The Right to Cool the Planet Lydia Powell, Observer Research Foundation
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W |
arming of the planet may be inconvenient for those who have to bear the brunt of it but it is very convenient for those are in the business of cooling it. The recent story in the media that India has ‘finally’ agreed to phase out the use of hydroflurocarbon (HFCs) under pressure from the United States is a case in point. HFCs were introduced as replacements for ozone depleting Chloroflurocarbons (CFCs), used in refrigeration and other industrial purposes under the Montreal Protocol in the 1980s. HFC is not ozone depleting but it is a very potent green house gas (GHG) which means that it would contribute to global warming. The global warming potential (GWP) of some types of HFCs could be as high as 14,800 compared to 1 for carbon dioxide. The idea now is to use the same Montreal Protocol which introduced HFCs to get rid of them.
Those yet to be initiated into the politics of climate change may ask why India opposed efforts of the United States to cool the planet in the first place. After all isn’t it good that a powerful country is ready to send in its drones to find the last molecule of HFC in India and banish it into the far depths of the universe? If only the story was as simple as that! A short digression into the war on CFCs which culminated in the Montreal Protocol will explain why.
In the 1970s scientific studies showed that trace amounts of CFCs emitted into the atmosphere remained in the atmosphere for over a century and that these molecules underwent complex chemical changes in the atmosphere that converted atmospheric ozone (three oxygen atoms) into oxygen. As chlorine was a catalyst, a single chlorine atom could destroy many ozone molecules. This meant that the ozone layer, considered the single most important chemically active trace gas in the earth’s atmosphere protecting the earth from harmful ultra-violet radiation from the Sun, was being destroyed.
At that time the United States and the twelve-nation European Community dominated the market for CFCs accounting for 84% of world output. Naturally the industry was opposed to any action on CFCs but ozone depletion captured the public imagination in the United States. Many environmental and social movements were set up to push for a complete phase out of CFCs. Surprisingly, Europe did not have an equivalent movement notwithstanding the fact that Europeans were at the forefront when it came to environmental causes such as acid rain and oil spills.
However on both sides of the Atlantic, industries that produced or used CFCs joined hands to fight against any action on the production and use of CFCs. United in cause, they mobilised resources to promote research that questioned the role of CFCs in depleting the ozone layer. CFC manufacturing and using companies also engaged in public relations exercises to highlight scientific uncertainty in the link between CFCs and the ozone layer. Eventually public pressure in the United States led to the authorisation of the Clean Air Act to combat CFC use. American companies were forced to comply but they remained envious of their European and other counterparts who gained market share at their expense. Led by efforts of Dupont, American companies came up with a range of alternatives to CFCs which included HFCs. The large variety of HFCs developed for different uses meant that the Dupont (and other companies) could not benefit from economies of scale. This was eventually turned into an advantage with a sweeping increase in the price of HFCs. The UN action on CFCs which finally got the European industry in the net took much longer as it culminated only in 1985 with the Vienna convention on Protection of the Ozone Layer. The Montreal Protocol on substances that depleted the ozone layer was agreed in 1987 and came into force in 1989. For environmental activists the Montreal Protocol was a case study in successful regulation of environmental pollution but for the industry it was just a new business model in which profits originated in coalitions of the green and the greedy. Since then, American, European and British chemical companies have successfully reinvented themselves as evangelists of environmental protection. That they were once the devils that dirtied in the first place is immaterial under this paradigm. What is important is not saving the ozone layer or saving the planet but having the right to identify a ‘problem’ and then ensure that you have the right to ‘solve’ the problem. If today’s solution becomes tomorrow’s problem, it is just the beginning of another cycle of gains. This is key to understanding what is going on today with regard to HFCs.
When the Montreal Protocol was being rolled out, the use of CFCs in India and China were big concerns. At that time, India’s use of CFCs was said to be rising at 30% per year and China was said to supply refrigerators to 200 million households. The continued use of CFCs by India and China on account of inability to pay for alternatives was interpreted as environmental blackmail. The third world as they were labelled back then, was seen to be saying, ‘pay up or we will pollute’. Some support was offered and eventually the poor countries caved in. Let us now revert back to the war on HFCs.
In September 2013, Brazil, South Africa, India and China, known as BASIC group of nations were said to be in agreement with India's stated position that unless there was a cost effective and environmentally sound technology, the proposal seeking phasing out of HFCs could not be accepted. Ministers from these countries agreed that HFCs should be guided by the provisions of UNFCCC and Kyoto and not Montreal Protocol. The United States pushed India hard – first through Todd Stern, US special envoy on climate change and then through President Obama who acted as marketing agents for American companies which manufactured most of the expensive new alternatives to HFCs. India finally succumbed but only after all other members of the BASIC group succumbed. India’s preference for Kyoto over Montreal is easy to explain. Montreal Protocol forced it to change at huge expense while Kyoto has not been even remotely successful. The reason why the Montreal Protocol succeeded is a widely researched subject but there is a simple reason which is often ignored. The Montreal Protocol offered huge gains for the United States (through its chemical companies) while the Kyoto Protocol offered no such benefits. The Montreal Protocol was resurrected to combat HFC as it carried a huge pay off to the United States through its chemical companies. The United States can come out as the Baptist promoting green values while its bootleggers (chemical companies) profit from new products and markets. This is not a game of environmental ethics. It is a pure and simple game of interests. India will remain a loser in the game as long it fights using the superficial armour of the poor. It needs battle hardened commercial weapons of mass destruction fashioned out of knowledge. The right to cool the planet belongs to those with the right dirty it and the right to clean-up is as profitable as the right to dirty. These rights are derived from fundamental knowledge of materials and how they can be extracted and combined to produce new materials. India needs look no further than the commercial of a popular detergent to understand this game: in the detergent business it pays to get clothes dirty first!
Views are those of the author
Author can be contacted at [email protected]
POWER
Investment in the Power Sector: A Convenient Tool for upward Revision of Power tariffs
Ashish Gupta, Observer Research Foundation
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I |
ndeed it is true that the services provided to the citizens of the country must be complimented with correct prices. The power sector is no exemption and the sector is always criticised because of distorted pricing prevailing in the sector. There have been many reports prepared by government agencies highlighting the urgent need for reforming the power sector covering the whole spectrum of the value chain starting from generation to the distribution. The Shunglu Committee report is one of the good reports as it has put forth many credible ways for reforming the power sector. Though the report was well received by all the stakeholders the issues highlighted in the report have not been followed up. But one point which attracted most interest among all the power utilities was the distorted electricity tariffs prevailing in the country. They left aside all the other recommendations and focussed on low electricity prices irrespective of whether they are efficient of inefficient. Now the discourse of low tariff is becoming a norm and every utility is craving for higher tariffs. For some states the demands may be genuine but it does not hold true for the whole of India.
Even the reports prepared by analysts and think tanks bat for higher electricity prices calling attention to the fact that no investment is coming towards the power sector. Certainly no one wants to talk about the inefficiency prevailing in the sector and how to remove them. The power sector is a rent seeking industry which is compared with the revolutionised telecom industry. Every now and then one can find a discourse on how to replicate the telecom industry model in the power sector. Since every household has a mobile phone these days even in the remotest areas, it is assumed, even by the intelligent thinking minds, that the people of India can pay any amount called out by the power utilities.
The recent report of Asian Development Bank on “Energy Outlook for Asia and the Pacific” highlighted that India will need US $ 2.3 trillion investment in the energy sector by 2035. The report highlighted many genuine concerns and issues and at the same time pressed for building a more reasonable energy price system, enhancing the efficiency of the existing energy equipment and diversifying the energy basket. As we are aware, the power sector is in dire need of investment and therefore the investment figure cited in the report will become the trigger point for every utility to pressure State Electricity Regulatory Commissions for approving tariff revisions.
Indeed investment is a genuine concern and we need to formalise a mechanism backed with proper policy framework and incentives to induce investors to invest. But at the same time lack of investment is not the genuine benchmark for highlighting low electricity tariffs. The question here is whether the electricity tariffs prevailing in India is really too low or is the call for higher tariff corporate extortion?
Electricity Cost Vs Relative Purchasing Power
|
Country |
India |
Japan |
USA |
UK |
Germany |
|
Electricity Cost in US cents/ kwh (2011) |
8 |
26 |
12 |
20 |
35 |
|
Electricity prices relative to purchasing power in US cents/ kwh (2011) |
19 |
19 |
12 |
20 |
32 |
Source: IEA, EIA, UN, & theenergycollective article
The cost of electricity is on the higher side in the other nations but if we take into account the relative purchasing power altogether the different picture emerges. It is quite visible from the table above that the electricity prices in India are the highest among the nations in terms of purchasing power parity (roughly two and a half times). Therefore how the notion of “low electricity tariff” fits into the agenda is not clear. Secondly with whom we are comparing ourselves?
Per capita Income (US $)
|
Country |
India |
Japan |
USA |
UK |
Germany |
|
Per Capita Income |
1,509 |
45,903 |
48, 812 |
38,974 |
44,021 |
Source: World Bank
From the per capita income table, India is in no way comparable to any of the developed nations but tariff revisions in the country is felicitated purely on the practices prevailing in developed nations. Leaving aside these developed nations, we must also note that we are not even comparable with China which has a per capita income of US $ 5,445 (roughly four times of India) and electricity price relative to their purchasing power is US cents 12/ kwh (7 cents less than India). Therefore, why the idea of low tariffs is being mooted is simply not comprehendible. Justification for seeking tariff revision on the same ground holds no merit. Also the assumption that consumers in India especially the rural class (most often seen as culprits) are rich enough to accommodate any hike is baseless.
Why is there a push for tariffs revision on the basis of false arguments? Why do we want to accommodate vested interests by showing the best models working elsewhere in the world? Why is there no discourse on reducing the tariffs?
The problem with India is that we do have the answer for all the questions mentioned above but we simply do not want to implement them in the right spirit. The benefit of cheap power is always availed by the rich at the cost of the poor. We have brought out this issue in our column “Discoms: Beneficiary or Victims? Vol 10, issue 7”, where we have shown how discoms in Delhi suffered losses from the posh localities like South extension, Saket, Vasantkunj etc. There is no need to reiterate that our discoms are subsidizing the rich at the cost of the poor. Every year the tariff is approved depending upon the submission of Average Revenue Requirement (ARR) by the discoms. Interestingly this ARR is increasing every year inspite of their claimed efficiency. The problem persists not because of distorted prices but due to inefficiency and corruption. Isn’t it?
The point here is why are we shying away from addressing the inefficiency prevailing in the power sector? Even the policy makers, who openly support tariff hike in the name of inevitability, avail of free power. As a matter of fact, India must try to base its decision on viability rather on international models. The need of the hour is to learn lessons from the best practices and try to replicate the model in the most economically credible manner. Needless to say, the reality is that the leaks in the power sector that go to rent seekers is remunerative and the resistance to change is too strong.
Views are those of the author
Author can be contacted at [email protected]
DATA INSIGHT
Coal Import Export Scenario of India
Akhilesh Sati, Observer Research Foundation
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Country |
Quantity (Million Tonnes) |
Value (` Million) |
||||
|
2010-11 |
2011-12 |
2012-13 |
2010-11 |
2011-12 |
2012-13 |
|
|
Coal Imports |
||||||
|
INDONESIA |
35.94 |
55.26 |
80.30 |
1,34,788 |
2,58,417 |
3,21,736 |
|
AUSTRALIA |
15.95 |
27.79 |
27.00 |
1,71,194 |
3,66,256 |
2,82,348 |
|
SOUTH AFRICA |
11.21 |
12.22 |
17.64 |
57,273 |
77,107 |
98,371 |
|
USA |
1.77 |
2.97 |
6.10 |
19,829 |
39,746 |
52,672 |
|
NEWZEALAND |
0.80 |
0.96 |
0.97 |
7,704 |
12,986 |
10,480 |
|
Others |
3.25 |
3.64 |
5.55 |
24,708 |
33,864 |
44,521 |
|
Total imports (1 to 6) |
68.92 |
102.85 |
137.56 |
4,15,496 |
7,88,376 |
8,10,128 |
|
Coal Exports |
||||||
|
CHINA |
2.3 |
0 |
0 |
7,024 |
0 |
0 |
|
BANGLADESH |
1.2 |
1.2 |
1.5 |
2,463 |
3,092 |
5,177 |
|
NEPAL |
0.7 |
0.7 |
1.1 |
1,210 |
2,363 |
1,983 |
|
JAPAN |
0.2 |
0 |
1,865 |
0 |
||
|
BHUTAN |
0 |
0.1 |
0.1 |
23 |
329 |
428 |
|
Total Exports (1 to 5) |
4.4 |
2 |
2.7 |
12,585 |
5,784 |
7,588 |
Source: Lok Sabha, Un-starred Question No. 325 & 432
Oil & Gas: India’s Milestones
Dinesh Kumar Madhrey, Observer Research Foundation
Continued from Volume X, Issue 17......
1989:
OIL discovered commercially exploitable gas in Tanot (Mata Temple) Structure in Rajasthan. During 1989-90 oil production reached a peak at 692,000 bpd and the India’s oil dependency was reduced to 32 per cent.
1989-90:
Western offshore production reaches a peak of 21.72 MMT. South Heera field was discovered in Mumbai offshore.
1990:
Till 1990, the government had invited four rounds of bidding for blocks. One noticeable feature of the fourth round was that Indian private companies were allowed to participate along with foreign partners for the first time. However no major field was discovered by these partnerships.
1991-1994:
The liberalized economic policy adopted by the Government of India in July 1991, sought to deregulate and de-license the core sectors (including petroleum sector) with partial disinvestments of government equity in Public Sector Undertakings and other measures. As a consequence thereof, ONGC was re-organized as a limited Company under the Company's Act, 1956 in February 1994. From 1991 to 1996, the government had held five rounds (fourth, fifth, sixth, seventh and eighths) of bidding for exploration acreages offering as many as 126 blocks, ranging in sizes from a few hundred square kilometres to over 50,000 sq kilometres. 11 contracts were awarded. Some of the important companies which have been either awarded contracts or participated in the exploration round were: Shell, Occidental, Amoco, and Enron. In this period, the process of opening up the oil & gas sector gathered momentum and was more stream-lined in approach.
1992:
The Government offered a more attractive option to foreign and private companies. However this culminated in generating controversy concerning the Production Sharing Agreements (PSAs) offered in 1994. And ONGC undertook exploitation of Coal Bed Methane (CBM) potential in Damodar valley in 1992.
1993:
After the conversion of business of the erstwhile Oil & Natural Gas Commission to that of Oil & Natural Gas Corporation Limited in 1993, the Government disinvested 2 per cent of its shares through competitive bidding. Subsequently, ONGC expanded its equity by another 2 per cent by offering shares to its employees.
to be continued…
NEWS BRIEF
NATIONAL
OIL & GAS
Upstream
RIL to invest $3.2 bn to bring D34 gas discovery to production
October 15, 2013. Reliance Industries Ltd (RIL) has said it will invest USD 3.2 billion in bringing to production the satellite D34 gas discovery to reverse the decline in output at the Bay of Bengal KG-D6 block. RIL said the D34 discovery, which holds 1.2-1.4 trillion cubic feet of gas reserves, will start producing in four years with peak output of 12 million standard cubic meters per day (mmscmd). The reserves in D34 discovery are one-third of the revised inplace volumes at the main D1&D3 gas fields in KG-D6 block. The envisaged peak output is more than D1&D3's current production of 10 mmscmd. RIL and its partner BP plc of UK plan to quickly bring satellite fields in the KG-D6 block to production to help reverse the decline in output. The duo are investing USD 1.529 billion in four other satellite fields that can produce 10 mmscmd. D34 and the four satellite are expected to begin producing around the same time in 2017-18. RIL said it will drill 8 development wells on D34 and lay a pipeline to take the gas to the existing facilities of D1-D3 fields from where it will be transported onshore. (economictimes.indiatimes.com)
RIL, PdVSA to study development plan for Ayacucho Block 8
October 11, 2013. Reliance Industries Limited (RIL) and the Venezuelan state oil company, Petroleos de Venezuela, SA (PdVSA) have signed a Joint Study Agreement for Ayacucho Block 8 in Orinoco Oil Belt in Venezuela. As per the study agreement, both the parties will jointly evaluate the development plan for Ayacucho 8. RIL and PdVSA have also extended the term of the Memorandum of Understanding (MOU) signed between the parties last year by one year for continued cooperation. The signing of the Joint Study Agreement for Ayacucho Block 8 and the extension of MOU marks further strengthening of the long standing relationship between RIL and PdVSA as well as between India and Venezuela. (www.rigzone.com)
IOC says it was first company to cross ` 1 tn qtrly turnover
October 15, 2013. Indian Oil Corp (IOC) said it was the first Indian company to cross a trillion rupee turnover in a quarter and "not Reliance Industries". RIL had reported a turnover of ` 106,523 crore in July-September quarter and it was hailed as the first company to cross the one trillion rupee turnover in a quarter. (economictimes.indiatimes.com)
IAF ends IOC monopoly, launches bidding for ATF
October 9, 2013. High fuel costs continue to bite into the defence budget. After austerity measures in fuel use, the Indian Air Force (IAF) has resorted to hard bargaining and launched competitive bidding for jet fuel, ending the monopoly of Indian Oil Corp (IOC). Rising fuel cost has prompted IAF to do some hard bargaining with IOC and launch competitive bidding for jet fuel supply, ending the state-firm's dominance on supply of ` 4,000 crore worth of fuel for aircraft and lubricants. (economictimes.indiatimes.com)
Transportation / Trade
Glencore to supply crude to IOC from Sandesara Group's Nigerian assets
October 14, 2013. Indian Oil Corp (IOC) tied up with global trader Glencore to procure Okwuibome oil, which is produced by Sandesara Group in Nigeria. Sandesaras' privately held Sterling Energy and Exploration Production Company (SEEPCo) operates four blocks covering over 2,000 square miles in Niger Delta of Nigeria. The group is claiming to be the first Indian operator and oil producer in Nigeria, which is member of Organization of the Petroleum Exporting Countries. Glencore will supply 5 million barrels, including a million barrels of Okwuibome oil, to IOC's subsidiary Chennai Petroleum Corporation. A group executive confirmed that SEEPCo sells its produces to Glencore that has tied up with IOC. (economictimes.indiatimes.com)
GAIL selling $65 mn worth of stake in China Gas
October 11, 2013. The state-run gas company GAIL is selling about $65 million worth of stake in China Gas Holdings Ltd through block trade, according to a term sheet. GAIL is selling 60 million shares in China Gas at a price range of HK$8.2 to HK$8.3 per share, the term sheet showed. (economictimes.indiatimes.com)
Policy / Performance
Govt delaying price & allocation approvals; forced to sell CBM gas at $13/unit: RIL
October 15, 2013. Reliance Industries Ltd (RIL) has told the government it would start selling gas from its coal bed methane (CBM) blocks at $13 a unit, and will not wait endlessly for official approval because the contract says the market-discovered price is deemed to be approved in 60 days. It has accused the oil ministry of trying to delay the approval of the price of CBM blocks in Madhya Pradesh although the company had invited bids in February 2012 and discovered the price of $12.93 per unit. The last query from the ministry came on December 26 last year, which the company had replied to the following day, but the company did not receive any communication until the government sought some more details in a letter on August 22. If the government does not send the list, RIL would sign sales agreements on the basis of bids they made last year. Reliance is unable to develop the CBM fields in Madhya Pradesh pending pricing and allocation approvals by the government since 2011. The peak output from the two fields is about 3.5 million metric standard cubic meters per day. According to the letter, the company first sought the government's approval for its pricing formula on September 16, 2011 based on competitive pricing received from consumers along the Hazira-Vijaipur-Jagdishpur (HVJ) gas pipeline. Later, the company also validated the pricing through an open bidding on February 21, 2012. (economictimes.indiatimes.com)
No petrol price revision this fortnight
October 15, 2013. Petrol prices will remain unchanged this fortnight as oil companies decided to monitor movements in international oil rates and the value of the rupee before taking a decision. Petrol prices were due to be changed as per the practice of changing rates every fortnight based on trends in the international oil market and the rupee-dollar rate in the preceding 15 days. International gasoline, against which domestic petrol rates are benchmarked, has shown a firming trend in recent days. The rupee, too, has depreciated marginally against the dollar. Petrol prices were last revised on October 1, when it was cut by a steep ` 3.05 per litre, excluding local taxes. After including value added tax (VAT), the price of petrol in New Delhi was reduced by ` 3.66 to ` 72.40 per litre. (economictimes.indiatimes.com)
Delhi petrol pump outlets to close on Oct 28 to protest VAT
October 14, 2013. Petrol pump operators in the national capital said they will shut their fuel outlets for a day on October 28 in protest against the Delhi government's refusal to reduce value added tax (VAT). VAT on diesel in Delhi is 12.5 per cent compared with about 9 per cent in Haryana, which makes its lucrative for truckers to tank up in the neighbouring state. All the 400 petrol pumps in Delhi will remain closed on that day and no diesel, petrol or CNG would be sold, Delhi Petrol Dealers Association Atul Peshwaria said. A litre of diesel is ` 1.50 costlier in Delhi due to higher VAT as compared to Haryana, he said. He claimed the Delhi government is losing almost ` 400 crore in revenue due to loss of business to Haryana. (economictimes.indiatimes.com)
RIL seeks gas price clarity before boosting KG-D6 investments
October 14, 2013. Reliance Industries Ltd (RIL) said further investment at its key gas field to reverse falling output rests on a rise in domestic gas prices, after subdued global demand for fuel narrowed its refining margins in the second quarter. Reliance and peers such as state-run IOC are likely to see refining margins tighten further in the near-term as demand growth lags refining capacity additions, which analysts expect in the US, China and the Middle East. Natural gas output from Reliance at its key Krishna Godavari D6 field, in which Britain's BP Plc has an equity stake, has declined to 14 million cubic metres per day (mmscmd). (economictimes.indiatimes.com)
Drive against cooking gas misuse helps govt save $1 bn in imports
October 14, 2013. The government's clampdown on diversion of subsidised cooking gas for commercial use has reduced demand by 1.5 per cent and prompted oil firms to cancel 0.9 million tonnes of LPG imports worth $1 billion. The government has capped the number of subsidised cylinders to nine per year and cut duplicate connections to block diversion of subsidised cooking fuel for commercial use. It has also weeded out fake connections with use of identification documents such as Aadhaar card. Oil companies have already cancelled import orders of about 0.9 million tonnes of LPG, which is worth about a billion dollar, the oil ministry said. India's annual consumption of LPG is about 15 million tonnes. It imports 6 million tonnes of the fuel to meet its demand. Cooking gas consumption has dropped 0.5 per cent in August and 1.6 per cent in the first five months of the fiscal year, according to the Petroleum Planning and Analysis Cell (PPAC). Recently, the court had ordered that no services should be denied to a person who doesn't have Aadhaar card. The government and oil companies plan to argue in the court that consumers will continue to get cooking gas cylinders even without Aadhaar, but at the market rate of ` 1,004, not the subsidised price of ` 410.50. (economictimes.indiatimes.com)
Policy on O&G survey data sale likely by Oct-end
October 14, 2013. Opening an entirely new business stream in the oil and gas exploration and production sector, the government plans to grant 10-year exclusivity rights for geological data mined through a speculative survey. A comprehensive speculative survey policy would come out by the end of this month, Petroleum Secretary Vivek Rae said. The policy is aimed at attracting global companies for data acquisition. The government will also get access to the data once it is ready. This policy, along with the national data repository (NDR), would be a precursor to a new system of a continuous bidding process for oil and gas blocks, called an Open Acreage Licensing Policy (OALP) regime. Here, companies would get the freedom to select any block on offer any time, compared to the existing New Exploration Licensing Policy (NELP), where the government puts a particular area up for bidding. Under the speculative survey policy, India would follow a revenue sharing model. Currently during the roadshows for NELP, data is sold by the government. Under the new model, an application fee would be charged, either as a fixed amount or depending on the area to be surveyed. (www.business-standard.com)
Govt extends GAIL CMD BC Tripathi's tenure in the office
October 11, 2013. The government has extended Gail India Chairman & Managing Director BC Tripathi's tenure by another five years, nine months before he would complete his tenure, the oil ministry said. Tripathi is the first chairman of state oil major to get an extension in about a decade. According to a recent government order, Tripathi will head the state gas utility till July 31, 2019. Tripathi helped the gas transportation major expand and grow to become a 'maharatna' by aggressively acquiring energy assets abroad, particularly shale gas acreages in the US. (economictimes.indiatimes.com)
West Bengal accepts IOC's financial bid for HPL
October 11, 2013. The West Bengal government accepted Indian Oil Corp (IOC)'s financial bid for Haldia Petrochemicals Ltd (HPL), industry minister Partha Chatterjee said. He also said that the availability of naphtha, a primary input for HPL, has plagued the plant because of international price fluctuations. Deloitte India is the official transaction advisor to the state government and is managing the 39.99% HPL stake sale on its behalf. There is speculation that the reserve price was set at 20-28.80 a share and 24-31 was what IOC bid. The premium that IOC offered will be crucial in determining how the deal plays out. The Chatterjee Group (TCG), which is a 41% stakeholder in HPL and has the right of first refusal, will have to match IOC's offer in case it decides to choose the option to do so. TCG will get a month to decide and another month to pay up. IOC said that if it gets the stake, HPL won't have to worry about its naphtha needs. Incidentally, IOC's Haldia refinery currently supplies about 40-50,000 tonnes of naphtha per month to HPL, which is about 60% of its production. (economictimes.indiatimes.com)
Petroleum University to host international conference on energy
October 10, 2013. Pandit Deendayal Petroleum University that will soon host BP Plc chief executive Bob Dudley and Gujarat Chief Minister Narendra Modi at its convocation ceremony is gearing up for yet another high profile event. Its School of Petroleum Management is gearing up to host an international conference on energy and infrastructure in the second week of January 2014. The fourth edition of the conference is aiming at deliberating and documenting key contemporary issues relevant to managing the energy and infrastructure sector with reference to the emerging economies. The university has also called for papers and participants will make their submissions by October 21, 2013. The research papers will deal with issues such as business & techno-managerial aspects & prospects, regulatory & policy, marketing, operation management, financial and accounting, social and human resource among others. Besides Indian scholars and researchers, the conference will witness the participation from international institutions like Collins College of Business of the University of Tulsa and CT Bauer College of Business of University of Huston. (economictimes.indiatimes.com)
RIL may retain $10 bn oil fields; Ministry to seek cabinet nod
October 10, 2013. The oil ministry will seek cabinet approval for a general amnesty scheme for oil and gas field operators, which will allow Reliance Industries Ltd (RIL) to retain fields worth $10 billion, which regulatory authorities want it to surrender saying the contractor did not meet deadlines. Apart from Reliance, several other companies are involved in disputes and are unable to develop proven oil and gas fields because the directorate general of hydrocarbons (DGH) is reluctant to take a decision on issues that are not clearly articulated in the contracts. The Directorate General of Hydrocarbons (DGH), which wants Reliance to surrender over 80% of its KG-D6 block including eight gas discoveries. Reliance blames the DGH for the delay. The oil ministry has also finalized another cabinet note to disallow increased price of gas, produced from RIL's old fields in the D6 block, provided it is proved that the operator has "willfully and deliberately" done so. Cabinet's intervention is now required because both RIL and DGH are firmly refusing to budge from their stated positions, blaming each other for the deadlock. (economictimes.indiatimes.com)
OMCs expansion plans in Southern region welcome sign: Rosaiah
October 10, 2013. Observing that the Southern region is poised for a promising growth with announcement of Petroleum, Chemical and Petro-Chemical Investment Region, Tamil Nadu Governor K Rosaiah said major Oil Marketing Companies (OMCs) undergoing expansion plans in the region is a "welcome sign". The Cabinet had approved the Tamil Nadu Government's proposal to set up a Petroleum Chemicals and Petrochemicals Investment Region (PCPIR) in Cuddalore and Nagapattinam districts. PCPIRs have also been approved in Andhra Pradesh, Gujarat, West Bengal and Orissa. Rosaiah said with expansion plans undertaken by OMCs, opportunities would open for the allied service sectors. (economictimes.indiatimes.com)
OMCs want to use Aadhaar cards for LPG supply
October 9, 2013. Oil Marketing Companies (OMCs) Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation Limited have urged the Supreme Court to allow them to use Aadhaar cards to restrict LPG subsidies to those entitled to it on the grounds that they are facing "severe under-recoveries". The companies claimed that the court's order directing them to stop using the Aadhaar cards to plug subsidy leaks would immediately bring to a halt the direct cash transfer scheme being introduced across 97 districts in the country. Under the scheme, all LPG consumers need to buy cylinders at the market price and those entitled to subsidy will get the amount credited to their Aadhaar-linked bank accounts. The three companies claimed that this will reduce the extent to which domestic LPG is diverted to commercial use and plug substantial leaks in the subsidies, which amounted to ` 39,558 crore in 2012-13, ` 29,997 crore in 2011-12 and ` 21,772 crore in 2010-11. The uncertainty will force them to revert to the old system in the 54 districts where the scheme has already been implemented, the companies claimed, adding that continuing both schemes would lead to extreme confusion, cost overruns and wastage of resources. The companies urged the court to clarify its order that no consumer would be denied domestic LPG cylinders at market rates, whether or not the consumer held an Aadhaar card, but if a consumer wanted to avail benefit of subsidy, he or she should hold an Aadhaar card.
The companies said the decision to phase out subsidies was taken after an expert committee recommended it. They also claimed that the sale of domestic LPG in 20 districts had gone down by 7.73 lakh cylinders from June to August, compared with the year-ago period, after the implementation of the scheme. The sale of commercial LPG has gone up by 0.97 lakh cylinders during this period, the companies said. About 45,000 multiple connections have been detected and ` 24 crore can be saved once these are blocked, the companies told the court. (economictimes.indiatimes.com)
Cabinet to consider additional penalty on RIL
October 9, 2013. The Cabinet may consider an Oil Ministry proposal to deny Reliance Industries Ltd (RIL) a hike in natural gas prices on top of USD 1.786 billion penalty it is already imposing as punishment for producing less than targets. The Ministry is proposing that RIL should be forced to sell natural gas from the currently producing D1&D3 fields in KG-D6 block at current rate of USD 4.2 per million British thermal unit even though the rest of the country will move to a new pricing regime that effectively doubles rate to USD 8.4. (economictimes.indiatimes.com)
Moily and oil ministry officials save 600 litres of fuel by using public transport
October 9, 2013. Oil Minister Veerappa Moily said the ministry alone would save about 600 litre of petrol and diesel worth over ` 40,000 by using public transport. The minister had announced that he would travel by bus or metro every Wednesday starting October 9 and all officials will follow the suit. The voluntary use of public transport once in a week is part of Moily's mega fuel conservation campaign launched, which aims to save $5 billion oil import bill. Other measures include, staggered office timings for government employees and encouraging bicycle for short distance travel. But, executives of state-run mega oil corporations criticized the dictate. Moily has also sought cooperation from his cabinet colleagues to conserve fuel. The oil ministry decided to launch the fuel conservation campaign after its oil import bill soared because of rising international crude oil rates and record depreciation in the value of rupee in August. (economictimes.indiatimes.com)
POWER
Generation
Neyveli Lignite plans for growth in power generation capacity
October 15, 2013. Neyveli Lignite plans to take its installed power generation capacity to 4,240 MW by the end of the current fiscal, on the back of ongoing power projects. The Tamil Nadu-based lignite miner has an installed capacity of 2,740 MW at present. The TPS-II expansion project, being implemented at a cost of about ` 2,030 crore is likely to be operationalised by March 2014. The Centre had earlier approved implementation of coal based 2x500 MW Thermal Power Project at Tuticorin at an estimated cost of ` 4,910 crore. (www.thehindubusinessline.com)
NTPC power plants less affected due to Cyclone Phailin
October 14, 2013. Power generation from NTPC's thermal plants in Odisha and Andhra Pradesh was not affected much due to Cyclone Phailin, though overall distribution in some parts of southern India was impacted. As far as power transmission from Power Grid's network is concerned, the company said it is not facing any difficulty. However, four transmission grids run by the Odisha state government were affected. Power Ministry had said that there were some disturbances in electricity transmission due to the cyclone but were attended to in time. In Andhra Pradesh, the load was reduced to about 9,000 MW against normal demand of 10,000 MW and in Odisha it was 600 MW against the normal demand of 2,800 MW. (economictimes.indiatimes.com)
Indian firm to build power plant in Myanmar
October 9, 2013. A multi-national joint venture between India, Myanmar and Singapore will build a 500-MW coal-fired power plant in Myanmar's Yangon region. The power project will be jointly implemented by Myanmar's Ministry of Electric Power, Orange Powergen Pvt Ltd of India, Global Advisors Pte Ltd of Singapore and Myanmar's Diamond Palace Services Co Ltd through a build-operate-transfer system. The plant will increase electricity supply to the Yangon region. (www.newstrackindia.com)
Power generation to be doubled to 4 GW by next year: Bihar CM
October 9, 2013. Bihar Chief Minister (CM) Nitish Kumar said that generation would be doubled to 4000 MW in the state by next year. Kumar said that work was underway to start generation in one unit at the 660 MW NTPC plant in Barh. Kumar said that under the Rajiv Gandhi rural electrification project, 16 KV and 26 KV transformers were being installed. (economictimes.indiatimes.com)
Avantha Power synchronises 600 MW unit of Raigarh plant in Chhattisgarh
October 9, 2013. Avantha Power & Infrastructure has synchronised its first unit of 600 MW at Raigarh in Chhattisgarh, making way for its commercial operations to start soon, the company said. Synchronisation refers to the first stage of commissioning, where the plant is run on oil to test if it is ready to operate commercially. The Avantha Group's power utility's capacity now stands at 626.19 MW. Avantha Power began construction in August 2010 and successfully executed the project in 38 months. BHEL has supplied the boiler, turbine, and generator equipments. Avantha Power has another 1,860 MW under various stages of construction and an additional 1,320 MW under planning. Avantha Power currently has a plant at Malanpur, Madhya Pradesh with an installed capacity of 26 MW. (economictimes.indiatimes.com)
NTPC may take over some struggling power projects
October 9, 2013. NTPC, which has been approached by banks, financial institutions and consultancy firms for taking over ailing power projects, has decided to buy out those it finds fit. Damodar Valley Corporation, a central sector company, on the other hand, is developing a model under which the lender would be made an equity holder, while it will be the operator with a management stake. A couple of large power projects that had used Chinese equipment have realised that these equipment won't last in the long run and now they want to sell these off. (economictimes.indiatimes.com)
Transmission / Distribution / Trade
Power Ministry approaches CCEA to hive-off PGCIL's grid operating unit POSOCO
October 11, 2013. The power ministry has proposed to hive-off electricity grid operating subsidiary of Power Grid Corp of India Ltd (PGCIL) into an independent company to avoid conflict of interest in the power transmission sector. The ministry has circulated a note for consideration of the Cabinet Committee on Economic Affairs (CCEA) to provide autonomy to Power System Operation Corporation (POSOCO) that will operate the electricity grid, penalise distribution companies and power generators for indiscipline and coordinate with regional grid managing authorities. Inter-state and intra-state power transmission projects worth ` 22,000 crore are currently either under bidding or have just been awarded. The government is also expected to invite global bids in the next two months to set up another dozen inter-state power transmission projects worth ` 20,000 crore. Private firms like Reliance Infrastructure, Sterlite Industries and L&T Infra have been awarded power transmission projects in the last two years.
Companies like Sterlite Industries, L&T infra, PowerGrid Corp of India, Tata Projects, Kalptaru Power Transmission, UK-based Balfour Beatyy Infra and Spain's Isolux Corsan are among the companies bidding for transmission projects. Presently, POSOCO facilitates transfer of power across the country and trans-national exchange of power by coordinating functioning of national and regional power systems. The wholly owned subsidiary of Power Grid Corp supervises all grid constituents and also ensures infrastructure planning and implementation for smooth operation. (economictimes.indiatimes.com)
Kalpataru Power Transmission bags ` 6.2 bn orders
October 10, 2013. Kalpataru Power Transmission has bagged orders worth ` 620 crore, the Mumbai-based engineering, procurement and construction company said. These orders include a ` 463 crore order from Tamil Nadu Transmission Corporation for setting up a transmission line. The company also announced bagging a ` 94 crore project for setting up a 160 km long liquefied petroleum gas pipeline from HPCL. (economictimes.indiatimes.com)
Alstom T&D India eyes major share in transmission business
October 9, 2013. Bullish on prospects about the domestic power sector, transmission solutions provider Almost T&D India plans to secure a major share in the Indian market. The company has bagged two contracts worth ` 225 crore from the Power Grid Corporation of India Ltd for setting up transformers. (economictimes.indiatimes.com)
Odisha govt pegs loss to power sector at ` 9 bn
October 15, 2013. Odisha government pegged at ` 900 crore the loss to the power sector in the state according to a preliminary assessment, after cyclone 'Phailin' severely damaged infrastructure particularly in worst-hit Ganjam district. Of the projected figure, loss in Ganjam district alone is estimated in the range of ` 500-600 crore. Low transmission line of 34,000 kms length and high tension line of 3,700 kms have been completely damaged. At least 13 electric sub-stations in Berhampur town and three substations in Chhatrapur have been completely damaged and require new machinery. Besides drawing attention of Prime Minister Manmohan Singh to the damage to the power infrastructure due to the cyclone, Chief Minister Naveen Patnaik also wrote a letter to Union Minister of State for Power Jyotiraditya Scinda requesting him to support the state government by sending technical experts. (economictimes.indiatimes.com)
RGPPL sends urgent message to PowerMin on Dabhol plant
October 15, 2013. Ratnagiri Gas and Power Pvt Ltd (RGPPL), operator of the beleaguered Dabhol power plant, has sent an urgent message to the Power Ministry saying that it may become a Non-Performing Asset unless domestic gas supplies are restored or Maharashtra agrees to buy electricity produced from costlier imported gas, LNG. The 1,967 MW plant has not been operating since August due to stoppage of natural gas supplies from domestic fields. (economictimes.indiatimes.com)
NHPC's ` 10 bn tax-free bonds issue open on Oct 18
October 14, 2013. State-owned power producer NHPC's first ever tax-free bonds issue worth ` 1,000 crore was opened for subscription on October 18 and close on November 11, this year. A K Capital Services and Axis Capital are the lead managers while Karvy Computershare is the registrar to the issue. The country's largest hydro power is awaiting approvals for about ten projects having total capacity of 8,801 MW. Further, NHPC is planning to join hands with private sector players for developing hydel power projects. The state-owned hydro power producer is also diversifying into thermal, solar and wind energy projects. The company plans to develop grid connected 50 MW wind and 100 MW solar power projects. Currently, NHPC has an installed power generation capacity of 5,702 MW. (www.business-standard.com)
Power Ministry proposes relaxation in norms for 25 projects
October 14, 2013. The power ministry has proposed a relaxation in norms for 25 big projects that are being implemented at a cost of ` 1.61 lakh crore by companies including NTPC, Jindal Power, Reliance Power and Lanco Infratech to help them avail fiscal benefits under the mega power policy. The ministry has asked the Cabinet Committee on Economic Affairs (CCEA) to grant more time to the companies to sign power purchase agreements with distribution companies and allow tax benefits proportionate to the tied-up capacity. (economictimes.indiatimes.com)
India needs $2.3 tn investment in energy sector by 2035: ADB
October 14, 2013. India's energy sector will need $ 2.3 trillion in investments by 2035, accounting for bulk of the energy share in South Asia, according to the Asian Development Bank (ADB). In its 'Energy Outlook for Asia and the Pacific' report released, ADB also said that energy pricing is a "core problem" in India. The projections are for a period of 25 years from 2010 to 2035. Besides India, other nations in the South Asia region are Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka. In the business-as-usual scenario, the final energy demand of India is projected to increase at an annual rate of 2.7 per cent from 2010 to 2035, a slower rate compared with projected GDP growth rate of 5.7 per cent during same period. Coal will remain dominant through 2035, driven by the power sector. India will continue to account for the bulk of the energy share in South Asia at 92.5 per cent in 2035, the report said. With energy demand expected to grow much faster than domestic energy production, the economic impacts of importing fossil fuel, oil, gas and coal are rising, and energy security has become a policy priority for India, ADB said. As per the report, electricity price controls have also curtailed the motivation to invest in new power plants, further hurting electricity supply. (economictimes.indiatimes.com)
Policy on underground coal gasification likely soon
October 13, 2013. The government is likely to come out with a policy on underground coal gasification soon, according to the Coal Ministry. Underground coal gasification is a method of converting coal still in the ground to combustible gas that can be used for various things, including power generation. The Coal Ministry had in February moved a Cabinet note on the policy and had received comments from various ministries on the same. After the policy is finalised, the blocks for coal gasification would be identified and expression of interest for allocating the blocks to the companies would be invited. Only those companies having a net worth of at least ` 200 crore would qualify to apply for those blocks. Coal Minister Sriprakash Jaiswal had earlier sought cooperation of countries like South Africa for underground coal gasification technologies. (economictimes.indiatimes.com)
Debate over Delhi's 'high' power tariffs: Why both AAP & Sheila Dikshit may be wrong
October 13, 2013. With the election commission announcing polling dates for Delhi, the state opposition parties will increase pressure on the government over electricity prices. The BJP and the Aam Aadmi Party (AAP) both claim that power tariff hikes in recent years, the most recent one being just a couple of months ago, have led to Delhi ranking high among states in terms of the cost of power to end-consumers. The ruling Congress, led by chief minister Sheila Dikshit, claims just the opposite. And the three private sector power distribution companies in the state — Tata Power, BSES Rajdhani and BSES Yamuna — under increasing criticism over high power tariffs, have taken out ads pointing to comparative power costs between Delhi and other metros and states, claiming power rates in the national capital are among the lowest in the country. Between August 2011 and August 2012, Delhi power rates rose between 51% and 63%. In July this year, just days after the Delhi Electricity Regulatory Commission approved a further tariff hike of 5% for domestic consumers (households), the Sheila Dikshit government extended a subsidy on power bills it had first granted only to poorer consumers. (economictimes.indiatimes.com)
Reliance Power appeals to CERC for tariff hike from Tilaiya UMPP
October 10, 2013. Reliance Power has sought increase in tariff from its Tilaiya project in Jharkhand due to factors including withdrawal of various duty exemptions and cost escalation on account of resettlement and rehabilitation programme. As per the petition filed by the company with CERC, Reliance Power has cited reasons including withdrawal of exemption in respect of custom and excise duties on mining equipment and fuel transportation. The petition was filed last month by Jharkhand Integrated Power Limited, a subsidiary of Reliance Power which is executing the ` 20,000 crore project. Power Finance Corporation, the nodal agency for UMPPs, has awarded four such projects. Reliance Power has bagged three - Krishnapatnam in Andhra Pradesh, Tilaiya and Sasan. Tata Power has set up a 4,000 MW plant at Mundra in Gujarat. Meanwhile, Reliance Power has already filed four petitions with the regulatory commission, seeking relief for its other UMPP at Sasan in Madhya Pradesh, on grounds of rise in construction cost and rupee depreciation. A UMPP is a power plant with a generation capacity of about 4,000 MW. (economictimes.indiatimes.com)
Haryana Power Utility to intensify pending electricity bill recovery
October 10, 2013. A government of Haryana undertaking Uttar Haryana Bijli Vitran Nigam (UHBVN) has decided to depute its nine of its senior officers to monitor recovery of arrears of connected and disconnected consumers. UHBVN caters to 2757506 customers in 11 districts covering 20,278 sq km in its jurisdiction. It is in process of improving recovery of the pending bills and incentivise the regular payers. Recently, it announced 10% rebate on the amount of last six bi-monthly bills at the end of the year for those who have paid their bills regularly for the last one year. It also amended "one time settlement scheme" of defaulting amount making it available to rural domestic consumers in those villages where at least 80% households have regular electricity connections. (economictimes.indiatimes.com)
States oppose tariff hike for Tata, Adani imported coal based power plants
October 9, 2013. Tata Power may have to wait longer for relief to its imported coal-based power projects in Gujarat as Punjab and Haryana have opposed tariff hike to the plants while the host state has set up a committee to look into the matter. Earlier, Maharashtra government had decided to take opinion from the national auditor or vigilance commission before signing a report that recommends tariff hike for the projects. The state governments' stand could also delay judgment on tariff-hike plea made by Adani Power for its imported coal- based project that is also being heard by power regulator Central Electricity Regulatory Commission (CERC). (economictimes.indiatimes.com)
INTERNATIONAL
OIL & GAS
Upstream
US becomes world’s top oil producer in 2013, PIRA says
October 15, 2013. The U.S. is expected to overtake Saudi Arabia as the world biggest total supplier of oil this year when natural gas liquids and biofuels are added to crude, PIRA Energy Group said. The U.S. is projected to produce an average of 12.1 million barrels a day of liquids in 2013, 300,000 barrels a day higher than Saudi Arabia and 1.6 million more than Russia, according to PIRA. The U.S. is forecast to pump 7.4 million barrels a day of crude and condensate, 2.5 million of natural gas liquids and 1 million of biofuels, according to PIRA. Saudi Arabia and Russia pump about 3 million barrels a day more crude oil than the U.S., PIRA said. (www.bloomberg.com)
Saudi Aramco plans ‘massive’ spending to extend field life
October 14, 2013. Saudi Arabia, the world’s largest crude exporter, is making “massive investments” as it seeks a production buffer to guard against swings in global oil prices while addressing a decline in output from its older fields. Saudi Arabian Oil Co., the state-owned producer known as Saudi Aramco, plans to maintain spare output capacity of more than 2 million barrels a day. The Dhahran-based company raised its annual capital budget tenfold to $40 billion over the last decade and, in the past two years, has adjusted its daily production by more than 1.5 million barrels. Saudi Arabia, OPEC’s biggest producer, will maintain its output capacity at 12.5 million barrels through new fields including the offshore Manifa deposit. Saudi Aramco also plans to add 550,000 barrels a day of capacity from the Shaybah and Khurais fields by 2017. (www.bloomberg.com)
Novatek boosts gas production by 9 pc in 3Q 2013
October 11, 2013. Russia's largest independent gas producer Novatek said it boosted its third quarter 2013 natural gas production by 9.1 percent to 513 billion cubic feet. The firm said it also saw its gross liquids production increase by 14.8 percent, compared to 3Q 2012, to 147,000 tons. Novatek's upstream activities are concentrated on the Yamal-Nenets Autonomous Region in northern Russia. (www.rigzone.com)
Senex makes oil discovery in Cooper-Eromanga Basin permit PEL 113
October 10, 2013. Senex Energy Limited announced that it has delivered a significant new oil discovery with the Dunlop-1 exploration well in southern Cooper-Eromanga Basin permit PEL 113 (Senex 100 percent) in South Australia. Wireline logs have confirmed a net pay interval in the McKinlay Member of approximately 10 feet (3 meters) and a subsequent drill stem test has resulted in oil free-flowing to surface at a rate of 1,200 barrels per day. (www.rigzone.com)
OVL signs MoU with Venezuelan firm
October 10, 2013. ONGC Videsh Ltd (OVL) said it has signed an MoU with Venezuelan state oil firm PdVSA for cooperation in oil-rich Faja area of the Latin American nation. OVL currently has stakes in two producing projects in Venezuela -- Petro-Carabobo and Petro-Indovenezolana with investments of about USD 341 million. The MOU underlines the spirit of collaboration and mutual respect between two E&P giants of India and Venezuela. (economictimes.indiatimes.com)
Downstream
Ineos shutting Scottish refinery; may cut 45 pc of UK oil output
October 15, 2013. Ineos Group Holdings SA is shutting the 210,000 barrel-a-day Grangemouth oil refinery and petrochemical site before a strike that could halt 45 percent of the U.K.’s crude production. The company is progressively stopping units before a 48-hour industrial action planned by Unite union workers, scheduled to begin on Oct. 20. (www.bloomberg.com)
South Korea's GS Caltex drops planned Brazil refinery project
October 14, 2013. South Korea's second-largest oil refiner GS Caltex said it has dropped plans to build a refining plant with GS Energy and Brazil's state-run oil firm Petroleo Brasileiro SA. GS Caltex, with a 775,000 barrel-per-day (bpd) refining capacity, thinks its investment should focus on secondary units to extract higher value gasoline and diesel from heavy oils. The refiner said it had completed a 53,000-bpd heavy oil upgrading unit worth 1.3 trillion Korean won ($1.21 billion), raising its gasoline and diesel output and boosting the refiner's heavy-oil upgrading capacity to 268,000 bpd. The refiner will increase its diesel exports, without giving a target number. The main destination for its overall exports will continue to be China. With China's top refiner Sinopec Corp expected to boost its diesel exports in the fourth quarter, more middle distillates coming out of South Korea could add further pressure to regional refining margins. In June, Petrobras signed an accord looking at a possible partnership with GS Energy to build a 300,000 barrel-per-day low-sulfur diesel refinery starting in late 2017 near Fortaleza on Brazil's northeastern coast. (www.downstreamtoday.com)
Iraq, Swiss firm sign $6 bn oil refinery contract
October 11, 2013. Iraq's prime minister says his country has signed a $6 billion contract with Swiss company Satarem to build and run an oil refinery in southern Iraq. The project calls for Satarem to construct and operate a 150,000 barrel-per-day refinery in the southern province of Maysan, which borders Iran. Iraq sits atop the world's fourth largest proven reserves of conventional crude, with about 143.1 billion barrels, and oil revenues make up 95 percent of the country's budget. It lacks refining capacity to meet local demand for fuel. (www.downstreamtoday.com)
Transportation / Trade
Tokyo Gas sees LNG cost control in majority project stakes
October 15, 2013. Tokyo Gas Co. is seeking to take majority stakes in liquefied natural gas projects in Southeast Asia or Africa as it seeks to reduce the cost of imports. Japan’s biggest gas supplier is interested in plants that can produce as much as 3 million metric tons a year of LNG. Bringing down LNG prices is a pressing issue for Japan, where the super-chilled fuel costs four times as much as in the U.S., Toshimitsu Motegi, the trade and industry minister, said. The country paid an average $16.37 per million British thermal units for LNG in July, according to data from LNG Japan Corp. That compares with about $3.64 in the same month for U.S. natural gas futures traded in New York. Tokyo Gas’s operating expenses surged 9.3 percent in the quarter ended June 30 amid higher import costs for LNG, a raw material used for city-gas supplies. The company plans to diversify its LNG supply sources by 2020 to mitigate the risk of price fluctuations. Tokyo Gas expects its LNG imports to rise by 14 percent to 12.1 million tons in the fiscal year that will end in March 2018, as its sales grow at a projected annual rate of 3 percent, the company said. It imported 10.7 million tons in the 12 months to March this year. Gas sales are forecast at 22 billion cubic meters in 2020. Tokyo Gas, which plans to purchase 1.4 million tons of LNG from the Cove Point terminal in the U.S. state of Maryland, is also considering trading the fuel with buyers in Europe. (www.bloomberg.com)
OVL to spend $529 mn for buying 12 pc more stake in Petrobras
October 15, 2013. ONGC Videsh Ltd (OVL) has agreed to purchase additional 12 per cent stake in a Brazilian oil block from Petrobras of Brazil for $529 million. The acquisition will raise OVL's stake in the field to 27 per cent. Shell-operated BC-10 block, also known as Parque das Conchas, is located in the Campos basin of Brazil. Shell and OVL exercised their preemption rights to acquire Petrobras' entire stake in the block after the Brazilian firm announced the $1.54-billion deal with China's Sinochem group. Before the deal, Shell had 50 per cent stake in the block. (economictimes.indiatimes.com)
Rosneft, Transneft agree on China oil link expansion costs
October 14, 2013. Rosneft and Transneft have agreed in principle to increase Russian oil supplies to China. Rosneft and Transneft have been at odds over the expansion of pipeline routes to Asian markets, including to China. Rosneft agreed to double oil supplies to China, currently at 300,000 barrels per day, via the spur of the ESPO pipeline. The decision raised concerns over Russia's ability to maintain oil exports to Europe. Under the agreement, Transneft will find the financing and build the infrastructure for the expansion of the ESPO spur, while Rosneft will share Transneft's costs by paying a special oil shipping tariff, different from the one it pays for ESPO as a whole. Traders expected Rosneft's export volumes to China to rise to 17 million tonnes in 2014 and to as much as 20 million by 2015, on a par with Germany, the top consumer of Russian oil to date. (www.reuters.com)
Kurdistan’s Tawke ‘sea of oil’ for DNO as well flow hits record
October 14, 2013. A well at DNO International ASA and Genel Energy Plc’s Tawke oilfield in northern Iraq flowed at a record rate, bolstering prospects for higher output from the region as it completes an export pipeline to Turkey. The Tawke-23 well flowed at 32,500 barrels of oil a day after horizontal drilling, DNO said. The companies have initiated sales from the well, which is the second horizontal one to be drilled at the field. Kurdistan is building a pipeline to Turkey after years of disputes with the central government in Baghdad over oil payments. The Kurds expect to export 1 million barrels a day of oil by 2015 and 2 million by 2019. (www.bloomberg.com)
China’s crude oil imports increase to record as economy expands
October 12, 2013. China’s daily oil imports rose to a record in September as the world’s second-largest economy expanded and demand for energy grew. China imported a net 25.61 million metric tons of crude oil last month. That’s equivalent to an average 6.26 million barrels a day, 25 percent more than in August and 2 percent greater than the previous record of 6.13 million barrels a day in July. China may increase its net crude imports to 6.45 million barrels a day by October, surpassing an estimated 6.23 million for the U.S. A government report due on Oct. 18 may show that China’s gross domestic product grew 7.8 percent from a year earlier in the third quarter. Growth in the second quarter was 7.5 percent. (www.bloomberg.com)
Policy / Performance
Romania to hike oil and gas royalties in 2014
October 15, 2013. Romania aims to raise royalty taxes for mineral resources by the end of next year. Companies must pay royalty taxes ranging from 3.5 to 13.5 percent of production for oil and gas, depending on quantities extracted, and 2 to 8 percent for mining. The European Union member state collects about 1.4 billion lei ($426.45 million) in royalties per year, the bulk of which come from crude oil and gas. The new tax levels will also apply to top oil and gas firm Petrom, majority-owned by Austria's OMV. Under the firm's privatisation contract in 2004, the Romanian government agreed to leave its royalties unchanged for 10 years, a deadline which expires next year. Petrom and ExxonMobil have said they will resume gas exploration drilling in their offshore Black Sea block at the end of this year or in early 2014. (www.rigzone.com)
UAE looks to gas, nuclear power to diversify, minister says
October 14, 2013. The United Arab Emirates (UAE), OPEC’s fourth-largest crude producer, is investing in nuclear power, renewable energy and liquefied natural gas terminals to reduce its reliance on oil, according to its energy minister Suhail Mohammed Al-Mazrouei. Abu Dhabi, holder of most of the U.A.E.’s crude reserves, plans to raise output capacity to 3.5 million barrels a day in 2017 to meet export demand and feed an expanded local refinery. The emirate supplies parts of the country with gas imported from Qatar and from its own fields and provides electric power to other emirates. Abu Dhabi and Dubai, the second-biggest emirate, are also investing in renewable energy. (www.bloomberg.com)
US to Asia gas price gap to vanish over long term -Exxon
October 14, 2013. The cost of delivering U.S. gas to Asia will eventually rise as U.S. production costs increase, erasing North America's price advantage over other global suppliers of the fuel in its liquefied form, ExxonMobil said. The development will disappoint Japan and other buyers who are counting on bringing liquefied natural gas (LNG) to Asia at huge discounts. Prices for U.S. natural gas are currently around $3.80 per million British thermal units (mmBtu) compared with just over $16 per mmBtu for LNG delivered into Asia. U.S. natural gas prices are currently below replacement costs because producers are drilling in areas rich in more lucrative petroleum liquids, which subsidise the cost of drilling for the cheaper gas. History indicates those low prices cannot be maintained over the long term. (www.reuters.com)
Angola set to impose up to 10 pc tax on oil cos
October 14, 2013. Angola, Africa’s largest oil producer after Nigeria, is imposing a consumption tax on petroleum companies that will raise some costs by as much as 10 percent, according to government documents. The law, which comes into effect with its publication that may happen as early as, requires companies to follow a tax schedule that adds five percent to most services and supplies and double that for equipment rentals, a presidential decree showed. Angola set up a special tax reform branch in 2010 to work with government ministries on increasing revenue and closing loopholes in a bid to simplify taxation. The southwest African country, a member of the Organization of Petroleum Exporting Countries (OPEC), pumped about 1.74 million barrels a day in September from offshore fields. (www.bloomberg.com)
Libyan PM says oil production at 600,000 to 700,000 bpd
October 13, 2013. Libya is currently producing between 600,000 to 700,000 barrels per day of oil, Prime Minister (PM) Ali Zeidan said, as the OPEC member tries to end protests that have shut down oilfields and ports. Striking workers, militias and political activists have knocked the country's oil production to as low as 200,000 bpd. Libya took its first steps towards resuming output from some fields in the west in mid-September after reaching a deal with some protesters, and its oil minister had said full output could be restored within days. (in.reuters.com)
OVL wins two oil blocks in Myanmar
October 13, 2013. ONGC Videsh Ltd (OVL) has won two onland oil blocks in Myanmar, strengthening its presence in the south-east Asian nation. OVL, which has stakes in the A-1 and A-3 gas discovery blocks and three other offshore acreages in Myanmar, was awarded two oil and gas exploration blocks in that country’s Onshore Blocks Second Bidding Round — 2013. The firm got Blocks B-2 (Zebyutaung-Nandaw) and EP-3 (Thegon-Shwegu), according to the list of winners released by Myanmar’s Energy Ministry. Other pre-qualified Indian companies Cairn India, Oil India Ltd (OIL), Jubilant Offshore Drilling and Prize Petroleum drew a blank. Myanmar awarded 13 onshore blocks, with OVL, Italy’s Eni, Pakistan’s Petroleum Exploration and Canada’s Pacific Hunt Energy Corp each winning contracts to operate two blocks. Malaysia’s Petronas, Brunei National Petroleum Co, CAOG Sarl of Luxembourg, Bashneft of Russia and PTT Exploration and Production of Thailand won one block each, the ministry said. (www.thehindu.com)
Shale drillers offered water cheaper than UK residents
October 9, 2013. Britain’s water utilities, which coped with at least three separate periods of drought in the last decade, are ready to offer discounts for drillers needing supplies for fracking oil and natural gas wells. A reduction would help make the technique to extract hydrocarbon reserves more profitable in Britain, where municipal water rates often are two-thirds higher than in the U.S. Hydraulic fracturing uses high volumes of pressurized water mixed with chemicals and sand to crack open underground deposits. Cheaper water along with tax breaks and government support for the technology support Prime Minister David Cameron’s goal to draw investment for petroleum production in the U.K. as wells in the North Sea go dry. (www.bloomberg.com)
POWER
Hunan Electric to build 555 MW plant in Ghana
October 15, 2013. Hunan Electric Power and Hunan Construction Engineering Group Corporation are set to add a 555 MW power to Ghana's energy generation mix. The Minister for Energy and Petroleum, Hon. Emmanuel Armah-Kofi Buah, says Ghana’s quest to be energy sufficient is unwavering and finds expression in the enabling environment created for independent power producers to invest in the country. According to him, the country is poised to achieve its target of generating 5000 MW of power by the close of 2016. The Minister said the country’s energy demand was growing fast and needed massive investment. (www.ghanaweb.com)
US court overrules New Jersey law subsidizing new power plants
October 14, 2013. New Jersey cannot subsidize construction of new natural gas-fired electric plants in the state, a federal judge decided, ruling in favor of Pennsylvania power company PPL Corp and other generators who sued to stop the subsidies. PPL and the other companies could lose money on electricity and capacity they sell from existing power plants if New Jersey subsidizes the construction of new plants. U.S. District Judge Peter Sheridan said that New Jersey's capacity law was unconstitutional because it violates the Supremacy Clause of the U.S. Constitution and infringed on the U.S. Federal Energy Regulatory Commission's (FERC) authority to regulate the sale of wholesale power in interstate commerce. (www.reuters.com)
Japan invests on Kosgulana Mini Hydro Power Plant
October 14, 2013. Kosgulana Hydro Company (Pvt) Ltd. signed an agreement with the Board of Investment of Sri Lanka to set up a Mini Hydro Power plant. The wire site of the 1.5 MW project is located on Kukule Ganga in Kosgulana village in the Ayagama Divisional Secretariat in the Ratnapura District. The project’s estimated investment will be around LKR 475 Million. The power plant will commence construction shortly and is expected to be completed soon. The mini Hydro plant will provide electricity to the national grid. (www.lbt.lk)
Transmission / Distribution / Trade
Bulgaria's day ahead power exchange hits new delay
October 14, 2013. Bulgaria's state-owned power grid operator ESO has withdrawn its application to run the country's proposed day-ahead bourse, a move electricity traders said was a surprise and would delay the start of the exchange. Bulgaria has been planning to launch a day ahead exchange from 2014 to boost transparency and ensure fair wholesale prices in the European Union's poorest country, where electricity costs for households are politically sensitive and state-regulated. ESO, which operates the energy grid, confirmed it had withdrawn its application to operate the exchange, saying it had waited more than 5 months to get an approval from the state energy regulator. It declined further comment. The energy regulator said it had asked for additional information from ESO in order to move forward with its licensing, but instead the company had withdrawn its application without giving any reasons for its decision. Power traders said the move would hinder plans to get the exchange working from the beginning of 2014 and increase the pressure on struggling power producers to seal short-term deals to compensate for what they were expecting to buy on the bourse. Bulgaria is a net power exporter to other countries in southeastern Europe, mainly Greece and Turkey, due to its nuclear and thermal power capacity. (www.reuters.com)
China to raise prices for gas-fired power generation
October 15, 2013. China will raise the on-grid prices paid to power generators that use natural gas to encourage the use of cleaner forms of energy and address the impact of possible supply shortages. The National Development and Reform Commission (NDRC) said recent natural gas price hikes had raised generation costs and power prices needed to be adjusted accordingly. Specific power price changes will be determined "soon" on a provincial level, it said. On-grid coal-fired power prices have been cut in order to reflect falling coal prices. On-grid prices paid for coal-fired generators have been cut on a region-by-region basis, ranging from around 0.009 yuan per kilowatt hour in Beijing to 0.025 yuan in Shanghai. (www.reuters.com)
Czechs to push for nuclear future amid low power prices
October 15, 2013. The Czech Republic aims to increase the share of nuclear power in its energy mix even as neighboring Germany plans to shut down all of its atomic plants and prices of European electricity hover close to all-time lows. The country’s new energy strategy categorizes nuclear power as “crucial” for preserving energy security, Deputy Industry Minister Pavel Solc said. The strategy draft, subject to environmental assessment, is slated for the cabinet’s approval early next year. With two nuclear-power stations and a fleet of coal-fired plants fed by lignite from local mines, the Czech Republic exports as much as 20 percent of its electricity production. Czechs will need to replace almost 3,500 MW of capacity by 2030, which will come mostly in the form of new atomic power, the deputy minister said. (www.bloomberg.com)
Four Central European states urge EU to support nuclear energy
October 14, 2013. Poland, the Czech Republic, Slovakia and Hungary want the European Union to support nuclear energy projects and not to over-regulate the area, Prime Minister Viktor Orban said after a summit of the "Visegrad Four" countries. The four also threw their backing behind shale gas extraction in Europe, and agreed to set up a natural gas market forum with the aim of fostering a regional gas market, which will convene in Budapest this month, Orban said. Hungary plans to expand its existing nuclear plant, though it has not issued a tender yet. The Czech utility CEZ is running a tender to build two big new units of about 1,200 MW each at its Temelin plant. In Slovakia, two new reactors with a combined capacity of 880 MW are expected to start up in 2014 and 2015. Poland, which relies on highly polluting coal for most of its electricity, this year cleared the initial legal and regulatory hurdles needed to complete its first nuclear reactor by 2023. (www.reuters.com)
Kenya to exit power generation, plans to usher in private sector
October 13, 2013. The government is on the brink of exiting power production activities and transferring the baton to the private investors. It is increasingly inviting bids from private investors to take up power generation projects with hopes of transferring the benefits of bulk power production to consumers through reduced electricity tariffs. But in as much as the private sector will play an increased role in power production, the government said it would cap prices to ensure electricity cost comes down. This is part of efforts to lower the cost of power in the country from a high of 18 US Cents and 19 US Cents per KWh to between 9 US Cents and 10 US Cents per KWh. Projects already handed to the private sector include generation of 900 to 1000 MW of Coal power at Lamu and generation of 700 to 800 MW of power using liquefied natural gas at Dongo Kundu in Mombasa. The other one is production of 900 MW to 1000 MW of Coal power at Mui Basin in Kitui County. The government plans to add 5000 MW of power to the national grid in the next 40 months through power mix such as geothermal, coal and liquefied natural gas, which are relatively cheaper compared to heavy fuels and diesel. (www.standardmedia.co.ke)
Congo open to more investors joining Inga hydropower project
October 10, 2013. The Democratic Republic of Congo is open to more investors joining three groups of companies bidding to construct the $12 billion Inga 3 hydropower project, Energy Minister Bruno Kapandji said. Congo will choose a development group for the 4,800 MW project in June or July of next year. The bid groups are currently made up of China Three Gorges Corp. and Sinohydro Corp.; Posco and Daewoo Corp. of South Korea in partnership with Canada’s SNC-Lavalin Group Inc.; and Actividades de Construccion y Servicios SA, based in Madrid, and Spain’s Eurofinsa Group. Construction on the Congo River may begin in October 2015 and power generation could start in 2020. Congo is set to sign a treaty this month that will guarantee 2,500 MW from the project for South Africa. Inga 3 will be the first step in the Grand Inga project, which may eventually produce more than 40,000 MW of electricity, making it the largest source of hydropower in the world. About 170 square kilometers (66 square miles) around the Congo River will be flooded to create a total of 8 Inga hydropower plants. Inga 1, built in 1972, and Inga 2, completed in 1982, have the capacity to produce about 1,775 MW, though they are being refurbished and operating below capacity. (www.bloomberg.com)
EU may allow aid to energy-intensive firms defended by Merkel
October 9, 2013. The European Union is considering allowing governments to help industries with high energy bills after German Chancellor Angela Merkel vowed to defend the country’s aid program for big power users. The EU’s regulatory arm may approve partial support to some businesses, Joaquin Almunia, the EU’s competition chief, said concerning new state-aid guidelines to be adopted in the first half of 2014. The European Commission, which held initial discussions on the matter, will seek views on draft plans before the end of this year. (www.bloomberg.com)
RENEWABLE ENERGY / CLIMATE CHANGE TRENDS
National
Solar energy sector: Intense competition to limit growth potential of IPPs, says Crisil
October 15, 2013. Crisil believes that intense competition will limit growth potential of independent power producers (IPPs) in the solar energy sector, the rating agency said in a research report. Solar power projects under different state policies have been competitively bid and awarded at a tariff of about ` 6.5 per unit. According to Crisil, the levelised tariff is significantly lower than ` 9.4 per unit, a level which their research indicates is required to achieve reasonable equity internal rate of return of around 16%. In the last two year, the capital cost for setting up solar power units has dropped significantly, prompting states like Tamil Nadu, Rajasthan, Andhra Pradesh and Karnataka to invite bids to set up solar projects. Crisil says that non-IPP, which are companies with diversified business interest, have been bidding aggressively in the last year as they can set off accelerated depreciation against profits from other businesses. Non-IPPs such as Mohan Breweries and Essel Mining have bid at ` 6.5 per unit or below whereas IPPs such as Welspun and Azure Power have bid in the range of ` 8-9 per unit. This has compelled IPPs to match such low tariffs as projects under most state solar policies are awarded at the lowest bid. (economictimes.indiatimes.com)
Don’t add private investments to climate fund, says India
October 15, 2013. The developed countries should not count private investments against the commitment of $100 billion annual fund for fighting climate change, India demanded, along with several other developing countries, at the recently meeting of select countries in Warsaw. Poland was the host of this year’s annual climate talks. The meeting, called the pre-COP (Conference of Parties), is organised to firm up the agenda for the meeting, where all member-countries of the UN Framework Convention on Climate Change gather. It helps the host country and other key countries informally etch out areas of differences and agreements that could lead to some concrete decisions at the main meeting. At the Warsaw meet, held on October 2-4, the developing nations also demanded that the developed countries deliver clarity on how they would put up the promised $ 100 billion fund. The developed countries had promised to drum up an annual stream of 100 billion starting 2020. But poorer countries have been demanding a clear road map of how the developed countries will ratchet up their funding support. The meeting also saw countries conclude that the COP, starting November 11, must draw up a clear time line against which the new global agreement will be drafted and finalised. At the pre-COP, several countries expressed apprehensions about the difficulty of enhancing the volunteered emission reduction targets that were once approved by respective governments. Disagreements were also expressed by the developing countries, including India, against the idea of a ‘thin agreement’ in 2015, which has the backing of the U.S. Also called the hub and spoke model in climate jargon, it suggests that only the targets of reducing emissions should form part of the main agreement in 2015. The rest of the issues, such as finance, adaptation and technology transfer, it has been suggested, can be dealt with later under legally less onerous decisions of the COP. (www.thehindu.com)
Gamesa Wind signs up for 54 MW wind power project in AP
October 14, 2013. Wind farm developer Gamesa Wind Turbines announced it has inked an agreement with a power and utility company, for setting up a 54 MW wind power project in Andhra Pradesh (AP). The Chennai-based company, however, did not disclose the size of the deal or the name of the power utility. As per the agreement, Gamesa would supply 27 units G97-2.0 MW turbines at Taggubarthi, Andhra Pradesh. The commissioning is scheduled to be completed by May 2014, the company said. (economictimes.indiatimes.com)
Suzlon bags order from Uruguay
October 14, 2013. Wind turbine maker Suzlon said it has bagged an order for setting up a 65 MW project in Uruguay. The project will be developed by Rouar S A, a joint venture between UTE, Uruguay's state-owned utility, and Brazilian utility Eletrobras, the largest in Latin America. The wind farm will be supplied with 31 units of 2.1 MW wind turbine. Suzlon will be responsible for full EPC (engineering, procurement and construction) delivery for the project, scheduled for completion in September 2014. (economictimes.indiatimes.com)
Welspun Energy to invest $1.6 bn in solar, wind projects by 2017
October 11, 2013. Welspun Energy, which will commission the world's second-largest solar power plant and two other projects by December, will invest an additional $1.6 billion in new projects over three years. The 151 MW plant in the central Indian state of Madhya Pradesh is a part of Welspun's push to capture a slice of the renewable energy market that the government hopes will nearly double in the five years to 2017. Renewable energy companies are free of some of the stumbling blocks plaguing their peers in India's thermal power industry, such as coal and gas shortages and fuel transport hassles. But the sector still faces problems including in acquiring land for projects, a creaky transmission network and state distribution companies that are often too broke to buy power. (economictimes.indiatimes.com)
India to set up agency for monitoring water efficiency
October 9, 2013. India, where water availability per person has shrunk by 70 percent in six decades, will set up a monitoring agency for government, industry and private users to help meet its target of cutting leaks and waste by a fifth. Improved water use will help India save ` 500 billion ($8 billion), M. Satyanarayana, adviser to India’s water ministry, said. The government will establish the National Bureau of Water Use Efficiency by the financial year that ends in March, he said. The agency will help India, where 80 percent of its water supplies go for agriculture and food crops, to label irrigation equipment and help factories to set standards for water use, Satyanarayana said. At least 60 percent of the water supplied to Indian farms is wasted, he said.
To counteract that, India’s water ministry plans to set up an agency similar to the Bureau of Energy Efficiency to ensure efficient water usage by agriculture and industry, he said. Industrial water demand in the second-most populous country may surge 57 percent by 2025, with India being the most water-stressed of the Group of 20 nations that includes China, according to HSBC Holdings Plc estimates. (www.bloomberg.com)
Global
EPA greenhouse-gas rules draw US Supreme Court scrutiny
October 15, 2013. The U.S. Supreme Court said it will scrutinize the Environmental Protection Agency (EPA)’s first-ever push to curb greenhouse-gas emissions, agreeing to hear appeals from industry trade groups and Republican-led states. The justices said they will decide whether the EPA was justified in setting up new permit requirements for stationary sources of pollution, including power plants and factories. The Obama administration is seeking to reduce carbon emissions it says threaten public health and contribute to climate change. Dozens of trade groups, companies, public policy organizations and states pressed nine separate Supreme Court appeals, six of which the court agreed to hear. The justices said they won’t review the EPA’s conclusion that carbon emissions endanger public health and the planet, as some of the appeals had urged. The court also refused to revisit its 2007 decision ordering the EPA to consider regulating greenhouse-gas emissions. The court rejected three appeals that raised those issues. (www.bloomberg.com)
EU nations agree to seek softer law to curb car emissions
October 15, 2013. European Union (EU) governments agreed to seek a revision of a draft law to curb emissions from cars, bowing to calls from Germany for more flexibility to protect the competitiveness of the domestic automobile industry. EU environment ministers meeting in Luxembourg authorized Lithuania to start talks with the European Parliament to change a preliminary deal on the measure, which was blocked by German Chancellor Angela Merkel in June. The proposal would cap average carbon discharges by passenger vehicles in the bloc at 95 grams a kilometer in 2020 through varying targets for individual manufacturers ranging from Volkswagen AG to General Motors Co. The decision was made after Germany built a coalition of countries supporting its plan to delay the start of the emission curbs. It proposed the law should be fully applicable to all new cars only in 2024. (www.bloomberg.com)
China drafting rare earth rules on mining
October 15, 2013. China, the world’s largest producer of rare earths, is drafting rules to crack down on illegal mining, reduce pollution and prevent price wars, an industry association said. They are at the proposal stage and a long way from becoming laws, said the Association of China Rare Earth Industry in Beijing. The group has extensive contacts with various ministries and is in charge of drafting rules on the issue, although it isn’t affiliated with the government. (www.bloomberg.com)
Chile doubles renewable-energy goal to 20 pc to spark new projects
October 15, 2013. Chile doubled its renewable-energy target and may solicit competitive bids in 2015 for contracts to sell electricity as the South American nation seeks to spur investment in new power plants and curb its reliance on imported fossil fuels. Utilities must get 20 percent of their power from renewable sources by 2025. That will work out to 6,500 MW of capacity from projects including solar farms and small hydroelectric dams, up from about 1,000 MW now, according to Maria Paz de la Cruz, director of Chile’s Renewable Energy Center, a government agency. President Sebastian Pinera signed the new target into law. Chile is already exceeding its current 5 percent goal, slowing demand for new renewable-power plants. Chile previously required utilities that own at least 200 megawatts of capacity to get 5 percent of their energy from renewable sources, rising to 10 percent in 2024. Chile produced about 8 percent of its energy from renewable sources last year. (www.bloomberg.com)
Germany power consumers to pay record green surcharges
October 15, 2013. Germany’s power grid operators boosted the surcharge consumers pay for renewable energy by 18 percent to a record, adding to pressure on Chancellor Angela Merkel’s government to act against rising electricity bills. The four grid companies set the fee paid through power bills at 6.24 euro cents (8.5 cents) a kilowatt-hour next year from 5.28 euro cents now. The charge has more than quintupled since 2009, helping to make German household power bills the third-highest in the European Union. Big industrial users are largely exempt from the increase. Merkel is looking for ways to reduce the cost of renewable-energy subsidies after deciding to close the country’s nuclear power plants. The government will reshape the 13-year-old EEG law granting support to technologies such as wind and solar power once Merkel’s Christian Democratic bloc reaches an agreement with another party to form a new coalition following last month’s elections. (www.bloomberg.com)
Abbott publishes draft legislation to abolish carbon pricing
October 15, 2013. Australian Prime Minister Tony Abbott’s government published draft legislation to abolish carbon pricing and called on the opposition Labor party not to block the bill in parliament. The Carbon Price Mechanism passed by former Prime Minister Julia Gillard in 2011 requires more than 300 of Australia’s largest emitters to pay about $24.15 a metric ton for greenhouse gases this year, the highest price in the world. While Abbott’s coalition has a majority in Australia’s lower house of parliament, it doesn’t control the upper house Senate, which has the power to block his attempt to repeal the legislation. Labor’s new leader Bill Shorten has indicated the party won’t support Abbott’s plans to scrap the so-called carbon tax from July 1, 2014. (www.bloomberg.com)
Chevron claims Ecuadorians’ lawyer won case through fraud
October 15, 2013. For more than a decade, lawyers for Ecuadorian villagers have argued Chevron Corp. is responsible for polluting a swath of Amazon rainforest bigger than Rhode Island that it refuses to clean up. Today, facing a $19 billion judgment won on behalf of those villagers, the second-largest U.S. oil company will try to prove in a federal courtroom in Manhattan that it’s a victim rather than the villain in a legal drama over the environmental devastation. In a non-jury trial, Chevron seeks to persuade U.S. District Judge Lewis Kaplan to bar enforcement of a 2011 verdict against the company in Ecuador that it says was a product of coercion and manufactured evidence. The company contends the judgment was obtained by fraud, including through bribery of an Ecuadorian judge, as part of a racketeering scheme by the villagers’ attorneys, consultants, activists and others to extort money from the oil producer. (www.bloomberg.com)
China earmarks $818 mn to curb air pollution
October 14, 2013. China’s central government has allocated 5 billion yuan ($818 million) to curb air pollution in six regions including Beijing. Tianjin city and the provinces of Hebei, Inner Mongolia, Shanxi and Shandong also will get access to the funds. The money will be distributed to projects based on the reduction in pollution and concentration of fine particulates they intend to make. (www.bloomberg.com)
Italy's ERG plans to expand wind power in Brazil
October 13, 2013. Italian energy group ERG plans to invest in wind power in Brazil and Europe, accelerating its expansion in the sector after its recent decision to exit the refining sector. ERG completed the acquisition of wind power assets from France's GDF Suez this year to become Italy's largest wind energy player and one of the top ten in Europe. ERG planned to invest in countries and areas which had strong wind conditions and were less dependent on government subsidies, such as South America. ERG has transformed itself in recent years into a renewable energy company in order to counter declining profits at its refinery business. (www.reuters.com)
UK to plan budget for low-CO2 power deals this year
October 11, 2013. The U.K. government said it plans to propose by year-end budgets for each successive round of long-term power contracts that will be awarded under new laws to boost nuclear and renewable power. The money available for the so-called contracts for difference, or CFDs, must fall within annual caps that the government has set for assistance to low-carbon energy through to 2021, the Department of Energy and Climate Change said. (www.bloomberg.com)
Kaneka’s solar power plant starts operations in central Japan
October 10, 2013. Kaneka Corp., a Japanese maker of synthetic resins, said its 12.7 MW solar power plant in central Japan began operations on Oct. 1. The plant in Ibaraki prefecture uses thin-film silicon modules produced by Kaneka, the Osaka-based company said. (www.bloomberg.com)
First Solar to sell never-commissioned panel plant in Arizona
October 10, 2013. First Solar Inc. agreed to sell a facility in Mesa, Arizona, to an unidentified buyer at a loss of as much as $60 million against book value. The company expects proceeds of more than $100 million from the sale, which will close this quarter. The site was intended to be a panel-production plant and was never commissioned. The loss will be incurred in the third quarter. The deal will also involve $5 million to $10 million in costs. (www.bloomberg.com)
New York set to reach climate point-of-no-return in 2047
October 9, 2013. Temperatures in New York are increasing, and after 2047 they won’t return to the historical average of the past one and half centuries, according to a study in the journal Nature. “Climate departure,” when the average temperature for each year is expected to exceed historical averages from 1860 through 2005, will occur in Jakarta and Lagos in 2029, Beijing in 2046 and London in 2056, according to the study. New York will match the global departure 34 years from now and tropical areas will get there sooner. The research highlights the urgency of cutting greenhouse-gas emissions because the warming climate may drive some species to extinction, threaten food supplies and spread disease, according to the study. By 2050, 5 billion people may face extreme climates, and migration and heightened competition for natural resources may trigger violence and instability. The global point of climate departure will be 2047, with tropical areas reaching it earlier. The forecast assumes that carbon emissions will continue at a “business-as-usual” pace, according to the study. Under a separate scenario that assumes greenhouse gases are stabilized, the global climate departure is delayed more than two decades, until 2069. (www.bloomberg.com)
Battery-stored solar power sparks backlash from utilities
October 9, 2013. California’s three biggest utilities are sparring with their own customers about systems that store energy from the sun, opening another front in the battle that’s redefining the mission of electricity generators. Edison International, PG&E Corp. and Sempra Energy said they’re putting up hurdles to some battery backups wired to solar panels because they can’t be certain the power flowing back to the grid from the units is actually clean energy. The dispute threatens the state’s $2 billion rooftop solar industry and indicates the depth of utilities’ concerns about consumers producing their own power. People with rooftop panels are already buying less electricity, and adding batteries takes them closer to the day they won’t need to buy from the local grid at all, said Ben Peters, a government affairs analyst at Mainstream Energy Corp., which installs solar systems. California is the largest of the 43 states encouraging renewables by requiring utilities to buy electricity from consumer solar installations, typically at the same price that customers pay for power from the grid. The policy, known as net metering, offers a way for households to reduce their bills. It underpinned a 78 percent surge in the state’s residential installations in the second quarter from a year earlier, according to the Solar Energy Industries Association. (www.bloomberg.com)
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