Bi-weekly column Asian Waters
Tridivesh Singh Maini, Associate Fellow, Observer Research Foundation
Pakistan:
nce again a link has been drawn between water scarcity in Pakistan and the Kashmir dispute. A story titled ‘Pak-India water dispute to be resolved when Kashmir issue is settled’, which appeared in The Nation on August 3 quotes former foreign minister, Shah Mehmood Qureshi, who in a recent interview expressed the view that the resolution of the Kashmir issue and Indo-Pak water disputes were intertwined. Says the story, ‘Former Foreign Minister Shah Mahmood Qureshi said on Wednesday that water dispute between Pakistan and India is the other side of Kashmir issue and if both sides make sincere efforts to resolve Kashmir problem the water issue would automatically be settled’.
An editorial in Dawn titled ‘Unusable water’ draws attention to the scarcity of potable water in the country. Says the editorial ‘, The shortage of reasonably clean water that can be used for general purposes is yet another item that has been added to the already extensive list of people’s grievances. In Lahore, it is an issue that has become acute enough to bring people into the streets. A photograph published in this newspaper yesterday showed traders from Shahalam market protesting against load shedding and the unavailability of clean water in their area...’
The editorial further makes the point that this problem is not restricted to Lahore, ‘Studies conducted on the tap water available in Karachi, for example, found that in many areas it is contaminated with sewage. It is vital that city governments turn their attention to this issue. Infrastructure such as water networks requires investment, continual upgrading and maintenance. Without that, it will of necessity crumble’.
China:
A story in the China Daily, ‘ Food crisis in Asia, dated August 1 deals with the reasons for declining productivity of farmers in developing countries. One of the crucial reasons for this according to the story is climate change which is leading to water shortages. Says the story, ‘Climate change is starting to have an impact on crop yields. The International Food Policy Research Institute ran a series of scenarios on climate change. All of them led to lower crop yields by 2050’. It also quotes William Dar, director of the International Crops Research Institute for the Semi-Arid Tropics, who says "With climate change comes the problem of water scarcity and higher temperatures”.
Drought has resulted in acute water shortage in the province of Guizhou, and great economic loss, most newspapers have been focusing on the consequences of the drought.
According to a story ‘1.8 million people face water shortage in SW China’, which appeared on August 1 in the Xinhua news agency, ‘Drought has left 1.82 million people suffering from drinking water shortage in southwest China's mountainous province of Guizhou, the provincial civil affairs bureau said in a statement. The drought, which started in June, has damaged 550,200 hectares of crops, it said. The direct economic loss amounted to 1.82 billion yuan (US$ 283 million), according to the statement’.
The same paper reports that National Commission for Disaster Reduction and the Ministry of Civil Affairs initiated an emergency response to cope with the drought. Says a story titled, ‘Emergency response launched for drought hit areas’, which appeared on July 31, ‘China initiated a fourth-level emergency response plan Sunday afternoon to cope with the drought in southwest Guizhou province. The fourth level is the lowest in the country's emergency response system. According to a statement jointly issued by the National Commission for Disaster Reduction and the Ministry of Civil Affairs, as part of the emergency response program the two departments have sent a working group to the province to assess the situation and assist ongoing disaster relief efforts’.
By August 2 the number of people facing water shortages as a consequence of the drought had gone up to 4.28 million people and the emergency response had been intensified, with the government launching a level 3 emergency response.
A story in the China Daily, ‘Lengthy drought leaves 4 mn in need of water’ dated August 2 while giving details of the drought and the government’s reaction says, ‘A lingering drought has caused water shortages for 4.28 million people in China, the country's drought relief authority said on Monday. The high temperatures and lack of rain that persisted throughout July have resulted in drought in the Inner Mongolia autonomous region, the Ningxia Hui autonomous region and the provinces of Gansu, Guizhou and Hunan, the State Flood Control and Drought Relief Headquarters said on its website. By Sunday, 4.22 million hectares of arable land had been affected by the drought, the statement said. Some 3.88 million head of livestock suffered from water shortages, it added. The statement said Vice-Premier Hui Liangyu has asked for more support for relief work in the drought-hit southern regions to guarantee supplies of water for people and agriculture. By Monday, 39 counties and regions in Guizhou were suffering from severe drought, said Yu Junwei, spokesman for the Guizhou provincial meteorological bureau. Yu said his bureau had launched a level-3 emergency response and further details about drought will be released on Tuesday.
Pipelines in the Middle East and North Africa
Saleem H. Ali*
efore assessing pipelines as a vehicle for enhanced cooperation, it is worth considering the history of existing projects and what impact, if any, they have had on interstate relations. Was peace a prerequisite for pipelines or did pipelines contribute to a resolution of existing conflicts?
THE IRAQI TRANSBOUNDARY PIPELINES
The oldest pipeline project in the Middle East can be traced back to the colonial period when oil was first discovered in present-day Iraq. In 1927, the Iraq Petroleum Company struck oil in Baba Gurgur near Kirkuk. To transport the oil to western markets, a pipeline was proposed, and construction began in 1937. The routing of this pipeline was extraordinary considering the current geopolitics of the area. From Kirkuk the pipeline traveled southwest to Haditha, west toward Amman, and on to Haifa (Appendix 1). The completion of the pipeline coincided with the establishment of Israel; oil flowed for only a few days before war broke out.
Soon thereafter, pipelines to the Mediterranean were built to Baniyas, Syria, and through Syria to Tripoli, Lebanon. A large pipeline to the Turkish Mediterranean coastal city of Ceyhan was completed in 1977. Given the strained relations between the Syrian and Iraqi Ba’thists, once the first Turkish line was completed, Iraq stopped using the Syrian pipelines and relied primarily on the outlet through Turkey and on new terminals in the Persian Gulf. By the early 1980s, Iraq had three Gulf terminals – Mina al-Bakr, Khawr al-Amaya, and Khawr al-Zubayr. However, because they were all damaged during the Iran-Iraq war, Iraq constructed a new pipeline in 1985 that fed into Saudi Arabia, terminating at the Red Sea port of Yanbu. In December 1996, the Iraq-Turkey pipeline was reopened under the oil-for-food program.
After the start of the Iraq War in 2003, Iraq’s pipelines were subjected to numerous acts of sabotage by insurgents. Meanwhile, the United States actively discouraged flow of oil via Syria.1 The flow of the most active pipeline to Turkey, with a capacity of 1.6 million barrels per day, fell to 30,000 barrels in 2003. Despite occasional spurts of activity, the pipeline remained considerably below capacity until 2008, when the flow increased to 355,000 barrels after the U.S. military began protecting pipelines as an operational objective.2
Plans to revitalize the Haifa pipeline and the Trans-Arabian pipeline (built by the British in the 1940s, the latter went from Saudi Arabia to Lebanon through Syria) depend on Jordan’s willingness to support the projects and so far there are few indications that it does. The Trans-Arabian pipeline’s resurrection was supported as far back as 1975 when former Secretary of State Henry Kissinger signed a memorandum of understanding, according to which the United States would guarantee Israel’s energy supply in the event of a crisis. Kissinger’s consulting firm, Kissinger & Associates, drew up plans in the mid-1980s—when Saddam Hussein was a key American ally—to run a pipeline from Iraq to Aqaba in Jordan, near the Israeli port of Eilat, partly to make the need for such a reserve less relevant. However, these plans never reached fruition due to Saddam’s attack on Kuwait and the subsequent Gulf War.3 Whether or not the Haifa pipeline can be resurrected or a new Aqaba spur built from the original Trans-Arabian Pipeline largely depends on the ability and willingness of the United States and Middle Eastern governments to link such projects to regional peace-building efforts.
THE TRANSMED PIPELINE
Plans for a trans-Mediterranean pipeline go back to the early 1960s when natural gas demand in Europe was growing. As early as 1963, French companies, with the support of the French government, proposed building pipelines to bring Algerian gas to Spain and on to France.
At the time of its construction in the 1970’s, the Transmed pipeline was the deepest pipeline at over 150 meters. It was intended as a transboundary effort involving not only the source and demand country but also a transit country, Tunisia, and international waters. Transit through Tunisia from Algeria was a significant political challenge due to the two countries’ strained relations. Tunisia’s first president, Habib Bourguiba, had initially supported the Algerian rebels in their anti-colonial struggle against France but later sided against an independent Algeria in its territorial disputes with Morocco. Tunisia insisted on negotiating bilaterally with Italian energy giant Ente Nazionale Idrocarburi (ENI) rather than collectively with Algeria and was able to secure an annual $25 million transit fee.4 Despite such tensions, the establishment of a pipeline appears to have been an important motivator for the signing of the “Treaty of Fraternity and Concord” between the two countries in 1983. The improvement of relations between the two sides coincided with the development of the pipeline to the extent that the treaty and the opening of the pipeline occurred in the same year.5 In addition, the pipeline paved the way for several other projects across the Mediterranean (Appendix 2).
Similarly, the pipeline between Algeria and Spain heading west and then north (Maghreb-Europe pipeline) required transit through Morocco. However, relations between Morocco and Algeria were considerably worse than those between Tunisia and Algeria. Algeria’s independence in 1962 had led to a border dispute over the regions of Bechar and Tindouf, sparking the infamous “War of the Sands” the following year. Also of concern was the issue of the Western Sahara, where in the 1960s the Sahrawi tribe led an independence movement, as Morocco, Algeria, and Mauritania all sought to assert their dominance over the region. Much to Morocco’s chagrin, the Algerian government supported self-determination for the Saharawi. Yet, in spite of the hostility, economic interests helped bring Algeria and Morocco back to the negotiating table. The prospect of a pipeline was one important element in the thawing of relations between the two adversaries. Both countries decided to reopen diplomatic ties in 1988, around the same time that plans for the Maghreb-Europe pipeline began to take shape.
Meanwhile, the tenuous relations between Spain and Morocco have been strained by longstanding territorial disputes. Although the status of the enclaves of Ceuta and Melilla remains unresolved, bilateral relations have improved steadily since the European Union began to play a more active role in bridging regional differences. The Maghreb-Europe pipeline, which opened in 1997 between Morocco and Spain, has arguably played an important role in this regard as well. Not surprisingly, energy cooperation is recognized by the EU as a major tool for fostering cooperation. For example, the action plan for the Euro-Mediterranean partnership with Morocco, initiated by the EU in 2005, stated that “development of the energy sector, including inter-connections and infrastructure under optimal safety, competitiveness, and quality conditions” is an area of priority for cooperation.6 In October 2008, Morocco became the first country south of the Mediterranean to receive “advanced status,” a further affirmation of the EU’s willingness to deepen economic and political ties with key regional partners as part of its “neighborhood policy.”
The Greenstream project between Italy and Libya has also served as a catalyst for better relations between Arab and European countries. The project—initiated in 2003 after Italy succeeded in convincing the EU to relax sanctions on Libya— carries some 10 billion cubic meters of gas a year from Mellitah on Libya’s western coastline to Sicily and then on into southern Europe (covering about 10 percent of Italy’s annual consumption needs). The $6.6 billion pipeline, with projected returns of $20 billion over 20 years, is one of the world’s deepest underwater pipelines and the longest in the Mediterranean.
Relations between Italy and Libya had been greatly shaped by the experience of colonization. After Muammar al-Qaddafi came to power in 1969, more than 20,000 Italians born in Libya were expelled. The opening ceremony for the pipeline in 2004 was directly linked to a gesture of reconciliation to grant Libyan-born Italians the right to return. The ceremony was held on October 7, the date the Italian invasion began in 1911. In his remarks at the ceremony, Qaddafi said: “We now want to make it a day of friendship and cooperation between Libya and Italy, a cooperation which has been cemented by the gas project which we are inaugurating today.” The Italian Prime Minister Sylvio Berlusconi responded: “Today, a new era of rapprochement and cooperation starts between our two peoples thanks to this project which will supply Italy with 10 percent of its energy needs.”7
More recently, the direct undersea pipeline from Algeria to Almeria, Spain, known as the Medgaz project, was completed in December 2008, while the Galsi pipeline project, which would bring Algerian gas to Italy via Sardinia, is in the early stages of development. As exemplified by continuing interest in such projects, pipelines have played an important role in strengthening and cementing ties within the Maghreb as well as between North African and European countries.
EGYPT AND ISRAEL: COOPERATION AMID CONFLICT
Despite its modest fossil fuel reserves, Egypt is becoming an important pipeline builder and supplier of gas to its neighbors, most notably Israel. Egypt is estimated to have 67 trillion cubic feet of proven natural gas reserves with probable reserves of nearly twice as much. By the end of 2004, its cumulative gas production amounted to 1.5 trillion cubic feet. The government aims to double exports in five years from the current level of 17 billion cubic feet to 35 billion cubic feet per year.8
Construction on a pipeline from Egypt’s gas fields began in 2001. Initially, the project was only meant to supply gas to Jordan. Soon, however, economies of scale made it more attractive to consider other partners, and Israel, both geographically and economically, was a natural choice for such an effort. In 2005, Egypt and Israel negotiated an agreement whereby the Egyptian government would sell 1.7 billion cubic meters of gas per year to Israel. The gas is being pumped via a 100 kilometer subsea pipeline running from the Egyptian Mediterranean port of El-Arish to the Israeli city of Ashkelon (Appendix 1). The gas is being sold to the East Mediterranean Gas Company (EMG), which is a consortium of the Egyptian General Petroleum Corporation, Israel’s Merhav Group, and Egyptian businessman Hussein Salem, who claims to have sold his shares to American and Thai investors.9 Egypt agreed to sell the gas at a variable price between $2.5 and $2.65 per million British thermal units (BTU).10 This project has gone largely unreported due to the political sensitivity of any cooperation between the two countries, which have maintained a cold peace since the establishment of diplomatic relations in 1979.
After the January 2009 war in Gaza, pressure mounted on Egypt to reconsider the deal. The government has argued that it was simply selling gas to a private company which, in turn, was selling it on its own terms. Since the pipeline went into operation in May 2008, there have been heated exchanges in the Egyptian parliament and lawsuits filed against the deal. A November 2008 judicial ruling called for a moratorium on gas exports to Israel due to the government failing to adequately consult lawmakers. The ruling, however, was overturned in February 2009 by a higher court. Minister of State for Legal and Parliamentary Affairs Moufid Shehab indicated that under the 1979 Egyptian-Israeli peace treaty, Israel has the right to submit tenders to buy gas. An opposition member of parliament countered that the government had violated article 151 of the constitution which states that strategic agreements should first be discussed in parliament. Despite these legal and political challenges, the pipeline has thus far endured, suggesting that major infrastructure investments in pipeline transport – in this case worth $400 million – are likely to be lasting cooperative mechanisms, even against the backdrop of major crises such as the war in Gaza.11
In addition to gas from Egypt, Israel has been considering other partnerships. Former Israeli National Infrastructure Minister Benjamin Ben-Eliezer confirmed in an interview that Israel and Turkey were discussing the construction of a 610 kilometer undersea pipeline from the Turkish port of Ceyhan to Ashkelon, which could be completed as early as 2011.12 The prospect of pipelines between Israel and two Middle Eastern states with which it has tense relations suggests that energy security can be a significant binding element in situations otherwise unconducive to cooperation.
THE DOLPHIN PROJECT
Within the Gulf Cooperation Council (GCC), the most significant project has been a marine pipeline supplying gas from Qatar to the UAE. The Dolphin Project, as it is known, evolved out of Abu Dhabi’s need for gas. It was part of a broader political effort by the UAE to strengthen ties with other smaller Gulf States to balance Saudi Arabia, the dominant Gulf power that has been involved in several territorial disputes with both the UAE and Qatar.
Well before becoming a major economic power, the UAE had bowed to pressure from the Saudis to sign an agreement in 1974, under which Saudi Arabia relinquished claims to the Buraimi region, while the UAE ceded a 25 kilometer-long land strip linking it to Qatar and relinquished nearly 80 percent of the resources of the Shaybah oilfield.
Amidst this backdrop, Qatar and the UAE signed an agreement in 1998 to develop gas trading ties, doing so through the construction of a pipeline the following year. Saudi territorial waters were bypassed in the proposal though the countries welcomed cooperation from Saudi Arabia in addressing nearby border tensions. After the signing of a memorandum of understanding, concerted efforts were taken to resolve border disputes – a clear indication of the power of pipelines to facilitate dispute resolution. In May 1999, Oman and the UAE signed an agreement to demarcate their border at Umm Zummul, where the borders of Saudi Arabia, Oman, and the UAE converge. A month later, Qatar and Saudi Arabia agreed to mark their shared 60 km border culminating in a signed accord in March 2001, followed by an Oman-UAE accord in 2003 to settle territorial ambiguities that had existed since the colonial era.13
The Dolphin Project was initiated in 2004 under the auspices of a newly created company called Dolphin Energy which comprises three shareholders: Mubadala Development Company (owned by Abu Dhabi) with 51 percent, and Total of France and Occidental Petroleum of the United States with 24.5 percent each. Qatar supplies the gas and has its own management for the portion of the pipeline based in Doha. The pipeline supplies up to 2 billion standard cubic feet per day of natural gas from Qatar to the UAE. The gas is derived from South Pars gas field—the largest independent gas reserve in the world—shared by Iran and Qatar. The underlying legal structure of common property law, which allows for such sharing is itself an example of how energy concerns can foster cooperation, even in the case of Iran and Qatar, a pairing historically been at odds on foreign policy.
In ascertaining the rationale for the Dolphin Project, economic factors were necessary but not sufficient to make it happen. Political considerations— including expectations that the pipeline could serve as a basis for strengthening cooperation— were also instrumental. In an official response to a questionnaire, Dolphin Energy administration addressed the drivers for the project as follows:
“The long term operating costs for Dolphin [are] considerably less than an LNG facility. All of these aspects cause the Dolphin project to cost considerably less on a per unit basis. Cost was a motivating factor for Dolphin, but there were also political and logistical reasons as well.”14
The political rationale for moving ahead with the project is perhaps best reflected in the pricing arrangements. The Qatari government enjoys enormous demand for its gas and the decision to pursue a project with the UAE—and at a lower pricing regimen than other competitors—signals that “the government considered regional politics… in its decision to take on the project.”15
An important derivative benefit of the project has been an increased level of environmental cooperation. Dolphin Energy has participated in joint coral regrowth projects in the Gulf in association with Qatari and UAE authorities. A two-year program initiated in 2008—one year after the pipeline opened—will attempt to provide the first integrated study of coral ecosystems in the region. As noted in Dolphin Energy’s vision statement: “The founders had always conceived Dolphin as a force for international cooperation— one that would unite the vision and resources of the region with multinational capital and expertise.”16 The success of the Dolphin Project in spurring regional cooperation exemplifies the important role pipelines can play in regional dispute resolution and ecological cooperation.
Appendix 1
Arabian & Anatolian Pipelines
Appendix 2
Pipeline Project from Africa to Europe
Notes:
* The author is professor of environmental planning and Asian Studies at the University of Vermont.
1 “U.S. Blocks Syria pipeline,” BBC News, April 15, 2003, <http://news.bbc.co.uk/2/hi/middle_east/2951327.stm>.
2 Author’s interview with Matthew Amitrano, April 8, 2009.
3 Ed Vuillamy, “Israel seeks pipeline for Iraqi oil,” The Observer, April 20, 2003.
4 Mark Hayes, “Algerian Gas to Europe,” 16.
5 For a good review of inter-Maghreb relations see Yahia H. Zoubir and Haizam Amirah Fernández, eds., North Africa: Politics, Religion and the Limits of Transformation (London: Routledge, 2008).
6 European Union External Relations, <http://ec.europa.eu/external_relations/morocco/index_en.htm>.
7 “New gas pipeline linking Libya to Italy opened,” Alexander’s Gas and Oil Connections, October 8, 2004, <http://www.gasandoil.com/GOC/news/ nte44584.htm>.
8 Waleed Khalil Rasromani, “Inching Closer to Europe,” Daily News Egypt, April 18, 2006.
9 EMG is also backed by an investment fund managed by former Israeli intelligence officer Yossi Maiman. Mohamed Abdellah and Jonathan Wright, “Cairo court says Egyptian gas exports to Israel can continue,” Reuters, February 2, 2009.
10 The price of the gas has become a major political issue in Egypt since this amount is considerably less than the current market gate price. Egypt is thought to be losing $9 million per day due to this “discount.” The government is considering ways to raise the price as part of a renewed deal involving a second pipeline on this route. See Avi Bar-Eli, “Egypt: Israeli gas prices could rise by 70%,” Haaretz, March 2, 2009, <http://www.haaretz.co.il/hasen/spages/1067579.html>.
11 Gamal Essam-El-Din, “Sales Strategies: The Government Launched a Spirited Defense of its Position over Gas Exports to Israel,” Al Ahram Weekly,February 26, 2009.
12 “Israel sets sights on Russian Gas,” Upstream Online, February 8, 2007, <http://www.upstreamonline.com/live/article127529.ece>.
13 Jareer Elass, Stacy L. Eller, and Kohei Hashimoto, “Liquefied Natural Gas from Qatar: the Qatargas Project,” in Natural Gas and Geopolitics, ed. David G. Victor, Amy M. Jaffe, and Mark H. Hayes (New York: Cambridge University Press, 2006).
14 Dolphin Energy Corporation, e-mail statement in response to author’s questionnaire, April 15, 2009.
15 Author’s interview with Saad Al-Kaabi, director of oil and gas ventures at Qatar Petroleum, April 28, 2009.
16 Dolphin Energy Home Page, <http://www.dolphinenergy.com/Public/our-company/aboutus-shareholders.htm>.
Concluded
Views are those of the author
Courtesy: Brookings Doha Center
NEWS BRIEF
OIL & GAS
RIL's KG-D6 produced 31 pc less gas than estimated
August 2, 2011. The prized KG-D6 fields of Reliance Industries produced 31 per cent less than previously projected natural gas output in the April-June quarter. The present output is made up of about 8 mmscmd from the MA oil field in the predominately gas-rich KG-D6 block off the Andhra coast. The rest comes from the Dhirubhai-1 and 3 (D1 and D3) gas fields, the largest of the 18 natural gas finds Reliance has made in the block.
Reliance has so far drilled only 20 out of the committed 22 wells on D1 and D3 as reservoir has not performed on expected lines. Pressure in the wells has dropped sharply and there is an increased water ingress, resulting in lower per-well gas output. Of the 20 wells drilled, only 18 wells are under production.
Further in the FDP approved in 2006, Reliance had committed to drill 31 wells by end of current fiscal. Reliance currently holds 90 per cent interest in KG-D6 while the rest is with Niko Resources of Canada. It is selling 30 per cent in the block and 22 others to UK's BP Plc for over $7 billion.
An Empowered Group of Ministers (EGoM) had in September 2007, after considering the price proposal submitted by Reliance-Niko, approved a price formula for gas produced from KG-D6 for five years from date of commencement of supply. Reliance started natural gas production from KG-D6 fields from April 1, 2009.
ONGC, Sistema may soon merge assets in Russia
July 30, 2011. Oil and Natural Gas Corporation (ONGC) is scrutinising data of Russian blocks of the Sistema group, preparatory to finalising a seven-month old proposal to merge their assets in Russia to create giant energy firm that will be 25% owned by Indian firm's overseas arm ONGC Videsh (OVL).
Sistema was also studying data of OVL's Russian assets held by Imperial Energy. Energy majors of two countries had announced a mega-merger of three companies - Bashneft, RussNeft and Imperial Energy - that would make ONGC a shareholder in Russian firms' annual oil production of 25 million tonnes, refining capacity of 20 million tonnes a year, and discovered oilfields Trebs and Titov.
The merger is expected to bail out Imperial Energy that is struggling to be profitable due to high taxes imposed on foreign oil and gas in Russia.
Cairn India: Royalty burden a value destroyer for its retail shareholders
July 28, 2011. The continuing delays in government approvals will mean that Cairn India is likely to miss out on its production growth targets in Rajasthan beyond the current 125,000 barrels per day.
Although the company has invested in expanding production capacity, actual output of every incremental barrel depends on government approvals.
Experts view these delays as tactics by the government to force Cairn to accept the royalty burden for its portion of production, a compromise that will significantly erode the company's value.
Since the Cairn India's board had earlier assured its shareholders that no government condition would be accepted that is detrimental to shareholder value, it has decided to approach the shareholders for their view on the compromise.
However, this is likely to be a mere formality considering 80% of the company's shares are held between Cairn and Vedanta Group, both of which are eager to see the deal through.
The company's Mangala field is producing 125,000 barrels per day and its Bhagyam field will be ready by the end of 2011.
However, the company can't produce anything more than current 125,000 bpd without government approvals. A delay here means the company's production would stagnate at current levels for an extended period.
Cairn India's June 2011 quarter results were better from the March 2011 quarter. Since the production is unlikely to change for the next couple of quarters, the company's profitability will depend mainly on oil prices.
The company's acceptance of the royalty burden could prove a value destroyer for its retail shareholders in the near term.
Downstream
Punj Lloyd bags ` 3.3 bn contract in Karnataka from ISPRL
July 27, 2011. Punj Lloyd said it has won a ` 330-crore order for setting up process facilities and utilities at an upcoming crude oil storage cavern in Mangalore from Indian Strategic Petroleum Reserves Ltd (ISPRL). The project, located near Mangalore Refinery and Petrochemicals Ltd, is scheduled to be completed within a period of 29 months. The Mangalore crude oil storage will comprise two separate but identical underground caverns, each approximately 900 metres long, having a total capacity of 1.5 million tonne of crude oil. The Ministry of Petroleum and Natural Gas plans to store 5.33 million tonnes of imported crude oil in these crude reserves, based on a 15-day crude oil requirement of all the refineries in the country. The crude oil reserve near Mangalore will cater to the requirements of refineries of Mangalore Refineries & Petrochemicals Ltd, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd. With this contract, the order backlog for the Punj Lloyd Group on a consolidated basis has gone up to ` 25,739 crore.
Iran temporarily cuts oil export to India by 90,000 bpd
July 27, 2011. Iran has temporarily cut its oil export to India by 90,000 barrel per day (bpd) because of technical problems in that country's oil terminals. India compensated the cut from other oil sellers. The Islamic state had previously threatened India it would halt its oil supplies in August as New Delhi failed to solve a payments dispute that has cast a shadow since December over the two countries' $12 billion annual crude trade. Iran, facing increased isolation internationally, and energy-hungry India have been looking to resolve an impasse triggered when the Reserve Bank of India ended a regional clearing mechanism under U.S. pressure. Iran's export to India will "return to its normal trend" in September.
GAIL plans LNG trading desk in Singapore
July 27, 2011. State-run gas utility GAIL India plans to set up an LNG trading desk in Singapore. GAIL has tied up two spot cargoes for August and aims to import two more in September.
India makes first payment for Iranian oil in five months
August 1, 2011. India has made its first payment in more than five months for crude oil its buys from Iran when a $100 million wire-transfer by Mangalore Refinery and Petrochemicals Ltd (MRPL) was received by Tehran via Turkey. MRPL deposited an equivalent of $ 100 million in a rupee account in the New Delhi branch of Union Bank of India which then routed euros equivalent to state-owned Turkiye Halk Bankasi (Halkbank) in Istanbul.
India may need to raise fuel prices if global prices rise
August 1, 2011. India may need to raise petroleum product prices if international prices rise. India previously raised prices of diesel, kerosene and cooking gas in late June.
Indian oil retailers hike ATF prices by 2.7 pc
July 31, 2011. After a brief lull, state-owned oil firms hiked jet fuel, or ATF, prices by a steep 2.7 per cent, in line with firming rates in international markets. The Aviation Turbine Fuel (ATF) price in Delhi has been hiked by ` 1,520 per kilolitre (kl), or 2.69 per cent, to ` 57,844 per kl. Prices of jet fuel, which accounts for 40 per cent of an airlines' operating cost, had softened this month. ATF rates were on July 1 cut by over 2.75 per cent and only marginally raised by ` 78 per kl from July 16. ATF in Mumbai, home to the nation's busiest airport, will cost ` 1,597 per kl more at ` 58,628 per kl, as against the current price of ` 57,031.66 per kl.
India to cut duties on diesel engines, gearboxes from Japan
July 31, 2011. At a time when India and the EU are struggling to negotiate duty cuts on automobiles, New Delhi will drastically reduce tariffs on diesel engines and gear boxes from Japan under their free trade pact.
The Comprehensive Economic Partnership Agreement (CEPA) between India and Japan will come into force. While India will reduce duty on diesel engines to 5 per cent from 12.5 per cent in the next six years, it will cut tariffs on gear boxes to 6.25 per cent from 12.5 per cent in the next eight years. In addition, the country will eliminate duties on car mufflers, which currently stand to 10 per cent, in the next 10 years. Under the CEPA, which was signed in February, the two major Asian economies will eliminate import duties on 94 per cent of their trade items in 10 years. The agreement covers goods, services like telecom and finance, movement of professionals, customs procedures and cooperation in other areas. The agreement will give a boost to bilateral trade between Indian and Japan, which may touch $25 billion by 2015 from $12.35 billion at present. India and the 27-nation European Union (EU) have been negotiating hard over a similar pact since June, 2007, which is likely to be concluded by the end of 2011. While India is seeking greater access to the services sector in the EU, as a quid pro quo, EU wants India to open up the auto sector by lowering import duty on imported cars and components, among other things. However, the Indian auto industry has cautioned that if such a concession was granted, future investments in the sector in the country will be hit.
ONGC bets higher domestic fuel prices will cut subsidy bill, boost profit
July 29, 2011. Oil & Natural Gas Corp., India’s biggest energy explorer, is betting higher local fuel prices will reduce discounts given to state-run refiners and help to boost profit. The company’s subsidy bill has dropped by about 500 million rupees ($11.3 million) daily after the government raised fuel prices and cut taxes on crude last month, after ONGC posted first-quarter earnings that missed analyst estimates. ONGC supplies oil to state refiners at a discount to help compensate them for fuels sold below cost in a bid to curb inflation in the second-fastest growing major economy. India’s government plans to divest a 5 percent stake in the explorer as part of asset sales aimed at raising 400 billion rupees this fiscal year to fund infrastructure and social welfare projects Higher oil prices increase the losses of state refiners from selling fuels below cost. State oil explorers including ONGC and Oil India Ltd. (OINL) currently bear about 33 percent of the total fuel subsidy bill. State-run ONGC posted a 12 percent increase in net income to 40.95 billion rupees in the three months ended June 30. Profit would have increased by 68.8 billion rupees in the quarter if discounts hadn’t been given to refiners. The explorer sold crude at $48.76 a barrel in the first quarter, an increase of 1.5 percent from a year earlier. The discount given to state refiners doubled from a year earlier to 120.5 billion rupees. A higher subsidy bill limits ONGC’s gains from rising crude prices. ONGC is seeking energy assets overseas to take advantage of higher oil prices. Potential acquisitions include oil sands stakes in Canada and Exxon Mobil Corp.’s stake in Kazakhstan’s Kashagan oil field in a joint bid with GAIL India Ltd. (GAIL), the country’s biggest gas distributor. ONGC trades at 7 times fiscal 2012 earnings and is one of 10 stocks that may increase about 50 percent over the next two years if domestic economic and regulatory conditions improve.
Cairn Energy gets oil ministry letter on Vedanta deal
July 27, 2011. More than three weeks after the Cabinet Committee on Economic Affairs gave conditional nod to the $9-billion Cairn-Vedanta deal, the oil ministry sent a formal letter to the companies informing of the decision. Cairn Energy, which is selling 40% out its 62.4% stake in its Indian unit to London-listed, India-focused mining group Vedanta Resources, was eagerly awaiting the formal letter so that it can quickly conclude the transaction.
POWER
Monnet Ispat doing due diligence on 2 Africa coal assets
August 2, 2011. India's steel and power producer Monnet Ispat & Energy is carrying out due diligience on a coal asset each in Mozambique and South Africa and expects to close a deal in six months. The company plans to spend about $50-60 million on the coal asset purchase.
NHPC to invest ` 150 bn for developing 2 projects in Myanmar
August 1, 2011. State-run hydro power generation company NHPC would invest around ` 15,000 crore for developing two projects in the neighbouring country Myanmar. The cost incurred for producing one megawatt of hydro power is approximately ` 8 crore. Currently, NHPC has 14 operational power stations with a total installed capacity of 5,295 MW. NHPC has commissioned the 14.1 MW Devighat Project in Nepal and 60 MW Kurichu Project in Bhutan on turnkey basis. The company is providing its technical expertise in the area of hydro power development in countries like Myanmar, Bhutan and Tajikistan. It is expanding its international operations and is harnessing the hydropower potential available abroad. The company is also preparing DPRs for the 670 MW Chamkarchhu-I and 1,800 MW Kuri-Gongri HE projects in Bhutan. NHPC has resigned signed a Memorandum of Understanding (MOU) with Orissa Hydro Power Ltd (OHPC) and Government of Orissa for formation of a Joint Venture Company (( JVC)) with OHPC to develop three Hydro-electric Projects with a total capacity of 320 MW in the state.
NTPC, Tata Power, Lanco Infratech, GMR Energy are among 20 companies to bid for Orissa UMPP
August 1, 2011. NTPC, Tata Power, Lanco Infratech, GMR Energy are among 20 companies to have bid for the much-delayed Rs 18000 crore ultra mega power project in Orissa. Others to have submitted technical bids for are Jindal Power, JSW Energy, Aditya Birla Power, Torrent Power, Larsen & Toubro, NALCO, GVK Energy Ventures and Adani Power.
Neyveli Lignite seeks coal blocks that NTPC lost
August 1, 2011. Neyveli Lignite has asked the government to allocate three coal blocks that were recently taken back from NTPC, potentially triggering a clash between the two ministries (coal and power) that control the state-run firms. The three blocks in Jharkhand - Chatti-Bariatu, Chatti-Bariatu (South) and Kerandari - hold 836 million tonnes reserves that can feed all the proposed coal-based power projects of Neyveli Lignite. If approved, allocation of the three blocks would facilitate Neyveli Lignite's foray into coal mining and coal-based power generation but the power ministry has already asked the coal ministry to review de-allocation of NTPC blocks and said if required would take up the issue with higher authorities. Neyveli Lignite plans to set up two 2,000-mw power projects at Kanpur in Uttar Pradesh and Nagapattinam in Tamil Nadu. It also proposes to set up a 1,000-mw project at Tuticorin in Tamil Nadu.
Blackstone to invest ` 5 bn in Visa Power
July 28, 2011. US-based Blackstone Group will invest ` 500 crore for a 28% stake in power producer Visa Power Ltd. The company would offload a minority stake to Blackstone. Blackstone would pick 28% stake. Visa Power has 7,800-mw of power projects in pipeline. Projects with combined generation capacity of 2,520-mw are in advanced stages of development in Orissa, Madhya Pradesh, Jharkhand and Gujarat. Blackstone has invested $500 million in the Indian power sector over the last 15 months. It has put in $60 million in Monnet Power Corp and $300 million in Moser Baer.
Transmission / Distribution / Trade
GVK may finalise deal with Australia's Hancock in two months
July 31, 2011. GVK Power and Infrastructure may finalise a deal to buy coal mines operated by Australia's Hancock Prospecting in two months. GVK Power - a GVK Group company - may raise $1.2 billion in debt to part-fund its acquisition of Hancock mines in Australia, with the final transaction estimated to cost about $2.4 billion. Hancock's Alpha Coal and Kevin's Corner mine are located in Australia's Queensland province and have an estimated 7.6 billion tonnes of thermal coal reserves. The GVK group is also reportedly in talks with Middle East-based MEC Coal to buy a coal mine in Indonesia. Both the companies are said to be in advanced talks and are working out the valuation of the coal mine.
Tata Power's vessel supplies coal to Mundra UMPP
July 28, 2011. Tata Power said a cargo ship owned by its Singapore-based subsidiary has delivered coal for the 4,000 MW power project at Mundra in Gujarat. 'Trust Integrity', owned by Singapore-based Trust Energy Resources Pte Ltd, delivered the coal from Indonesian mines to Mundra project. Trust Energy was set up in 2007 to help integrate coal supply chain to support growth plans of Tata Power. The entity has a portfolio of a fleet of five Cape vessels, in its first phase. The Mundra ultra mega power project is expected to come up later this year.
Policy / Performance
Coal India misses Q1 production target
August 2, 2011. State-run Coal India has missed its production target for the April-June quarter of the current fiscal, achieving an output of just 96.3 million tonnes (MT) of coal. The public sector firm missed the production target of 98.6 MT for the first quarter of the current financial year by 2.3 million tonnes. Coal Minister Sriprakash Jaiswal also attributed the shortfall to delays in supply of equipment and evacuation problems in the Talcher coalfields in Orissa. Last month, Coal India Chairman N C Jha had also blamed early rains and inclement weather in the eastern region for playing spoilsport in achieving the target for the first quarter. However, Jha had exuded confidence that the Maharatna firm would achieve the 452 MT production target for the current fiscal. Facing environmental clearance delays on over 150 mining proposals, the world's largest coal miner had missed last fiscal's production target by recording an output of 431.325 MT, as against the revised target of 440.20 MT. Coal India, which accounts for more than 82 per cent of domestic coal production, had blamed the slippage against the target to delays in the grant of clearance for its projects. The Coal Ministry, too, has repeatedly expressed concern over such delays, saying procrastination on the part of the Ministry of Environment and Forests in granting clearances could result in a production loss of about 190 MT by March, 2012. Meanwhile the demand-supply gap for the dry-fuel is projected at 142 MT this fiscal and is likely to reach 200 MT by 2016-17.
PowerGrid net marginally up at ` 7 bn
August 2, 2011. Central transmission utility PowerGrid Corp said its net profit for the quarter ended June 30, grew marginally to ` 705 crore against ` 703 crore in the same period previous fiscal. However, the total income of the company rose over 11 per cent at ` 2,044.14 crore as against ` 1,837.16 crore in the corresponding period of the previous fiscal. PowerGrid Corp plans to invest ` 55,000 crore for adding 37,000 MW of inter-regional electricity transmission capacity in the country during the 11th Five-Year Plan (2007-12).
Rising dependence on overseas coal to hurt private power companies
July 31, 2011. Private power producers, which have embarked on ambitious capacity addition plans, are likely to see adverse financial impact due to uncertainty over fuel supplies and increasing dependence on pricier imported coal.
India, which is facing acute power shortage, is expected to see a capacity addition of over 80,000 MW in 12th plan (2012-17), with major chunk coming from private power players.
Power Min asks AP govt to look into stalled Krishnapatnam UMPP
July 29, 2011. Concerned over the refusal of banks to provide loans for Reliance Power's 4,000-MW ultra- mega power project at Krishnapatnam, as spiralling coal prices have impacted feasibility, the Power Ministry has asked the Andhra Pradesh government to intervene in the matter.
With work on the Reliance Power project stalled due to unavailability of funds, the Power Ministry has asked the Andhra Pradesh government to meet the procurer of power (primarily the home state) and developer of the project (Reliance Power) to further discuss the issue.
Reliance Power, which is developing this 4,000 MW ultra mega power project through a special purpose vehicle -- Coastal Andhra Power Ltd -- is believed to have stated that since coal prices shot up, banks have been shying away from providing funds for the project. If the price of coal rises, it would increase the input cost of the power project and investors may not find it feasible to put money in such projects.
This project is based on imported coal and the raw would be sourced from the overseas market like Indonesia and Australia. Indonesia has said it would not allow exporting companies to sell coal at prices below notified rates after September 23, 2011. Previously, there were no restrictions imposed by the Indonesian government on coal pricing.
Another major coal exporting country, Australia, has issued a draft mining law to impose tax on coal and iron ore projects from next year (2012).
Earlier, the Andhra Pradesh government had communicated to the Power Ministry that work has stopped at the Krishnapatnam project, following which a team comprising officials from the Central Electricity Authority was sent to investigate the matter.
The CEA report has confirmed that work has "stopped" at the Krishnapatnam project site, sources said. Subsequently, the Power Ministry asked the Andhra government to intervene in the matter and work out a solution. Krishnapatnam is one of the three UMPPs being executed by Reliance Power.
The others are Sasan (Madhya Pradesh) and Tilaiya (Jharkhand). The project achieved financial closure in July, 2009. The lenders for the project are a consortium of almost 12 banks, led byIDBI, and the lending was done on a project finance basis for an estimated project cost of around ` 17,450 crore ($4 bn) with a debt-equity ratio of 75:25.
The government has so far allotted four UMPPs -- Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh), Tilaiya (Jharkhand) and Mundra (Gujarat).
The Mundra UMPP is being developed by Tata Power, while the remaining projects are being constructed by Reliance Power. Power Finance Corporation is the nodal agency for these ultra-mega power projects.
CESC's Haldia thermal power project by 2013-14
July 29, 2011. The 600 MW thermal power project at West Bengal's Haldia, being developed by power utility CESC Limited - a RP-Sanjiv Goenka Group company, is scheduled to be completed by end of 2013-14.
The 2x300 MW thermal power project at Chandrapur in Maharashtra was also progressing according to schedule. Land has already been identified for a coal-based project at Danro in Jharkhand.
On 90 MW hydro power project in Arunachal Pradesh, the detailed project report (DPR) has been completed. The 9 MW solar power project at Pratapgarh in Gujarat will be commissioned within the next three quarters.
Total investment in the project will be ` 120 crore. The prices of certain grades of coal, which was primarily supplied by Eastern Coalfields Limited (ECL), were increased by nearly 100 percent which was creating pressure on tariff.
Naveen faces heat on Sidhol Hydro-power project, appeases people with lift irrigation
July 28, 2011. Even as the people in Western Orissa are up in arms against National Hydro Power Corporation (NHPC) Ltd's plan to set up three hydropower plants, chief minister Naveen Patnaik is trying to woo protesters by directing the Water Resources Department to set up mega lift irrigation points on either side of the three barrages on river Mahanadi.
NHPC Ltd signed a pact with the state government to set up the hydropower plants in Subarnapur (100 MW), Sambalpur (100 MW) and Boudh (120 MW) districts across Mahanadi river in western parts of the state. The hydropower generating company will build the plants in five years time in a joint venture with the Orissa state-run Hydro Power Corporation with a combined investment of ` 2,600 crore to generate 320 MW power.
Private firms overtake govt enterprises in power production, adds about 84 pc of the target
July 27, 2011. Skewed procurement policies and poor project management have forced the Planning Commission to slash the capacity addition target of public sector power producers.
The commission has instead raised the bar for private generation companies, an indication of its growing expectations from the sector in servicing India's future energy needs.
Power projects run by the Central government added only half of the targeted generation capacity in 2010-11, while state government-funded projects fared even worse, meeting only 42% of the target. Projects funded by the private sector, however, added 5,122 MW of more capacity, about 84% of the target set by the commission.
The commission has cut the 2011-12 target of central projects by 25% and that of state projects by 36%. But it has raised the capacity addition target of the private sector by 25% to 7,610 MW. The commission had initially fixed the capacity addition target for the 11th Plan (2007-11) at 78,700 MW. But it later year scaled down the figure to 62,374 MW.
During its mid-term appraisal last year, the commission had reduced the target for the 11th Plan even further to 34,462 MW. As public sector companies battle issues of procurement, private sector firms have successfully established strategic partnerships with Chinese companies.
At present, Chinese companies are sitting roughly in excess of 25,000 MW of orders from private power companies in India.
The private sector's contribution to the power sector in the 11th Plan has been much more than what the commission had originally anticipated.
The commission had envisaged the private sector to contribute only 19% of new capacities at the beginning of the Plan. But in 2010, it revised the figure to 30%. It now expects the private sector to contribute most of the 60% of new capacities in the 12th Plan (2012- 17).
OIL & GAS
Shell to cease processing at Australian refinery by mid-2013
July 27, 2011. Royal Dutch Shell Plc, Europe’s largest oil company, will halt refining operations at its Clyde plant in Sydney before mid-2013 and convert the facility into a fuel-import terminal.
The refinery, which processes about 79,000 barrels a day, is no longer regionally competitive against Asian “mega- refineries,”. Shell intends to reduce global refining and marketing costs by $1 billion by the end of next year as it seeks to accelerate production growth through 2014. The company, which also operates a second refinery at Geelong in Victoria state, acquired Clyde in 1928. The Clyde plant supplies about 40 percent of Sydney’s petroleum needs.
Siemens plans gas turbine business with Russian partners
August 1, 2011. Europe's biggest engineering group Siemens said it plans to enter into a joint venture with Russia's Power Machines OJSC to build gas turbines. The joint venture, which is to be based in Russian city of St. Petersburg, is due to begin operations in the coming months.
Under the deal, Munich-based Siemens will hold a 65-percent stake in the new joint venture. In exchange, Siemens will hand over its current holding in Power Machines of 25 percent plus one share to the Russian group's majority stakeholder Highstat Ltd.
House passes bill to speed up oil sands pipe review
July 27, 2011. The House of Representatives approved legislation that would set a firm deadline for the Obama administration to decide the fate of a proposed $7 billion pipeline that would transport Canadian oil sands crude to the U.S. Gulf Coast.
The House voted 279-147 in favor of the bill that would force the State Department to approve or deny a permit for TransCanada's planned Keystone XL pipeline by November 1.
South African oil workers may end strike after revised offer
July 27, 2011. A 17-day strike by workers at the South African units of oil companies including Royal Dutch Shell Plc and Petroliam Nasional Bhd. may be called off after “positive” feedback from union members on a revised pay offer. Workers polled so far by the General Industries Workers Union reacted “positively” to the revised offer, Edson Ntsibande, a spokesman for the union. The union is still getting feedback from some regions.
U.S. aims to slash emissions from oil, gas industry
July 29, 2011. The U.S. Environmental Protection Agency issued draft rules that would cut emissions of health-harming gases emitted during the production of oil and natural gas. The rules, which were expected, would lower emissions of volatile organic compounds that contribute to smog by nearly 25 percent across the oil and gas industry and by 95 percent from natural gas wells drilled using the controversial technique of hydraulic fracturing, or fracking.
Shell profit almost doubles as surging oil price counters production drop
July 28, 2011. Royal Dutch Shell Plc, Europe’s biggest oil company, said second-quarter earnings almost doubled on higher oil prices and project startups in Qatar and Canada. Net income rose to $8.66 billion from $4.39 billion a year earlier, The Hague-based Shell said. Excluding one-time items and inventory changes, profit matched analyst estimates. Shell started the Pearl gas-to-liquids and Qatargas 4 liquefied natural-gas ventures in the Middle East this year. It also expanded an oil-sands project in Canada’s Alberta region.
POWER
Generation
Chubu Electric Power to purchase hydro power plants
August 1, 2011. Chubu Electric Power Co. Inc., Japan based leading electric utility, is set to purchase a number of hydro power plants. At present, Chubu Electric Power is negotiating with Mie prefectural government for this purpose. The purchase is likely to cost about JPY 10.5 billion (US $135 million). Chubu Electric Power stated that, presently electric utility had been negotiating to buy a number of hydro power plants from prefectural government before 11 March earthquake and tsunami which has changed its energy generation options.
This purchase will offer additional 98MW to company s production capacity. Chubu Electric Power mainly gets energy from gas-fired units and a 3617MW nuclear plant in Hamaoka, which is likely to stay out of action till December 2012. Chubu Electric Power is currently building 18m seawall to boost plant s safety in quake-prone places.
Japan July nuclear plant usage falls to 33.9 pc
August 1, 2011. Japan's nuclear power plant utilization rate fell to an average 33.9 percent in July, the lowest in at least 32 years, as public worries over safety kept reactors offline after they had completed routine maintenance.
The run rate fell further from June's 36.8 percent and was less than half the 70.0 percent rate a year earlier. It also dipped below the 34.2 percent rate for May 1979, the last month for which data was available.
The prolonged radiation crisis at Tokyo Electric Power's Fukushima Daiichi plant has stirred fears about nuclear safety, leaving local governments wary about granting approvals to restart reactors taken offline for maintenance. The government plans safety tests of Japan's reactors and is reviewing its energy policy as the country confronts the prospect of power shortages that could stretch into 2012.
Only 16 reactors are still operating of the 54 commercial reactors available to Japan's nine Japanese utilities and a non-utility electricity wholesaler, Japan Atomic Power Co, at the time the March 11 earthquake and tsunami that triggered the Fukushima crisis. By the end of September, another five reactors are scheduled to shut for maintenance, and all of Japan's reactors could be shut by next May if there are no restarts.
Transmission / Distribution / Trade
Peabody, Arcelor Mittal make A$4.7 bn hostile bid for Macarthur
August 1, 2011. Coal miner Peabody and steel-maker Arcelor Mittal made a hostile A$4.7 billion ($5.2 billion) bid for Australia's Macarthur Coal. The joint bidders said they had offered A$15.50 per share, plus a 16 cents-a-share dividend, but Macarthur had refused to recommend it. Peabody and Arcelor Mittal said in a joint statement they would take the "compelling" offer direct to shareholders of Macarthur.
Policy / Performance
Tepco says highest radiation yet is detected at Fukushima Dai-Ichi
August 1, 2011. Tokyo Electric Power Co., operator of Japan’s crippled Fukushima Dai-Ichi nuclear plant, said it detected the highest radiation to date at the site. Geiger counters, used to detect radioactivity, registered more than 10 sieverts an hour, the highest reading the devices are able to record.
The measurements were taken at the base of the main ventilation stack for reactors No. 1 and No. 2. The Fukushima plant, about 220 kilometers (137 miles) north of Tokyo, had three reactor meltdowns after the March 11 magnitude-9 earthquake and tsunami knocked out power and backup generators.
Radiation leaks displaced 160,000 people and contaminated marine life and agricultural products. The utility, known as Tepco, tried to vent steam and gas the day after the earthquake as pressure in reactor No. 1 exceeded designed limits.
A buildup of hydrogen gas subsequently caused an explosion that blew out part of the reactor building. Tepco sent three workers around the ventilation stack after a gamma camera detected high radioactivity levels in the area.
The workers were exposed to as much as 4 millisieverts during the work. The utility will create a no-go zone around the stack and cover the area with protective material.
Japan expands cattle-shipment ban as radiation contaminates beef
August 1, 2011. Japan banned cattle shipments from Iwate prefecture, the nation’s fifth-largest grower, as the contaminated-beef crisis widened with radiation threatening the country’s food supply.
The government banned shipments from Miyagi and nearby Fukushima prefecture, where radiation from a crippled nuclear plant contaminated hay. A total of 2,965 cattle that ate tainted feed were shipped to the market from 130 farms in 15 prefectures.
U.S. nuclear fund for waste, not deficit: panel
July 30, 2011. The U.S. government should start using the $25 billion it has collected for dealing with nuclear waste for its intended use rather than hoarding it to reduce the deficit, a bipartisan panel said. The Nuclear Waste Fund is currently used to "reduce the apparent deficit," the report said. It acknowledged that freeing up the money would be politically difficult.
Japan vows to skirt nuclear shutdown, watchdog embarassed
July 29, 2011. Japan will strive to avoid a complete shutdown of its 54 nuclear reactors and avert crippling power shortages in the near term while charting plans to reduce the nation's dependence on nuclear power. Heightened safety fears since the March 11 earthquake and tsunami triggered meltdowns and radiation leaks at the Fukushima power plants may hinder restarting of reactors shut for maintenance and leave Japan with no nuclear power by May 2012. The government faces an uphill battle in winning over an increasingly skeptical public and it suffered a fresh setback when one of the power utilities revealed the state-run nuclear power regulator tried to manipulate the outcome of a citizen debate on nuclear power four years ago.
Japan to examine separation of Tepco power plants, distribution
July 28, 2011. The head of the oversight committee for Tokyo Electric Power Co. said a possible separation of the utility’s electricity distribution and generation units will be part of the probe into the company’s structure and assets. The committee will “thoroughly examine systems that regulators haven’t touched for a long time” including separation of Tepco’s distribution and generation operations. Japan’s government set up the committee to assist in compensation plans for those affected by the nuclear accident at Tokyo Electric’s Fukushima Dai-Ichi nuclear plant. The utility known as Tepco plans to raise more than 600 billion yen ($7.7 billion) through asset sales, one of the conditions for receiving government support, for compensation payments.
U.S. rules seen shutting 20 pc of coal power capacity
July 28, 2011. The U.S. power industry will probably retire up to 20 percent of the country's coal-fired electricity generating capacity this decade, due to proposed federal environmental regulations, consulting firm ICF International said in a report. Fairfax, Virginia-based ICF, which helps utilities meet environmental rules, among other things, said grid operators and regulators in charge of reliability will have to work with environmental regulators to ensure the system remains reliable as 30 to 50 gigawatts of coal-fired generation are shut. ICF said the units would likely retire due to various proposed air emissions rules by the U.S. Environmental Protection Agency (EPA) with implementation deadlines over the next few years. To meet the proposed rules, ICF said many utilities will retire older and smaller coal plants rather than spend millions to retrofit the units. Most retirements will occur in the Midwest and Southeast, which has the largest concentration of coal-fired capacity.
Renewable Energy / Climate Change Trends
Tata BP Solar commissions 1 MW plant for the cooperative sector
August 1, 2011. Tata BP Solar India Ltd, a joint venture of Tata Power and BP Solar, has installed and commissioned a megawatt scale solar power plant in the co-operative sector under the Rooftop and Other Small Solar Power Generation Plant scheme administered by IREDA under the Jawaharlal Nehru National Solar Mission (JNNSM). This project is owned and developed by Dr Babasaheb Ambedkar Sahakari Sakhar Karkhana Ltd (BASSKL), Arvindnagar, Osmanabad in Maharashtra. This project uses 4400 number of crystalline silicon modules of 230 Watts each spread out over an area of 4.5 acres. These modules will generate electric current when solar radiation falls on them. The solar power plant will generate 1.56 million units of electricity per year. Tata BP Solar has also taken the contract to provide the Operation and Maintenance (O&M) services to the plant for the first 10 years after commissioning. The plant is designed to run for 25 years. Tata BP Solar has been able to secure a number of EPC contracts in the IREDA- run scheme and is currently executing around 15 such projects in different parts of India including Tamil Nadu, Andhra Pradesh, Maharashtra, Chattisgarh, Orissa, Jharkhand and Uttarakhand. The JNNSM is a flagship project of the Indian government to mainstream the use of solar energy and has galvanised the industry by setting out an ambitious target of installing 20000 MW of grid-connected solar power generation capacity by 2022 in addition to 2000 MW of off grid solar power.
Suzlon Energy FY12 guidance upbeat after Q1 net profit of ` 600 mn
August 1, 2011. Suzlon Energy sees growth in profits for the rest of the year as it boosts sales, cuts operating costs and executes orders from emerging economies to help the wind turbine maker maintain growth momentum after a difficult phase. The debt-ridden company is upbeat after an 80% rise in sales helped it post a net profit of ` 60 crore in the April-June quarter, recovering from a loss of ` 912 crore a year ago. This is the company's second consecutive profitable quarter after it reported a loss in every quarter since December 2009 due to low sales, high cost and interest burden.
ABB India bags ` 16 crore order to supply solution for three PV solar power plants
August 1, 2011. ABB India has won orders worth Rs 16 crore to supply turnkey power and automation solution for three photovoltaic solar power plants with a combined capacity of 11 megawatts (MW) in India. The orders comprise of two 5 MW photovoltaic (PV) solar power plants and one 1 MW photovoltaic (PV) solar power plant. When completed in October this year, the plants will have an annual generating capacity of up to17.6 Gigawatt-hours of electricity.
Bipin Engineers to set up greenfield unit
July 29, 2011. The central government's ambitious National Solar Mission, under which 20,000 MW generation capacity is to be installed by 2022, has given a huge boost to the solar power sector. Targeting this opportunity, Bipin Engineers Pvt Ltd, a manufacturer of solar equipment, will set up a new manufacturing facility at Warve, on the Pune-Bangalore highway. The new plant will manufacture solar flat plate collectors, ETC manifold and tanks, integrate solar power packs and small wind energy systems. The new plant will increase the production capacity of the company to 4000 solar collectors per month, from the current level of 1,000 collectors per month. The manufacturer is also expanding its dealer network, with plans to set up 100 dealerships in the next two years. Presently it has 40 dealerships across Maharashtra, M.P, Karnataka and Goa.
U.S. ethanol industry will maintain subsidies until the end of 2011
August 2, 2011. U.S. ethanol subsidies will not be affected by a congressional agreement to lift the country’s debt limit that may be voted on by both chambers. The 45-cent tax credit for each gallon of the biofuel blended into gasoline and the 54-cent tariff on Brazilian imports, due to expire Dec. 31, will stay in place for now. Industry subsidies total $6 billion a year.
China sets solar power price to boost profits, investment
August 1, 2011. China, the world’s biggest polluter, set a price for electricity supplied by photovoltaic projects approved under non-competitive tenders to boost industry profitability and investment. Grid operators will pay solar developers 1.15 yuan (18 cents) per kilowatt-hour. The projects must have been approved before July 1 or be completed by the year-end. Projects approved after July 1 will supply power at 1 yuan per kilowatt-hour. China offers solar projects to developers under both open and non-competitive tenders. Under the government’s two rounds of competitive bidding in 2010 and 2009, project approval was granted to companies offering the lowest on-grid tariffs. Tariffs in the last bidding round ranged from 0.73 yuan to 0.99 yuan a kilowatt-hour. The government seeks to keep on-grid tariffs of electricity generated by solar projects as competitive as those set by plants using coal, oil and gas as fuel to encourage consumers to shift to cleaner-burning energy sources. Based on the prices announced by the government, solar projects approved under non-competitive tenders may get an internal rate of return of as much as 8 percent.
Malaysia plans green palm oil certification scheme
August 1, 2011. Malaysia, the word's No.2 palm oil producer, will come up with a certification scheme to ensure the tropical oil is grown without clearing forests and destroying wildlife. Malaysia joins top palm oil producer Indonesia that is set to issue its own certification for planters next year on growing concerns that the RSPO has been dominated by green groups and sales of eco-friendly palm oil have been slow. Malaysian Palm Oil Council said the Malaysian scheme will emulate the one by Indonesia, which is mandatory and where offenders could be punished by law. The RSPO scheme is voluntary but in recent months it has taken a harder stance on plantations. In April, the RSPO censured Malaysia's No.2 planter IOI Corp for green violations and suspended ongoing plans to certify its estates.
Norway court rules in favor of China Sunergy in dispute with REC
August 1, 2011. China Sunergy Co. said a court of appeal in Norway ruled in favor of China Sunergy in relation to the dispute with REC Wafer Norway AS. After an oral hearing the Halogaland Court of Appeal on June 30, 2011, ruled in favor of China Sunergy and determined that REC Wafer was not, and had never been a party to the contract, the company said. As of a result of this, there will be no need for a further injunction with regard to a $50 million bank guarantee.
GM, Ford, Toyota agree to double fuel economy to 54.5 mph on U.S. vehicles
July 30, 2011. Automakers agreed to double the fuel economy of the vehicles they sell in the U.S. to a fleetwide average of 54.5 miles per gallon by 2025, President Barack Obama said. The White House negotiated the proposal, which will take effect in 2017, with automakers including General Motors Co. (GM), Ford Motor Co. and Toyota Motor Corp. The administration proposed a 56.2 mpg requirement last month, up from a fleetwide average of 27 mpg for cars and light trucks. Obama is seeking to limit the amount of fuel used by U.S. vehicles as part of a pledge to reduce oil imports by a third by 2025. The agreement with automakers, which also curbs greenhouse-gas emissions, comes as his administration negotiates with Congress on raising the U.S. debt ceiling to avoid default. Obama used the event to promote his energy priorities and to highlight some of the issues being weighed in the standoff over raising the federal debt ceiling.
EPA proposes pollution cuts for oil production, gas fracking
July 29, 2011. The Environmental Protection Agency proposed rules to cut pollution from oil and gas exploration and production, including the first U.S. air standards for drilling using hydraulic fracturing. The proposal, incorporating four air regulations, would cut emissions of smog-forming volatile organic compounds by about one-fourth, with an almost 95 percent reduction in such discharges from new and updated gas wells using fracturing, or fracking.
African wind, hydro, cook stoves may benefit from new CO2 Rule
July 29, 2011. Wind turbines, hydro-electric dams and efficient cooking stoves in Africa and other countries may attract up to $1 billion in investment, according to ClimateCare after the United Nations agreed on new carbon market rules that may grant such projects more emissions credits. The UN Clean Development Mechanism’s Executive Board, regulator of the world’s second biggest carbon market by traded volume, agreed this month on new standards for projects in places where basic human needs aren’t met. The new rule melds the CDM’s goal of reducing emissions blamed for global warming with an aspiration to transfer technologies that poor nations need to avoid higher-polluting development paths akin to Europe’s Industrial Revolution.
Japan ending nuclear age risks $5 trillion economy as komatsu, sharp walk
July 29, 2011. Japan’s Fukui prefecture helps Sharp Corp. make solar cells, generates cash for BHP Billiton Ltd. and keeps the lights on in the Kansai area, which has an economy the size of Mexico’s and is home to Panasonic Corp. What makes Fukui key to production of global brands is the reason it got the nickname “Nuclear Ginza.” The prefecture on the Japan Sea coast north of Osaka is home to 14 reactors in atomic plants, the highest concentration in the world. The power lines that snake out hundreds of kilometers from the town of Ohi -- with four reactors and a population of 8,700 -- and three nearby atomic plants supply 49 percent of Kansai’s electricity. The region is about the size of Belgium and includes Kyoto and Osaka, the world’s seventh-largest metropolis. Sharp and Panasonic have factories in the area, along with Toshiba Corp.’s that makes chips used in the iPad.
After dismal second-quarter, solar outlook brightens
July 29, 2011. Solar investors should brace themselves for some downright dreadful second-quarter earnings reports in the coming weeks, though the rest of the year may provide some relief to battered solar stocks as panel prices stabilize and profit margins recover. The solar market likely bottomed in the second quarter after pullbacks in subsidies in No. 2 solar market Italy stalled development of projects there this spring, creating an oversupply of solar panels in the market and sparking a more than 20 percent drop in prices.
Obama fuel-efficiency goals put automakers ahead of 100-year pace
July 29, 2011. When President Barack Obama proposed new fuel-economy standards, he set a pace that’s more aggressive than the industry has managed in the past four years -- or for any sustained period in the last 100. With the introduction of cars such Nissan Motor Co.’s electric Leaf and the proliferation of Toyota Motor Corp.’s hybrid Prius, fuel efficiency has gained almost 2 percent a year on average since 2007. To meet Obama’s targets, automakers need to improve cars by 5 percent a year and trucks by 3.5 percent most years. Accelerating the improvements will be possible with lighter vehicles, smaller engines and fuel-saving technologies such as fuel-injectors and turbochargers. Obama’s plan is for the average vehicle by 2025 to be rated by the Environmental Protection Agency at 54.5 mpg, a level that translates to about 37 mpg on a window sticker. Obama has pledged to reduce dependence on imported oil by a third, and he said the standards announced are aimed at helping him attain that goal as well as reducing greenhouse-gas emissions. California, which has the authority to set its own rules that are stronger than federal regulations, is helping write the national fuel-economy standards.
UK solar plants soar ahead of government tariff cuts
July 28, 2011. British solar power capacity rose by more than 50 percent in the three months to June as developers scrambled to finish projects before lower government support tariffs kick in next month. Installed capacity for photovoltaic plants rose by 56 percent to 121.6 megawatts between March and June and grew more than eighteenfold in one year. The government went ahead with an early support tariff cut for solar installations bigger than 50 kilowatts (KW), saying too many large commercial plants would absorb government money destined for smaller household and community projects.
GM invests in solar energy systems maker
July 28, 2011. A General Motors Co unit has invested $7.5 million and taken an undisclosed stake in Sunlogics Inc, helping the solar energy systems manufacturer to establish plants in Michigan and Canada and create 310 jobs at the small company. GM Ventures said it also signed commercial agreements with Sunlogics for the installation of solar charging stations at Chevrolet dealerships and GM plants, as well as a power purchase deal to install large solar arrays at GM factories and buy the energy produced by the arrays. In conjunction with the Sunlogics deal, GM said it has committed to doubling the use of solar power use at its plants globally to 60 megawatts -- the equivalent of powering 10,000 homes annually -- by the end of 2015. The U.S. automaker derives 1.4 percent of its U.S. energy consumption from renewable resources. GM has gained attention with the Volt. The U.S. automaker's push into electric vehicles is partly aimed at seizing the green mantle Toyota Motor Corp earned with the roll-out of its popular Prius hybrid vehicle. Sunlogics and GM previously collaborated to develop a solar photovoltaic canopy and charging station for Volt dealers and there are two in place at stores in Grand Blanc, Michigan, and Modesto, California.
Algal Scientific seeks funds for fertilizer-eating algae project
July 28, 2011. Algal Scientific Corp., a U.S. developer of algal biomass for use in fertilizer and biofuels, said it’s seeking $3 million to help produce algae that remove pollutants from industrial sewage. The Plymouth, Michigan-based company is raising $500,000 to complete demonstration plants and will seek the remaining funds in the next six to nine months. The plants will use algae to treat wastewater by soaking up pollutants including nitrogen and phosphorus, found in fertilizers.
SunPower, Citi to finance solar lease projects
July 28, 2011. SunPower Corp and Citigroup have formed a new fund of $105 million to enable the solar panel maker extend its lease to customers in eight states. A solar lease is a financing option that provides the use of a solar equipment in exchange for a monthly lease payment. Citi is contributing $80 million to the fund that will expand the lease option's reach in Massachusetts, Arizona, California, Colorado, Hawaii, New Jersey, New York and Pennsylvania.
EDP Renovaveis says it expects decline in wind energy unit costs
July 27, 2011. EDP Renovaveis SA, the renewable- energy unit of Portuguese utility EDP-Energias de Portugal SA, said it expects a “sustainable downward trend” in wind energy costs per unit of output. Manufacturing overcapacity and competition among sellers of equipment is leading to “price pressure”.
Slovak solar-plant capacity rises to 478 MW on subsidies
July 27, 2011. The total capacity of solar power plants in Slovakia rose to 478 megawatts by end-June as the government’s plan to reduce subsidies prompted investors to speed up construction. As many as 514 companies have this year asked the regulator for permission to operate solar generators, compared with 299 by the end of the last year. Slovakia has passed legislation that from July 1 limits subsidies for new solar generators with capacity exceeding 100 kilowatts, seeking to tame the impact of more expensive green energy on electricity prices for households. The state support was meant to help the country attain the European Union’s goal to boost the share of renewable energy to 20 percent by 2020.
Brazil may cut ethanol output tax to avoid shortage
July 27, 2011. Brazil may cut taxes on ethanol production or allow mills to delay tax payments to avoid a shortage of the fuel in the future. The government is also considering reducing the amount of ethanol mixed into gasoline to 20 percent from currently 25 percent to prevent the scarcity of the product in the short term.
Montana launches $85 mn carbon storage project
July 27, 2011. The federal government has given final approval to an $85 million, eight-year pilot project to inject a million tons of carbon dioxide, a major greenhouse gas, into underground rock formations in Montana for storage. The Montana State University project seeks to determine whether carbon dioxide emissions from sources such as coal-fired power plants and cement production can be safely and economically captured and stored instead of being released into the atmosphere.
|
Dear Reader,
You may have received complimentary copies of the ORF Energy News Monitor. Our objective in bringing out the newsletter is to provide a platform for focused debate on India’s energy future. You could be a partner in this effort by becoming a subscriber. You could also contribute recommendations for India’s energy future in the form of brief insightful articles.
We look forward to receiving your patronage and support.
ORF Centre for Resources Management
|
|
 ORF ENERGY
NEWS MONITOR
Sponsorship Form
Please fill in BLOCK LETTERS
|
|
· Commercial Sponsorship: Rs 15, 000 per annum
1 hard copy (52 issues) + soft copies by email as per list provided by sponsor
· Non Commercial/ Academic Sponsorship: Rs 2, 500 per annum
1 hard copy (52 issues) + soft copies by email as per list provided by sponsor
· Individual Sponsorship: Rs 1, 000 per annum
Soft copy only
|
|
Yes! I/we would like to receive copies of the weekly ORF Energy News Monitor for a period of ______year(s). I/we shall be entitled to one hard copy along with the option of soft copies to a list of e-mail addresses provided by me/us for the period specified.
Name……………………………Address…………….………………………Telephone……………………Fax………………….E-mail…………………
Please find enclosed cheque/Bank Draft No.........................dated …………………drawn at New Delhi for Rs.........……….favouring ‘Observer Research Foundation’
Please fill in this form and mail it with your remittance to
Mr. Vinod Kumar Tomar
ORF Centre for Resources Management
OBSERVER RESEARCH FOUNDATION
20 Rouse Avenue,
New Delhi - 110 002
Phone +91.11.4352 0020 extn 2120
Mobile: 9871417327
Fax: +91.11.4352 0003
E-mail: [email protected], [email protected]
|
Registered with the Registrar of News Paper for India under No. DELENG / 2004 / 13485
Published on behalf of Observer Research Foundation, 20 Rouse Avenue, New Delhi–110 002 and printed at Times Press, 910 Jatwara Street, Daryaganj, New Delhi–110 002.
Disclaimer: Information in this newsletter is for educational purposes only and has been compiled, adapted and edited from reliable sources. ORF does not accept any liability for errors therein. News material belongs to respective owners and is provided here for wider dissemination only. Sources will be provided on request.
Publisher: Baljit Kapoor Editor: Lydia Powell
Production team: Akhilesh Sati, Vinod Kumar Tomar
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
PREV
