MonitorsPublished on Nov 20, 2023
Energy News Monitor I Volume X, Issue 23
Need Money – Replace Meters: The case of UP Power Sector Ashish Gupta, Observer Research Foundation


espite having a large consumer base, the power sector is struggling for survival. The fundamentals principles of the economics are not working for the sector. Apart from some states, most of them are incurring huge losses. The government has announced two financial packages, first in 2002 (` 40,000 Crore) and the second last year to cover distribution losses up to ` 1,80,000 Crore for reforming the power sector. Though it gives some hope for short term revival of the power sector, it will only harm the sector in the longer term.  The panacea for all problems is ‘tariff hike’, as advocated by intellectual minds. The question is why economies of scale are not working for the Indian power sector? The answer is obviously the high inefficiency and politicisation of the sector. The power utilities are not independent and they always have to succumb to the political masters. This column focuses on why the Indian power sector (especially Uttar Pradesh Power Utilities) justifies this “criticism”.

The Electricity Act, 2003 opened the power sector for private players. Before the Act was passed, Orissa was the first state to privatize its power sector but failed miserably. Delhi is another state which went for privatization of the distribution sector in 2002. Privatization of the distribution side was not exactly a choice as the then Delhi Electricity Board was bankrupt and they did not have an alternative option. But the good news is that Delhi privatization has become a role model for a country like Pakistan. There is no doubt that many other states are in the process of privatizing the power sector. Though Delhi is performing well in terms of quality of electricity supply (low or no outage) consumers are always threatened with tariff hike for one or the other reason. The burden of carrying the regulatory assets is also borne by the consumers.  But nonetheless, the Delhi power sector is doing well at least as far as availability is concerned!

Having said that, we come to the situation of power sector in Uttar Pradesh (UP) which is really in a mess and does not need any elaboration per se. Ironically, free laptops have been distribute to the students with no improvements in power access hours. The arbitrary billing system, harassment of the consumer, faulty meter readings etc are becoming a norm in the state. Interestingly no one is aware of why the problem persists.  Is it in reality simply another tactic to extort money from the consumers to hide the inherent inefficiency in the system?

The UP Power sector is somewhat different from the other states that have opted for complete privatization as in many parts of UP the power sector is still in the control of the state utilities. This does not indicate that UP Power sector is deprived of private participation. Functions such as meter reading, replacement of old meters and other supportive services are provided by the private third parties. Few years back, electricity theft was rising at an alarming rate because of outdated meters. The Aggregate Technical & Commercial losses were hovering at 40% which now reduced to 32%. After private operators changed all meters in most parts of the state, the consumers had to bear the cost of installations. The move was justified as UP Power Corporation was incurring huge losses due to theft.

Initially there was opposition from niche groups over replacement of old meters but slowly consumers have understood the fruitfulness of the move. Things started moving in the right direction and the bill collection improved remarkably. This happy situation did not last long and soon the consumers started facing harassment from the private recruits in terms of faulty bills, false meter readings, cutting of electricity connection and so on. Mostly electricity meters were installed outside the house so as to avoid any interference. Another point that is noteworthy is that these electricity meters were installed at a certain height which requires the support of the chair/ stool for noting the readings. But rather than asking for support, these recruits started noting arbitrary meter reading on the basis of guess estimates.  The guess wisdom translated into inflated bills for consumers by 100 – 300 units. Many consumers paid the inflated bills believing it to be correct. Also there is another class of consumers who avail all possible luxuries that electricity has to offer without paying anything to the state utility. This class is famous and this ‘dabang’ class flourishes under the patronage of political parties. Their burden is offset by poor retail consumers who do not have any political links. Apart from paying their electricity bills the sincere consumers have to bridge the gap for technical faults and political snags.

Now the power situation in UP is deteriorating on a yearly basis. Power cuts remain a part of the system in every city. After offloading the burden of inadequate power supply the UP Power division is looking forward to giving another shock to the consumers. This time it is the arbitrary change of the electricity meters by private agencies in the name of replacing old Chinese meters with the new Indian made meters. There is no credibility to this argument as the meters were installed just few years back and changing them without giving any prior notice or reason gives hint of another scam.

Therefore the question that must be opened for debate is why change of meters is required when they have been only replaced recently and why consumers will have to pay for the same? Another pertinent question is on the use of private vendors whose motives and genuineness cannot be guaranteed. It appears that there is some hidden agenda of private gain in replacing meters. If it this can happen in the small matter of meters there is no reason why it cannot happen in the case of bigger matters involving transformers and transmission lines.

Views are those of the author                     

Author can be contacted at [email protected]



Flexibility turns out to be trump in stumbling European LNG market

Thomas Elmar Schuppe, CIM Integrated Expert on Energy, Observer Research Foundation


he European gas industry has traditionally been characterised by international gas trade based on long-term (pipeline) import contracts. Nevertheless, with the first unload of an LNG cargo about 25 years ago the upcoming LNG technology has opened a new opportunity in terms of supply diversification and flexibility as well as potential gap filler for the continuously dwindling indigenous gas production. However, indigenous production remained still the largest gas source for EU27 with about one third of the total net gas supplies in 2012. Besides pipeline supply from outside the EU (particularly from Russia, Norway and Algeria) about ten countries delivered the balance of more than 10% as LNG. In 2012 Qatar has been by far the largest source of LNG for Europe (mainly via long-term contracts into UK). Substantial LNG supply has also arrived from African as well as South-American countries and Norway’s Snovhit field, too (see Graph 2). More than one fifth of the total global LNG regasification capacity is located on 21 sites in Europe. Spain and UK are the most important LNG players in Europe with a combined share of almost 60% of Europe’s total LNG regasification capacity (see Graph 1). [1]

Graph 1: LNG terminals in Europe [2013]

After the second consecutive year of European gas demand destruction (down 10% from 2010 to 2012), the region’s future gas demand prospects seems to remain more unreliable than ever. In any case the need for gas imports will increase more strongly due to broadly falling production across the continent (e.g. the IEA expects the EU’s gas import requirement to increase by about 140 bcm until 2035).[2] LNG imports are expected to reduce the EU’s dependence on pipeline imports, diversify the sources of its gas supplies and provide furthermore (arbitrage) opportunities from switching between LNG and pipe supplies. By all means Europe’s current import capacity is largely sufficient to meet growing midterm import needs as non-OECD Europe had a total import capacity of 550 bcm per year (thereof about one third can be attributed to regasification terminals).

According to the IEA the global LNG trade has slightly declined in 2012 for the first time since 2008. Indeed Europe’s LNG imports are in a downward trend since the second quarter of 2011: they went down by a third from 2011 to 2012 and even the first four months of 2013 saw a drop of another third relative to the same period in 2012 (Graph 2).[3] The absolute LNG import volumes went down by more than half compared to the peak in early 2011 (and fall even below the 2009 level). UK’s LNG importers’ have lost more than two thirds of their LNG import volumes since the peak in 2011.

Graph 2: EU LNG imports by country of origin [04/2008 - 04/2013]

As of 2012, the world’s average utilisation rate of regasification terminals was as low as 36%.[4] Confronted with lower import volumes numerous European LNG players are more and more economically pressured while the utilisation rate is dropping further on: by about half since 2011 and almost down to poor 20% in mid 2013, with Spain and UK being actually even below the European average (see Graph 3).[5]

Graph 3: Utilisation Rates for Europe [2009 - 08/2013]

On the one hand the sluggish European LNG imports can be partly attributed to the (contractual and logistical) opportunity to optimize procurement depending on the relative pricing terms of either LNG or pipe gas. On the other hand a rising number of European LNG importers are actively seeking to take advantage of emerging arbitrage opportunities by turning their LNG facilities in a newly experienced export mode due to the drastic demand drop and constantly higher priced Asian LNG markets at the same time. However, due to contractual obligations they cannot advantageously divert the cargos directly towards new harbours but have to unload the LNG carriers at the originally planned destination harbour before re-exporting them. Data from IEA show that re-export volumes from Belgium and Spain have more than tripled between 2011 and 2012.[6] Data for 2013 confirm this trend, e.g. Belgium has reloaded about the half of its imports this year so far. In total almost half of all working LNG terminals have been involved in re-exporting so far, which sums up to about 10% of EU gross LNG imports volumes (6% in 2012).[7]

Besides full reloading, European LNG importers are seeking more adjustment strategies against idling LNG terminals:

·         Currently there has been the 2nd successful transhipment at the Montoir-de-Bretagne LNG terminal in France, which gives operators the option to split cargoes or change ship (-size).

·         Moreover small scale solutions are being envisaged, e.g. LNG short term/medium sea shipping, usage of LNG as a fuel for shipping (e.g. GATE), for trucks or not least bunkering.

·         Besides that it is said that some operators are asking for help from Qatar to acquire regasification capacities in Europe as an insurance policy in case Asian demand drops. These put-options would give Qatar the right (but not the obligation) to deliver LNG to Europe, i.e. to hedge waning LNG diversions towards Asian markets.[8]

However, current regional LNG prices are still reflecting the persistent (post Fukushima Daiichi) global pricing order: due to the shale gas bonanza the US prices remain at the very bottom with slightly above 3 US-$/mmbtu. In contrast the Asian premium markets Japan, South Korea and China (and somewhat below India) are valued almost five times higher (more than 15 US-$/mmbtu) reflecting less supply alternatives, oil linked long-term contract pricing and/or surging demand.  European LNG prices of about 10-11 US-$/mmbtu are stuck in-between.[9] IEA’s latest WEO assumes that regional gas price differences will remain beyond 2035. Gas prices are expected to continue to spread across the regions until more flexible supply terms develop and a liquid global market is formed to narrow the gaps. While regional price differences narrow in the central “New Policy scenario”, they nonetheless remain large (see Graph 4, dotted lines), more or less reflecting the transportation costs between the continents with contemporaneously diminishing price premiums.[10]

Graph 4: Regional gas prices in the New Policies Scenario and in the Gas Price Convergence Case [2000-2012, Forecast]

This survey on the latest developments in the European LNG market shows up that the LNG industry is currently challenged by some unfavourable global market excesses. However, the evolution of the European gas industry to a market-based approach (e.g. widely interconnected net(works), TPA, several gas trading hubs, competition, different pricing regimes and import modes, more flexible contracts) has left more opportunities and therewith more freedom to market players to withstand unfavourable market developments. Besides that the buildup of import overcapacities over time has proved advantageous: though somewhat inefficient in economic terms, it is the logistical base for import optimizations in terms of gains from enhanced arbitrage opportunities arising from access to different markets via different transportation modes (pipe vs LNG). As a result it can be established that the recent move to a more globalized gas (LNG) market has shown that “flexibility” is going to replace “volume” as the key success factor to create value.

In respect thereof the realisation of further LNG regasification capacities in India (beyond expected midterm demand) might prove a good idea to participate in future market opportunities as the (gas) world is turning faster and faster. The latest developments of LNG markets and unconventional gas bonanzas have demonstrated this. To think a little bit out of the box in this sense and beyond conventional (forecasting) wisdom, why not we’ll see another surprise in global gas markets within the next few years, e.g. because the Chinese are keen enough to exploit unforeseen high volumes of marketable unconventional gas and turns LNG imports down or we see a sooner and higher LNG wave from the US splashing over global gas markets. Nevertheless, the extent to realize potential windfall profits stands and falls with the physical import opportunities, flexibilities and more open market structures.

Views are those of the author                    

Author can be contacted at [email protected]


Category-wise Plant Load Factor of Power Plants in India

Akhilesh Sati, Observer Research Foundation

Station Type


PLF (%)



Thermal Station







(Gas, Liquid Fuels, Diesel)






Nuclear Station




Thermal Stations (Coal/ Lignite based) with PLF more than 90% during Sept’2013

S. No.

Station Name

Installed Capacity (MW)


PLF (%)

















































































Source: Central Electricity Authority.

Oil & Gas: India’s Milestones             

Dinesh Kumar Madhrey, Observer Research Foundation


Continued from Volume X, Issue 22......


Oil and Natural Gas Corp (ONGC) reported a gas discovery in the west Tripura block in the Assam and Assam Arakan basin. ONGC achieved all-time record in oil, gas production. ONGC awarded contract worth ` 753 crore to UAE Company. RIL joined the league of global deepwater oil and gas operators with commencement of production of hydrocarbons in its KG-D6 block in the Krishna Godavari basin with the production of sweet crude of 420 API. The production of oil in KG-D6 was commissioned in just over two years of its discovery, making it the world’s fastest green-field deepwater oil development project.


NELP-VIII: Under the eighth round of New Exploration Licensing Policy (NELP-VIII), Government signed 31 production sharing contracts on 30th June 2010. It included 8 deepwater blocks, 11 shallow water blocks and 12 onland blocks which are in the states of Assam (2), Gujarat (8), Madhya Pradesh (1) and Manipur (1).

GAIL ranked no.1 company among gas utilities in Asia in the Platts Global Ranking. During the year, RIL and BP announced a strategic partnership in the oil and gas business. This partnership comprised BP taking 30 per cent stake in 23 oil and gas production sharing contracts that Reliance operates in India, including the KG-D6 block, and the formation of a joint venture (50:50) for sourcing and marketing gas in India.


GAIL acquired a 20% stake in Houston-based Carrizo Oil and Gas’s Eagle Ford shale acreage, first instance of a PSU acquiring shale assets in USA. A wholly-owned subsidiary company GAIL Global (USA) Inc. formed in Houston, USA and an office was opened. Office of GAIL Global (Singapore) Pte Ltd opened in Singapore.


NELP-IX: Under the ninth round of New Exploration Licensing Policy (NELP-IX) Government signed 13 Production Sharing Contracts on 28th March, 2012 for 2 shallow water blocks and 11 onland blocks which are in the states of Assam (2), Gujarat (6), Madhya Pradesh (2) and Rajasthan (1) and in the basins of Gujarat-Kutch (2), Assam-Arakan (2), Cambay (6), Rajasthan (1) and Vindhyan (2).

to be continued…






RIL plans to increase KG-D6 gas output

November 18, 2013. Reliance Industries Ltd (RIL) would repair a third of the wells shut at its main gas field in the eastern offshore KG-D6 block to boost output in the first quarter of 2014. RIL closed half of the 18 producing wells at the D1&D3 gas fields in the KG-D6 block, due to sand and water flooding, leading to an 85 per cent output drop at 9.4 million standard cubic metres a day (mmscmd). Workover is the process of performing major maintenance or remedial treatment on an oil or gas well. Niko, which holds a 10 per cent interest in the KG-D6 block, said that the workovers will “contribute” to an increase in gas production. BP Plc of UK holds the remaining 30 per cent in KG-D6. RIL, the operator of the block with a 60 per cent stake, produced 12.26 mmscmd from the D1&D3 gas fields and the MA oil and gas field in the block in the Bay of Bengal, according to a status report of the Directorate General of Hydrocarbons (DGH). RIL had also shut two of the six wells at the MA field due to high water and sand ingress. The DGH report said the D1&D3 fields produced 9.39 mmscmd of gas, while the remainder came from the MA field. The KG-D6 fields, which began gas production in April 2009, hit a peak output of 69.43 mmscmd in March 2010 before water and sand ingress shut down well after well. D1&D3, the largest of the 18 gas discoveries in the KG-D6 block, produced 66.35 mmscmd, while 3.07 mmscmd was the output from the MA field, the only oil discovery on the block. Besides the fall in output from D1&D3, gas production from the MA field, which had hit a peak of 6.78 mmscmd in January 2012, has dropped. Niko said a development well, MA-8, has been spud at the MA field. The well and the workovers will help reverse the drop in output at KG-D6. The workovers had been stuck for almost two years as the Oil Ministry and the DGH refused to approve their budgets. They were cleared only after Oil Minister M Veerappa Moily intervened. The DGH report said 12 mmscmd of the last reported output at KG-D6 was sold to urea manufacturing plants and no sale was made to power plants. The remaining production was consumed by the pipeline that transports the KG-D6 gas, it said. (

ONGC, RIL sign agreements for data-sharing

November 13, 2013. Oil and Natural Gas Corp. Ltd (ONGC) and Reliance Industries Ltd (RIL) have signed an agreement for data-sharing to resolve the vexed issue of whether the RIL drew gas from a reservoir that overlaps each other's fields. ONGC, India’s largest oil and gas explorer, wants to be compensated if it is established that RIL indeed drew gas from this reservoir—the latest controversy to strike RIL’s gas field in the KG basin. ONGC had written to the DGH raising the possibility of RIL drawing gas from blocks allocated to ONGC. The deepwater fields in question are RIL’s D6 field (KG-DWN-98/3) off the east coast and ONGC’s adjacent KG-DWN-98/2 block. While RIL has revised the recoverable reserves from D1 and D3 discoveries in the KG basin to 3.4 trillion cu. ft (tcf) of gas from 10.03 tcf approved in 2006, ONGC estimates its block to hold 4.85 tcf. After the data-sharing is done, there will be dynamic testing to ascertain the facts. ONGC has been unable to produce from the deepwater field off the coast of Andhra Pradesh and is scouting for a partner after Statoil ASA and Brazil’s Petroleo Brasileiro SA (Petrobras) quit the consortium. (


Essar Billionaires cut exports on refiner glut: Corporate India

November 13, 2013. Billionaire brothers Shashikant and Ravikant Ruia, who run India’s second-biggest oil refinery, will increase fuel sales at home as capacity additions in China and the Middle East shrink export margins. Essar Oil Ltd will reduce overseas sales from its 400,000-barrel-a-day plant as it predicts local demand for gasoline and diesel will rise in the year ending March 31. The end of an above-normal monsoon in India will help revive diesel demand in Asia’s second-biggest energy consumer. New processing capacities in China and the Middle East are set to increase supplies of petroleum products to Asia and erode earnings of export-focused refineries including Essar Oil and RIL. The coming jump in output has forced Asian oil companies including Japan’s JX Holdings Inc. and South Korea’s SK Innovation Corp. to also cut their profit estimates. Mumbai-based Essar Oil primarily sells fuels to state-run Indian refiners at market rate. Those refiners in turn sell below cost to help curb inflation. This year, India received the biggest monsoon rain since 2007, according to the India Meteorological Department. More rain means farmers don’t have to depend on diesel generator sets to irrigate fields. India is the world’s second-biggest grower of rice and wheat. Demand for fuels in the country in the year ending March 31 is estimated to increase 4.1 percent to 162.1 million tons from a year earlier, according to the Oil Ministry. Diesel demand may rise 6.3 percent to 74.5 million tons and gasoline consumption 4.5 percent to 16.5 million tons. By the end of the decade, demand for diesel may rise to 97.9 million tons and gasoline to 28.8 million tons, according to the ministry. (

Transportation / Trade

Gujarat to get CNG at uniform price by Nov 30

November 19 2013. After the Centre filed an affidavit of compliance before the Gujarat HC stating that it would supply CNG to the state at the same price as Delhi and Mumbai under the administered price mechanism (APM), the court reserved the matter for December 3. As per the guidelines issued by the Petroleum Planning and Analysis Cell (PPAC) of the ministry of petroleum and natural gas earlier, GAIL has been directed to finalise the operational modalities of supplying gas to the City Gas Distributors (CGDs) that should come into effect at the earliest and not later than November 30 this year. (

Panel seeks blueprint to improve natural gas output, supply

November 13, 2013. A Parliamentary panel has suggested that the Petroleum Ministry should prepare a blueprint to improve production and supply of natural gas to curb the widening demand-supply gap of the fuel. According to the recommendations, the government should clearly indicate the availability of gas for the power sector in the next five to 10 years so that utilities can factor in the estimate before investing in gas-based plants. The recommendations of the Parliamentary Standing Committee on Petroleum and Natural Gas were submitted last month. The panel was headed by Vundavalli Arun Kumar, a Member of Parliament from Andhra Pradesh. The committee said the gap between demand and supply of gas in the country is widening and noted that in 2012-13, availability of gas, including imported LNG, was 134 million metric standard cubic meters a day (mmscmd). That was less than half the demand of 286 mmscmd. The shortfall is estimated to widen to 300 mmscmd in 2015-16, with supply of 139 mmscmd against demand of 439 mmscmd. The bulk of the deficit is expected to be met through imports of liquefied natural gas (LNG). The panel noted that while LNG terminal capacity is expected to grow to 180 mmscmd by 2016-17 from 53 mmscmd currently, it still would not be sufficient to cater to increasing LNG imports. The panel was of the view that the Petroleum Ministry should prepare a plan to explore all options to increase production and supply of natural gas in the country. The committee felt gas allocation by the Empowered Group of Ministers should be more pragmatic as there is a mismatch between production and the allotments made to various sectors. The panel said it is surprising to note that the allocations made by the EGoM for 2012-13 were to the tune of 238.27 mmscmd, which was more than double the projected production during the period. Somabhai Gandalal Koli Patel, Lok Sabha member from Surendranagar in Gujarat, is the acting Chairman of the Standing Committee. (

Policy / Performance

Govt mulls cover from RIL for higher price

November 19, 2013. Reliance Industries Ltd (RIL) will have to provide a bank guarantee of $135 million every quarter to get a higher price for natural gas from April 1 next year. The bank guarantee will be encashed if it is proved that RIL hoarded gas or deliberately suppressed production at the D1&D3 main gas fields in its eastern offshore KG-D6 block, the Oil Ministry said. The bank guarantee will cover the difference between the current gas price of $4.2 per million British thermal units and the rate of $8.4 per million BTU, which will come into effect from April 1. The Oil Ministry previously proposed that RIL be forced to sell gas from the D1&D3 fields at the current rate until it is proved that the 80% fall in output at the fields was due to natural reasons or it makes up for the shortfall in production since 2010-11. The veracity of allegations that RIL was hoarding gas in anticipation of a higher price can be established either by arbitration or by appointing a third-party expert, a process that can take over a year. The government could have charged customers the higher price applicable from April 1 and paid RIL the lower rate while keeping the difference in an escrow account until the issue was sorted out. However, the production sharing contract does not provide for escrow accounts. Alternatively, the government can allow RIL the increased price, provided the company furnishes a bank guarantee for the incremental amount, which can be encashed if the hoarding charges are proved true later. From April 1, all domestic gas will be priced at an average of international hub prices and the cost of LNG imported into India. Prices will change quarterly, based on the previous one-year average. RIL will have to provide a bank guarantee for $135 million, presuming a gas price of $8.4 per million BTU in April. The penalty in the form of the lower gas price would have been the second imposed by the Oil Ministry on RIL for falling short of stated production targets. It had already levied a $1.8 billion penalty for the output drop and the issue is before arbitration. (

India to rely on next fiscal year's budget for oil subsidies: Fitch

November 18, 2013. Rating agency Fitch said says Indian government will have to depend on its budget for the financial year ending March 2015 (FY15) to fund a part of the oil subsidies bill for the current financial year's (2013-14). The government allocated ` 65,000 crore for petroleum subsidies in FY14, of which ` 45,000 crore was used to pay oil marketing companies for the subsidy gap incurred in the previous financial year, Fitch said. Rating agency said this leaves the government with ` 20,000 crore to meet its share of the shortfall between the subsidised price and the market price, known as under-recovery. This is likely to be insufficient, and it is likely that the state will have to tap around ` 45,000 crore from next year's budget. With Loksabha polls slated for April-May 2014, the UPA government will not present full fledged budget but can table only an interim budget. The new government would be in position to come out with full budget for 2014-15. For the first half of the current financial year, the total under-recovery from diesel, public distribution kerosene and household liquefied petroleum gas (LPG) was ` 60,900 crore. The subsidies for diesel accounted for ` 28,300 crore. Assuming the under-recovery in the subsequent two quarters is around ` 40,000 crore each, the total FY14 under-recovery would be ` 140,000. The total under recoveries for FY13 stood at ` 161,000 crore, Fitch said. (

CCI to pass order on issue of its jurisdiction on oil pricing

November 18, 2013. The Competition Commission of India (CCI) will this month pass an order on the issue of its authority to probe alleged cartelisation on fixing of petrol prices, as questioned by oil marketing firms. The CCI is currently looking into suspected unfair trade practices by state-run oil marketing firms while setting petrol prices. The oil companies had challenged the CCI saying the regulator had no jurisdiction on looking at fixing of petrol prices. (

ONGC seeks govt nod to bid for Lanka gas blocks

November 15, 2013. State-owned Oil and Natural Gas Corp (ONGC) has sought political clearance from the ministry of external affairs (MEA) to participate in Sri Lanka’s offshore bidding rounds that are open till November 29. The offshore area of Sri Lanka’s Cauvery and Mannar basins holds tremendous potential and has attracted several upstream companies due to gas discoveries in Mannar Basin. These blocks also hold immense strategic importance as they are located close to Indian shores. Government also said that MEA was unlikely to hold back ONGC to bid for oil and gas blocks in Sri Lanka as New Delhi over the past few years has making all efforts to get a toehold in most oil and gas exploration blocks on borders with neighbours such as Sri Lanka and Myanmar. Sri Lanka had launched the second offshore petroleum bidding round on March 7 and around 19 blocks have been offered. ONGC Videsh Ltd (OVL) has already qualified for participation in the bidding process. Prime Minister Manmohan Singh had recently conveyed his decision to Sri Lankan President Mahinda Rajapaksa over skipping the Commonwealth Heads of Government Meeting (CHOGM) keeping in mind public sentiments in Tamil Nadu. However, foreign minister Salman Khurshid attended the Commonwealth summit despite demands from political parties in Tamil Nadu for a total boycott. (

India to commission strategic oil storage facility in Jan

November 14, 2013. India’s first strategic oil storage will be commissioned in January but it is still not clear as to who will operate the facility that has been built as insurance against supply disruptions. India, which is 79 percent dependent on imports to meet its crude oil needs, is building underground storages at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka to store about 5.33 million tonnes of crude oil. This is enough to meet nation’s oil requirement for 13 days. The government has offered Hindustan Petroleum Corp Ltd (HPCL) the job of managing the Visakhapatnam facility which would have the capacity to store 1.33 million tonnes of crude oil in underground rock caverns or cavities which are almost ten storey tall and approximately 3.3 km long. But HPCL is unwilling to take the job as it does not have the money to buy crude oil that is to be stored. The company wants the government to fund the cost of buying the 1 million tons of crude oil and it can then manage the facility on an annual fee. A similar facility in Mangalore will have a capacity of 1.55 million tonnes and would be mechanically completed by March 2014. A 2.5-million tonnes storage at Padur, near Mangalore, would be completed by end of current fiscal. Operations of the Mangalore and Padur facility have been offered to Mangalore Refinery and Petrochemicals Ltd (MRPL). Operations are being handed over to refinery that is nearest to the facility but cost of filling the storage is holding up the assignment. With the commissioning of Visakhapatnam storage, India will join nations like the US, Japan and China that have strategic reserves. These nations use the stockpiles not only as insurance against supply disruptions but also to buy and store oil when prices are low and release them to refiners when there is a spike in global rates. Originally, India Strategic Petroleum Reserves Ltd (ISPRL) was to build the Visakhapatnam facility by October 2011 while the Mangalore storages were to be mechanically completed by November 2012. The storage at Padur was scheduled for completion in December, 2012. The cabinet had in January 2006 approved building of the strategic crude oil storages at a cost of ` 2,397 crore but due to time overrun the capital required is now estimated at ` 3,958 crore. The Visakhapatnam facility will cost ` 1,038 crore, Mangalore ` 1,227 crore and Padur ` 1,693 crore. (



BHEL bags ` 13 bn NTPC contract

November 19, 2013. State-run BHEL said it has bagged a ` 1,300 crore order from NTPC for supplying equipment to the electricity generator's Unchahar plant in Uttar Pradesh besides installation work. The ` 1,300 crore order includes supply and installation of the main plant package for the upcoming 500 MW Feroze Gandhi Unchahar Thermal Power Project in UP. The order has been received from NTPC BHEL Power Projects Private Limited (NBPPL), a joint venture between NTPC and BHEL. On commissioning of the unit, 12 million units of electricity will be added to the grid, every day. (

NLC to invest ` 292.3 bn in coal, power sector

November 13, 2013. Neyveli Lignite Corporation Limited (NLC) is expected to invest ` 29,239 crore in coal and power sectors during 12th plan of which a major share of the investment would into development of power projects. Sriprakash Jaiswal, Union Minister of Coal informed the members of Parliamentary Consultative Committee attached to his ministry that out of the total investment, ` 26,728.40 crore will be for development of power projects while ` 2,510.70 crore will be for coal projects. During the period NLC has planned expansion of a number of its ongoing projects which also include mines at Neyveli and Barsingsar (Rajashtan) and power plant at Tuticorin (Tamilnadu). (

Transmission / Distribution / Trade

NHPC to supply 300 MW unallocated power to Assam

November 18, 2013. The National Hydroelectric Power Corporation (NHPC) has agreed to supply 300 MW of unallocated power to Assam from the Subansiri (Lower) Hydroelectric Power Project, in addition to 233 MW from the sub-lower Hydroelectric Project. In a note circulated by the Ministry of Power regarding the updated status of the 2000 MW project, which has been mired in controversy, it claimed that the Technical Advisory Committee (TEC) constituted by the Planning Commission examined the various issues and based on its recommendation, the Dam Design Review Panel (DDRP) was formed, which in its recommendation, has validated the seismic design parameter adopted in the design of the project.The note said that all downstream issues were examined by the Joint Steering Committee (JSC) and the NHPC has agreed to implement its recommendation having an implication of ` 470 crore. It has also been decided to give 300 MW unallocated power to Assam, in addition to 233 MW including 25 MW free and 208 MW paid power – it is getting from the sub-lower Hydroelectric Project. (

CIL hikes transportation charge; power cost may go up slightly

November 18, 2013. Coal India Ltd (CIL) has hiked the fare it charges from customers for transporting coal from mines to loading points, a development that may lead to a marginal hike of one paisa per unit in power tariff. Since 2009, CIL has not increased the transportation charges. The company has hiked the charges due to increase in diesel prices and wage costs. The revised rates, applicable with effect from November 14, are ` 57 per tonne for 3-10 kms. Earlier, the charge was ` 44 a tonne. For a distance of more than 10 kms and not more than 20 kms, the fares is ` 116.00 per tonne, CIL said. (

Maharashtra industry consumers protest against high power tariff

November 16, 2013. High-tension industry consumers in Maharashtra (those whose consumption exceeds 100,000 units a month) are protesting against high power rates. They argue the rates charged by state-run Maharashtra State Electricity Distribution Company (MahaVitaran) are ` 2-2.5 a unit more than the rates in other states. According to the latest data available with the Maharashtra Electricity Regulatory Commission, the state has the highest per-unit rate of ` 8.82, followed by Delhi (` 6.64), Tamil Nadu (` 6.04), Jharkhand (` 5.82), Karnataka (` 5.56), Chhattisgarh (` 5.46) and Odisha (` 4.95). Of MahaVitaran’s 22.1 million consumers, 312,000 are industry consumers. And, 12,000 of these are high-tension ones. MahaVitaran collects about ` 10,000 crore annually from these high-tension consumers to cross-subsidise agricultural consumers. Of the total dues of ` 8,000 crore from farmers, the power distribution company has sought ` 3,800 crore from the state government. (

Alstom T&D India bags orders worth ` 1.3 bn from AP Transco

November 14, 2013. Alstom T&D India said it has bagged two contracts worth a combined ` 130 crore from Transmission Corporation of Andhra Pradesh Limited. The first order worth ` 66.9 crore is to supply air-insulated substation at Suryapet in Nalgonda district. The second order is worth ` 63.3 crore and covers the supply of the Kamavarapukota air-insulated substation in the West Godavari district. (

Policy / Performance

'PowerMin did not favour NHPC disinvestment via OFS'

November 18, 2013. The government shelved the offer for sale (OFS) route to sell 11.36% stake in NHPC after the Power Ministry said uncertain markets and a vacuum at helm in the hydro power producer were not conducive. The Cabinet had deferred a proposal for divesting government stake through the OFS route. The NHPC board has unanimously approved the buyback of up to 10% of fully paid-up equity shares of ` 10 each for an aggregate amount of nearly ` 2,400 crore. The government has set a target of raising ` 40,000 crore through disinvestment in (2013-14). The Power Ministry had written to the Finance Ministry stating that conditions were conducive to disinvestment. (

India will be leader in nuke energy: C.N.R. Rao

November 17, 2013. India will become a leader in nuclear energy with new technology which is being used for the first time to build a fast breeder reactor to generate 500MW at Kalpakkam near Chennai, Prime Minister's scientific advisory council chairman C.N.R. Rao said. Rao said if the new technology succeeded, the reactor would be commissioned by April 2014 at the Kalpakkam atomic power plant, about 80km from Chennai in Tamil Nadu. (

Govt steps up pace of talks with Japan on nuclear deal

November 15, 2013. The government is steadily accelerating negotiations with Japan on civil nuclear cooperation. The previous round of formal negotiations was on November 7-8. This was only a couple of weeks after a massive earthquake struck Japan’s east coast; a tsunami advisory was issued for the Fukushima area, where there was a notorious accident, in the wake of a quake, in early 2011. This was also apparently discussed during the meeting between External Affairs Minister Salman Khurshid and Japan foreign minister Fumio Kishida, on the sidelines of the recently concluded Asia-Europe Foreign Ministers Meeting. Formal negotiations to establish a civil nuclear deal with Japan started in June 2010 in Tokyo, followed by consecutive rounds in October (Delhi) and November (Tokyo). However, India slowed the pace of negotiations in the the aftermath of the Fukushima nuclear accident in March 2011. The talks were revived in May this year by Prime Minister Manmohan Singh and his Japanese counterpart Shinzo Abe. India has inked deals on cooperation in nuclear energy with a host of countries — the US, France, South Korea, Canada and Australia, among others. The governmenta aims to achieve a nuclear power capacity of 63,000 MW by 2032, from the current installed capacity of 4,780 MW. (

PowerMin sends note on discom debt rejig to Cabinet

November 15, 2013. Power Ministry has sent the note on financial restructuring of state discoms to the cabinet for final approval, the ministry said. As per the proposal, the state electricity boards of Jharkhand, Bihar and Karnataka will be allowed to convert their outstanding loans, till March 2013, into bonds as part of an amendment to the discom debt restructuring package. Karnataka along with Jharkhand and Bihar had approached the Ministry seeking this special provision. Currently, under Financial Restructuring Package (FRP) 50% of the accumulated debt of the discoms till March 2012 can be converted into bonds. These bonds will be issued by the distribution companies to the participating lenders, backed by state government guarantees. Balance 50% loans will be restructured by providing moratorium on principal and best possible terms for repayments. The support under the scheme is available for all participating state-owned discoms on fulfilling short-term mandatory conditions. The accumulated losses of state power distribution companies are estimated at about ` 1.9 lakh crore as on March 31, 2011, and ` 2.46 lakh crore as on March 31, 2012. (

Draft guidelines on hydel projects' local area fund issued

November 13, 2013. The Mumbai power ministry has issued guidelines on the local area development fund (LADF) of central hydro-electric projects, in order to meet the infrastructure and development needs of local population. As envisaged in the National Hydro Power Policy 2008, an additional one per cent free power from the project would be provided and earmarked for LADF. The host state governments would also provide a matching one per cent from their share of 12 per cent free power towards this corpus. These guidelines will be applicable to all central hydro-electric projects whose power allocation orders have been issued after August 31, 2008. The ministry has sought comments and suggestions from all stake holders. According to the draft guidelines, the amount received from the sale of one per cent additional free power by the project developer will be allotted by the local area development committee (LADC) in the form of cash transfer to all families of the project affected area (PAA), every year, during the entire life span of the project. Cash transfer to the beneficiaries under the scheme be carried out only by electronic transfer of funds from the bank account of the LADF to the bank account of the beneficiaries. The works to be taken up in the PAA and project affected zone will be only on the basis of the recommendations of the concerned gram panchayat, block and district level local bodies. The revenue to be deposited in the LADF for a project for a particular year would be based upon the annual tariff fixed by the power regulator. The contribution into LADF would be made annually by the state government and project developer. The LADF would be available in the form of an annuity over the entire life of the project. A state-level committee headed by secretary (energy) will monitor the operation of the LADF. Further, the LADF will be administered by LADC, which will be constituted for each project separately. All these LADCs constituted within the district will function under the overall superintendence and control of the district magistrate. There will be four categories of families in the PAA: fully-affected families; partially affected families; below-poverty-line families among non-projected affected families; and above-poverty-line families among non-projected affected families. (




China to carry out large-scale shale gas production by 2015

November 17, 2013. More than 100 million cubic meters of shale gas has been extracted in China this year, according to China's Ministry of Land and Resources. The second round of shale gas development is also expected to begin its first drilling in late November. The ministry said that as of September, 142 boreholes have been dug to extract shale gas across the country. Most of them are located in Sichuan province and Chongqing municipality. All of them are owned by three state-owned companies: China National Petroleum Corporation (CNPC), Sinopec and Shaanxi Yanchang Petroleum. CNPC and Sinopec plan to increase their shale gas production to 2.5 billion and 5 cubic meters, respectively, by 2015. If the excavation continues at present speeds, the companies may be able to reach the 6.5 billion-cubic-meter target set in the 12th Five Year Plan or even exceed it by up to 3.5 billion cubic meters. China is said to hold the world's largest reservoir of shale gas. Royal Dutch Shell has jointly worked with Sinopec to drill an exploration well Liye-1 in central China. Shell is also collaborating with CNPC to evaluate the Fushun-Yongchuan block and is considering commercial production next year. (

Shale revolution spreads with record wells outside US

November 15, 2013. The hydraulic fracturing of shale in search of oil and gas has hardly started outside the U.S., but that’s changing. A record 400 shale wells may be drilled beyond U.S. borders in 2014, with most in China and Russia. While that’s a fraction of the thousands of shale wells drilled in the U.S., the number of rigs used onshore in Europe and the Asia-Pacific region has increased 10 percent over the past year. Most of those rigs are meant for shale. Fracking in the U.K. will start next year, after the government lifted an 18-month moratorium imposed when a drilling company found it had accidentally caused earthquakes. Two utilities -- Centrica Plc of Britain and GDF Suez SA of France - - have bought stakes in the country’s drilling licenses to help bankroll the drillers and win a cut of any profit. (

Ophir in $1.3 bn deal with Temasek unit for Tanzania gas

November 14, 2013. Britain's Ophir Energy agreed a $1.3 billion sale of a stake in Tanzanian gas fields, bringing in a unit of Singapore's Temasek Holdings to help fund a development project in the latest Asian investment in East Africa's gas sector. Ophir said a sale process was under way with Indian state-run gas company GAIL in the running as a potential buyer. The Tanzanian fields that Ophir discovered with its partner BG Group are its prize assets, estimated to hold 15 trillion cubic feet of gas. (


Nigeria sale of four state-owned oil refineries next year

November 18, 2013. Nigeria, Africa’s largest oil producer, plans to begin privatizing its four state-owned oil refineries before the end of the first quarter, Petroleum Minister Diezani Alison-Madueke said. The refineries, which have a combined 445,000 barrel-a-day capacity, should be privatized within 18 months, according to the report submitted to President Goodluck Jonathan in November 2012. Nigeria produced 1.99 million barrels a day of crude in October. While Nigeria is also Africa’s top crude exporter and the most populous with more than 160 million people, it relies on fuel imports to meet more than 70 percent of its needs. Its state-owned plants operate at a fraction of their capacity because of poor maintenance and aging equipment. The West African nation exchanges 60,000 barrels a day of crude for products with Trafigura Beheer BV and a similar amount with Societe Ivoirienne de Raffinage’s refinery in Ivory Coast, according to Nigeria National Petroleum Corp (NNPC). Improvements to the two-unit 210,000 barrel-a-day Port Harcourt refinery, the country’s biggest, will be completed by the end of the year, to be followed by enhancements at the Warri and Kaduna sites in 2014, according to the NNPC. Warri has a daily processing capacity of 125,000 and Kaduna 110,000 barrels. (

Hyundai E&C wins $1.4 bn order in Venezuela

November 18, 2013. South Korea's Hyundai Engineering & Construction (E&C) said it has won a 1.5 trillion won ($1.41 billion) order to build a refinery plant and a highway in Venezuela. The project, received from Venezuela's state-run oil firm PDVSA Petroleo S.A., will be completed after 32 months and is part of a $2.3 billion construction project, Hyundai E&C said. (

Oil producers overtaking refiners on flood of US shale

November 14, 2013. Energy investors are shifting their attention from U.S. refining stocks that added $20 billion in market value last year to oil producers promising record output in shale fields. An S&P energy index of U.S. shale-oil explorers such as Pioneer Natural Resources Co. has jumped about 28 percent, or nine times the gain achieved during the last three years combined. They’re riding the explosion of new wells and rail links to refineries that’s bolstering revenue after crude traded in New York touched a 27-month high in August. (

Transportation / Trade

Norway oil-service strike may hurt production

November 18, 2013. A strike by Norwegian oil-platform workers that began three days ago may hurt crude and gas output in the country, western Europe’s largest producer of the fuels. About 1,400 workers conducting insulation and maintenance work for Bilfinger SE, Beerenberg Corp. AS and Kaefer GmbH both off- and onshore are working at 45 percent capacity in a protest over pay. The dispute arose less than 1 1/2 years after Norway’s longest oil-worker strike disrupted production, prompting the government to intervene to avert a complete shutdown. (

US crude production beat imports in Oct, EIA says

November 14, 2013. U.S. crude oil production exceeded imports in October for the first month since February 1995, the U.S. Energy Information Administration (EIA) said. Output averaged 7.74 million barrels a day, the EIA said. Crude oil net imports were 7.57 million, down from 7.92 million the previous month. Horizontal drilling and hydraulic fracturing, or fracking, have unlocked supplies in shale formations in North Dakota, Texas and other states. West Texas Intermediate (WTI), the U.S. crude benchmark, has dropped to below $95 from above $110 in September as domestic output reached a 24-year high. For the year, production will reach 7.49 million barrels a day, the EIA forecast, 20,000 barrels lower than imports. Output will reach 8.49 million in 2014 as imports drop to 6.54 million. The EIA lowered its WTI price forecast to $97.74 a barrel this year from last month’s projection of $98.69. The U.S. benchmark grade will average $95 in 2014 versus last month’s estimate of $96.21. (

China buys second North Sea crude cargo this year

November 13, 2013. China will receive a tanker of North Sea crude for the second time this year, according to fixture reports from two shipbrokers. The rare arbitrage opened after the spread between benchmarks Dated Brent and Dubai narrowed to the smallest in seven months. China International United Petroleum & Chemical Corp., known as Unipec, booked the suezmax SKS Satilla to load at Ekofisk Teesside terminal in England for Ningbo from Nov. 20 to Nov. 25. This unusual purchase comes after Chile bought two cargoes of November Ekofisk, one of four grades that make up Dated Brent. Refiners in South Korea, who get a 3 percent import waiver, will load three very large crude carriers of Forties blend this month. Oseberg and Brent are the other two components of Dated Brent, which is used to price more than half the world’s oil. China typically buys crude from nearby countries as well as the Middle East, Russia and West Africa. (

Policy / Performance

OPEC says $160-a-barrel oil by 2035

November 18, 2013. The Organization of the Petroleum Exporting Countries (OPEC) raised its forecasts for its crude-oil basket price and long-term world oil demand growth, according to the latest annual World Oil Outlook report. The report from OPEC, which provides a view on the world oil market from 2010 to 2035, said oil prices CLZ3 are forecast to "remain stable in the long run," though its estimates are a bit higher than last year’s report. OPEC said it expects its nominal OPEC Reference Basket price (ORB) to average $110 a barrel over the period to 2020 and then rise to $160 by 2035. In its 2012 report, OPEC had said it assumed that the ORB nominal price would average $100 a barrel over the medium term before rising with inflation to reach $120 by 2025 and $155 by 2035. The ORB is made up of a dozen different types of crude oils. For the medium-term period of 2012-2018, demand is expected to increase by an average of 0.9 million barrels per day annually, reaching 94.4 million barrels per day by 2018, OPEC's latest report said. In last year`s report, it projected that by the year 2016, demand would reach 92.9 million barrels a day. For the long-term, it expects demand to rise by nearly 20 million barrels per day for the 2012-2035 period to 108.5 million barrels per day by 2035. That`s up from its previous forecast for demand of 107.3 million barrels per day by 2035. (

Platts says oil review shows it’s meeting regulator guidelines

November 18, 2013. Platts, an energy news and price publisher, said its reporting practices and governance policies comply with guidelines set out by international regulators. The company’s procedures align with principles set out by the Madrid-based International Organization of Securities Commissions, a group of national market regulators from more than 100 countries, Platts said. The conclusion follows an independent review by Ernst & Young that examined Platts’s price assessment processes, including those for oil, at its offices in London, Houston and Singapore. (

UK North Sea breaks make EnQuest tax free to 2018

November 15, 2013. The North Sea's largest British independent oil producer, EnQuest Plc, will pay no tax until 2018 after its decision to go-ahead with the development of a second new field of heavy oil. Companies operating in the British North Sea have enjoyed improving tax terms over the past two years as the government has become increasingly concerned about declining output there. The ultra heavy oil tax allowance Enquest will tap for its two Kraken fields will trigger two 800 million pound allowances, giving the fields tax relief worth 512 million pounds ($824 million). Enquest made a profit of about $98 million in the first half of this year after paying $70 million in tax. Enquest announced it would go ahead with plans to develop Kraken along with its two partners. The project has 137 million barrels of oil equivalent (boe) in gross reserves, increasing the company's total reserves by almost 50 percent compared with the 2012 year end. Kraken is expected to produce as much as 30,000 boe a day, coming on stream in 2016/17. Enquest estimated net capital expenditure to reach first oil at $1.4 billion. (



Bangladesh plans to increase power generation capacity to 24 GW

November 19, 2013. The government has unveiled a plan to generate 24,000 MW of electricity by the year 2021 to meet the country's growing demand for power. The demand for electricity in the country is increasing at a rate of 9 to 12 percent per year. The power division planned to set up power plants with a combined generation capacity of about 17,900 MW and to phase out the rundown plants with a combined generation capacity of over 3,500 MW by 2021. According to the plan, 7,651 MW of the 17,900 MW capacity will be installed by the private entrepreneurs which are 43 per cent of the total capacity to be installed by next eight years. (

Pertamina to venture into power plants in Indonesia

November 18, 2013. State energy company Pertamina is expanding into the electricity business and plans to build power plants in several parts of the archipelago, including three industrial estates in West Java. The company is aiming to become an independent power producer with the ability supply up to 5 GW of electricity to the state electricity company Perusahaan Listrik Negara. Pertamina also plans to build three plants in industrial estates in East Java. The construction is expected to take three years. (

Alliant Energy says new gas power plant will be needed by 2019

November 18, 2013. Wisconsin Power and Light Co. will need to add a power plant by 2019, after it shuts down a coal-fired power plant in southwestern Wisconsin in the next few years. The Madison-based utility, a division of Alliant Energy Corp., is studying whether to convert a natural gas-fired power plant in Sheboygan Falls, or one in Neenah. Also under consideration is to build a new power plant fueled by natural gas. The utility is looking at adding 300 MW of generation, after it shuts down the 200 MW Nelson Dewey plant in Cassville, on the Mississippi River, in 2015. Also retiring is a 60 MW boiler at a coal plant in Sheboygan, on Lake Michigan. (

Tepco successfully removes first nuclear fuel rods at Fukushima

November 18, 2013. Tokyo Electric Power Co. (Tepco) successfully removed the first nuclear fuel rods from a cooling pool at the wrecked Fukushima nuclear plant, an early milestone in decommissioning the facility amid doubts about whether the rods had been damaged and posed a radiation risk. The first of the fuel-rod assemblies at the plant’s No. 4 reactor building was transferred from an underwater rack on the fifth floor to a portable cask just before 4 p.m., the utility known as Tepco said. Tepco planned to remove 22 assemblies from the pool, which contains 1,331 spent fuel assemblies and 202 unused assemblies, the company said. Crews are beginning with the unused assemblies because they are less fragile. (

China to build power plants in Yemen, expand ports

November 16, 2013. China will build power plants in Yemen with total output capacity of 5,000 MW and expand the Arab country's main container ports, the Yemeni president said after his return from a visit to China. China will be building two power plants. (

Transmission / Distribution / Trade

Abengoa wins Brazilian electricity transmission project

November 19, 2013. The Brazilian Electricity Regulatory Agency has selected Abengoa to carry out a new electricity transmission project in the states of Sao Paulo and Minas Gerais in south east Brazil. The project, which is worth around €170mn, comprises a 367km transmission line with a capacity of 500kV between the Marimbondo II and Campinas substations. The transmission line will be operational in September 2017. (

Power coal surplus to remain amid insufficient cuts, Citi says

November 18, 2013. The thermal coal market will remain in surplus next year as producers fail to cut shipments in response to the glut and Chinese inventories of the power-station fuel increase, according to Citigroup Inc. Citigroup maintained its forecast for Newcastle coal to average $85 a ton in 2015. The bank increased its estimate for the first quarter of next year by 2.5 percent to $82. The fuel has averaged $85.26 this year, according to data from globalCOAL. Supply reductions have been muted in Australia, the world’s second biggest exporter, because producers are locked into long-term rail freight and port deals, which are required to finance the export infrastructure, Citigroup said. Under the agreements known as take-or-pay contracts, suppliers must pay a fee regardless of whether the coal is shipped. Producers from Australia to the U.S. have cut workers and shelved projects as slumping prices and escalating costs reduce profits. Coal inventories in China, the world’s biggest energy user, have climbed at mines, ports and power plants, and demand is projected to weaken as tighter credit conditions slow industrial growth, Citigroup said. (

Potomac boosts Maryland transmission network with line reconstruction

November 18, 2013. FirstEnergy subsidiary Potomac Edison has reconstructed a 138kV transmission line in Maryland, US, as part of a key project to strengthen its transmission network in the region. The $5.3 mn project also seeks to maintain reliable electric service for the company's over 65,000 customers in parts of Carroll, Frederick, Howard and Montgomery counties in Maryland, US. Under the project, Potomac crews installed higher capacity conductor on a 13-mile stretch of transmission line connecting a substation in Thurmont, in Frederick County, and a substation in Union Bridge, located adjacent to the Carroll County. (

BC Hydro starts DCAT transmission line construction

November 15, 2013. BC Hydro has started right-of-way clearing and site preparation for the Dawson Creek-Chetwynd Area Transmission (DCAT) project, in South Peace, British Columbia (BC), Canada. The DCAT project is expected to double the electricity capacity in the region. The right of way clearing and site preparation will employ 55 to 110 workers, according to the company. The project includes a new substation at Sundance Lake near Highway 97, a new 60km, double circuit, 230kV transmission line between the new substation and Bear Mountain Terminal, located west of Dawson Creek, and a new 12km, double circuit, 230kV transmission line to connect Bear Mountain Terminal to the existing Dawson Creek Substation. (

JCP&L holds open house for Morris County transmission project in New Jersey

November 13, 2013. Jersey Central Power & Light (JCP&L) is holding open houses for its proposed Montville-Whippany transmission reinforcement project at the Holiday Inn, 707 Route 46 East, Parsippany, in New Jersey, US. The proposed route for the project involves construction of a new, seven-mile 230kV transmission line in Morris County through parts of East Hanover, Parsippany and Montville, to help improve service reliability, add redundancy to JCP&L's system and also address the growing demand for electricity in the region. Meanwhile, the company expects to file a petition for the project with the New Jersey Board of Public Utilities in the first quarter of 2014. Based on current and projected system conditions and the potential for future demand on the system, PJM Interconnection has determined that the project should be built and enter service by June 2017. The project is part of JCP&L's Local Infrastructure and Transmission Enhancement (LITE) Program, a $200 mn, multi-year transmission system initiative designed to boost service reliability for its customers in northern and central New Jersey. (

Policy / Performance

South Korea to increase power prices as demand causes shortages

November 19, 2013. South Korea will increase power prices by an average 5.4 percent, the second increase this year, as the government seeks to curb soaring demand for electricity that’s caused shortages. Electricity prices will rise 6.4 percent for industrial plants and buildings, 2.7 percent for households and 3 percent for farms from Nov. 21, the Ministry of Trade and Energy said, following an average 4 percent increase in January. The government also plans to impose a tax on soft coal of 30 won ($0.03) per kilogram from July 2014, and reduce duties on liquefied natural gas and kerosene to shift consumption of coal to gas and oil, the ministry said. (

Japan won’t set dates for restarting 50 idled nuclear reactors

November 19, 2013. Japan’s nuclear regulator said it has no fixed schedule to complete safety checks at idled atomic plants, possibly delaying reactor restarts and the supply of cheaper energy the government wants to drive economic growth. Speculation on when some of Japan’s 50 reactors would restart increased this year as the Nuclear Regulation Authority (NRA) introduced stricter safety tests in July in response to the 2011 nuclear disaster in Fukushima. NRA said at the time the inspections would take about six months, suggesting some atomic plants may restart in January. (

Turkish minister says nuclear power plant to affect France’s stance on ‘Armenian Genocide’ issue

November 19, 2013. "France's investments in the Turkish nuclear power plant will affect its stance on the so-called Armenian genocide", Turkish Minister of Energy and Natural Resources Taner Yildiz said. The minister said that the French authorities are well aware that the 'Armenian genocide' issue for Turkey is a "line that can not be crossed." Turkish and Japanese Prime Ministers signed an agreement on launching the negotiations on the implementation of the nuclear power plant construction project in Sinop city. (



Developed nations must do more to tackle global warming: India

November 18, 2013. India said it will push the industrialised nations to take a leadership role to tackle global warming, even as there was no breakthrough in sight on key issues after week-long negotiations at the UN Climate Conference. India and other developing countries including China are upset with countries like Australia, Japan and Canada for abandoning the greenhouse gas emission targets set by the 1997 Kyoto Protocol. Japan recently announced that it will let emissions rise 3 per cent above 1990 levels by 2020. As the week-long official-level talks failed to clinch an understanding, all hopes are now pinned on the ministerial level discussions set to begin in Warsaw, the Polish capital. Environment Minister Jayanthi Natarajan is expected to arrive to attend the ministerial level talk. The Kyoto Protocol is a global treaty that sets binding obligations on industrialised nations to cut greenhouse gas emissions. At the negotiation level talks, India has expressed its disagreement with the European Union (EU) on the refrigerant gas hydroflurocarbons (HFCs), saying that the country is still not sure about alternative technologies, its cost and how it is going to impact millions of consumers. (

CDC Group to invest $25 mn in India’s Green Infra

November 18, 2013. CDC Group Plc, a development finance institution owned by the U.K. government, agreed to invest $25 million in an Indian renewable-energy developer. CDC will provide the funds to Green Infra Ltd. to help expand its wind and solar capacity, the London-based private equity fund said. The CDC investment is part of a $125 million financing round that will allow Green Infra to more than double its portfolio to 1,000 MW by 2016, it said. Green Infra owns 387 MW of capacity, about 90 percent wind-based. The New Delhi-based developer was set up by IDFC, India’s biggest financier of clean-energy projects, in 2008. (

Shriram Group's energy arm expects business prospects to improve

November 17, 2013. The Shriram Group's renewable energy arm Orient Green Power Company Ltd (OGPL) said it is confident about the prospects of the business going forward as some of the strategies which the company has been working on will help to address most of the problems which had affected the functioning of the business. The company said it is closely working on completing its on-going projects in a time bound manner and this should result in improved sales and margines in the coming years. The company's immediate target is to complete the on-going 300 MW in the wind business and 46 MW in the biomass business. The company has undertaken few initiatives which should help to reduce to lower the interest outgo in the coming years. (

Premier Solar ties up with US firm to invest $400 mn in AP

November 17, 2013. Premier Solar has tied up with Chicago-based renewable energy company New Generation Power to set up solar farms in Andhra Pradesh (AP). The consortium, which plans to invest $400 million (` 2,500 crore) in the next couple of years, has already secured contracts to set up 70 MW capacity and will bid for another 245 MW under the Andhra Pradesh Solar Policy, which aims to build 1,000 MW in renewable capacity. In the first phase, the consortium will install 70-MW solar farms in 14 locations in the State. The Hyderabad-based company is negotiating with US investors to get low-cost funding. The consortium has signed a power purchase agreement with the AP Government for 20 years. Mumbai-based WAAREE Group and Premier Solar will be the joint EPC contractors for the first phase. (

Wipro tops India 200 CDLI

November 15, 2013. IT major Wipro said it has been named leader in the India 200 Climate Disclosure Leadership Index (CDLI) for the second time. Wipro continues to retain the top position with a disclosure score of 98/100. The average disclosure score of Indian companies is 68, the company said. Wipro's ranking was revealed in the 2013 CDP India 200 Climate Change Report titled 'Energy efficiency: Driving the climate change response in Indian high performing companies'. The report that is said to provides authoritative evaluation of corporate progress on climate change in India is co-written by CDP, formerly known as the Carbon Disclosure Project, and the Sustainability practice of the leading Management Consulting firm Accenture. (

Gujarat tribunal notices to solar energy developers

November 14, 2013. The Appellate Tribunal for Electricity (Aptel) has issued notices to 80 Gujarat-based solar project developers on an appeal filed by Gujarat Urja Vikas Nigam (GUVNL), the state government-run utility. GUVNL is seeking a cut in the rate of power it will buy from the solar players on the grounds that the actual cost incurred by developers of these projects was 40 per cent less than initially assumed. The utility is seeking a proportionate cut in the rate to ` 9 a unit from the ` 12.54 agreed under the power purchase agreements (PPAs). GUVNL has signed PPAs with 80 players, including the solar arms of Tata, GMR Essar and Welspun. The dispute has put solar energy projects in Gujarat of ` 14,000 crore under a cloud. The tribunal admitted the appeal, with a rider on its maintainability. The hearing is set for December 11. (


Ban Ki-Moon scolds rich countries backtracking on climate

November 19, 2013. United Nations Secretary-General Ban Ki-Moon lashed out at rich nations that are watering down commitments to fight global warming, citing the typhoon that devastated the Philippines. Scientists say rising temperatures are spreading droughts, more violent storms and boosting sea levels. Typhoon Haiyan struck the Philippines with 195 mile-per-hour winds earlier this month, killing thousands and leaving more without homes. Japan shelved its target to reduce greenhouse gas emissions from 1990 levels, arguing that the closure of nuclear reactors following the meltdown in Fukushima in 2011 make meeting that goal impossible. (

Putin adviser sees political will to end Greenpeace row

November 19, 2013. Russia is showing “political will” to end a two-month-long dispute over the prosecution of Greenpeace activists as courts start to set them free on bail, President Vladimir Putin’s human rights adviser said. Courts in St. Petersburg granted bail to a Brazilian, two Argentines, a New Zealander, a Canadian, an Italian, a Frenchman, a Finn and a Pole a day after three Russian citizens detained during an Arctic protest were also set free, Greenpeace’s Russian branch said. (

EU said to weigh Dec deal on carbon-fix timetable

November 19, 2013. European Union (EU) nations may seek an initial deal next month to adjust a draft carbon-market fix by delaying sales of emission permits over three years starting in 2014. Representatives of the 28 EU member states are likely to opt for keeping the volume of permits to be withheld at auctions at 900 million. That’s unchanged from last year’s draft of the rescue plan. The European Commission, the EU’s regulatory arm, originally proposed delaying sales of emission allowances in 2013-2015 to alleviate a record glut. (

Tsunami-blocking mangroves lure carbon investors: Southeast Asia

November 19, 2013. Replanted mangrove trees in Southeast Asia are getting credit for protecting against deadly tsunamis and typhoons such as Haiyan in the Philippines and cutting greenhouse gas emissions. Mangrove regeneration in Northern Samar, about 100 miles (160 kilometers) north of the worst-hit Philippine city of Tacloban, helped minimize damage from the Nov. 8 storm, according to the Trowel Development Foundation, which oversaw the plantings. On Indonesia’s Sumatra island, where a 2004 tsunami killed 170,000 residents, companies including Danone and Credit Agricole SA have put up about $4 million in exchange for tradable carbon offsets tied to the reforestation. (

Climate change makes any disaster global

November 19, 2013. Historians may look back at Typhoon Haiyan as a turning point in disaster journalism and the politics of climate change. For the first time, an extreme-weather catastrophe in the tropics has shrugged off its “made in Asia” label and gone global. Coverage of storms, floods and droughts usually begins and ends with war-zone style reporting about dire conditions on the ground. The raw numbers of the dead are interwoven with tragic personal histories of survivors who have lost homes and loved ones. The truism that a picture speaks a thousand words is most true of disaster journalism. With so many shocking scenes of destroyed homes, floating corpses and crying children, the ratio of images to words -- already high in everyday reporting -- skyrockets. (

Colorado fracking agreement joins drillers and activists

November 19, 2013. Colorado will become the first U.S. state to limit methane emissions from the production of natural gas and oil, addressing an issue that climate watchdogs say is a downside of the boom in hydraulic fracturing. Colorado Governor John Hickenlooper announced an agreement between oil-and-gas producers Anadarko Petroleum Corp., Noble Energy Inc. and Encana Corp. and the Environmental Defense Fund, a watchdog group, to have the industry track and eliminate methane gas leaks from tanks, pipelines and other production equipment. (

Most coal must stay in the ground, UN climate chief says

November 19, 2013. The coal industry needs to change rapidly to help prevent global warming by leaving most of the fuel in the ground and closing the least efficient power plants, UN climate chief Christiana Figueres said. Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, said fumes from burning the fossil fuel are loading the atmosphere with greenhouse gases, competing for water resources and harming public health. Coal's role in fueling the world economy has moved into the focus at the UN talks after a study by UN scientists indicated that humans have already burned half the fossil fuels they can before risking dangerous changes to the climate. At best, emissions pledges for 2020 would lead to greenhouse gas output about 18 per cent above the level needed to keep global temperature increases to 2 degrees Celsius since the industrial revolution, according to the UN Environment Program. (

Japan added 4 GW of clean energy since July 2012, METI says

November 18, 2013. Japan added 4,086 MW of clean energy capacity since the country began an incentive program in July 2012. The Ministry of Economy, Trade and Industry (METI) announced the added capacity through July 31. Solar accounted for most of the capacity with 1,521 MW of residential and 2,395 MW of utility- and commercial - scale projects, the ministry data showed. The ministry has approved 23,607 MW of clean energy projects through the end of July. The METI revised the added capacity through June 30 to 3,540 MW, from 3,666 MW announced on Oct. 4. (

Ocean acidification may more than double by 2100

November 18, 2013. Ocean acidity is likely to more than double by 2100 because of fossil-fuel pollution, putting fisheries at risk and diminishing the capacity of the seas to absorb carbon-dioxide emissions, a study showed. The seas have already acidified by 26 percent since industrialization began two centuries ago, and a continuation of current trends may lead to a 170 percent increase in acid levels by the end of the century, according to the study released at the United Nations climate talks in Warsaw. (

World emissions may peak amid China green push, Germanwatch says

November 18, 2013. Global carbon-dioxide emissions from energy may peak this decade because of China’s efforts to cut pollutants, Bonn-based research group Germanwatch said. China, which accounted for about four-fifths of the growth in annual CO2 emissions in 2002-2012, is adding renewable power and boosting energy efficiency as it expands climate-protection measures, Germanwatch said. China’s government, seeking to tackle the pollution that’s choking Beijing and other cities, is increasingly promoting cleaner-burning natural gas, as well as wind and solar energy, to produce electricity and reduce carbon emissions. While the country remains the world’s largest consumer of coal, growth in use of the fuel is slowing. (

World Bank says natural disasters cost $3.8 tn since 1980

November 18, 2013. Annual economic losses from natural disasters have almost quadrupled in the past three decades, the World Bank said in a report that recommends investments ranging from early-warning systems to safer roads and buildings. The average reported losses rose from around $50 billion a year in the 1980s to almost $200 billion a year in the past decade, totaling $3.8 trillion from 1980 to 2012, according to the report. Three-quarters of the total was due to extreme weather, it said. (

Atico, Steag to invest $331 mn in Brazil wood power plant

November 18, 2013. Grupo Atico, a Brazilian asset manager, will build a 750 million-real ($331 million) biomass project in the northeastern city of Sao Desiderio with Germany’s Steag GmbH that will run on wood chips. The 150 MW project will include 25,000 hectares of eucalyptus plantations and a 70-kilometer (44 mile) power line. Atico owns 75 percent of the project through its power-generation fund while Steag owns the remainder. Atico and Steag sold energy from the plant at 136.69 reais a megawatt hour in a government-organized auction for new power projects in August. The plant must begin operations by January 2018. (

Typhoon fuels call for global warming compensation funds

November 18, 2013. The typhoon that killed thousands of people in the Philippines has energized debate about whether rich nations should compensate poor ones for climate-related losses, a proposal the U.S. and European Union are resisting. Some 130 countries, including islands concerned they’ll disappear with rising sea levels, are pushing for reparations as part of a “loss and damage” mechanism at United Nations climate talks in Warsaw. They blame countries that industrialized 200 years ago for damaging the atmosphere. (

Global climate change likely to affect dominant coral population

November 16, 2013. Researchers have said that the dominant, abundant corals that have wide distributions are much affected by global changes in climate and ocean chemistry. The team of scientists from the University of Hawaii - Manoa (UHM), Joint Institute for Marine and Atmospheric Research (JIMAR) and the National Oceanic and Atmospheric Administration (NOAA) evaluated both the geologic record of past extinctions and recent major events to assess the characteristics of dominant corals under various conditions. They determined that during periods advantageous to coral growth, natural selection favors corals with traits that make them more vulnerable to climate change. (

Renewable fuels quota to be cut in US EPA change

November 16, 2013. The Obama administration proposed a cut in the amount of renewable fuels that refiners must blend with gasoline next year, bowing to oil industry complaints that the targets contained in 2007 legislation were too high. The U.S. Environmental Protection Agency (EPA) said it would require between 15 billion to 15.52 billion gallons of renewable fuels such as corn ethanol and biodiesel in 2014. That compares with 18.15 billion gallons set in the legislation, making it the first time the legal mandate would be cut. (

Japan sets emissions target in setback to UN treaty talks

November 15, 2013. Japan set a new target for greenhouse gas emissions that critics say will set back United Nations talks for a treaty limiting fossil fuel emissions. The new target effectively reverses course from the goal set four years ago by allowing a 3.1 percent increase in emissions from 1990 levels rather than seeking a 25 percent cut. The new target, announced by Minister of the Environment Nobuteru Ishihara in Tokyo, calls for Japan to cut emissions by 3.8 percent by 2020 compared with 2005 levels. Ministry data shows Japan’s production of greenhouse gases increased 7 percent by 2005 compared with 1990, the baseline for the government’s previous goal. The country’s previous commitment, set in 2009, sought to reduce emissions 25 percent by 2020 from 1990 levels. The new goal would represent a 3.1 percent increase from 1990 if that year is used as the starting point. China has singled out Japan and the European Union for their failures on action against carbon pollution. (

US, EU, reject Brazilian call for climate equity metric

November 15, 2013. The U.S. and European Union blocked a proposal supported by 130 nations including Brazil and China that would use pollution levels dating back to the industrial revolution to help set limits on emissions in the future. Australia and Canada joined in opposing discussion of the plan when it was introduced Nov. 11 at the start of two weeks of United Nations-sponsored talks Warsaw. Developing nations are still pressing for it to be included in the discussions, said Ambassador Jose Antonio Marcondes de Carvalho, the lead envoy for Brazil, which authored the plan. (

Google will build another six solar power plants in the US

November 15, 2013. Google has announced plans to continue its rollout of solar energy plants in the U.S. with one of its larger investments to date: $80 million for six new facilities. So far, Google has committed over $1 billion to wind and solar power plants that create clean energy and generate "attractive financial returns," it said in a blog post. The new plants, which will be built in California and Arizona, are expected to generate 160 MW of electricity, enough to power 17,000 typical U.S. homes. They are expected to be operational by early 2014. (

Wal-Mart said to fail its own post-Katrina climate pledge

November 14, 2013. In the wake of Hurricane Katrina, Wal-Mart Stores Inc. pledged to rely fully on renewable energy and sell products that sustain the environment. Eight years later, the Bentonville, Arkansas-based retailer is failing to carry out its environmental pledges, according to a report an environmental group released. Its greenhouse-gas emissions are rising, and its share of renewable energy, measured as a percent of power it uses, lags behind rivals such as Kohl’s Corp. and Best Buy Co., according to the report. Wal-Mart, the world’s largest retailer, is drawing the attention of environmental groups such as the Sierra Club because its reach is so long, and its pledge so dramatic. In 2005, then-chief executive Lee Scott mentioned the devastation in New Orleans from Katrina, and then pledged that becoming more efficient would help both the environment and the company’s bottom line. The retailer met a goal of cutting greenhouse gases by 20 percent at its existing stores, and has increased the mileage efficiency of its fleet of trucks, the company said. It predicts that it will begin reducing its overall emissions by 2020, even as it grows the number and size of its stores. (

Eurus Energy plans 14 MW solar plant on Japan Golf Course

November 14, 2013. Eurus Energy Holdings Corp., a Japanese developer of clean-energy projects, will build a 14 MW solar-power plant in northern Japan. The facility, to be built on a former golf course straddling the Miyagi and Fukushima prefectures, is expected to start operations in March 2015, the Tokyo-based company said. (

Black treasure in Poland clouds UN warming negotiations

November 13, 2013. A few weeks after it finishes hosting United Nations talks on limiting fossil-fuel emissions, Poland may decide to double the size of one of its biggest coal-burning power plants. Prime Minister Donald Tusk in June revived a $3.8 billion plan to expand the Opole electricity plant to guarantee security of power supplies, as it uses domestically mined coal. Next month, a final decision on the project is to be made by a government utility that owns Opole. The facility, along with Poland’s dependence on coal to produce 87 percent of its electricity, raises questions about the nation’s stewardship of the annual UN global warming talks under way in Warsaw. As host, Poland is responsible for helping craft the final agreement. Environmental groups are concerned it may be weak because of the nation’s reliance on coal, the most polluting of major energy sources worldwide. The government doesn’t see any inconsistency between its own policies and hosting the UN talks. Erased from the map for more than a century when its territory was divided between Russia, Prussia and Austria in the late 1700s, Poland puts a big emphasis on its energy security as an essential safeguard for its sovereignty. Russia supplies most of its natural gas, and Polish politicians often speak of coal as a “black treasure” to be protected. (

Keystone defended by Alberta premier as carbon questioned

November 13, 2013. Alberta’s premier defended her province’s environmental record while lobbying in Washington for the Keystone XL pipeline amid new questions over Canada’s ability to meet greenhouse-gas reduction targets. Alison Redford, making her fifth trip to promote the $5.3 billion project that would connect the oil sands in her Canadian province to refineries on the Gulf Coast, met with officials at the U.S. Environmental Protection Agency, the White House’s Council on Environmental Quality and the State Department. The State Department is overseeing an environmental review to estimate the extent Keystone would contribute to global warming, which has become the central issue in the more than five-year effort by TransCanada Corp. to get approval to build the pipeline. The tie-in between oil sands development and global warming surfaced again last month amid reports that Canada will have difficulty in meeting its obligation made at a 2009 United Nations summit to cut greenhouse gases by 17 percent by 2020 from 2005 levels. (

Tea Party’s green faction fights for solar in red states

November 13, 2013. A Georgia splinter group known as the Green Tea Coalition, which is part of the broader anti-big-government movement, is reviving the Republican link with the Sierra Club that dates back more than a century to President Theodore Roosevelt’s work to protect the environment. Its influence is being felt in other states, from Arizona in the West to North Carolina on the East Coast. The alliance is a danger for utilities such as Southern Co.’s Georgia Power unit and Pinnacle West Capital Corp.’s Arizona Public Service, which are resisting the spread of solar energy as a threat to their business model. It may help solar developers such as SolarCity Corp. and panel manufacturers including SunPower Corp. of San Jose, California. What’s uniting the environmental and Republican groups is the view that plunging prices for solar panels may mean consumers don’t need to buy all their electricity from utilities and their giant centralized generation plants. (

[1] GIIGNL 2013a, The LNG Industry in 2012, p. 31

[2]IEA 2013b, World Energy Outlook2013, p. 124.

[3]EU 2013, Quarterly Report on European Gas Markets, Volume 6 issue 2, Second quarter 2013, p. 10

[4]IEA 2013a, Gas Medium Term Market Report 2013, p. 123.

[5]Gas LNG Europe 2013, LNG Terminal Activities, Madrid Forum XXIV, 15/10/13. (GIIGNL, GLE, Poten&Partners)

[6]IEA 2013a, Gas Medium Term Market Report 2013, p. 123.

[7]Gas LNG Europe 2013, LNG Terminal Activities, Madrid Forum XXIV, 15/10/13

[8] Reuter 2013, “Many European LNG terminals face idling, seek new activities”, 20/09/2013;

Gas LNG Europe 2013, LNG Terminal Activities, Madrid Forum XXIV, 15/10/13

[9]FERC 2013, World LNG Estimated November 2013 Landed Prices, 07/10/13 (

[10]IEA 2013b, World Energy Outlook 2013, p. 128ff. (Nevertheless, IEA has prepared a “Gas Price Convergence Scenario” (see lines in Graph 4), which reflects primarily closer linkages between the regional markets).

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