have so far not been approved, the company's counsel wrote to the oil ministry.

Petrol prices to come down: Pranab Mukherjee

June 10, 2012. Petrol prices are expected to come down with the rate of crude declining in the international market, finance minister Pranab Mukherjee said. The oil companies had on May 24 hiked petrol prices by ` 7.54 a litre, the steepest hike in many months. Later, the rate was cut by ` 2.02 a litre. Mukherjee said the Centre would discuss the Pension Fund Regulatory and Development Authority Bill with Mamata Banerjee. Government has not yet fixed a date for ministers to review diesel pricing, Oil Minister S. Jaipal Reddy said, suggesting no immediate increase is on the cards. Reddy also said his ministry has recommended the tax on diesel vehicles should be raised.

EGoM to decide on KG-D6 gas price: S Jaipal Reddy

June 8, 2012. An Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, will decide if price of natural gas produced by Reliance Industries from KG-D6 fields can be revised before 2014, Oil Minister S Jaipal Reddy said. RIL has demanded a market price of KG-D6 gas instead of USD 4.205 per million British thermal unit rate fixed for five years ending March 31, 2014. The Oil Ministry had sought an opinion of the Attorney General G E Vahanvati if prices can be revised before the 5-year tenure fixed by the government.

RIL to invest $18 bn in India to double profit

June 7, 2012. Reliance Industries Ltd. (RIL), owner of the world’s largest oil-refining complex, plans to invest ` 1 trillion ($18 billion) in India in the next five years to double operating profit. The company will invest across all its businesses and in new divisions including retail and digital services. The aim is to increase revenue from the retail business as much as six times in three to four years and more than double natural gas output to 60 million cubic meters a day. Reliance is also boosting investment in extracting gas trapped in shale rocks in the U.S. The shale-gas business is a major area of Reliance’s investment over the next three to five years. The company is planning an $8 billion expansion of its petrochemicals business, betting Indian demand for materials used to make plastics and polyester will help counter weak global fuel sales. Output from Reliance’s KG-D6 block, India’s biggest natural gas field, is expected at 28 million cubic meters a day in the current fiscal year and may decline to 20 million in the year starting April 1, 2014, oil minister S. Jaipal Reddy said.

CBI concludes KG Basin inquiry; seeks AG's opinion

June 6, 2012. The CBI has sought Attorney General (AG)'s opinion on registering a case in the alleged artificial cost inflation by Reliance Industries for the development of eastern offshore KG-D6 fields. The CBI has completed its inquiry into the alleged conspiracy in allowing RIL to raise cost of developing the KG-D6 field from USD 2.39 billion proposed in 2004 to USD 8.8 billion in 2006. V K Sibal was the head of Directorate General of Hydrocarbons (DGH) which gave RIL approvals for raising the cost on the plea that gas reserves as well as cost of services have gone up. Operators like RIL are allowed to recover all their cost before sharing profits with the government. Higher capital cost directly impacts the government's revenue.

Weak rupee negates benefit of falling global oil prices: Assocham

June 6, 2012. India is not able to get the benefit of drop in global crude oil prices due to depreciating rupee, industry body Assocham has said. Global oil prices were hovering near USD 85 per barrel in global markets against nearly USD 125 a barrel in recent months. However, the rupee has depreciated to 55 levels against the dollar against the 49 level. India imports about 83 per cent of its oil requirement and this increase has widened the trade deficit to USD 185 billion in 2011-12, Assocham said.

ONGC in talks with Mitsui for LNG terminal at Mangalore

June 6, 2012. Oil and Natural Gas Corp (ONGC) is in talks with Mitsui Group of Japan for setting up a liquefied natural gas (LNG) import terminal at Mangalore as part of its diversification plans. ONGC had in 2005 proposed to build a 5 million tonne a year LNG import and regassification terminal adjacent to its subsidiary Mangalore Refinery in Karnataka. The company has again revived the diversification plan and is now actively looking at setting up LNG terminal at Mangalore to meet the fast growing energy needs in the country. ONGC plans to sign an agreement with Mitsui to explore opportunities for setting up an LNG terminal in India, specifically at Mangalore, or at any other mutually identified locations. ONGC wants to use Mitsui's 30 years of global experience to source LNG. A gas-based power plant may also be set up at a later stage.

PNGRB seeks cancellation of KG-D6 pipeline permits given to RGTIL & GAIL

June 6, 2012. The petroleum regulator has recommended cancellation of licences for five pipelines that GAIL India and Reliance Gas Transportation Infrastructure (RGTIL) were planning to build to transport natural gas from Reliance Industries' D6 block, where output has fallen sharply. The oil ministry has received a communication from the Petroleum and Natural Gas Regulatory Board (PNGRB) saying the licence for one pipeline being planned by GAIL and four by RGTIL should be revoked as work has not progressed on the projects for a long time.

POWER

Generation

GAIL to set up 1 GW power plant in Punjab

June 12, 2012. The Punjab government approved a 1,000-MW power plant to be set up in the state's Ropar district. The proposed plant will have three units of 330 MW each. Chief Minister Parkash Singh Badal gave in-principle approval to set up the gas-based plant in collaboration with the Gas Authority of India (GAIL) at Ropar.

Essar Steel commissions 19 MW heat recovery plant at Hazira

June 11, 2012. Essar Steel has commissioned a 19 MW heat recovery power plant at its Hazira unit of Gujarat, which is likely to reduce the power cost of the company. The company said this would also benefit with the availability of carbon credits due to the reduction in emission of green house gases. Essar Group has already commissioned a similar facility at its Canadian operations at Essar Steel Algoma Inc. Essar Steel produces a 14 million tonne per annum of steel globally with presence in Canada, USA, India and Indonesia.

BHEL commissions 250 MW power generating unit in UP

June 7, 2012. Bharat Heavy Electricals Ltd (BHEL) has commissioned a 250 MW power generating unit at Harduaganj in Uttar Pradesh (UP). With this, 6 million units of electricity will be added to the grid of the power deficit state, every day, the company said. Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (UPRVUNL) had placed orders on BHEL for setting up 2 units of 250-MW each at Harduaganj. While the first unit of the thermal project was commissioned by BHEL in September, 2011, the project has now been completed with the commissioning of the second unit. BHEL is also executing contracts for another 250 MW unit at Parichha and two units of 500 MW each at Anpara for UPRVUNL. BHEL's scope of work in the Harduaganj contract envisaged manufacture, supply, erection, testing and commissioning of the main plant package along with associated auxiliaries and civil works for the main plant package. The equipment for the project were supplied by BHEL's Haridwar, Trichy, Ranipet, Hyderabad, Bangalore, Bhopal and Jhansi plants, while BHEL's power sector - northern region is undertaking erection and commissioning of the equipment.

NTPC-UPRVUNL sign ` 75.7 bn loan agreement for Meja plant

June 7, 2012. Meja Urja Nigam Pvt Ltd, a joint venture of NTPC Ltd and Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (UPRVUNL) has signed ` 7,575 crore loan agreement with consortium of 16 banks led by State Bank of India for funding 1,320-MW Meja thermal power project in Uttar Pradesh. The loan has disbursement period of 60 months and is to be repaid in 10 years thereafter. The loan would be utilised for financing capital expenditure of Meja Thermal Power Project. The loan facility was syndicated by SBI Capital Markets Ltd, NTPC said.

Higher coal availability from Coal India helps to increase power generation in May

June 6, 2012. Higher coal availability from Coal India in May 2012 has helped increase in coal based power generation by 12.5% year-on-year, off-setting 16% year-on-year decline in gas based power generation and 12% decline in hydro generation. Overall generation of power increased by 5.1% to 78.9 billion units. This higher generation was mainly due to higher generation of NTPC and other private utilities. NTPC's y-o-y generation in May 2012 increased by 11% y-o-y while that of private utilities increased by 42%. NTPC's generation mainly increased due to capacity addition at Simhadri and Sipat plants and higher plant load factor (PLF) or higher capacity utilization.

Transmission / Distribution / Trade

India and Pakistan may have a power transmission line

June 11, 2012. The prevailing bonhomie between India and Pakistan may soon have a grid interface as Islamabad is seeking 500 MW energy from New Delhi. This, however, may be a simple trading exercise and will lack any impact on the existing cold war over water resources, union power secretary Dhruv Vijay Singh hinted in Srinagar. In a hot debate over Indus Water Treaty and allied controversies involving the two neighbours, Singh said the water sharing treaty is continuously generating a lot of debate but most of it is half truth. Cold war over water notwithstanding, Singh ruled out the possibility of Pakistan blocking any power project in J&K as long as it is run of river project.

Alstom bags contracts worth ` 554 mn from NTPC

June 8, 2012. Alstom in India has secured two strategic contracts for the execution of turnkey station control and instrumentation for NTPC's 660 MW supercritical projects for Solapur II and Mouda II in Maharashtra. These contracts worth close to ` 55.4 crore was awarded to Power Automation & Controls (PAC) Business India. The turnkey scope of the projects includes a combined area of complete station control with control systems. These will be manufactured in Alstom's manufacturing facilities in India and Europe.

OPTCL to take up ` 12 bn transmission projects on PPP mode

June 8, 2012. Odisha Power Transmission Corporation Ltd (OPTCL) plans to take up power transmission projects worth ` 1211 crore on the public private partnership (PPP) mode. This is expected to help meet the state's power transmission capacity which is projected at 19500 MVA by 2016-17 to evacuate surplus power to be produced from projects proposed by independent power producers (IPPs).

Policy / Performance

Haryana started power plant in Jan, ordered coal in June

June 12, 2012. It took around six months for Haryana to understand the plight of jaded residents of the state facing power outage because of non-availability of coal and technical faults in power plants. After facing outrage from people for unexpected power cuts in the entire state - especially Gurgaon - the Haryana government has only now begun procuring coal from the central government, which will get their 660 MW unit power plant in Jhajjar operational from June 15. Even a Chinese turbine at Yamunanagar plant, not working since March, was recently sent to China by sea route for repair.

Sikkim govt decides to scrap four hydel projects

June 12, 2012. Sikkim government has decided to scrap four hydel projects on tributaries of the Teesta in North Sikkim. The hydel projects scrapped were the 99-MW Bop hydro- electric project (HEP), 99-MW Bhimkyong HEP and the 99-MW Lachung HEP on the Lachung Chu and the 280-MW Teesta Stage-I HEP at Lachen.

Akhilesh lays foundation of 1,980 MW power plant

June 12, 2012. Uttar Pradesh Chief Minister Akhilesh Yadav laid the foundation stone of 1,980 MW capacity thermal power plant in the state's Kanpur district. The project, at Ghatampur in the district, is a joint collaboration between Neyvelli Lignite Corporation (NLC) and Uttar Pradesh Rajya Vidyut Utpadan Nigam (UPRVUN). The chief minister said his government was committed to improving the power scenario in the state. He said without the availability of adequate power supply in the state, all-round development was extremely difficult. Industrial, social and financial development was only possible when power supply was in good measure, he said. Akhilesh Yadav also assured that the state government would do all it could to increase power availability so as to ensure that development reaches all strata of the society. The chief minister also said that more compensation would be given to farmers whose lands had been acquired by the project and it would be ensured that they were given employment on priority basis. The Union Coal Minister Shri Prakash Jaiswal said that the central government was committed to providing coal blocks and coal linkages for thermal power plants. Mr Jaiswal further said that by the year 2015, the plant would be in a position to ensure that power crisis in Ghatampur, its nearby areas and Bundelkhand were met.

Karaikal power plant to be expanded in 12^th plan

June 11, 2012. To meet the growing demand, the Puducherry Administration has proposed to expand the gas based power plant run by Puducherry Power Corporation, an undertaking of Puducherry government in Karaikal. The administration has proposed to augment generation of power in the twelfth plan. Generation of power would be expanded from 32.5 MW to 100 MW to meet the growing power demand. The gas needed for production of energy at the plant has been available from the gas wells of the ONGC in Narimanam near Karaikal. This is the only power plant in the Union Territory. Puducherry and other outlying regions are getting the power from Central electricity generating stations besides the one situated in the state sector at Karaikal to meet its demand. The power plant was started in Karaikal in 2000.

State govt to invite bids for 1.3 GW Etah power plant

June 11, 2012. After giving 18-month extension to nine power plants proposed to be set up through the memorandum of understanding route, the UP government has geared up to invite bids for setting up of a 1,320 MW power plant in Etah district's Jawaharpur area. UP Power Corporation Limited said that the state government will be making arrangements for coal, land and water for the project as per the Centre's guidelines. The project was recently given clearance by the energy task force headed by UP chief secretary, Jawed Usmani. UPPCL said that around 900 acres of land, which would also include land for reservoir with 21 days storage capacity, will be needed for the project. Around 4,220 cubic metres per hour of water will be required for the power plant proposed to be set up in two stages of 660 MW units each.

CIL invites firms to assess CBM reserves

June 11, 2012. Coal India Ltd (CIL) has invited expression of interest from companies for carrying out studies to assess methane reserves of coalfields as part of efforts to increase energy supply and overcome fuel crunch. The tender which opened will expire next month, CIL said. India's coal bed methane (CBM) production is estimated to reach 4 million standard cubic meter per day (mmscmd) by 2016-17, as compared to the current level of 0.23 mmscmd in 2011-12.

Assocham asks govt to enhance coal output to meet power needs

June 11, 2012. Amid investigations in alleged irregularities in allocation of mines, industry body Assocham said the government must immediately initiate steps to enhance coal output and ensure adequate fuel supply to the power sector to save it from being engulfed by controversies. Expressing concern over widening demand-supply deficit, Assocham said it has hit several power projects, including the ultra mega power projects, being forced to import coal from other countries such as Indonesia. Appreciating Prime Minister Manmohan Singh's efforts to fast-track the sector's growth, Assocham said there is a need to ensure that the enhanced target set for infrastructure ministries are met. The government has set a production target of 470 MT for CIL. The company will dispatch 347 MT to the power sector, as against 312 MT. On future allocations, it said the policy for that should be transparent.

Power companies may get to raise tariffs

June 11, 2012. Power projects using imported coal would soon be allowed to raise tariffs by up to ` 1 per unit to offset the effect of increase in fuel price due to additional taxes or changes in law by the governments of source countries. The power ministry has suggested to the central regulator to figure a way out of the logjam between promoters of big power projects and their bulk consumers - the state utilities. Power producers have been demanding tariff revision on the ground of coal prices rising substantially - in several instances five times - due to various reasons since the time their project was bid out or power supply pacts were signed.

Power Ministry mulls coal imports to meet supply shortage

June 10, 2012. The Power Ministry is likely to move a proposal to Coal India for importing the dry fuel to bridge the shortfall in supply under fuel supply agreements (FSAs). Central Electricity Authority (CEA) is working on a proposal along with the Power Ministry to work out a mechanism for importing coal. As per the Presidential Directive to Coal India, the PSU has to supply a minimum 80 per cent of the requirement to power companies. But Coal India has expressed inability in delivering that quantity due to low production. Prices of imported coal and domestic fuel would be pooled to supply coal at an average price to power generation utilities. However, the proposal is at a nascent stage and requires assent from various stakeholders.

J-K govt plans to implement 45 hydro power projects in 10 yrs

June 10, 2012. The Jammu and Kashmir Power Development Corporation said 45 hydro power projects in the state to be implented will take the combined capacity generation to 8,000 MW over the next 10 years. Basharat Ahmad Dhar, the managing director of J-K Power Development Corporation said 41 projects having a capacity of generating 3,231.85 MW will be completed during the 12th Plan period ending March 2017 and by the end of the 13th Five-year Plan in March 2022, the total harnessing capacity will reach 8,298.85 MW. He said four major projects which include Sawlakot and Kirthai will be completed during the 13th five-year plan and will have a capacity of nearly 5,000 MW. Jammu and Kashmir has a hydro power potential of 25,000 MWs, of which less than 10 per cent is being harnessed, he said.

India to give $100 mn aid for Nigeria's power sector

June 8, 2012. India has committed a $100 million line of credit to Nigeria for improvement in its power sector that has been battling with instability and corruption. Indian High Commissioner to Nigeria Mahesh Sachdev announced this during inauguration of the manufacturing and repair of power transmission equipment plant developed by India's Skipper Group in Ikorodu area of southern state of Lagos. He noted that unlike many other foreign companies which were content to execute projects on tactical basis, Skipper Group, over the past decade, had invested in Nigeria to create manufacturing and repair capacity, transfer of technology and employment generation. Nigeria's power minister Bart Nnaji said with the completion of the repair plant, the country would no longer ship transformers to South Africa, India and other countries for repair.

Essar Energy gets final approval for Indonesian coal block

June 8, 2012. Essar Energy said it has received final forest approval for its Aries coal mine in Indonesia. Essar Energy acquired a 100 per cent interest in the Aries coal mine in April 2010 for USD 118 million. The mining area comprises approximately 5,000 hectares located in the West Kutai region of East Kalimantan. A Joint Ore Reserves Committee (JORC) compliant resource assessment estimates that the block contains approximately 64 million tonnes of mineable reserves with an annual potential production of 4 million tonnes of coal. This is sufficient to provide a dedicated fuel supply to the Salaya I, 1,200 MW coal-fired power plant located in Gujarat, India.

Alstom and Druk Green to establish a JV for services of hydro components in Bhutan

June 7, 2012. Alstom and Druk Green Power Corporation (Druk Green) will establish a state-of-the-art hydropower service centre in Jigmeling, Gelephu under Sarpang Dzongkhag (district) of Bhutan to provide repair services for hydro runners and other underwater parts of hydropower plants. This strategic partnership will be implemented as a joint venture with a shareholding of 49% for Alstom and 51% for Druk Green. This will be the first service centre in the country and it aims to create 160 new jobs in Bhutan. The service centre is expected to employ 62 people in the first year of operation and plans to ramp up to 160 when the centre reaches its full capacity utilization. The service centre construction is scheduled to be completed within 27 months from the signing of this agreement. Considering the huge impact the hydropower sector has had on the socio-economic development of the country, the Royal Government of Bhutan has embarked on a mission to achieve 10,000 MW installed capacity by 2020 in cooperation with the Indian government.

UP govt extends MoU signed with nine cos to set up power projects

June 7, 2012. The Akhilesh Yadav government gave an 18 months extension to 9 power projects for which MoU's were signed during the previous Mayawati regime but failed to take off. All nine projects were stuck up due to lack of coal linkages something that the private developer had promised to arrange on their own. They now expect the state government to push for their case with the central government for speedier allotment of coal mines. Atleast three of these nine projects also had issues related to insufficient land acquisition and water availability.

Kerala plans 300 MW power plant

June 7, 2012. The Kerala government is planning to set up a 300-MW power plant using petcoke, to be produced from BPCL’s Kochi refinery after the completion of the proposed integrated refinery expansion project (IREP). Inaugurating a 220-kV substation on the Kochi refinery premises, state power minister Aryadan Mohamed said that the government would extent all possible support to the capacity expansion project of the refinery.

Global coal prices cool, but weak rupee worries importers

June 6, 2012. Power companies that use imported coal have got a respite from skyrocketing fuel costs as international coal prices have softened considerably, and are projected to fall further, but the depreciation of the rupee has limited their gains. The coal price index for Australian coal, popularly called the NewCastle Index, and an Asian benchmark had jumped 92% between April 2009 and March 2011 to touch 127.87, but has cooled off to 98.24 last month, dropping 23% over the past year, including a 14% decline since May. API4, the index for South African coal, mirrored the trend.

P Chidambaram to head GoM on Coal regulator

June 6, 2012. The government has chosen home minister P Chidambaram to head the group of ministers (GoM) to decide on a regulator for the coal sector. The union cabinet had referred the draft coal regulatory authority bill to a GoM. The coal sector has been in the headlines with the Comptroller and Auditor General (CAG) alleging a loss of ` 10.67 lakh crore to the government on account of allotment of coal blocks to 100 private and public sector companies between 2004 and 2009. The regulatory authority is proposed to be put in place to encourage investments in the coal mining sector, enable a level playing field and ensure a transparent allotment process for future coal blocks.

INTERNATIONAL

OIL & GAS

Upstream

Kea Petroleum confirms New Zealand's Puka-1 well yields light oil

June 11, 2012. UK-based Kea Petroleum revealed that swabbing operations from its Puka-1 well in New Zealand produced oil and gas to the surface almost immediately. Independent analysis of the oil showed it to be of "excellent quality light oil," the company said. Preparations are currently underway at the well to start longer term production testing. Kea announced that drilling at Puka-1 had hit a 131-foot interval of Mt. Messenger reservoir quality sands with a net pay of between 14.8-foot and 29.5-foot. The company had maintained its original estimate of gross recoverable resource of one million barrels of oil with a potential upside of up to three million barrels of oil at the Puka-1 well.

Gazprom Neft likely to pass on African offshore drilling

June 9, 2012. OAO Gazprom Neft, the oil arm of Russia’s natural gas exporter, may opt against drilling in two blocks off the West African coast after disappointing seismic studies, according to company. The offshore blocks in Equatorial Guinea probably don’t contain commercial oil or gas reserves based on the research. Dropping the African project would be a set back for the company, which plans to almost double output to 100 million metric tons of oil and gas a year in 2020, or 2 million barrels a day, partly by expanding overseas.

Libya's NOC discovers new oil field

June 7, 2012. Libya's National Oil Corporation (NOC) has announced that the Arabian Gulf Oil Company (AGOCO), wholly owned by the NOC, has drilled the D1-NC8 new field wildcat well to a total depth of 7,020 feet. The well is located in Ghadames Basin approximately 400 km south of Tripoli City.

Downstream

Neste Oil's Naantali refinery resumes production after major turnaround

June 11, 2012. Neste Oil's Naantali refinery is back in normal operation following the completion of a scheduled major maintenance turnaround. The turnaround began in April and lasted a total of around six weeks, and will help ensure the refinery's good performance for the next four to six years. Neste Oil Corporation is a refining and marketing company concentrating on low-emission, high-quality traffic fuels. The company produces a comprehensive range of major petroleum products and is the world's leading supplier of renewable diesel.

China’s refiners face biggest fuel-price cut since 2008

June 8, 2012. China Petroleum & Chemical Corp. and PetroChina Co., the nation’s biggest refiners, face more losses from processing crude after the government cut fuel prices by the most since 2008 as global crude costs tumbled. State-controlled retail gasoline prices fall by 530 yuan ($83) a metric ton and diesel by 510 yuan starting. The cut is the steepest since the government’s current pricing system was introduced in December 2008. A drop in fuel prices threatens to reduce revenue at PetroChina and China Petroleum, known as Sinopec, offsetting cheaper crude costs and extending processing losses that widened. Brent oil in London, a benchmark price tracked by the government, entered a so-called bear market on June 1 after sliding more than 20 percent from this year’s peak. Sinopec had a 16-fold increase in its first-quarter refining loss to 9.2 billion yuan compared with a year earlier, the company said. PetroChina said its operating loss from processing widened to 10.4 billion yuan in the three months from 6.1 billion yuan a year earlier.

Transportation / Trade

Iran seen drawing fewest tankers since Oct as sanctions loom

June 8, 2012. The fewest supertankers in at least eight months were headed for Iran as the deadline neared for a Europe Union embargo against the nation’s oil. The Daylam, owned by Tehran-based NITC Co., was the only very large crude carrier signaling a future destination in Iran. That’s the fewest ships since at least October, based on a weekly snapshot of the global fleet’s movements. The latest signals from 23 NITC tankers are more than a week old. International tanker owners are avoiding Iran because carrying the country’s crude will cause them to lose insurance under EU sanctions taking full effect July 1. Iran is under pressure to stop a nuclear program that the U.S. and Europe suspect involves weapons development and will export 1.2 million barrels a day starting next month, down from 2.2 million.

Turkmengaz signs framework agreement with CNPC

June 7, 2012. A framework agreement on cooperation to transport additional amounts of natural gas from Turkmenistan to China was signed between the state concern Turkmengaz and the China National Petroleum Corporation in Beijing, the Turkmen government said. The volume of Turkmen natural gas delivered to China each year will reach up to 65 billion cubic meters.

Chesapeake is said to discuss $4 bn pipeline sale

June 7, 2012. Chesapeake Energy Corp. is in advanced talks to sell pipelines to Global Infrastructure Partners for more than $4 billion. The energy explorer, facing a $22 billion cash-flow shortfall after natural-gas prices touched a decade low, is discussing selling its entire stake in Chesapeake Midstream Partners LP and other pipeline assets. The negotiations may lead to a deal within days and could also fall apart. Chesapeake Midstream operates pipeline networks in Texas, Louisiana, Pennsylvania and other gas-producing states, and had 3,953 miles (6,360 kilometers) of pipe as of March 31. The partnership gets about 75 percent of its revenue from Oklahoma City-based Chesapeake Energy, with the remainder from energy producers such as France’s Total SA and Norwegian oil company Statoil ASA. Chesapeake Energy also owned 1,950 miles of pipelines separate from the Midstream partnership as of Dec. 31.

LNG tankers dodge price slump on China-yard shutout

June 7, 2012. Liquefied natural gas tankers, the most expensive type of vessel, have avoided a slump in new ship prices because of rising Asian gas demand and limited competition from Chinese shipbuilders. Prices for tankers able to hold 160,000 cubic meters of gas have held steady at about $202 million since 2010. Capesize dry-bulk ship prices have plunged 18 percent in the period because of a glut partly caused by China financing orders to prop up local yards. Chinese shipbuilders have been largely shut out of the LNG tanker market as the vessels are more complicated and more expensive to build than ships for carrying commodities or containers. That’s curtailing competition for the 140 new LNG tankers that ship-classification society ABS expects operators to order over the next five years. South Korean yards have won all 13 of the new LNG tankers ordered this year through April. The country also built 197 of the 372 tankers afloat. Japanese yards, which last won an order in 2011, are the second- biggest builder with 103 in service. LNG is natural gas chilled to minus 260 degrees Fahrenheit (minus 162 degrees Celsius), liquefying it for shipment by tanker.

Seaway Pipeline makes first delivery of crude oil to Texas Gulf Coast

June 6, 2012. Enterprise Products Partners L.P. and Enbridge Inc. said the Seaway Pipeline made its first delivery of crude from Oklahoma to the U.S. Gulf Coast, providing some long-awaited relief to the mid-continent's glut of crude oil. The pipeline, which began operating May 19, is pumping 150,000 barrels a day from Cushing, Okla., to Freeport, Texas, the first south-bound route for the rapidly expanding production of crude from the U.S. interior toward the heart of the refining industry, in the Texas and Louisiana Gulf Coast. The companies are working to expand the pipeline's capacity to 400,000 barrels a day by the first quarter of 2013.

Policy / Performance

U.S. exempts India, South Korea from Iran oil sanctions

June 12, 2012. The U.S. added seven economies to the list of nations qualifying for an exemption from financial sanctions on Iranian oil imports, penalties intended to pressure Iran’s leaders to abandon any nuclear weapons ambitions. India, South Korea, Turkey, South Africa, Malaysia, Sri Lanka and Taiwan will not be penalized by the U.S. for continuing to import oil from Iran over the next six months because they have proven they “have all significantly reduced” the volume of the oil they buy from Iran, Secretary of State Hillary Clinton said. China, the leading importer of Iranian crude in the first half of last year, and Singapore were not granted exemptions. U.S. officials familiar with the decision said talks are continuing, and they may win exemptions before the June 28 deadline for the sanctions to take effect. India and South Korea were the third- and fourth-largest buyers of Iranian oil in the first half of last year, according to the U.S. Department of Energy.

Global LNG supplies to remain tight through 2015

June 12, 2012. Global liquefied natural gas (LNG) markets will tighten and prices are likely to increase over the next two to three years as supplies rise more slowly than appetite from a growing number of importers, industry leaders said. Consumers will pay the price for delays to investment decisions during the global financial crisis, with few new projects scheduled to start exporting until 2015. It will be 2015 at the earliest before material new supply comes into the market and even those are exposed to the risk of delay. Any delays would mean LNG markets stay tighter for longer, making it harder for buyers to find the spot cargoes they need to meet additional fuel demand. Australia will supply the next round of gas to the LNG market from 2014 onward and is set to overtake top exporter Qatar in 2017. But several of those projects are the first of their kind - including three to export coal-bed methane from the country's east coast. The challenges that come with breaking new ground will be expensive. These projects will be more than twice as costly as the previous generation of LNG plants, this means that this new gas supply will not be cheap.

Saudi Arabia’s Naimi says maybe OPEC needs higher quota

June 12, 2012. Saudi Arabian Oil Minister Ali al- Naimi said “maybe” there is a need for higher group production from the Organization of Petroleum Exporting Countries (OPEC). OPEC might need to enlarge its collective production ceiling of 30 million barrels a day. OPEC, which supplies 40 percent of the world’s crude, meets in Vienna on June 14 to decide on output levels for the second half of the year. Brent crude futures fell to $98 a barrel on al-Naimi’s comments and amid concern that Europe’s debt crisis will derail global growth, curbing energy demand. OPEC’s 12 members exceeded their quota by 1.9 million barrels a day in April, according to the International Energy Agency. As the largest exporter, Saudi Arabia has more sway over OPEC decisions than other members and al-Naimi’s comments cast doubt over whether expectations for no change in the quota will prevail. Kuwaiti Oil Minister Hani Abdulaziz Hussain said some OPEC members are concerned about oil-production levels and the direction of crude prices.

Jupiter Energy's Kazakh reserves approved by govt

June 7, 2012. Australia's Jupiter Energy reported that the Kazakhstan Government's state reserves committee has approved C1 and C2 reserves of 37 million barrels for the four wells drilled by Jupiter on Block 31. Jupiter previously reported that independent consultants had judged the J-53 well's Mid Triassic reservoir to contain 184 feet (56 meters) of net pay. The government has also granted Jupiter a two-year extension on its exploration permit for Block 31 – an oil block within the country's Mangistau Basin. The company had applied for the extension to the block's exploration license in March 2012. The license extension means that Jupiter can continue exploring on Block 31 until at least December 2014. It is expected that the second two-year extension will be applied for in 2014.

Chesapeake developed shopping centers as gas prices fell

June 7, 2012. Chesapeake Energy Corp., under fire from investor Carl Icahn for focusing on “non-core assets,” has amassed more than $300 million of real estate in its home- town Oklahoma City area, including shopping centers. The exact size of Chesapeake Land Development Co.’s holdings, valued according to county tax records, is unclear from public filings. The empire, which has built at least two retail developments from scratch, has also included a church, houses and a grocery store. The real estate subsidiary is seen as an example of costs that Chesapeake will have to rein in. Chesapeake’s home-town development projects illustrate how it can be difficult to distinguish between the personal interests of Chief Executive Officer Aubrey McClendon, who once said he might have been a developer in another life, and those of the company he leads. According to county real estate records, Chesapeake is the landlord for the upscale restaurant Deep Fork Grill, of which McClendon owns 49.7 percent.

Halliburton sees margins lower in quarter on guar gum cost

June 7, 2012. Halliburton Co., the world’s largest provider of hydraulic-fracturing services, said North American profit margins this quarter will shrink more than previously forecast because of higher material costs. A potential shortage of guar gum, an agricultural commodity used to blend materials used in hydraulic fracturing, has driven up prices more than expected, Houston-based Halliburton said.

Saudi Arabia achieving $100 oil signals output reversal

June 7, 2012. Saudi Arabia is poised to rein in oil sales after it achieved a $100-a-barrel target by cutting the price of its crude and pumping at the highest rate in at least three decades. The world’s biggest crude exporter started to scale back shipments. The desert kingdom raised the July official selling price to Asia of its main crude grade, Arab Light, for the first time in three months, another sign that it is reducing production. Saudi Arabia has been trying to lower the international price of oil to about $100 as slowing global economic growth counters concern of a supply shortage following a ban by western nations on imports from Iran. Brent crude, used to price more than half the world’s oil, fell to a low of $95.63 a barrel on June 4 amid Europe’s debt crisis, brimming supplies and weaker- than-expected Chinese manufacturing. Prices were as high as $128.40 in March.

Thailand's PTTEP wins exploration blocks in Myanmar

June 6, 2012. Thailand's PTT Exploration and Production said that it has been awarded blocks number PSC-G and EP-2 by the government of Myanmar under the country's 2011 onshore block bidding round. The award sees PTTEP take a 90-percent interest in the blocks. The remaining 10-percent interest is held by Win Precious Resources. Block PSC-G and EP-2 are both in the Central Myanmar Basin, west of the new capital Nay Pyi Taw. The PSC-G acreage encompasses 5,148 square miles in Myanmar’s Taungdwingyi while EP-2 covers a span of 519 square miles in Aunglan.

World energy demand to rise 40 per cent by 2030, Chevron’s Kirkland says

June 6, 2012. Global energy demand will climb by 40 percent by 2030, George Kirkland, Chevron Corp.’s upstream vice president for gas. From 2010 to 2030, Chevron sees worldwide gas consumption rising by 60 trillion cubic feet a year, said Kirkland. There are now 29 regasification projects for liquefied natural gas under construction globally, he said. Chevron will shift its production portfolio to 40 percent gas by 2017 from 30 percent now, said Kirkland.

POWER

Generation

Egco building huge new plant in South

June 12, 2012. Egco Group Plc, Thailand's first independent power producer, is poised to spend 17-18 billion baht to build a 900-megawatt power plant in Khanom, Nakhon Si Thammarat province. The natural gas plant will replace an existing 824-MW plant that will be phased out in 2016. Construction is set to begin in mid-2013 and finish by mid-2016. The company expects the Khanom power plant to make a profit of at least 500 million baht a year once operational.

China Guodian hires Goldman for UK power plant bid

June 10, 2012. China Guodian Corp., the nation’s third-biggest power producer, hired Goldman Sachs Group Inc. to bid for a U.K. power plant. The Baglan Bay plant in South Wales, put up for sale by General Electric Co., generates power for more than 500,000 homes.

Transmission / Distribution / Trade

Kenya to build high-voltage transmission line

June 8, 2012. Kenya plans to build a 100 kilometre power transmission line to carry electricity from upcoming geothermal and wind power projects. East Africa's largest economy faces constant blackouts due to supply shortfalls and an ageing grid. It is diversifying its sources of power in order to reduce over-reliance on hydrogeneration, which is often affected by drought. The project is jointly funded by the French Development Agency (AfD), European Investment Bank (EIB), Kenya Power and government-owned Kenya Electricity Transmission Company (Ketraco) at a cost of 146.7 million euros ($184.3 million). The project would also include the construction of six new substations. The country's main power producer KenGen is constructing a 280 MW geothermal station in Naivasha, expected to be ready to supply power to the national grid by 2014. Another private company is building a 310 MW wind power project at Lake Turkana, which is expected to start generating power next year. The transmission line which would also transmit 400 MW of power imported from Ethiopia, would be completed in 2014.

Policy / Performance

IAEA declares Gori-1 reactor safe

June 11, 2012. The International Atomic Energy Agency (IAEA) said that Korea’s aging Gori-1 nuclear reactor was safe, concluding its much-anticipated investigation after a shutdown at the plant triggered concerns. While the power failure didn’t lead to any meaningful damage, the public’s uneasiness over the condition of the country’s oldest nuclear power plant only grew after it was found that engineers had tried to cover up the mishap. The IAEA announcement failed to convince environmentalists and local residents, who vowed to continue protests and call on the government to close down the reactor.

Japan wins scientists’ panel nod to restart atomic reactors

June 11, 2012. A panel of Japanese scientists reported that two nuclear reactors idled for safety checks are safe to operate, giving Prime Minister Yoshihiko Noda the approval he needs to re-start the units. After a meeting that was moved to a new venue after anti-nuclear protests, the 12-member panel appointed by the governor of Fukui prefecture, where Kansai Electric Power Co.’s Ohi nuclear plant is located, released a document stating the plant can be operated safely.

China, India lack water for coal plant plans: GE

June 8, 2012. China’s and India’s plans to build more coal-fired power plants to meet electricity needs aren’t feasible because of a lack of water needed to cool the plants, General Electric Co. (GE)’s global strategy director said. The two countries have not adequately considered the water needs of their proposed coal plants in their plans, Peter Evans, GE’s director of global strategy and planning, said. China’s coal demand will increase 70 percent to 3.71 billion metric tons coal equivalent by 2035 from 2009, under the country’s energy policy, while India’s demand will increase 188 percent to 1.15 billion tons equivalent over that time. China’s water consumption for power generation is set to increase to 250 billion gallons (947 billion liters) a day in 2025 from 141 billion gallons in 2011, according to GE’s calculations. The 2025 figure is 167 times the total current daily water use of New York City, according to GE. GE, which produces gas-fired and wind-powered turbines, solar equipment and other projects that would benefit from a shift away from coal, was not immediately able to provide comparable water-use figures for India.

RENEWABLE ENERGY / CLIMATE CHANGE TRENDS

National

SPU develops country’s first solar tracker

June 12, 2012. Researchers at Sardar Patel University (SPU) have designed, developed and implemented an automated dual axis solar tracker system, which works on sunflower motion for a solar power plant. And the country's first indigenously designed solar tracker system also increases solar energy harnessing power of a solar power plant by 45 per cent. Interestingly, this indigenously developed solar power plant with the dual axial auto tracking system has been installed at the terrace of SPU's Department of Physics where it generates up to 1.5 kilowatt per hour (KWh) of electrical power through 20 multi-crystalline solar panels of 75 watt generation capacity each. The system has been designed in such a way that the batteries connected in the circuit stores excess power that can be utilized during the non-solar conditions like early mornings, late evenings or at nights.

CSIR-NCL working on harnessing solar energy to produce power

June 9, 2012. A major programme on energy is underway at Council of Scientific and Industrial Research (CSIR) and its affiliate National Chemical Laboratory (NCL) with a focus on search for novel materials and turning them into devices for affordable technologies. The CSIR-NCL which has identified Solar energy and Fuel Cell as two major "thrust areas" of its research, is working on harnessing solar energy to produce thermal and electric power, in particular "organic photovoltaics and dye-sensitised solar cells", the important components of the country's Solar Mission project to add a 500 MW of power availability, according to CSIR-NCL.

India may take up EU carbon tax at Rio

June 8, 2012. India's concern over European Union (EU) law to tax air carriers for carbon emissions may find an echo at the Rio Conference on sustainable development, with environment ministry calling it an important issue for discussion. The Union Cabinet cleared the mandate for negotiations at Rio, but the meeting saw Union civil aviation minister Ajit Singh flag the concern about EU's Emissions Trading Scheme (ETS). When he asked if ETS would be on the conference agenda, environment minister Jayanthi Natarajan said it was a key concern that needs to be addressed.

Gujarat has highest potential for generation of renewable energy, says GoI report

June 8, 2012. The state of Gujarat has the highest potential for generation of renewable energy from various sources, revealed the report 'Energy Statistics 2012' by the Central Statistical Office (CSO), government of India (GoI). The report was brought out by the CSO which is under the ministry of Statistics and Programme Implementation (MOSPI) to help planners and reserchers. India’s energy-mix comprises both non-renewable (coal, lignite, petroleum and natural gas) and renewable energy sources (wind, solar, small hydro, biomass and cogeneration bagasse) and information on its reserves of non-renewable sources and potential for generation of renewable energy sources is a pre-requisite for to assess the country’s potential for meeting its future energy needs.

Solar Power bids below ` 9 per unit risky says Crisil Research

June 7, 2012. CRISIL Research believes that the pace of reduction in capital costs in solar power is expected to moderate in 2012. This will exert pressure on the margins of players, who have bid below ` 9 per unit under batch 2 of Jawaharlal Nehru National Solar Mission (JNNSM), unless they can access low-cost foreign debt. In 2011-12, India's solar power capacities increased manifold to nearly 940 mw from a meagre 20 MW in 2010-11. Besides favourable government policies, particularly Gujarat's solar policy, a sharp decline in capital costs over 2011 drove this rapid expansion. In 2011, the capital costs of Solar Photovoltaic (PV) projects fell by 3%, following a 50 % decline in the prices of solar PV modules that make up for half of the total capital costs in PV projects. Prices of these modules have been sliding due to weak demand from key European markets including Germany, Italy and Spain following the withdrawal of incentives after a period of explosive growth in capacity additions.

Suzlon signs EoI to develop 2.5 GW of wind power capacity

June 7, 2012. Wind turbine manufacturer Suzlon Group signed an expression of interest (EoI) with the government of Karnataka to develop 2,500 MW of new wind power capacity in the state between 2012 and 2017. The EoI covers the development of new capacity in wind farms across the state, with developments planned in the districts of Bijapur, Chitradurga, Tumkur, Dharwad, Raichur, Chikmagalur, Mysore, Belgaum and Bagalkot. The investment is worth ` 15,000 crore, according to a company. Under the EoI signed during GIM 2012, the Karnataka government would obtain the necessary permissions, registrations, approvals and clearances for the development of wind farms in the state.

Global

Poland fights carbon cuts in EU again

June 12, 2012. Coal-reliant Poland has pitched itself against the other 26 members of the European Union (EU) ahead of a debate on a low-carbon energy future, EU said. The Commission aims to establish policy direction once a set of green energy goals runs out in 2020. Poland has repeatedly objected to any language in EU texts pointing towards deeper carbon cuts to guide decision-making for the years following 2020, when the EU is set to meet a binding target of a 20 percent emissions cut from 1990 levels. EU energy ministers will debate an energy 2050 road map published in December, which sets out the route towards almost zero carbon power generation by the middle of the century.

Renewable energy grows despite financial crisis

June 11, 2012. Renewable energy sources supplied 16.7 percent of global energy consumption in 2011, but the $257 billion of investment in the sector was still 15 percent lower than into fossil power generation, two influential bodies reported. The investments were a 17 percent increase on the previous year and 94 percent higher than in 2007, the year before the beginning of the financial crisis. By the end of 2011, total renewable power capacity worldwide exceeded 1,360 GW, up 8 percent on 2010, said two reports published jointly by the United Nations Environment Programme (UNEP) and the Renewable Energy Policy Network for the 21st Century (REN21). Coal remains the world's top fuel for power generation, followed by natural gas, according to the U.S. Energy Information Administration (EIA).

EU report on carbon market due before Aug: Hedegaard

June 11, 2012. The European Union will present a report on its emissions trading system and a proposal to delay auctions of some carbon permits before the summer recess that starts in August, EU climate Commissioner Connie Hedegaard said. The report, which is being brought forward by a year, will include some long-term options to improve the EU cap-and-trade program. The price of permits in the European carbon market dropped to a record low earlier this year due to oversupply caused by the economic slowdown.

Romney helped spark green-energy boom in Massachusetts

June 11, 2012. Mitt Romney’s criticism of President Barack Obama for promoting green-energy subsidies may keep the former Massachusetts governor from boasting about his own contribution to his state’s expanding clean-energy industry. As a Republican presidential candidate, Romney has chided Obama for doling out billions of dollars to companies such as failed Solyndra LLC, saying the president is in an “imaginary world” where renewable energy fuels the economy, not traditional sources such as oil, natural gas and coal. As governor, Romney’s administration employed the same incentives used by Obama. He promoted a green-energy fund backed by the state as a “major economic springboard,” and oversaw an increase in support for renewable and energy-efficiency projects. Like Solyndra, some of the companies funded by the state have failed.

BrightSource to bid for solar trust 500 MW project

June 11, 2012. BrightSource Energy Inc., a solar- thermal developer that withdrew an initial public offering in April, is seeking to buy an unbuilt 500-megawatt power plant from the bankrupt Solar Trust of America LLC. Solar Trust, a joint venture of the insolvent German company Solar Millennium AG and steelmaker Ferrostaal AG, asked a bankruptcy court to schedule a June 15 hearing to approve BrightSource as a stalking-horse bidder for its solar-thermal Palen project in Riverside County, California.

Germany may pass solar subsidy cuts by July 7 after bill blocked

June 11, 2012. Germany may pass legislation to cut solar-power subsidies before July 7 should the government and regional leaders reach a compromise. Chancellor Angela Merkel’s plan to cut solar subsidies by a record from April 1 was blocked by officials in the upper house on concerns it would hurt employment. The bill was sent to a parliamentary panel for arbitration, which meets June 13, according to Carla Vollmer, head of the renewable energy section at the agency. Merkel plans to lower by about half the pace of annual solar installations after incentives pushed new projects to a record 7.5 gigawatts. Germany plans to have 52 gigawatts of panels by 2020, with a yearly installation rate of 2.5 gigawatts to 3.5 gigawatts a year.

IEA calls for more funds to support carbon capture technology

June 11, 2012. Governments must increase funds to support carbon capture and storage technology and ramp up efforts to improve energy efficiency or risk missing climate change targets, the International Energy Agency warned. Progress in deploying nine out of 10 technologies that curb carbon emissions and reduce energy use is stalling, the Paris- based agency, which advises 28 nations, said in a report. Greater use of electric vehicles and pollution-trapping CCS equipment are needed to cut energy-related CO₂ emissions by half by 2050, according to the IEA. That’s required to ensure an 80 percent chance of limiting the average global temperature rise to 2 degrees Celsius, it said. The IEA reiterated that about $140 trillion will be required to shift to a low-carbon energy industry by 2050.

Renewable-power boom leaves nations without backup, report shows

June 8, 2012. Nations adding wind and solar power aren’t doing enough to ensure their electricity systems can meet demand when renewable-energy output falls short. Countries must do more to establish so-called capacity markets, which reward utilities to run coal- and gas-fired plants as a backup when alternative energy is insufficient, Chris Rogers, an analyst in London, said in a report.

China-U.S. trade tensions rise as renewable energy sags

June 8, 2012. When solar-panel maker Solyndra LLC collapsed in September after winning a $535 million U.S. loan guarantee, President Barack Obama’s administration blamed China’s even bigger aid for its renewable-energy industry. The China Development Bank Corp. in 2010 provided Solyndra’s Chinese competitors more than $30 billion in credit, dwarfing U.S. support for solar manufacturers as the price of polysilicon, the main material in solar cells, plummeted, Jonathan Silver, the Energy Department’s loan-guarantee chief at the time, told a House committee. China and the U.S. combined have supported their solar- and wind-manufacturing sectors with about $50 billion during the past two years. That government support is heightening trade tensions as both nations seek to protect manufacturing amid sluggish demand and falling prices.

China solar cos gain on Europe pain in shift East

June 8, 2012. The world’s largest solar-panel makers are boosting production on expectations that demand in China will double, a surprise shift as the $36 billion market migrates from Europe to Asia. The five biggest producers of polysilicon solar modules, led by China’s Suntech Power Holdings Co. and Yingli Green Energy Holdings Co., will increase shipments 27 percent to 37 percent from 2011 levels. Chinese demand will partially offset declines in Europe that are driving the industry toward its first global sales decline since at least 1999. China’s efforts to stimulate its photovoltaic industry at home and a 48 percent drop in panel prices in 2011 are boosting sales. The nation, which trails only Germany and Italy for new installations, will dominate growth this year and become the top solar market in 2013, after European nations cut subsidies for new projects.

U.K. urged to safeguard water after drought curbs supply

June 7, 2012. The U.K. should build new water storage facilities and introduce tariffs that reward lower water usage to avert future supply shortages, the Institution of Civil Engineers (ICE) said. The group said in a report that Britain isn’t doing enough to ensure safe water supplies after a 22-month drought. Parts of England have water use restrictions after two dry winters depleted underground reservoirs. Seven water companies including Anglian Water, Southern Water Ltd. and Veolia Environnement SA’s Water Southeast unit started temporary limits on the use of garden hoses from April 5. The government should create a U.K. Water Security Taskforce to ensure supply meets demand for all by 2025, as climate change and population growth place pressure on resources, according to the report. The wettest April in more than 100 years of records ended the drought in some areas, while failing to replenish water tables in eastern England. The government, water companies and regulators should work to cut consumption by 30 percent from the current 150 liters per person per day, the ICE said. Measures include universal metering and discretionary tariffs that also protect the poor.

Tweaking US tax code could spur green energy-senator

June 7, 2012. Chris Coons introduced legislation that would allow a broad range of renewable power generation and transmission projects to qualify for a tax structure used widely by pipeline and other energy-related companies. The bill is unlikely to be considered until after the November presidential election, but may give lawmakers food for thought as they wrestle with whether to extend tax breaks for green energy set to expire this year. The "master limited partnership," or MLP, structure allows certain types of companies to raise money in the stock market, while having income taxed only at the unit holder level, avoiding corporate income taxes. Under the current law, MLPs must generate at least 90 percent of their income from real estate or natural resources like fossil fuels or timber - and must return most of its cash to its investors, who are taxed on those returns. There are about 100 MLPs in the United States with a total market capitalization of more than $350 billion, including the likes of pipeline giants Enterprise Products Partners and Kinder Morgan Energy Partners.

Germany threatened by energy overcapacity

June 7, 2012. Competition by Germany’s regions to produce renewable energy as the country shifts away from nuclear and coal power could cause overcapacity if the process isn’t coordinated. Chancellor Angela Merkel will meet with state premiers next week to discuss greater cooperation as regional governments develop plans to build wind and clean-energy capacity. Competing plans could cause overcapacity in the coming decades. The northern state of Schleswig-Holstein aims to produce by 2020 three times more energy from offshore wind parks than its population uses, and southern states such as Bavaria are planning more energy self-sufficiency. Overcapacity could be costly for consumers because German regulations require them to pay for unused power generation.

EU Court said to dismiss steel producers’ suit on carbon

June 7, 2012. The European Court of Justice declared inadmissible two lawsuits brought by European steel producers contesting the European Union’s method for allocating free carbon permits. The court dismissed a case filed by companies including ThyssenKrupp Steel Europe AG and Voestalpine Stahl GmbH. It also declared inadmissible a suit brought by the association of European steel producers Eurofer. The decision of the court is that a complaint on the distribution of allowances, which is based on benchmarks designed by the European Commission, should be judged by a national court, according to Eurofer.

Cameron Norway visit will see energy-company expansion in U.K.

June 7, 2012. Norwegian energy companies will announce plans to expand in the U.K. during a visit to Oslo by Prime Minister David Cameron, the first by a British leader in 26 years. The plans will lead to the creation of 1,600 jobs in the U.K. and investment worth tens of billions of pounds. Cameron, who arrived in Oslo, and Norwegian Prime Minister Jens Stoltenberg will also reach an agreement to improve energy ties between the two nations.

Green energy needs milestones to grow -EU Commission

June 6, 2012. Europe must agree 2030 milestones as soon as possible to spur investment in renewable energy, or green power growth will fizzle once firm policy runs out in 2020, the European Commission said. Many in the renewable energy sector agree there is a need for strong guidance, but they want binding targets, rather than vague aims. At the other extreme, some of the 27 member states are strongly opposed to legal goals for renewables. The European Union currently has a firm target to increase the share of renewable energy in the mix to 20 percent, which analysts and industry say it should meet and could exceed.

Fish heads to chicken fat light homes, cut retailer costs

June 6, 2012. Fish heads and chicken fat are being turned into electricity by the U.K.’s largest retailers including Wal-Mart Stores Inc. that ship food waste to power plants to reduce garbage-removal fees. Tesco Plc, Britain’s biggest supermarket chain, along with Marks & Spencer Group Plc, John Lewis Partnership Plc’s Waitrose, William Morrison Supermarkets Plc and J Sainsbury Plc are testing how meat and fish, cooking oils and leftover sandwiches can lower energy bills and landfill costs when they’re transported to plants for converting into power.

U.S. House adopts measure to halt light-bulb efficiency law

June 6, 2012. Republicans in the U.S. House adopted a provision designed to save traditional incandescent light bulbs by blocking what one lawmaker called the “energy police” from enforcing an efficiency standard. Even if the House language approved last night survives in the Democratic-led Senate, the impact for consumers probably will be limited because manufacturers such as Royal Philips Electronics NV and General Electric Co. (GE) have revamped manufacturing to comply with the law, making bulbs that use less electricity to generate the same amount of light.

Earth approaching climate tipping point, scientists say

June 6, 2012. Earth may be nearing an ecological tipping point that threatens biodiversity, food production and water supplies as humans consume resources at an unsustainable pace. About 43 percent of the Earth’s surface has been built upon or is being used for agriculture to support the planet’s 7 billion inhabitants, according to Anthony Barnosky, a professor of integrated biology at the University of California, Berkeley. As that figure approaches 50 percent, there may be irreversible and significant environmental changes. Humans consume 2.25 acres of resources per capita, and with the Earth’s population projected to reach 9 billion by 2045, half of all land may be in use by 2025, Barnosky said. That includes Antarctica, Greenland and other mostly uninhabitable regions. Small-scale ecosystems have shown that once 50 percent of an area is altered, biodiversity is often lost and animal and plant species are at risk of extinction, he said.

World missing environmental goals in ‘paralysis of indecision’

June 6, 2012. Nations are making “significant” progress on just four of 90 environmental goals, with little advance on tackling climate change, replenishing fish stocks or stopping deserts from spreading, the United Nations said. The UN is calling on nations to redouble efforts to meet climate and sustainability targets two weeks before it hosts a conference in Rio de Janeiro, where world leaders will debate steps to curb poverty while stemming environmental degradation.

Siemens, Gamesa exporting U.S.-made wind turbines

June 6, 2012. Siemens AG and Gamesa Corp. Tecnologica SA plan to export wind turbines from their U.S. factories as domestic demand stagnates before a renewable-energy tax credit expires in December. Executives from the largest German and Spanish turbine companies discussed their plans at the American Wind Energy Association’s annual Windpower 2012 conference in Atlanta. European wind manufacturers that invested in U.S. factories to meet growing demand for renewable energy are counting on developing markets in the rest of the Americas to weather an expected slump. U.S. sales are already slowing and are expected to plunge next year if the credit lapses.

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