Energy News Monitor I Volume X, Issue 7

India’s Energy Security: Finding New Narratives Lydia Powell, Observer Research Foundation

 

 

 

NEWS BRIEF

OIL & GAS

July 28, 2013. The Assam Asset of Oil and Natural Gas Corp (ONGC) has set in motion a multi-disciplinary approach to complete projects on time so as to double its production by 2030 from the current level of 1.21 million tonnes per year. The Assam Asset of ONGC had successfully met all the Memorandum of Understanding (MoU) targets for the financial year 2012-13. Assam Asset saw a sharp decline in production in the past two decades. The asset saw a turnaround in 2011-12 and consolidated its position further in the last financial year. The steep target to double the output by 2030, the plan, albeit difficult, is not impossible to achieve. The Assam Asset registered a crude oil production of 1.21mmt (million metric tonne) in 2012-13 against a production of 1.19mmt in the previous fiscal. On the gas production front, the MoU target of 452.6mmscm (million metric standard cubic metre) has been increased to 472.24mmscm. The exploration major has set in motion a plan to double its production by 2030 from the current level of 1.21 million tonnes per year. The asset has recently achieved success in the Banamali field under Mahmora area in Sivasagar district. It is also focusing on exploiting the potential of the Khoraghat gas field in Golaghat district. Thrust has also been laid on increasing gas sales to augment revenue. In this connection, two Assam government companies — Assam Gas Company Limited and Assam Electricity Grid Corporation Limited — have shown interest in procuring gas produced in the Nambor field. (www.telegraphindia.com)

July 27, 2013. ONGC has signed an agreement with Reliance Industries Ltd (RIL) to explore possibility of hiring RIL's infrastructure facilities on the east coast. ONGC aims to cut capital expenditure as also expedite field development by using RIL's infrastructure. ONGC plans to produce about 6 to 9 million standard cubic metres per day of gas by mid-2017 from G-4, KG-DWN - D & E fields in the first phase. (www.business-standard.com)

July 25, 2013. Cairn India hopes to ramp up crude production in its Barmer block from 180,000 barrels per day to 210,000-215,000 bpd by the end of the current fiscal. It plans to invest $3 billion in its energy assets in India, on developing the prolific Barmer block in Rajasthan. The company said Cairn had sought the oil ministry's approval for an integrated field development plan for the block. Cairn produces over 150,000 bpd of oil from the Mangala fields, over 25,000 bpd from Bhagyam, and the balance from the Aishwarya fields which commenced production earlier this March. (economictimes.indiatimes.com)

July 26, 2013. Amid political controversy on refinery location in Rajasthan, Hindustan Petroleum Corporation Ltd (HPCL) said Pachpadara is technically superior site for the project than Leelala in Barmer district. Pachpadara is also much more away from the international border in Barmer and it still has all the positive factors. Any dispute related to location would further delay the process and setting up of a refinery in Rajasthan. HPCL strictly goes by the recommendation made by Engineers India Limited (EIL) and state Task Force's approval for setting the refinery project at Pachpadara, not at Leelala. However, HPCL's costs would rise if it lays a longer pipeline to bring crude or gas from Mangla crude exploration site in Barmer, which is about 40 to 50 kms away, to Pachpadara. The staggering land price at Leelala was the major hurdle for the company to go ahead with the proposed refinery project. The 15-member Rajasthan State Task Force comprising had approved the new location for setting up of oil refinery and petro-chemical complex at Pachpadra based on HPCL's Techno Commercial, Technical and non-tangible reports. (economictimes.indiatimes.com)

July 30, 2013. Cooking gas marketing has taken a bizarre turn, with dealers demanding the right to sell 300 'unaccounted' cylinders a month, refuse home delivery of cylinders and charge customers for checking the weight. Dealers are rattled by the proposed new guidelines that give oil firms enormous powers to penalise and terminate dealerships. This, they say, amounts to 'capital punishment' without trial, even if the fault is of an employee, not the owner. They allege that oil industry executives misuse the guidelines to blackmail dealers. Oil companies, on the other hand, say they will enforce strict rules to ensure customer satisfaction, safety and propriety in the last-mile delivery of cylinders, and will take action against defaulting dealers. Some executives say even if a person was given a dealership on compassionate grounds or due to political connections, the companies cannot pardon lapses as the product is vital for households and needs to be handled with strict safety guidelines. Dealers don't like many rules such as mandatory weighing of cylinders, which they say can cripple the delivery boy. They say such sales are a 'humanitarian act' and want the limit to be increased to 300 cylinders. The All India LPG Dealers Federation (AILDF) has alleged that the marketing discipline guidelines (MDG) are being misused for arm-twisting dealers by corrupt authorities. Further, they said oil marketing companies (OMCs) themselves don't abide by proper standards. They said LPG dealers had no choice but to accept malpractices of oil firms. The newly floated 'Marketing Discipline Guidelines (MDG) 2013' proposes strict adherence to regulations on timed delivery, regular checks and proper maintenance of accounts. Severe penal action has also been suggested on account of any irregularity. However, LPG dealers have called oil companies 'unauthorised' to issue such guidelines, especially pertaining to any penal action. MDG for LPG distributors has been in existence since 1982 and has undergone revision in 1988, 1994 and 2001 before this current draft version. The federation has also asked a review of its commission if additional infrastructure is supposed to be built for efficient home delivery of LPG cylinders. (economictimes.indiatimes.com)

July 30, 2013. Petronet LNG Ltd, India's largest importer of liquid gas, will offer 15-18 per cent stake in a new LNG import facility it is building at Gangavaram in Andhra Pradesh, to a gas supplier. The 5 million tonne a year liquefied natural gas (LNG) terminal is being built through a special purpose vehicle in which Petronet will offer a strategic stake to a LNG producer or supplier, the company said. Petronet will hold 74 per cent stake in the terminal while Gangavaram port has 8 per cent. The remaining stake can be offered to a producer or supplier of gas. The company had received final approval from its board of directors to build a third LNG terminal at Gangavaram, the first terminal to be located on the east coast. The terminal will have scope to be expanded to 10 million tonnes, with the initial capacity coming on stream in 2016. It signed a term sheet with the Gangavaram Port for the LNG terminal, when it also called for bids for leasing an FSRU (Floating Storage & Re-gasification Unit) for 3-5 years to cover the period till the terminal is completed in 2016. Petronet operates a 10 million tonnes per annum terminal at Dahej in Gujarat, which it plans to expand to 15 million by 2016. It will complete building a 5 million terminal at Kochi in Kerala. (economictimes.indiatimes.com)

July 29, 2013. Indian Oil Corporation (IOC) signed an MoU with Industrial Infrastructure Development Corporation of Odisha for development of a natural gas terminal at an investment of ` 5,000 crore in the State. The natural gas terminal will be set up at Dhamra coast in Bhadrak district at an investment of ` 5,000 crore. The terminal construction work will be completed by 2018. Terming the project as a milestone in the State’s economic development, the project would ensure distribution of natural gas to domestic users, auto-industries and others. About 150 acre of land is required for the purpose and IOC has already signed an MoU with the Dhamra Port Company. (www.odishareporter.in)

July 25, 2013. India has sought Russian cooperation for a plan to build a pipeline that would extend the proposed TAPI network to the latter's oil-rich Altai region via Kazakhstan and Uzbekistan. The proposed network would come in handy for OVL, the overseas arm of ONGC, which has acquired considerable hydrocarbon assets in the central Asian region. The proposal was discussed during foreign minister Salman Khurshid's visit to Moscow in April. When contacted, OVL said the company has submitted a concept paper to the oil ministry and the government was discussing the viability of the plan with central Asian countries. Any plan for such a network has to be worked out under relevant bilateral pacts. The proposed pipeline would originate from Russia's Altai region and reach Turkmenistan via Kazakhstan and Uzbekistan to complement the proposed ADB-funded Turkeministan, Afghanistan, Pakistan and India (TAPI) pipeline.

OVL already owns interest in Sakhalin- I hydrocarbon reserve in Russia and has, in 2009, bought Imperial Energy that has oil and gas assets in Siberia. Besides, the company has been looking at investment opportunities in Sakhalin-3 and in Russia with government-to-government negotiations also taking place for the joint development of unexplored blocks in the oil and gas-rich regions of Russia. There is another proposal to bring Russian oil and gas through Kazakhstan and China to Kashmir, Uttarakhand or Arunachal. Despite close relations with China, Russia has also not been able to make major headway in the Chinese market. Instead, China has successfully concluded direct deals with Central Asia. (www.downstreamtoday.com)

July 25, 2013. GAIL needs to buy 13 cargoes this fiscal year to March out of its planned 34. GAIL received 7 cargoes in the first quarter of the fiscal year. Contracts for 21 cargoes have already been finalised. GAIL received 12 cargoes in the last fiscal year. GAIL plans to issue a ` 10 billion ($169.23 million) bond next quarter. (economictimes.indiatimes.com)

July 24, 2013. GVK Oil and Gas Ltd, GVK group's oil and natural gas exploration wing, will go slow on investing further into the development of seven deep-water blocks it has on the west coast due to inordinate delay in getting government clearances. The group which is primarily concentrating on the development of $10 billion coal project in Australia for its future energy security, is disappointed with the Ministry of Defence restriction on proceeding further with regard to some of the blocks. The GVK-BHP Billiton consortium emerged as winners of seven deepwater exploration blocks off the West coast of India in the NELP VII. GVK holds 74 per cent stake, while BHP besides holding 26 per cent stake, acts as operator of all the blocks. (economictimes.indiatimes.com)

July 30, 2013. India will restore the supply of subsidised gas to Bhutan from August 1, a month after it was halted and became a campaign issue in the Himalayan Kingdom's second national polls. The decision has been conveyed to the new Bhutanese government. Prime Minister Tshering Tobgay met with the Indian Ambassador to Bhutan V P Haran at the Gyalyong Tshogkhang (National Assembly Hall) during which India's decision was conveyed. Before the elections, the Indian Oil Corporation discontinued the supply of the subsidised fuel, on technical grounds with officials maintaining that Bhutan's 10^th Plan of under which India was providing such assistance expired on June 30. (economictimes.indiatimes.com)

July 29, 2013. Government's controversial decision to raise the price of natural gas reached the Supreme Court (SC) which agreed to examine the matter. Taking up a PIL filed by CPI MP Gurudas Dasgupta, the court issued notices to the Centre, Reliance Industries Ltd (RIL) and the Petroleum Minister Veerappa Moiley. The bench headed by Chief Justice P Sathasivam said that the issue raised by the senior MP needs examination and the petition cannot be rejected at the initial stage.

The apex court also sought response from BP Exploration (Alpha) Limited, NIKO Resources Ltd and Ministry for Petroleum & Natural Gas on a PIL filed by CPI MP Gurudas Dasgupta who alleged that no due diligence was done by the government while increasing the price of natural gas. 

The court directed the parties to file their response within four weeks and posted the matter for further hearing to September 6. The MP pleaded for a slew of directions including review of Centre's decision to increase the price of natural gas from $4.2 per million British thermal unit (mbtu) to $8.4 mbtu from April 1, 2014.

The petition alleged that Moily was stalling arbitration proceedings against the RIL to recover a penalty of $1 billion from the firm for allegedly violating contractual obligations in gas extraction in the Krishna-Godavari basin. (economictimes.indiatimes.com)

July 28, 2013. Over $21 billion powers plants being stranded for want of fuel notwithstanding, an Empowered Group of Ministers (EGoM) may not give any significant natural gas to the fuel-starved units till domestic production rises in 2016-17. The EGoM headed by Defence Minister A K Antony is to meet shortly to squeeze out some gas from current year output of 105 million standard cubic metres per day (mmscmd) for the power plants. Things have been complicated by fall in Reliance Industries' eastern offshore KG-D6 field to just 14 mmscmd at present. It is projected to 11 mmscmd this fiscal before rising to 19 mmscmd in the first quarter of 2015 and remain at that level till 2016-17. The fall in KG-D6 from 62 mmscmd achieved in March 2010 means 25 power plants that signed up for 29.74 mmscmd of KG-D6 get no gas. On instructions of EGoM the Oil Ministry carried out a detailed exercise to assess additional gas available and the demand. About 4-5 mmscmd additional gas will be available from fields of ONGC and GSPC in 2013-14. A similar additional volume may be available in the next fiscal and a further 2 mmscmd from GSPC in 2015-16. This additional production will have to make up for fall in KG-D6 this fiscal and the next as also meet 3.8 mmscmd need of 5 newly converted fertiliser plants for whom allocation had previously been approved by the Cabinet and EGoM. Out of additional availability of 4-5 mmscmd in 2014-15, availability for power sector would be 2-3 mmscmd. Most of this will flow to the Dabhol power plant that had been given equal priority as fertiliser plants after its revival at a cost of ` 13,000 crore. No KG-D6 gas flows to the plant now despite it being allocated 7 mmscmd of KG-D6 gas. (www.business-standard.com)

July 26, 2013. The oil ministry has terminated Punj Lloyd's contract for constructing Rajiv Gandhi Institute of Petroleum Technology (RGIPT) in Rahul Gandhi's parliamentary constituency, citing "non-performance" and re-tendered the ` 435-crore project. The ministry wants to scale down the project to expeditiously complete it before the general elections scheduled next year. The ministry has deputed its additional secretary and financial adviser, SC Khuntia, to directly monitor the progress of the project. UPA Chairperson Sonia Gandhi laid the foundation stone of the project in 2008. The contract to build 27 buildings for the institute was awarded to Punj Lloyd in June 2010 with a two-year deadline. After about 38% completion, disputes arose between Punj Lloyd and Engineers India Ltd (EIL), the project manager appointed by RGIPT. The project was delayed because EIL and RGIPT could not provide regulatory clearances, drawings and sites for proposed buildings on time, which also choked the company's cash flows. (economictimes.indiatimes.com)

July 25, 2013. Oil India Limited (OIL) has requested the petroleum ministry to ensure that the price parity is maintained to all domestic gas producers for production of natural gas from all sources and the Company is not subjected to any additional subsidy burden on its gas price realization. OIL informed the ministry that the cost of producing natural gas from the existing producing fields of OIL is increasing significantly due to depleting fields, higher cost of inputs and services, and general inflationary pressures in the economy. The new exploration and production activities have become costlier. They require substantial investments and production from these new areas can be commercially viable only if higher price is allowed for production from these fields. In the current scenario, the Company competes with private sector and multi-national oil companies in the bidding in NELP rounds and it is essential that price parity is maintained for its production of natural gas with that allowed to other producers. OIL also informed the ministry that the crude oil prices realized by the Company has been stagnant for the last several years and has come down during 2012-13. In the first quarter of current year, the realization has come down to $46 per barrel due to lower international crude oil prices and continuation of subsidy at $56 per barrel, which was fixed when international crude price was $110 per barrel. OIL asserted that keeping in view the need for higher investments required in the E&P sector, it is necessary that OIL should at least realize full price of the natural gas in line with ‘Natural Gas Pricing Guidelines 2013’. Hence, it should not be asked to bear any burden dug to fixation of lower input prices if any, for power and fertilizer sectors. (www.projectsmonitor.com)

July 25, 2013. GAIL India has demanded price renegotiation of an LNG import deal with Australia's Gorgon project because of its high price. GAIL has asked Petronet LNG Ltd to renegotiate the a 20-year deal to buy 1.44 million tonnes per annum of liquefied natural gas (LNG) at a price equivalent to 14.5 per cent of ruling oil rates. GAIL is a promoter of Petronet LNG with 12.5 per cent stake. The price agreed with Gorgon translates into $ 14.5 per million British thermal unit price at $100 per barrel oil price. After adding shipping cost, 5 per cent import duty and the cost of converting liquid gas back into its gaseous state, the Australian gas will cost close to $18 at Kochi port. (economictimes.indiatimes.com)

July 24, 2013. Oil minister M Veerappa Moily approved the proposal allowing sale of 5-kg cylinders at commercial rate. The cost of the small refill will be ` 361. While a subsidized domestic cylinder comes for ` 400 in Delhi, such refills bought beyond the annual cap of nine cylinders cost ` 832 each. A regular 19-kg commercial cylinder, known as non-subsidized, non-domestic category, costs ` 1,375. Initially, the cylinders would be sold from select company-owned, company-operated petrol pumps - called COCO outlets in industry parlance - to test the market. Sale would be gradually expanded to all such pumps depending upon the success of the pilot project. Ever since he took over the ministry's reins in October last year, Moily has been on a drive to improve customer service by state fuel retailers and rationalize their investments in marketing networks. Industry executives see Moily's latest initiative as a precursor to non-subsidized cooking gas refills eventually being sold from multiple outlets - just like water jars or mobile recharge cards - to coincide with the fuel's deregulation and subsidy delivered through the government's DBT (direct benefit transfer) scheme. Starting free sale of 5-kg cylinders would benefit lakhs of students, young professionals and small vendors in the metros and infotech cities who now use refills of 2-3 kg size that are of dubious quality. Moreover, these consumers pay up to ` 150 or so extra to neighbourhood operators who illegally fill up the small cylinders from subsidized cylinders. Besides, it will save hassle for a family that may need some extra fuel for a special occasion or runs out of gas after working hours. In such a situation, consumers can just pick up a refill off-the-shelf from a petrol pump. The sale of cooking gas cylinders from petrol pumps, once they cover all outlets, would also help generate some additional income for dealers who claim to be struggling on account of falling sales and rising costs. Petrol pumps already have the required safety licences and space so the plan can be rolled out quickly. But oil company executives point to several bumps in the way. (economictimes.indiatimes.com)

POWER

July 30, 2013. Gati Infrastructure said it would jointly invest ` 1,188 crore with GE Energy Financial Services India, in its 110 MW hydroelectric power project in Sikkim, which it had commissioned in May. It said that GE Energy Financial Services India has invested ` 257 crore in the project through a share subscription agreement. The project was comissioned in May this year and IDFC is the lead financier, with a loan at the project level, the company said. (economictimes.indiatimes.com)

July 28, 2013. The Odisha Power Generation Corporation (OPGC), a joint venture between the Odisha government and the US based utility major AES, has kick started its 2 X 660 MW expansion project, comprising unit 3 and 4 of its 420 Mw Ib Valley power complex, with the issue of work order in favour of BHEL and BGR Energy Systems ltd.

OPGC had signed contracts with BHEL and BGRE on 27^th April and 11^th July, 2013 respectively for the award of work for the main plant (BTG) worth ` 4,051 crore and Balance of Plant (BoP) worth ` 1,573 crore. The above costs taken together works out to about ` 4.26 cr/MW which is by far the cheapest of the bids finalised in the country since 2010 for 660 MW plant configuration. The OPGC expansion project, which is targeted to be completed within 12^th Plan, had secured financial tie-up with Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) in November, 2012. (www.business-standard.com)

July 27, 2013. Having put on hold all new projects due to the policy and regulatory uncertainties in the power sector, JSW Energy is now eyeing acquisition of distressed assets to grow its energy portfolio. The Mumbai-headquartered company has shelved plans for new power projects as recent policy initiatives in the beleaguered power sector are yet to show results. The only project it plans to go ahead with is the 240-MW hydro power project in Kutehr, Himachal Pradesh. (economictimes.indiatimes.com)

July 26, 2013. Ind-Barath Energy (Utkal) Ltd (IBEUL) will start electricity production from the first 350 MW unit of its 700 MW power station at Sahajbahal near Jharsuguda from the second week of November. The company had signed a memorandum of understanding (MoU) with the state government for setting up the coal-based power plant in February 2009. IBEUL has already implemented the rehabilitation & resettlement (R&R) programme for the project. Only eight ST families had to be displaced for the power project. The company has built 22 houses at a cost of ` 1.74 crore with 10 decimal land plot around each house. (www.business-standard.com)

July 25, 2013. Neyveli Lignite Corporation (NLC) is aiming to add 1500 MW of capacity to its power generation basket by March 2014. With its 500 MW TPS-II Expansion project and 1000 MW Tuticorin thermal power plant in advanced stages, the utility is confident of achieving the target. Neyveli Lignite informed the coal ministry that BHEL, the main plant package contractor, has committed that the commercial operation date for the first unit of TPS-II Expansion would be attained in December 2013 and the second unit in January 2014. BHEL completed the re-design part of fluidized bed heat exchange and work commenced from April 2013. The units are progressing at a good pace and as per the status of the works, the project is likely to be commissioned as per the schedule stated by BHEL. Neyveli Lignite’s TPS-II Expansion includes development of two units of 250 MW each. The project was approved at a total cost of ` 3027.59 Crores. The original date of Completion for Unit I was June 2012 and March 2013 for Unit-II. Cumulative Expenditure of ` 2700.85 Crores was made up till April 2013. The Tuticorin project is being implemented as Joint Venture with Tamil Nadu Electricity Board through a JV Company called NLC Tamil Nadu Power Limited. Neyveli Lignite informed the coal ministry that considering the present status at site, it is anticipated that Unit-I will be commissioned by December 2013 and Unit-II by March 2014, with an overall delay of 19 months. The first unit of the project was originally scheduled to be completed by March 2012 and the second unit by August 2012. (www.projectsmonitor.com)

July 24, 2013. French energy giant GDF Suez is close to buying a power plant owned by a little-known Hyderabad-based company, signalling revived foreign interest in Indian power firms after a long hiatus. GDF Suez - the world's largest independent power company that generates 116,000 MW of electricity, which is more than half of India's installed capacity of 211,766 MW - is in advanced stages of buying a 900 MW coastal power plant owned by Meenakshi Energy. Meenakshi signed a binding agreement with GDF Suez a couple of weeks ago. Due diligence is still going on and more talks are likely before a full-fledged agreement is signed, they added. GDF may pay about $200 million for the plant. Meenakshi Energy is setting up the 900 MW power project in Krishnapatnam district of Andhra Pradesh, which will be primarily fuelled by imported coal. The project cost is pegged at ` 4,500 crore with a debt-equity funding of 75:25. The company has already commissioned the first unit of 300 MW, and is building two additional units of 300 MW each. For the first stage, Meenakshi Power entered into a first-of-its-kind agreement with power trading firm PTC India, where the latter would supply coal to the plant in return for an equivalent value of electricity in an effort to tie up long-term sources of power. (economictimes.indiatimes.com)

July 24, 2013. Jindal Power, a subsidiary of Jindal Steel and Power, has tied up ` 5,418 crore in loans for two units of its upcoming 2,400 MW generation plant in Chhattisgarh, the company said. The project at Tamnar consists of four units of 600 MW each and will cost about ` 13,500 crore. The first two units will cost about ` 7,740 crore and are being funded with a debt-equity mix of 70:30. The two units due to be commissioned will get 65 per cent of their coal requirement from Coal India, while the remainder will be met through imports. Jindal Power is also trying to start at least one additional 600 MW unit in the current financial year, though it is yet to secure a coal linkage. Overall, the project will need 4 million tonnes of coal annually. Jindal Power currently has a generation capacity of 1,000 MW at the same location. The station has been operating at a plant load factor of over 95 per cent for the past two years and its power is sold mostly through short and medium term power purchase agreements. The company is targeting 10,000 MW of generation capacity by 2020 at an investment of about ` 70,000 to 80,000 crore. About 7,000 MW of the new capacity will be added in India, either by setting up a new plant or acquiring one, while the remainder will be developed overseas, mostly in Africa. The company is in talks with government agencies in Botswana and Senegal for setting up plants. The cost of generating power in African countries is about ` 11-12 crore per megawatt, compared with the Indian average of ` 7-8 crore per megawatt. (economictimes.indiatimes.com)

July 30, 2013. Madhya Pradesh (MP) has wiped out huge electricity shortages and losses in a rare success story in the distribution sector. After a series of reforms, tariff hikes, involvement of private firms in supplying electricity to some cities and customer-friendly initiatives, Madhya Pradesh now enjoys 24-hour power supply. Latest data available with the Central Electricity Authority shows that the state does not have power deficit. Distribution losses, which have crippled many state utilities, have fallen from 37% to 27%, narrowing the gap between revenue and cost to 60 paise per unit from 1. The gap is expected to fall to 43 paise this fiscal. Losses in the transmission segment are at 3.5%, which is one of the lowest in the country. To bring fresh air in the system, the state hired and trained 5,000 young professionals, including 1,500 engineers in the past three years. It also framed new service rules to ensure a performance-driven culture. The government began with identifying the problem areas, including assessing the actual demand for electricity of the state. States accept the demand projections given by the Central Electricity Authority and Planning Commission. The state's assessment showed the demand to be far higher than the earlier projections for the state. The state hired PricewaterhouseCoopers (PwC) for providing all-round consultancy to the government and the generation, distribution and transmission companies. (economictimes.indiatimes.com)

July 26, 2013. The coal ministry has directed Coal India Ltd (CIL) to sign fuel supply agreements for about 78000 MW to ensure committed supply of coal to power sector. CIL has also been directed to sign these fuel pacts within four weeks after the power producers fulfill the requisite conditions. The coal ministry is monitoring supply of coal to power sector on daily basis. CIL was directed to sign fuel agreements of 60678 MW, which was the projected requirement by the power ministry for 131 power plants commissioned or to be commissioned by March 2015. CIL signed 82 fuel pacts of 34793 MW capacities. These include 11 with NTPC and 5 with its joint ventures. Six cases of 4480 MW capacity with NTPC and five cases of joint ventures of NTPC are under process of signing. (economictimes.indiatimes.com)

July 25, 2013. Alstom T&D India has secured five contracts worth ` 255.8 crore from Power Grid Corporation of India Ltd, the company said. Alstom T&D India won two contracts worth ` 166 crore for supply, erection, testing and commissioning of 400 kV substation extension packages. Once commissioned, these substations will help make more power available to meet the growing demand for electricity in the western region and will significantly improve the reliability and efficiency of the transmission grid, the company said. The company secured a contract worth ` 40 crore for delivery of high-tension 765 kV circuit breakers for various substations across India. All circuit breakers will be manufactured in its factory located at Padappai in Tamil Nadu, it said. The other two contracts include supply of 765 kV reactors for Power Grid's Padghe, Aurangabad, Bhiwani, and Meerut substations for ` 27 crore and 400 kV reactors for Power Grid's Khandwa Purnia, Gajuwaka Baripada and Bhiwani for ` 22.8 crore. These reactors will strengthen power transmission network in northern and western regions of India. (economictimes.indiatimes.com)

July 30 2013. The finance ministry has turned down a petroleum ministry-backed proposal for reinforcing the proposed Indian Energy Insurance Pool (IEIP) with a ` 24,000-crore sovereign guarantee in order to to support oil imports from Iran. The proposed IEIP, with an initial corpus of ` 2,000 crore, is a government initiative to insure Indian refineries that are denied re-insurance cover by foreign firms for import of Iranian crude oil following US and European sanctions. The finance ministry's stand is despite the fact that rupee payment mechanism with Iran against crude imports is giving some support to the currency right now. The finance ministry categorically ruled out a sovereign guarantee for IEIP. Instead, the ministry said, if needed the government could permit the refineries to opt for foreign insurers or seek Iran's help. To start with, the IEIP will consist of ` 1,000 crore from Oil Industry Development Board and a matching contribution from public sector general insurance companies. As the foreign insurance firms refused to give re-insurance cover, local insurers, too, subsequently declined to cover these refineries. Domestic insurance firms usually bank on major global reinsurers to reinsure the risks involved in such transactions or else they could suffer huge losses if they have to pay large claims. (www.financialexpress.com)

July 28, 2013. Coal Minister Sriprakash Jaiswal is expected to review the performance of CIL, which has been missing production target, in a meeting likely on August 7. The meeting will be attended by the Coal Ministry and CIL. The meeting, which was scheduled for July 25, got postponed due to the minister's other engagements. CIL had missed its output target and produced 32.57 million tonnes (mt) of coal in June. Its production target for the month was 35.23 mt. The maharatna firm had also missed its offtake target of 39.85 mt in June. Output in the April-June quarter was 102.87 mt, as against 106.88 mt. The state-owned miner had produced 452.5 mt of coal in the previous financial year, compared with a target of 464 mt. The Coal Ministry has set production target of 482 mt and offtake of 492 mt for CIL for 2013-14. (www.business-standard.com)

July 28, 2013. Delhi Electricity Regulatory Commission (DERC) said there should be a thorough scrutiny of finances of all three private power distribution companies by Comptroller and Auditor General (CAG). Chairman of the city's power regulator P D Sudhakar said scrutiny of the accounts of the discoms by the CAG will help knowing the actual financial position of the private companies. The BJP and Aam Admi Party (AAP) have been demanding CAG audit of finances of the discoms, alleging huge financial irregularities by them. However, the discoms are strongly opposed to auditing of their accounts by CAG. The BJP has been seeking CAG audit into finances of discoms referring to a DERC proposal in May 2010 to cut the tariff by around 25 per cent citing their healthy financial position. The Delhi Government had restrained the regulator from going ahead with the tariff order. Although DERC was strongly arguing for a cut in tariff, the three-member regulator, following retirement and subsequent appointment of two new members later in 2010, had taken a sympathetic approach to the demands of the discoms and effected a series of tariff hikes. Asked about allegations that the DERC have been favouring the discoms by heeding to their demands of hike in tariff, Sudhakar rejected the allegations and said the rates are finalised after going through the accounts of the companies and taking views of all the stakeholders. On whether tariff was hiked marginally by DERC due to political pressure as assembly polls in Delhi which are due in November, Sudhakar said the tariff order was finalised purely on the basis of laid down norms. Asked about any possible hike in near future, Sudhakar said the commission will review the Power Purchase Adjustment Cost after three months and the tariff may go up if power purchase cost goes up. The DERC hiked the tariff for domestic consumers by five per cent. But with the regulator waiving the fuel surcharge and the city Government swiftly announcing a subsidy for those limiting their monthly consumption to 400 units, the tariff will in effect come down marginally for low-end consumers. Slamming Delhi government and DERC for hike in tariff, the BJP has already announced an agitation against the "anti-people" decision and indicated that the party will make it a major issue in the run up to the assembly elections slated for November. (economictimes.indiatimes.com)

July 28, 2013. Electricity regulators from all over the country will meet to iron out the hurdles in the distribution segment and suggest measures for improving the power dissemination situation in the country. The 4-day long Regulators and Policymakers Retreat, in Goa, will attempt to address the burning issues in the Indian Power Sector and look at the challenges of Democracy and Development, a release by Independent Power Producers' Association of India (IPPAI), the organiser of this event, said. This annual event receives participation from Chief Ministers, Members of Parliament, regulators, policymakers, industry players in generation, transmission and distribution and other eminent personalities. Independent Power Producers' Association of India (IPPAI) was set up in 1994 to provide a forum to facilitate private sector investments in the Indian Power Sector. Some of the key issues which are likely to be discussed during the 4-day long event include Electricity Act 2003, fuel supply constraints and issues in distribution. The event is also expected to be attended by representatives of various regulatory commissions, private power companies, sectoral experts, among others. The present installed generation capacity of the country stands at over 2,10,000 MW and the government aims to add 88,000 MW by 2017 after the fuel scarcity (coal and gas) is addressed. (economictimes.indiatimes.com)

July 28, 2013. The government has modified the New Coal Distribution Policy in view of the presidential directive asking Coal India Ltd (CIL) to enter into pacts for assured supply of fuel to power firms ms 78,000 MW capacity. The Policy said the CIL would supply 100 per cent of the committed quantity to power plants at prices to be notified by the coal PSU. It also said that in order to meet the domestic requirement, CIL would import coal as required from time to time, if feasible and adjust the overall price accordingly. The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh, asked CIL to sign FSAs for a total capacity of 78,000 MW including cases of tapering linkage, which are likely to be commissioned by March 31, 2015. The government issued a Presidential directive asking CIL to supply at least 80 per cent of the quantity committed to power companies. (www.business-standard.com)

July 28, 2013. The Andhra Pradesh (AP) government is contemplating achieving additional hydel capacity of 410 MW by 2014-15 with the construction and commissioning of more units at Nagarjuna Sagar, Pulichintala and Jurala. At present, the state has the largest hydel capacity in the country with 3,829 MW. While the first unit of lower Jurala (Mahaboobnagar), with a capacity of 80 MW, is likely to be commissioned within two months from now, the second and third units with a capacity of 80 MW each are to be commissioned by July 2014. The Nagarjuna Sagar tailpond unit (Nalgonda) of 50 MW and Pulichintala (Guntur) of 120 MW are expected to be completed by 2014-15. (www.business-standard.com)

July 27, 2013. Power tariff in Delhi is set to rise five per cent from August, with the Delhi Electricity Regulatory Commission (DERC) allowing a ` 15,360-crore revenue gain for the city’s three private distribution companies (discoms) during FY14. The hike comes on the back of a 60 per cent jump in prices over the past two years. DERC, however, waived off the additional eight per cent surcharge levied on consumers for the quarter ending September 30. The surcharge, revised every quarter, is levied to make good the losses of discoms accumulated over the years. Reliance Infrastructure-owned BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd supply power to over three million consumers, covering around two-thirds of the city’s consumers. The rest of the consumers are supplied power by Tata-owned Tata Power Delhi Distribution Ltd. Power tariffs would increase by an average five per cent across all consumer categories. In the domestic category, DERC approved increasing tariff for consumers with less than 200 kilowatt hour (KwH) load from the existing ` 3.7 per unit to ` 3.9 per unit. The regulator increased tariff for consumers using between 200 and 400 KhH load from the current ` 5.5 a unit to ` 5.8 a unit. Tariff for consumers in the 400-800 KwH category will increase from existing ` 6.5 per unit to ` 6.8 per unit. Also, the commission added a new slab for consumers with over 800 KwH load. The three discoms had petitioned DERC for an annual revenue requirement (ARR) of over ` 19,044 crore in 2013-14. At the increased tariff, the total revenue accruing to the three discoms works out to ` 15,360 crore, compared to the approved ARR of ` 14,448 crore, leaving a surplus of ` 912 crore for discoms this financial year. After taking into account the eight per cent surcharge, total revenue will go up by an additional ` 1,228 crore, leaving a net surplus of ` 2,140 crore with the companies. This surplus will offset a major portion of the accumulated revenue gap of ` 3,497 crore, leaving a net incremental shortfall of ` 1,356 crore in FY14. The fresh tariff hike comes four months ahead of assembly elections in Delhi. Chief Minister Sheila Dikshit-led Congress government has been facing criticism from the opposition parties — including the Bharatiya Janata Party and Arvind Kejriwal-led Aam Aadmi Party — for increasing power prices to allegedly extend undue benefits to private discoms. (www.business-standard.com)

July 27, 2013. After the Uttrakhand disaster which killed thousands of people, the Union of ministry of environment and forests is cautiously approaching in according forest clearance to mega hydro power projects in Northeast India. The ministry has denied forest clearance to the 1,500 MW Tipaimukh hydel project in Manipur and the 3,000 MW Dibang multipurpose project in Arunachal Pradesh. NHPC Limited is the implementing agency for 3000 MW Dibang Multipurpose Project. For Tipaimukh hydel project the joint venture implementing agency include NHPC and Satluj Jal Vidyut Nigam Ltd (SJVN) and Manipur government. (economictimes.indiatimes.com)

July 24, 2013. The Central Electricity Regulatory Commission (CERC) will soon start studying various sectoral aspects, including current trends and challenges, to decide on power tariff norms for the 2014-19 period. The study, to frame 'Tariff Regulations for control period 2014-19', comes against the backdrop of multiple woes in the power sector especially rising dependence on imported coal which would push the electricity prices higher. The Central Electricity Regulatory Commission (CERC), which is the sectoral regulator, would also be engaging consultant to have a better understanding about the current scenario. (economictimes.indiatimes.com)

July 24, 2013. The Heavy Industries Ministry has sought an additional levy of 5 per cent on imported power gear to protect the struggling domestic power equipment players. The latest move comes against the backdrop of local power equipment makers, including BHEL, facing tough market conditions due to overall economic sluggishness and cheaper imports mainly from China. Heavy Industries and Public Enterprises Minister Praful Patel has written to Finance Minister P Chidambaram seeking higher import duty on power gear, which currently attracts 21 per cent levy. (economictimes.indiatimes.com)

July 24, 2013. The Ministry of Environment and Forests (MoEF) has come out with some statistics to prove its innocence. According to the figures given by the MoEF, 23 cases of Stage-I Forest Clearance (FC) and 51 cases of Stage-II clearance for mining projects are pending for want of information, thus putting the ball back in the court of Ministry of coal and concerned state government. The MoEF has recently given the details of Stage-1 and Stage-2 Forest Clearances to the Ministry of Coal which are pending with MoEF due to lack of desired/additional information or compliance reports from various project proponents or state governments. According to the Environment ministry Stage-I FC is pending for six projects of Central Coalfields Ltd (CCL), Jharkhand, 5 projects of Central Mine Planning and Design Institute Ltd (CMPIL), Madhya Pradesh, 5 projects of South Eastern Coalfields Ltd (SECL), Madhya Pradesh, 4 projects of Western Coalfield Ltd (WCL), Madhya Pradesh and one each of SECL, Chhattisgarh and WCL, Maharashtra. In the mean while, it is hoped that Urimari OC project of CCL, Jharkand would soon get Stage-I FC as the required information has been submitted to the MoEF recently. In Case of Stage-II Forest Clearance, nine pending cases belongs to CCL, Jharkhand, two of Eastern Coalfields Ltd (ECL), Jharkhand, four of Mahanadi Coalfields Ltd (MCL), Odihsa, two of North Eastern Coalfields Ltd (NEC), Assam, twenty seven of SECL in Chhattisgarh and Madhya Pradesh, six of WCL, Madhya Pradesh and Maharashtra and one belonging to Bharat Coking Coal Ltd (BCCL) in Jharkhand. Sources in Ministry of Coal say that they are helpless as most of the information required has to come from the concerned state governments. On the other hand, MoEF says that some of the applications lack even basic documents like topography sheet, NoC under FRA and DGPS map. In case of some projects project proponents have delayed the submission of compliance report thus delaying the process of environment clearance. (www.projectsmonitor.com)

July 24, 2013. Bihar government wants to speed up the implementation of power projects coming up in the state. Recently, Bihar government requested the Union Power Ministry to speed up the process of setting up Ultra Mega Power Project (UMPP) in the state which was held up due to non-availability of suitable site and water. According to state government sources, suitable site in Banka district of the state has already been identified and requisite water linkage from river Ganges has also been made available. The state government has also taken up the issue of 3X44 MW Dagmara HEP which has failed to make any significant headway since inviting first tender for preparing detailed project report in 2006. Though Wapcos has prepared the project report, Central Electricity Authority has not yet given its go ahead for the project for unknown reasons. Similarly, the state government has taken up the issue of Renovation & Modernization (R&M) of units of Barauni and Muzaffarpur Thermal Power Plants. R&M of these units was approved by the Planning Commission at a total cost of ` 1053 crore under Special Plan for Bihar and was supposed to be completed by March 2012.

However, R&M of these units is held up due to non-supply of requisite materials / equipments by BHEL who has been entrusted with the task of executing the project. NTPC is the consultant for the project. After persistent follow up by the state government, R&M is now expected to be complete by December 2013. (www.projectsmonitor.com)

OIL & GAS

July 29, 2013. South Korea's Daewoo Engineering & Construction (E&C) has won a $709 million service contract to develop Iraq's largest gas field in the western province of Anbar. Daewoo E&C will handle engineering, procurement and construction work for the processing facility and pipeline network at the Akkas gas field, which has reserves of 5.6 trillion cubic feet. Iraq signed a contract in 2011 to develop the western Akkas gas field, near the Syrian border, with South Korea's KOGAS for a fee of $5.50 per barrel of oil equivalent and a production target of 400 million cubic feet per day over 13 years. (www.rigzone.com)

July 26, 2013. BG Group Plc, the U.K.’s third-largest natural-gas producer, said earnings dropped 3 percent in the second quarter as output declined in Kazakhstan and Egypt. Profit excluding disposals and one-time items slipped to $986 million from $1 billion a year earlier. In Kazakhstan, production was hurt by a planned shutdown of the Karachaganak field for maintenance. In Egypt, BG saw gas-export volumes drop as reservoirs depleted and more supply was diverted to the domestic market to meet demand. BG production fell 2.4 percent to 59.8 million barrels of oil equivalent (657,000 barrels a day) in the quarter. Liquefied natural gas deliveries shrank 17 percent to 2.4 million tons. In Tanzania, BG and partner Ophir Energy Plc raised gas resource estimates to 13 trillion cubic feet. (www.bloomberg.com)

July 24, 2013. Abu Dhabi National Oil Co. (ADNOC) is pumping about 1.5 million barrels of crude a day from its main onshore fields and is halfway through a planned $40 billion investment plan. The state-owned energy producer has boosted capacity at its largest land-based deposits to about 1.6 million barrels daily from 1.4 million before the expansion, Abu Dhabi Co. for Onshore Oil Operations (ADCO) said. The ADCO venture will raise overall capacity to 1.8 million barrels a day by the end of 2017. Abu Dhabi is in the middle of a five-year, $40 billion plan aimed at boosting oil and natural gas output and expanding petrochemical and refining facilities, ADNOC said. (www.bloomberg.com)

July 24, 2013. Chevron Corp. is betting it can win over eastern Europeans with the idea of energy independence even after dry wells and government delays led Exxon Mobil Corp. and Talisman Energy Inc. to scrap efforts to tap natural gas deposits in Polish shale. Bringing shale drilling to Europe from North America promises to help the region ease years of dependence on Russian fuel and hurts the Kremlin’s ambition to secure the country’s future as an energy superpower. Use of hydraulic fracturing, or fracking, upended the U.S. gas industry, which overtook Russia as the biggest producer, driving prices to a decade-low. President Vladimir Putin is pushing investment in Russia’s gas industry, with new fields and a pipeline to Asia planned. Chevron has leased or licensed for exploration 5.6 million acres in Poland, Ukraine, Romania and Bulgaria, an area the size of New Jersey. Its joint venture in Lithuania has a license for about 600,000 acres, and Chevron is applying for another 450,000. In Ukraine alone it agreed to spend $400 million on exploration. Royal Dutch Shell Plc won rights to explore for shale gas in the Yuzivska field in Ukraine’s Kharkiv region in May 2012, and signed a production sharing agreement in January. (www.bloomberg.com)

July 24, 2013. Pakistan Petroleum Limited (PPL), the operator of Block 2568-18 (Gambat South) EL, announced a gas and condensate discovery at the Shahdad X-1 exploration well in District Sanghar, Sindh, Pakistan. Shahdad X-1 was spud March 30 and reached the final depth of 12,024 feet June 19. Based on wireline logs, potential hydrocarbon bearing zones were identified. Initial testing in the Massive Sand of Lower Goru Formation flowed 27.8 million standard cubic feet per day of gas along with 337 barrels per day condensate at 64/ 64 inch choke size, confirming the presence of commercial quantities of natural gas and condensate at Shahdad X-1. Shahdad X-1 is the second discovery in the block after the first well Wafiq X-1 also found gas and condensate. PPL has 65 percent working interest in Block 2568-18, with joint venture partners Government Holdings (Private) Limited and Asia Resources Oil Limited holding 25 percent and 10 percent interest, respectively. (www.rigzone.com)

July 24, 2013. China Petroleum Engineering & Construction Corporation (CPECC) has won a $547.95 million service contract to develop Iraq's Halfaya oilfield, Iraq's cabinet said. CPECC, which is affiliated to China National Petroleum Corporation (CNPC), will handle engineering, procurement, construction and commissioning work at the oilfield, which is forecast to produce 535,000 barrels of oil per day (bpd) in 2017, Iraq's oil ministry has said. Iraq signed a contract in 2010 to develop Halfaya with CNPC, France's Total, and Malaysian state company Petronas for a fee of $1.40 per barrel. CNPC has a 37.5 percent interest in the consortium. CNPC said the first phase of the Halfaya field had started operating and had a production capacity of 100,000 barrels per day. (www.rigzone.com)

July 29, 2013. A gas explosion at a furnace has forced Nansei Sekiyu KK to delay the restart of its Nishihara refinery in Okinawa, Japan, said the refinery's fire department. The explosion, which occurred during the preparation of resuming operations at the 100,000-barrel-per-day (bpd) refinery after maintenance, resulted in damage of one of the walls of the furnace used in the production of gasoline, but had no impact on the refinery's crude distillation unit (CDU). The fire department has ordered the company to suspend all the operations at the refinery as the repair work will take at least 30 days.

The fire department, said the timing of restart of the refinery remains unclear. Wholly-owned by Brazilian oil and gas firm Petrobras, the refinery was scheduled to resume operations on 20 July 2013, following the repair of the refinery from a fire accident that occurred on 6 June 2013. (refiningandpetrochemicals.energy-business-review.com)

July 24, 2013. Tajikistan has launched its second mini oil refinery, with initial annual capacity of 100,000 tonnes of crude, near the capital city of Dushanbe. The equipment for the refinery, worth $14.7 million, was manufactured in the Russian city of Tomsk. Tajikistan launched its first refinery, Kapital with capacity to refine up to 50,000 tonnes of crude per year, at the end of March 2013. The Tajik authorities had signed an agreement with China's Dong Ying Heli Investment & Development Co. Ltd to build an oil refinery in southern Tajikistan with annual capacity for 1.2 million tonnes of crude. (www.downstreamtoday.com)

July 30, 2013. China has started receiving natural gas from Myanmar through an 870-km-long strategic cross-border pipeline co-invested by four countries, including India. The multi-billion-dollar pipeline will ship natural gas and petroleum all the way from the coastal port in Myanmar to Yunnan Province. The gas pipeline has a designed annual throughput of 12 billion cubic metres before off-loading in Myanmar. A parallel oil pipeline is also part of the project. China National Petroleum Corporation (CNPC) is a partner in both assets. The designed annual capacity is 22 million tonnes for the oil pipeline and 12 billion cubic metres for the gas pipeline. The cost of the pipeline was in billions. It shortens the distance of transportation originally going through the Malacca Strait, a Chinese expert said. Petroleum and gas would now be shipped from the Middle East to Myanmar and from there it would be pumped to China through the pipeline. Experts estimate that the pipelines will satisfy a quarter of China's natural gas demand every year, and also bring about $1.5 billion to Myanmar each year. After the completion and commissioning of the whole project, two million tonnes of crude oil and 20% of the designed throughput of gas will be off-loaded in Myanmar, which will be helpful to promote Myanmar's development and people's living standards. (economictimes.indiatimes.com)

July 26, 2013. A federal antitrust probe into the $36 billion hydraulic fracturing market is increasing pressure on oilfield-service companies already reeling as skyrocketing competition cuts into their profit margins. Halliburton Co. and Baker Hughes Inc. said the U.S. Justice Department is seeking documents for an antitrust investigation related to pressure-pumping services, which include hydraulic fracturing, or fracking. Schlumberger Ltd., the world’s largest service company, declined to say whether the company’s been contacted by investigators. The investigation was met with widespread surprise among industry analysts and investors because it comes at a time when rising competition and falling prices have been the sector’s biggest problem. Of the $36 billion that explorers and producers are expected to spend on fracking globally this year, $31 billion will be spent in the U.S. and Canada. The Justice Department confirmed the probe, but gave no details about what it’s looking into. (www.bloomberg.com)

July 26, 2013. Nigeria's liquefied natural gas (NLNG) company has lifted a force majeure on gas exports, after the maritime security agency ended a blockade on its ships over a tax dispute, the company said. The Nigerian Maritime Administration and Safety Agency (NIMASA) began lifting a three-week blockade on NLNG ships two weeks ago, after the company agreed "under protest" to pay $140 million back taxes NIMASA said it was owed. The cost of the blockade in lost LNG exports was $475 million, said NLNG, which is 49 percent owned by  Nigeria's state oil firm, 25.6 percent by Shell, 15 percent by Total  and 10.4 percent by Eni. (www.downstreamtoday.com)

July 25, 2013. Enbridge Inc, Canada's largest pipeline company, said it will build a $1.3 billion extension to its Woodland crude line in northern Alberta to serve Imperial Oil's Kearl oil sands project. The 345-kilometer extension will have initial capacity of 400,000 barrels per day, with the ability to be expanded up to 800,000 bpd depending on crude viscosity. It will extend the Woodland Pipeline south from Enbridge's Cheecham terminal to its Edmonton terminal to connect with refineries and export pipelines in that area. The extended pipeline is expected to be in service by the third quarter of 2015. The Woodland pipeline between the Kearl oil sands project and the Enbridge Cheecham terminal started running in the autumn of 2012. (www.rigzone.com)

July 25, 2013. South Sudan made further reductions in oil output as it prepares to halt pipeline exports through neighboring Sudan amid conspiracy recriminations between the former foes. Oil production from Africa’s newest country fell to 97,000 barrels a day from 200,000 barrels a day a week ago. Sudan’s Oil Minister Ahmed al-Jaz said that his government intends on Aug. 7 to shut down the pipeline that carries South Sudanese oil to the Red Sea loading terminal of Port Sudan. He renewed accusations that the government in Juba supports rebels seeking to overthrow Sudanese President Umar al-Bashir. (www.bloomberg.com)

July 30, 2013. BP Plc Chief Executive Officer Bob Dudley said it’s unlikely Europe’s second-biggest oil company will reach a settlement with the U.S. over the Gulf of Mexico disaster as provisions set aside to pay for the spill rose. The company lost a bid to halt payments to spill victims that it says are being unjustly awarded and raised its estimate for the accident’s total cost to $42.4 billion. The final bill is still uncertain three years after the blowout at the Macondo well. Separate to the legal issues surrounding claims from the settlement with spill victims last year, BP is in the middle of a three-phase trial with the U.S. government over liability in the spill that could lead to as much as $17 billion in fines under the Clean Water Act. The final stage of the trial probably won’t start until next year, BP said. After agreeing to a deal with spill victims last year, BP says it has been forced to add hundreds of millions of dollars to the initially estimated $7.8 billion cost of the settlement. Today it increased the charge for that settlement to $9.6 billion to reflect the cost of claims and litigation in the second quarter. That doesn’t include future claims, which BP says can’t be reliably estimated. A judge refused to temporarily halt payments from the court-supervised settlement while Louis Freeh, the former director of the Federal Bureau of Investigation, probes allegations of misconduct in the program. BP contends two lawyers working for the settlement administrator, Patrick Juneau, improperly took fees from law firms while processing their clients’ claims. The staff attorneys were ousted after the alleged improper payments came to light. (www.bloomberg.com)

July 29, 2013. Prince Alwaleed bin Talal, the billionaire owner of stakes in Citigroup Inc. and Time Warner Inc., has written publicly to Saudi Arabian Oil Minister Ali Al-Naimi, questioning the kingdom’s energy policies. In an letter published in Arabic on Twitter, he said his country, the biggest crude producer, won’t be able to fulfill its plan to increase capacity to 15 million barrels a day, adding there’s a “clear and increasing decline” in demand for oil pumped by the OPEC, particularly Saudi Arabia. He also challenged Naimi over the impact of U.S. shale gas output. Saudi Arabia is now pumping at less than its capacity as consumers limit oil imports, he said. Al-Naimi said that he isn’t concerned about increased U.S. output from shale formations, adding that it isn’t the first time OPEC has faced a surge in production from outside the group. Saudi Arabia pumped 9.47 million barrels a day of crude in June compared with 9.83 million a year earlier. The impact of North American shale production on the kingdom’s state revenues isn’t apparent yet, with more Saudi exports going to Asia. The country is reducing its dependence on oil, which accounted for less than 30 percent of gross domestic product last year. The world will need 300,000 barrels a day less of OPEC crude next year, even as global oil demand growth rises to its strongest since 2010, amid competing supply sources. Demand for OPEC’s crude will slip next year to 29.6 million a day, or about 2.6 percent less than the 12-member group is pumping now. (www.bloomberg.com)

July 24, 2013. Total SA, Europe’s third-largest oil company, may win a contract from the Sri Lankan government in a month to study the prospect of oil and natural gas deposits deep off the island’s fabled white-sand beaches. Eni SpA of Italy has also expressed strong interest in the blocks located in waters more than two miles deep, said Saliya Wickramasuriya, director general at the Petroleum Resources Development Secretariat, which will give the contracts. Talks are on with Exxon Mobil Corp. and India’s Oil & Natural Gas Corp. (ONGC), which have yet to evince interest, he said. Sri Lanka, ravaged by three decades of civil war that ended in 2009, is seeking international help to discover its own wells and shrink the $6 billion it spends annually to import all its fuel needs. Royal Dutch Shell Plc and Exxon were among companies that attended a conference in Colombo as the government started its second and biggest oil auction, offering 13 blocks off the northern and western coasts, besides those for joint studies. The winners of the study contracts will have two years to collect data and an option to negotiate a deal with the government for the blocks, Wickramasuriya said. Should a deal fail to be worked out, the government may auction the blocks at the end of the third year, he said. President Mahinda Rajapaksa’s government, which pledged to spend $1 billion annually for at least three years from 2010 on infrastructure, is unlikely to give the contracts for the study blocks to a single company, Wickramasuriya said. The government also reserves the right to nominate a Sri Lankan company as a partner in the blocks, he said. (www.bloomberg.com)

POWER

July 29, 2013. The Kazak energy enterprises, which are part of the Samruk-Energo JSC, increased electricity production by 1.9 times - to 14.591 billon kilowatt per hour, in the first six months of 2013. The volume of electricity release for January-June amounted to 6.11 billion kilowatt per hour, which exceeds the volume in same period of 2012 by 1.4 times. The volume of coal production by "Bogatyr Komir" LLP amounted to 19.6 million tons during the reporting period, compared to 20.8 million tons in January-June, 2012. The capacity of the company's power stations amounts to 9665.2 MW, or nearly 47.3 percent of the capacity of power stations in Kazakhstan's United Power System. The annual volume of produced coal in the largest cuts "Bogatyr" amounts to nearly 40 percent of the coal volume produced in Kazakhstan. (www.azernews.az)

July 29, 2013. The Myanmar electric power authorities have signed a memorandum of understanding (MoU) with two foreign companies, GMS Power Publish Co Ltd and Global Power Synergy Co Ltd of Thailand. The MoU aims at conducting feasibility study for establishment of combined cycle power plant project in Ayeyawady and Yangon Regions. The cycle power plant project will be able to generate 500 MW. (www.mizzima.com)

July 30, 2013. The National Grid Corp of the Philippines (NGCP) has proposed the upgrade of Cebu's transmission lines to meet the island-province's growing demand and to accommodate future power projects. NGCP sought the Energy Regulatory Commission's approval of the P424.4 million Cebu-Lapu-Lapu Transmission Project, which involves the installation of an additional 138 kiloVolt (kV) circuit from the Cebu substation to the Lapu-Lapu substation using overhead and submarine transmission lines. (www.interaksyon.com)

July 30, 2013. China International Water & Electric has inked a memorandum of understanding with the Ugandan government for the construction of 188 MW Isimba hydro project. The government of China and China's Export-Import (Exim) Bank will allot funds totaling about $570 mn through a bilateral agreement. Exim's contribution would be $500 mn. The funds provided by China would be on concessional terms. The work on the project is likely to commence in August 2013, with production scheduled to begin in 2016. The Isimba hydro project will become the fourth largest in Uganda, after the 250 MW Bujagali power project, the 600 MW Karuma dam and the 600 MW Ayago power station. (hydro.energy-business-review.com)

July 29, 2013. U.K. energy regulator Ofgem should act to make energy company profits more transparent and increase competition in a market dominated by Centrica Plc, EDF Energy Plc and EON SE, lawmakers said. The six largest energy companies, including SSE Plc, Scottish Power Ltd. and RWE AG have different units generating, trading and supplying energy, Parliament’s multi-party Energy and Climate Change Committee said in a report. This makes it difficult to determine profits they make from energy supply and how this impacts on energy prices, the lawmakers said. (www.bloomberg.com)

July 24, 2013. While the World Bank is scaling down its financial assistance for new coal-fired power generation projects, Bangladesh has announced that, instead, it will now offer them a tax holiday of up to 15 years from the date they begin production. In an effort to encourage private investment into such projects, it is reported that the National Board of Revenue in Bangladesh has disclosed that an investing company that completes a contract to build a coal-fired facility before June 2020, and actually generates power from it by June 2023, will be able to obtain the corporate tax exemption. The tax incentives could also include an income tax exemption for non-Bangladeshi workers at the plants for three years, and an exemption from withholding taxes on interest paid on foreign investment loans. It is also expected that any capital gain from sale of the power-generating facilities, royalties and technical know-how will also be tax-exempt. With only 2 percent being so produced currently, and a target of increasing that to 24 percent, Bangladesh has adopted a strategy to develop coal-fired power generation, particularly utilizing its domestic resources, as the production of other options, including natural gas, has been decreasing. (www.tax-news.com)

July 24, 2013. Nepal's Supreme Court (SC) has stayed the negotiation for a power development agreement with Indian infrastructure major GMR for developing a 900 MW Upper Karnali Hydropower Project, responding to a petition claiming it ignored the rights of local people. A single bench comprising Justice Bharat Bahadur Karki issued the stay order that will remain effective until July 31, wherein a bench would decide whether a further stay is required, according to the court. The court also ordered the government not to accept Detail Engineering Report of the project by the GMR Energy. The court's decision comes at a time when the Investment Board Nepal is holding talks with the Indian power developer for signing the power development agreement. (economictimes.indiatimes.com)

July 29, 2013. Goldman Sachs Group Inc.’s ReNew Wind Power Pvt. said an Indian rule requiring wind farms to predict output will lead to penalties that will wipe out profits in the industry. ReNew joins Tata Power Co., both among India’s largest renewable-energy utilities, in voicing concern as wind-farm developers seek a court injunction against the directive ordering day-ahead forecasts for generation. India’s electricity regulator will fine developers if predictions aren’t correct. The Central Electricity Regulatory Commission imposed the order this month. The directive, applying to farms built since May 3, 2010, will affect developers including ReNew, Tata, CLP Holdings Ltd. and Morgan Stanley-backed Continuum Wind Energy Pte, which have added some of the largest projects in that time. Penalties may amount to as much as 15 percent of revenue, destroying profitability in an industry that has attracted about $10 billion of investment since 2011. ReNew, which doesn’t disclose its operating capacity, will find it “tough” to meet its own target of adding 200 MW a year. The Wind Independent Power Producers Association has filed for an injunction at the Delhi High Court. Another industry body, the Chennai-based Independent Wind Power Association, is considering doing similar. Objections from the industry have already delayed the order by two years and developers have had sufficient time to prepare. Forecasting of wind generation, an intermittent energy source, is carried out in parts of Europe and the U.S. to help stabilize the grid. In India, scheduling will allow wind power to be sold across states and help authorities prepare network upgrades to accept more clean energy. (www.bloomberg.com)

July 29, 2013. Agrochemicals maker Nagarjuna Agrichem said it has decided to sell off its entire wind power business for some ` 30 crore as part of its strategy to consolidate on core business. The company has approved the proposal. The company has currently three wind turbine generator-based power plants each having 2.1 MW installed capacity located at Tirunelveli district in Tamil Nadu. (economictimes.indiatimes.com)

July 29, 2013. Reliance Power commissioned its wind power facility of 45 MW in Vashpet, Maharashtra. Built with an investment of ` 300 crore, the power from this project would be sold to Reliance Infrastructure Limited for distribution to Mumbai in line with regulated tariff structure of Maharashtra. The wind project consists of 18 wind turbine generators (WTGs) having 2.5 MW of rated capacity each. The project is registered as a Clean Development Mechanism (CDM) project with UNFCCC and is expected to earn 1.6 million carbon credits during its operations phase. Reliance power is already operating a 40 MW solar photovoltaic project in Rajasthan and with the commissioning of the 45 MW wind power capacity, its operating renewable capacity has doubled to 85 MW. The Reliance group already has another 100 MW of wind power capacity. Reliance Power is also executing country's largest 100 MW solar CSP (concentrated solar power) project at Rajasthan, which would complete by year's end. (economictimes.indiatimes.com)

July 25, 2013. Gujarat government approved Wind Energy Policy to expedite and encourage development of wind power generation activities in the state. The 25-year policy will exempt the power producers from electricity duty and allow captive use, seeks to utilize 1,600 km of state coastline and waste patches of barren land for the generation of wind power. The state plans to have its 10% of its total installed capacity from renewable sources. (economictimes.indiatimes.com)

July 25, 2013. Investments in renewable energy sector will be sluggish in the short term globally, including in India, says a report. Leading consultancy firm Deloitte, in its report, said that global investments in renewable energy sector is set to continue to decline in the short term. Deloitte India said that very much like the global trend, there is a short-term setback in renewable energy investments in India. However, the report noted that the prospects for global renewable energy industry would be attractive in the long term. About 118 countries have renewable energy targets in place and the demand for clean energy is also on the rise. Meanwhile, fossil fuels received almost twice the amount of government-funded support than the total amount of public and private sector investment in renewable energy in 2012. (economictimes.indiatimes.com)

July 24, 2013. SunBorne Energy Holdings LLC, backed by billionaire Vinod Khosla, Moser Baer India Ltd., and three other companies asked a regulator to dismiss an attempt by the government of the Indian state of Gujarat to cut the tariff paid for solar power. The five solar project developers argued for the dismissal at a hearing held by the Gujarat Electricity Regulatory Commission saying such a move would violate laws. The developers are objecting to measures proposed by Gujarat Urja Vikas Nigam Ltd., the state-run bulk buyer of solar power, which submitted a petition to the regulator this month requesting a 28 percent cut in the rate it pays for electricity from solar plants. The move in Gujarat, home to more than half of India’s solar power capacity, adds to the number of jurisdictions including Greece, Spain, Romania and the Czech Republic working on cuts for solar power. (www.bloomberg.com)

July 30, 2013. Europe’s decision to curb imports of Chinese solar panels threatens to limit the biggest projects using the technology in the 28-nation bloc while having little impact on the manufacturers accused of dumping their products. The agreement to set a minimum price of 56 euro cents ($0.74) a watt for panels until the end of 2015, will hurt developers of ground-mounted plants and reduce installations. Developers were already buying Chinese panels cheaper, they said. The EU Commission set preliminary tariffs on the 11 billion euros of imports on June 4, allowing time for a deal in its largest commercial dispute of this kind. The agreement will keep higher antidumping duties from starting on Aug. 6, while preventing an escalation in the trade spat before a definitive decision on the case in December. Chinese companies such as Yingli Green Energy Holding Co., the biggest panel maker, have grabbed about 80 percent of the European solar panel market. The EU aims to reduce this share, protecting local makers from alleged dumping practices, by putting a floor on panel prices for as much as 7 GW in imports from China. (www.bloomberg.com)

July 30, 2013. Two of the largest oil producers are readying the Middle East’s first big push into renewable energy, planning solar-power plants that will need more than $1.5 billion in financing by the end of 2014. Saudi Arabia, the biggest member of the OPEC, and the United Arab Emirates, fourth-biggest in the group, are seeking to add 1,000 MW of solar capacity, enough to electrify 200,000 homes. The forecast expansion, which includes Jordan, will require loans and export credits, the Dubai-based Emirates Solar Industry Association said. Governments across the Middle East and North Africa consider sun and wind energy as crucial for meeting the needs of growing populations and economies, with Saudi Arabia leading the way. Oil-producers want to develop renewables to conserve more crude for export, while countries relying on imported fuel see local green power as a cheaper alternative. State support for utilities and a growth in regional power demand of about 5 percent a year mean companies such as Abu Dhabi National Energy Co. can borrow at rates that are 100 basis points, or 1 percentage point, lower than Spain’s Abengoa Solar SA. (www.bloomberg.com)

July 29, 2013. Germany’s air pollution is set to worsen for a second year, the first back-to-back increase since at least the 1980s, after Chancellor Angela Merkel’s decision to shut nuclear plants led utilities to burn more coal. The nation, which is seeking to lead European climate-protection efforts, probably will produce higher greenhouse-gas emissions in 2013 on top of a 1.5 percent gain last year, according to the DIW economic institute, which acts as an adviser to the government. Utilities led by RWE AG and EON SE boosted hard coal imports 25 percent in the first quarter to 10 million metric tons, the nation’s Coal Importers Association said. With elections due in September, the move is a blow to Merkel, a former environment minister who helped negotiate the 1997 Kyoto accord curbing carbon dioxide and other greenhouse gases. Coal is the most polluting fossil fuel and is blamed by scientists for contributing to global warming. Merkel opted to shut nuclear power plants after an earthquake in Japan two years ago resulted in meltdowns at reactors owned by Tokyo Electric Power Co. Merkel’s government is seeking to more than triple the share of renewable power consumed in Germany by 2050. Coal has become cheaper than natural gas for power generators, helping the more dirty fuel gain share in the energy mix of Europe’s largest economy. The shift has been noticed by environmental campaigners and threatens to fuel the election debate. Even so, Germany emitted the equivalent of 931 million metric tons of CO₂ equivalents last year, which was up from 917 million tons the year before, the Environment Ministry said. Merkel in 2011 ordered the country’s eight oldest atomic reactors that provided near CO₂-free power to be unplugged. She wants to shut the remaining nine by 2022. To fill the gap, her government wants utilities to build 10,000 MW of modern gas- and coal-fired generators this decade, replacing older plants. She also unleashed a boom in wind and solar power construction. (www.bloomberg.com)

July 28, 2013. European Union (EU) and Chinese negotiators reached an agreement to curb EU imports of solar panels from China in exchange for exempting the shipments from punitive tariffs. The accord would set a minimum price for imports of the renewable-energy technology from China. In return, Chinese manufacturers would be spared EU levies meant to counter below-cost sales, a practice known as dumping. The EU import taxes target more than 100 Chinese companies including Yingli Green Energy Holding Co., Wuxi Suntech Power Co. and Changzhou Trina Solar Energy Co. The goal is to limit Chinese competition against European manufacturers such as Solarworld AG in the EU’s largest commercial dispute of its kind, without resorting to anti-dumping duties. The case covers EU imports of crystalline silicon photovoltaic modules or panels, and cells and wafers used in them -- shipments valued at 21 billion euros ($28 billion) in 2011. (www.bloomberg.com)

July 26, 2013. Activist Bill McKibben, who helped turn an obscure oil pipeline project into a high-profile political fight, has a new target for his effort to curb global warming: energy companies such as Exxon Mobil Corp. McKibben’s group, 350.org, is asking colleges, cities and churches to divest their financial holdings from a group of 200 companies that produce coal, oil or natural gas. So far six schools, 16 cities and 11 religious institutions have agreed to divest from those companies, according to his group. McKibben’s group has modeled its campaign after the 1980s divestment effort aimed at companies working with the apartheid regime in South Africa. Unless these companies can be persuaded to leave 80 percent of the available fossil fuels in the ground, climate change will proceed at a pace that would be catastrophic for the planet. Students at more than 300 campuses, including the eight Ivy League schools, have joined the movement, which got a mention from Obama during his climate speech. They are demanding that over the next five years schools purge their endowments of investments in 200 publicly traded companies with the largest reserves of oil, gas and coal. (www.bloomberg.com)

July 25, 2013. Germany should introduce incentives so owners of clean-energy plants sell power when it’s needed instead of raking in aid and inflating consumer bills, Economy Minister Philipp Roesler said. Owners of renewable generators may get a fixed payment on top of what they make from having to sell power on the market, Roesler said. The payment would be a first step to replace feed-in tariffs that guarantee state aid for 20 years with fixed levels of renewable generation under a plan by his Free Democratic Party, he said. (www.bloomberg.com)

July 25, 2013. Maryland Governor Martin O’Malley plans to boost demand for renewable energy and slow emissions of greenhouse gases that contributed to a one-foot (30-centimeter) rise in the state’s sea levels over a century. O’Malley will ask state lawmakers to require utilities buy 25 percent of their electricity from solar and wind power by 2020, up from the current 20 percent by 2022. The target was included in a report released by the governor’s office. O’Malley will discuss how Maryland will meet its goal of cutting greenhouse-gas emissions 25 percent below 2006 levels over the next seven years in a speech on climate change. The investments in renewable energy and energy efficiency will produce economic benefits of $1.6 billion and support more than 37,000 jobs, according to the plan. He also will set a goal to reduce peak power demand 15 percent by 2015 through energy-efficiency programs that improve home and office insulation and appliances. (www.bloomberg.com)

July 24, 2013. The cost to the world from melting Arctic ice is equal to almost a year of global economic output as releasing methane trapped in the frozen continent leads to extreme weather, flooding and droughts, scientists said. The methane emissions are an “economic time-bomb” that may cost $60 trillion from effects on the climate, according to research by the University of Cambridge and the Rotterdam School of Management at Erasmus University. Extreme weather events would mainly affect developing nations. The research in the scientific journal Nature follows plans by companies including Royal Dutch Shell Plc and OAO Gazprom to explore the Arctic for resources. Shell halted operations off the Alaskan coast after accidents in 2012. Environmental groups such as Greenpeace criticize the plans, saying oil spills above the Arctic circle would be almost impossible to clean up. Global organizations such as the World Economic Forum should urge leaders to discuss the issue and encourage investment in economic modeling to explore the effects. The release of 50 gigatons of methane over a decade from thawing permafrost beneath the East Siberian Sea would bring forward the date at which the gain in global mean temperature exceeds 2 degrees Celsius by 15 to 35 years. The United Nations has called for the world’s governments to act to limit global temperature increases to 2 degrees. The researchers said costs may be higher than $60 trillion including effects such as ocean acidification. Discussions about the warming Arctic focus on benefits such increased fossil fuel drilling and new shipping routes. (www.bloomberg.com)

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