MonitorsPublished on Dec 10, 2010
Energy News Monitor I Volume XI, Issue 26
Regulation in the Indian Hydrocarbon Sector: Too Much or Too Little?

Lydia Powell, Observer Research Foundation


his was the question posed to the distinguished speakers at 12th Petroindia conference jointly organised by the Observer Research Foundation and India Energy Forum last week. There was no consensus response from the distinguished speakers.  Instead, they posed more questions. In the upstream segment one of the key questions that emerged was whether the upstream sector needs an ‘independent’ regulator? The Government seemed to convey that, as the custodian of State owned wealth, it has every right to make policy and regulate how the policy is being implemented through the Directorate General of Hydrocarbons (DGH) its technical arm. On the other hand, developers seemed to feel that resources beneath the surface have no intrinsic value unless they are actually brought out of the surface and therefore those with the ability to bring resources out of the ground must be allowed greater say over how the resources are extracted. They appeared to prefer an ‘autonomous’ regulator who would allow for greater flexibility and accommodation given the extent of uncertainty and complexity in extracting sub-surface resources. 

What appears to be the primary source of conflict between the custodian and the developer is not over who is regulating the sector but rather over how the prevailing regime is interpreted and enforced. The prevailing regime is that of a Production Sharing Agreement (PSA) and both parties seem to have succumbed to what is described as ‘hindsight bias’ in interpreting the agreement.  According to legal studies, ‘hindsight bias’ skews retrospective probability estimates irrespective of whether the outcome is a happy one or an unhappy one.  Depending on whether the outcome is happy or unhappy, pressure arises to adjust developers risk and reward retroactively. From a legal perspective, retroactive regulation of hydrocarbon regulation is seen as unfair and unsound even though it could lead to net economic and social gain.  Sanctity of contracts is enshrined in law and in the limited framework of the law, even national interest cannot disturb that sanctity. This leads to another issue that was raised in the conference which was over clarity of objectives. If objectives such as economic growth and energy security are clear, then what is acceptable and unacceptable can be interpreted on the basis of the objectives. As one of the speakers put it, ‘the Government’s responsibility is to ensure that right things are done, and the regulators responsibility is to see to it that things are done right. 

A subsidiary question was over the type of instrument that would enable ‘fair’ distribution of risks and rewards.  There seemed to be some disagreement over whether Production Sharing Contracts (PSCs), the mechanism that is currently in place to distribute risks and rewards was appropriate. In theory the PSA which is essentially a cost plus arrangement is seen as the appropriate instrument in early stages of exploration when the uncertainty is high. A shift to system of licensing in mature areas where the uncertainty is lower is generally accepted. Once again the disagreement did not seem to be over the type of instrument but rather the level of uncertainty and complexity in the concerned basin. This is probably a question over which technology and international best practices rather than a regulator have a better grip.

In the mid-stream sector there were fewer uncertainties. Almost all agreed that there is a problem with infrastructure, especially when it comes to gas transportation and liquefaction and re-gasification. As the only non-Indian speaker pointed out, the global natural gas landscape is shifting and no one is certain which way it will go. Three key sources of uncertainty that he pointed out originated partly on the supply side and partly on the demand side. On the supply side, there was uncertainty over the extent of gas supplies that would be available in the global market from USA and China after their growing demand is met and on the demand side there was uncertainty over what energy choices Japan would make. His recommendations were clear and straight forward and worthy of attention by Indian policy makers and regulators: (1) Invest in options to gain on upside risk in the gas sector (2) Err on the side the side of too much and not too little as far as gas infrastructure is concerned (3) Reduce uncertainty and bureaucracy (4) Trust markets. 

In the downstream segment once again there seemed to be lack of clarity on the philosophy of regulation as one speaker put it.  The source of conflict was whether or not the power over pricing petroleum products and natural gas should be ceded to the downstream regulator or retained with the Government. The Government saw the clause relating to price in the concerned Act to be ‘futuristic’ in nature. This could be interpreted the Government’s unwillingness to give up its monopoly on pricing in the short term. On the other hand the players in the field, including those owned by the Government conveyed the burden this imposes on them and how this negatively impacts energy security of the nation. A number of very convincing arguments may be made on the basis of fundamental economic principles to free petroleum and gas prices from any form of control.  However this view needs to be put in India’s larger socio-economic context. As the economist in the downstream panel pointed out the role of fossil fuels particularly petroleum products is increasing in the agriculture sector.  Consequently, the inflationary impact of any increase in petroleum price has a greater impact on the agriculture sector than it has on other sectors. This necessarily means that any form of price decontrol should be carefully thought through in a country where most of the livelihoods and lives are still in the agriculture sector. 

In the final analysis, it appeared that the question posed to the participants at the conference was premature.  The right question at this point would have been: do we know where we are going and if so, do we know how to get there?


Views are those of the author                    

Author can be contacted at [email protected]




Can the “Regulator” wielding the stick make the “CIL” more responsible?

Ashish Gupta, Observer Research Foundation


roblems at Coal India Ltd (CIL) seem to have become the norm. First it got stuck with Comptroller Auditor General of India (CAG), then with Central Bureau of Investigation (CBI) and now the Competition Commission of India (CCI). Though the CAG stand on windfall gains to the private companies is debatable as the approach used to calculate gain is purely based on the accounting principles rather than other economic or technical principles, it has cast a shadow on CIL. The CBI investigation over arbitrary allocation of coal blocks to private companies is yet to come to any conclusion. But the recent CCI case against CIL is somewhat different. There is no denying the fact that the slapping ` 177 million penalty on CIL is fully justified. The penalty was slapped on the allegation made by Maharashtra State Power Corporation and Gujarat State Electricity Corporation that CIL had been supplying low quality coal at higher prices with no transparency in fuel supply contract regarding coal quality and other parameters. Unlike other watchdogs, the CCI has some tooth and this is complemented with the fairness in its charge.  It also does not make any distinction between the private company and the state owned company. This is a good sign and this must continue!

Monopolistic situations under which any commercial entity embarking on distorted business practices must be taken to task but the discourse must not end with the privatization of the coal sector. Needless to say, there is a serious need to have a relook on the functioning of the CIL to bring progressive reforms in ‘change reluctant’ CIL. This also does not mean that we must come with the suggestion that another committee must be established to look into the matter. The fact is that this requires a serious rethink on making CIL subsidiaries independent and also on partially opening the sector to big mining giants who have technical competency. Returning to the original question, in the so called penalty drama, who will emerge as the winner?

Unlike other countries, Indian Regulators are dependent on the government grants/ funding. This is a major worry for the stakeholders and the watchdog position is always charged as being biased. Therefore imposition of any penalty by the Regulator will not give much confidence to the stakeholders though it is exercised in good faith.  But it is a win-win situation for the government.

In any Public Sector Undertaking (PSU), the government is the major stakeholder and therefore it gets not only the dividend but also the taxes.  Before any PSU makes any payment as dividends to the shareholders, it must deduct 17% as tax (including cess and surcharge). The same tax also goes to the government. When a penalty is imposed on the company due to wrong practices, the penalty expense is not treated as business expenditure and therefore no tax deduction is possible on penalty payments.  The tax will again go to the government’s kitty.  And most importantly, the penalty amount will also go to the government’s account unlike the regulators in most other countries with developed markets.  Needless to say, the government becomes the beneficiary on all fronts, through dividends, through tax and through penalty. 

Who is the loser?  It is the minor stakeholder as he will get lower amount as the dividend and the company which loses its credibility. Though the penalty mechanism is good it is not certain that it will transform the role of the Regulator. Indeed there is need for independent and empowered Regulator for any sector.  But we are asking for too much here because the Regulators too are appointed by the government.  Another very important question is whether the penalty amount will be used by the Government to reform the coal sector or just be used to bridge the fiscal deficit or fund political schemes?


Views are those of the author                    

Author can be contacted at [email protected]


Demand Estimates for Petroleum Products in India

Akhilesh Sati, Observer Research Foundation                                                                                           ‘000 Tonnes



Initial Estimate from 12th Plan

Revised Estimate (RE)

(A) Sensitive Products










Sub total



(B) Major Decontrolled Products






















Sub total



(C) Other Minor Decontrolled Products







Sub total



All Products (A)+(B)+(C)



Share of Petroleum Products in Demand (RE)

Source: Petroleum Planning & Analysis Cell

Oil & Gas: India’s Milestones             

Dinesh Kumar Madhrey, Observer Research Foundation

Continued from Volume X, Issue 25......


World’s first crude oil conditioning plant was commissioned at Nahorkatiya. India’s first deviated well NHK122 drilled by OIL. Cochin refinery was established at Kochi with a capacity of 2.5 mt. Foundation stone laid for Gujarat Refinery (IOC) by Pandit Nehru. On 25th March, a new Company was floated under the name and style of Indian Oil Blending Ltd to undertake the erection. The new Company was floated as a joint venture of Mobil and the IOC on 50:50 basis. 

1964 (IOC to IOCL):

Indian Refineries Ltd merged with Indian Oil Company with effect from 1st September, 1964, and Indian Oil Company was renamed as Indian Oil Corporation Ltd. IOCL entered aviation fuelling business with supplies to the Defence Services, first airfield refuelling station inaugurated at Palam, Delhi. OIL commissioned the 757 km Guwahati - Barauni (Bihar) crude oil pipeline. In the same year India’s first long distance product pipeline was commissioned from Guwahati refinery to Siliguri (GSPL).


‘Indane' brand LPG was launched for the first time in the country at Kolkata by IOCL. IOC’s Koyali refinery with intial capacity of 2 mtpa in Gujarat came into being in 1965. ONGC commissioned a pipeline from Anklesvar to Koyali refinery in the same year. Barauni Refinery was inaugurated by Prof. Humayun Kabir, Hon’ble Minister of Petroleum & Chemicals.


Koyali Refinery was dedicated to the nation by Dr. S. Radhakrishnan, President of India. Barauni-Kanpur Pipeline (BKPL) and Koyali- Ahmedabad product Pipeline (KAPL) was commissioned.


IOC’s Haldia Barauni product pipeline was commissioned for maiden export of petroleum products to the Far East.


The first link of ONGC with OIL was established with the commissioning of pipeline between Lakwa field and the OIL trunk pipeline at Moran. OIL commissioned the 1158 km oil pipeline to Guwahati and Barauni refineries.


A wholly owned subsidiary of IOC was registered on 24th October, under the name and style of the Indian Oil International Ltd for the sale of the Corporation's POL products within the territory of Nepal. Madras refinery came on stream with an initial capacity of 2.5 mtpa. 


SERVO, the first indigenous lubricant, launched by IOC, and its Haldia-Maurigram product pipeline was commissioned.

to be continued…







Cairn India discovers more gas prospect in Ravva block

December 9, 2013. Cairn India and its joint venture partners in the oil and gas producing Ravva block in the East Coast have discovered a new prospect in the existing fields. The new area is expected to see hydrocarbons flow in the next three-four years. According to estimates, the LO-110 prospect holds 368 billion cubic feet (10 billion cubic metres) of ‘recoverable gas’ and 16 million barrels of ‘condensate’, which is similar to light stabilised crude oil and used as feedstock for oil refining and other petrochemical industries. If all goes as planned to develop the LO-110, then the first round of gas production is likely to come by 2016-17. The LO-110 is likely to produce until 2022-23. The Ravva block has been into production for 19 years. The natural gas demand in India is about 125 million standard cubic metres a day (mmscmd), of which 93 mmscmd is met from domestic production and 25-30 mmscmd through imports. At present, gas demand in India is linked to availability. Cairn had reported that in the last quarter of the current fiscal, Ravva had produced 29,151 barrels of oil equivalent a day (both oil and gas). Of this, 39 million standard cubic feet was gas. Cairn (22.5 per cent) and its partners – Marubeni-owned Ravva Oil (12.5 per cent), Videocon (25 per cent) and ONGC (40 per cent) – will take at least three months to drill the exploration well in the new area. (

Cairn India bids for one block in Sri Lanka

December 7, 2013. ONGC Videsh Ltd. (OVL) has opted out of bidding for any of the 13 oil and gas blocks offered in the Sri Lankan Licensing Round. However, Cairn India has put in a bid for one block. OVL said it had decided against participation in this round of auctions in Sri Lanka as it did not find the prospects of these blocks viable. The bids for 13 offshore exploration blocks closed. Only three bids have been received at the close by the Sri Lanka’s Petroleum Resource Development Secretariat (PRDS) as major oil and gas giants, excluding Cairn India, stayed away, the Petroleum Ministry said. Cairn had bid for a block in the Mannar basin, while OVL skipped the round. Singapore-based Bonavista Energy Corp bid for two blocks in the Cauvery basin located offshore Jaffna in the North. (

RIL's KG-D6 output slips to 10 mmscmd

December 5, 2013. Reliance Industries Ltd (RIL) said natural gas production from its eastern offshore KG-D6 block has slipped further to about 10 million standard cubic meters per day (mmscmd). The present day production is made up of output from Dhirubhai-1 and 3 gas fields as well as MA oil and gas field. In November, it was about 12 mmscmd. RIL blames geological complexities like high water and sand ingress in wells as well as larger than anticipated drop in reservoir pressure for the fall in output from close to 70 mmscmd achieved in March 2010. The government however believes that the output fell because the company did not drill the wells as promised when it got a $8.8 billion investment plan approved for the D1&D3 fields in 2006. It sees the non-drilling of wells as a default in contractual obligation and has slapped a $1.797 billion penalty on it. These reasons have led to shutting of 10 out of 18 gas wells on D1&D3 fields and a third of those on MA. KG-D6 fields, which began gas production in April 2009, had hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress shut down of wells after wells. This peak output comprised of 66.35 mmscmd from D1&D3, the largest of the 18 gas discoveries on the KG-D6 block, and 3.07 mmscmd from MA field, the only oil discovery on the block. Besides the fall in output from D1&D3, gas production from MA field, which had hit a peak of 6.78 mmscmd in January 2012, too has dropped. (


Diesel demand drops first time in ten years: IOC

December 6, 2013. Diesel demand has declined for the first time in over a decade as monthly price increase and rise in power generation pulled down demand, Indian Oil Corporation (IOC) said. Improved power generation reduced use of generator sets, which resulted in lesser demand for diesel. But, the bigger reason is the move to deregulate diesel rates through small monthly increases. Diesel rates have risen by a cumulative ` 6.62 per litre since January, which has also lead to a drop in demand for diesel cars. Diesel is India's most-consumed fuel, accounting for close to 45% of the demand of total petroleum products. Since 2003-2004, the demand for the main transportation fuel had been growing at a healthy rate of 6-8%. IOC said petrol consumption had dropped when the fuel was deregulated in June 2010 but diesel continued to see rise in consumption as it was heavily subsidized, thereby discouraging people to use it optimally. Now petrol is at par with its cost of production but the current selling price of diesel is still ` 9.99 a litre less than cost. While diesel sales dropped in the first seven months of the fiscal, petrol consumption rose by 10% to 9.1 million tonnes. But, overall fuel demand during the April-October period was largely unchanged at 90.6 million tonnes against 90.2 million tonnes in the same period last year. Besides losing ` 9.99 a litre on diesel, state-run fuel retailers are losing ` 36.2 per litre on kerosene sold through ration shops and ` 542.5 per cylinder of cooking gas. (

Transportation / Trade

India, Japan eye joint tenders for cheaper LNG

December 4, 2013. India and Japan are stepping up the pressure for cheaper liquefied natural gas (LNG) with potential joint tenders as two of the world's biggest gas buyers try to ease the pain of high prices and rising demand. Asia is already the top destination for LNG supplies and economic expansion, nuclear plant shutdowns in Japan and South Korea and the shift toward cleaner-burning gas in smog-choked Chinese cities are boosting demand even higher. But that demand has helped push LNG prices to near record levels and now buyers such as India and Japan are trying to find ways to cut their soaring gas import bills. India and Japan signed an agreement in September to study joint procurement of supplies and now the two countries will hold meetings to work out the details of joint purchases. (

Policy / Performance

ONGC to appeal in SC against Gujarat HC order

December 10, 2013. Oil and Natural Gas Corp (ONGC) said it would appeal in the Supreme Court (SC) against a Gujarat High Court (HC) order asking it to pay ` 10,000 crore in past royalty dues, saying it cannot pay the levy on revenue it hasn't earned. The Gujarat HC had directed ONGC to pay royalty to the state government on the gross bill price of crude oil. The company, as per Government of India directive, pays royalty on the net or actual price realised from refiners after allowing for fuel subsidy discounts. As per government directive, ONGC offers discounts on crude oil to make up part of the losses refiners suffer on selling diesel, cooking gas (LPG) and kerosene at state controlled rates. When subsidy sharing started in 2003, ONGC paid royalty on output from offshore fields to the central government at post-discount sale price while it paid state governments for crude from onshore fields at pre-discount sale price. The Oil Ministry in 2008 allowed ONGC to pay state governments royalty on the net price realised. (

LPG price hiked by ` 3.46 per cylinder

December 10, 2013. Domestic cooking gas (LPG) price was hiked by ` 3.46 per cylinder after the government raised the commission paid to dealers by over 9 per cent. The increase in commission -- which as per practice is passed on to consumers - has been effected. LPG in Delhi costs ` 410.50 per 14.2-kg cylinder and after the increase it will cost ` 413.96. The last revision in cooking gas prices happened in October last year when because of an increase in dealers' commission the rates were raised from ` 399 per cylinder to ` 410.50. Also, dealers' commission on 5-kg LPG cylinder has been increased by ` 1.73 to ` 20.36 per bottle. A 5-kg LPG cylinder costs ` 353 in Delhi currently. The annual revision in dealers' commission is being proposed keeping in view the increase in expenses like salary and wages. No revision in the additional distributor commission of 75 paisa paid on sale of non- subsidised sale of 14.2-kg cylinder was required for the time being. The 75 paisa is over and above the commission of ` 40.71. Non-subsidised LPG is sold at market price of ` 1017.50 per cylinder in Delhi. LPG dealers' commission was last revised on October 7, 2012 when it was raised from Rs 25.83 per 14.2-kg cylinder to ` 37.25. The same for 5-kg cylinder was hiked from ` 13.30 to Rs 18.63 per bottle. The commission has more than doubled in the past six years with almost yearly increases. The commission was raised from ` 16.71 per 14.2-kg LPG cylinder to ` 19.05 on March 1, 2007; to ` 20.54 on June 4, 2008; to ` 21.94 on June 30, 2009 and to ` 25.83 per bottle on July 1, 2011. (

Oil Ministry rules out regulator nod for CNG stations

December 9, 2013. The Petroleum Ministry has held that the oil regulator's approval is not needed for setting up CNG selling stations and companies were free to set up CNG pumps across cities. Petroleum and Natural Gas Regulatory Board (PNGRB) has been since 2009 issuing licences to entities for city gas distribution (CGD) networks, essentially for retailing compressed natural gas (CNG) to automobiles and piped cooking gas (piped natural gas or PNG) to households. The Oil Ministry has, however, held that while PNGRB can issue authorisation for CGD, companies are free to set up a CNG stations without its prior approval. This essentially means that PNGRB can issue authorisation or licence for CGD which entails laying of local gas pipeline network. But any entity can set up a CNG station and hire pipeline network of PNGRB-authorised CGD entity for taking gas to the retail pump. The Ministry's letter was in response to GAIL writing to the Oil Secretary asking if in terms of PNGRB Act, 2006, CNG stations are integral part of CGD network or not. The directive comes as a blow to PNGRB which had in October invited bids for issuing licenses for retailing CNG and piped cooking gas in 14 cities including Bengaluru, Pune and Amritsar. Bids are due on February 11, 2014. PNGRB can issue authorisation for these cities to entities for laying of the pipeline network in the city. (

Finance Ministry not parting with cess for developing oil sector

December 9, 2013. India's oil industry has paid over ` 118,500 crore cess on the output of crude oil and natural gas in three decades, but not even 1% of this could be utilised for developing the sector, the oil ministry said. The oil ministry has asked the finance ministry to provide 75% of the annual cess collection to the board. The finance ministry, which shares a huge oil subsidy bill, is, reluctant to part with the cess money. The government has paid only ` 902 crore to the Oil Industry Development Board (OIDB) since its inception in 1974. It said the cess is credited to the Consolidated Fund of India. The oil ministry wants the finance ministry to release funds to OIDB for investment in strategic oil reserves in and an oil insurance corpus. The board needs ` 1,195 crore for investing in strategic oil reserves and ` 1,000 crore for insurance fund, which was required after foreign re-insurers refused to provide cover to Iranian oil imports. (

Cairn seeks oil swaps to circumvent export ban: Corporate India

December 9, 2013. Cairn India Ltd., the nation’s biggest onshore crude oil producer, is proposing swap deals in the commodity to help skirt the government’s ban on exports that yield higher margins. Some Japanese utilities and Singapore-based refiners are interested in the high-wax crude extracted from Cairn’s fields in the northwestern state of Rajasthan. The company has sought India’s approval for a tripartite agreement that would replenish the exported volume with no loss to any of the parties including the government. Cairn India, based in Gurgaon near New Delhi, has already sent a proposal to the government, which has been “received with an open mind”. The three-way deal would essentially require Cairn India to flout India’s ban on crude oil exports, while its local customer makes up for the deficit by sourcing the commodity from an overseas supplier. (

Law Ministry, Planning Commission support Oil Min plan on RIL

December 8, 2013. The Law Ministry and the Planning Commission have backed an Oil Ministry proposal to allow Reliance Industries to almost double the price of gas from April in return for a $90 million bank guarantee every quarter. The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main Dhirubhai-1 and 3 (D1&D3) fields in the eastern offshore KG-D6 block. The bank guarantee will cover the difference between the current gas price of $4.2 per million British thermal units and the rate of $8.2-8.4 per million Btu, which will come into effect from April 1. The Oil Ministry had 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 per cent fall in output at the fields was due to natural reasons or it makes up for the shortfall in production since 2010-11. This would have meant pronouncing RIL guilty even before trial. The veracity of allegations that RIL hoarded gas in anticipation of a price hike can be established by arbitration or a third-party expert, a process that can take 1-2 years. The government cannot ask consumers to pay a higher price for gas consumed in the period taken to decide on the hoarding charge. The government could have charged customers the higher price 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. The bank guarantee will be calculated quarterly as the gas price will change every three months, based on average international hub prices and the rate at which LNG (liquefied natural gas) is imported in India. The bank guarantee will be about $90 million in the first quarter of fiscal 2014-15, considering an anticipated output of less than 8 million metric standard cubic meters per day (mmscmd) from D1&D3, after netting the excess royalty that RIL will pay at the higher price. (

Subsidy outgo hitting new investment in ageing fields: ONGC

December 5, 2013. Oil and Natural Gas Corp (ONGC) said it cannot make new investments needed to arrest falling oil production from ageing fields as its net price realisation has sharply fallen due to subsidy outgo. Oil and gas producers like ONGC and Oil India make up for a part of losses fuel retailers incur on selling diesel and cooking fuel at government controlled rates. This subsidy payout is by way of discounts they offer on crude oil sold to them. ONGC's cost of production is $40 per barrel without considering any return on investment. Most of the ONGC fields are old and ageing where the easy oil and gas have all been produced. Consequently, production has started to dip and new investments are need to produced oil from difficult zones in those fields. Downstream fuel retailers are not allowed to sell diesel, cooking gas (LPG) and kerosene at a rate equivalent to cost of production, and so the differential is borne by the government and upstream firms. Currently, diesel is sold at ` 9.99 per litre lower than its actual cost while LPG is sold at a loss of ` 542.50 per 14.2-kg cylinder. Kerosene costs ` 36.20 a litre less than its cost of production. Since 2004, the company has paid ` 216,336 crore in fuel subsidy, but for which its net profit would have been higher by ` 125,477 crore that is enough to buy properties producing 10-15 million tons of oil per annum. ONGC says it needs a minimum price of $65 per barrel, without which the investments planned in redevelopment of old and ageing fields will not be commercially viable. The company has laid out plans to spend over ` 163,000 crore in 12th Five Year Plan which will rise further because thrust on overseas acquisitions. The company said if it is stripped of $56 per barrel in form of subsidy discounts, there would be significant shortfall of cash during XII Plan period. (

India will be largest source of oil demand growth after 2020: IEA

December 4, 2013. India will become the largest single source of global oil demand growth after 2020, the International Energy Agency (IEA) said. Paris-based IEA said the centre of gravity of energy demand is switching decisively in favour of emerging economies, particularly China, India and the Middle East, which drive global energy use one-third higher. IEA head Maria van der Hoeven said India's energy demand will double by 2035 on back of economic growth and rise in population. While the energy demand will double, per capita consumption in India will still be one-fourth of the OECD average, she said. IEA said China is about to become the largest oil-importing country by replacing US and India will become the largest importer of coal by the early 2020s. (

CNG prices may be hiked by about ` 16 per kg in Mumbai

December 4, 2013. CNG prices in Mumbai may have to be hiked by about ` 16 per kg and piped cooking gas by ` 10 after government decided to divert some of its cheaper domestic gas to Gujarat. The Oil Ministry decided to allot the available domestically produced natural gas to all CNG retailers in the country at a uniform price. At present, cheaper domestic gas is mostly allocated to firms in Delhi and Mumbai while those in other cities have to depend on costlier imported gas. Gas to retailers in Gujarat is being made available by cutting supplies of Mahanagar Gas Ltd (MGL) of Mumbai. The company presently gets about 2 million standard cubic meters per day of gas at a price of $4.2 per million British thermal unit. MGL said its supplies will be reduced by about 28 per cent to 1.45 mmscmd after the order is implemented. The Oil Ministry said the order to redistribute available domestic gas among all CNG and piped gas retailers will ensure growth of the city gas sector. (



NTPC coal plants generate 672 MUs power in single day

December 9, 2013. NTPC said its coal-fired plants generated more than 672 million units (MUs) of electricity, the highest level this fiscal. NTPC is the country's largest power producer with an installed generation capacity of 42,454 MW. The utility produced 672.44 MUs of electricity with 100.19 per cent capacity availability from its coal stations, the highest daily generation achieved by its coal stations in the current fiscal. Total generation -- coal and gas plants -- on that day stood at 710.54 MUs, also the highest for the current financial year (2013-14), NTPC said. NTPC operates 16 coal-fired and seven gas-based projects, among others. (

CERC order on Mundra UMPP likely by month-end: Tata Power

December 4, 2013. Tata Power, the nation's largest private power producer, has said the electricity regulator CERC's order for granting compensatory tariff for the company's Mundra project is likely to come up by month-end. Central Electricity Regulatory Commission (CERC), in April this year, allowed the private utility to raise power tariffs from its 4,000-MW Mundra ultra mega power project in Gujarat, to compensate for an unexpected increase in coal cost. Coastal Gujarat Power Ltd, a wholly-owned subsidiary of Tata Power, had petitioned CERC seeking relief on account of adverse impact of the unforeseen, uncontrollable and unprecedented escalation in the imported coal price. The commission had asked the power procuring states of Mundra to form a panel and decide on the quantum of compensation. The panel said the company should be allowed an increase of 45-55 paise tariff in its Mundra plant. Mundra UMPP supplies power to 5 States, namely Gujarat, Maharashtra, Haryana, Rajasthan and Punjab. (

Transmission / Distribution / Trade

Schneider Electric India aims to double North East business

December 10, 2013. Energy Management company Schneider Electric India said it would double business in North East in the next 3-4 years. The region is expecting around ` 1,500 crore investment in the 3-4 years from the government side. These will be mainly in transmission and utility products, and by the power distribution firms to expand electrification. Schneider Electric India Director said the North East region's contribution to the company's overall national revenue is "in single digit per cent" but hopes to increase it soon. Schneider Electric India is at present organising a roadshow in 50 cities, including Guwahati, across the country to celebrate 50 years of presence in India. (

Alstom T&D bags ` 1.5 bn orders in Gujarat

December 9, 2013. Power generation and transmission firm Alstom T&D said it has bagged two contracts worth ` 151 crore from Gujarat Energy Transmission Company. The contracts are for supplying 400 KV, 220KV and 66KV AIS substations on turn-key basis to evacuate power from the solar parks in Charanka and Sankhari, which are being set up in the state. (

Southco close to restoration of electricity in cyclone-hit Ganjam

December 9, 2013. Nearly two months after severe cyclone Phailin hit Odisha, power distribution company Southco said it was close to restoration of electricity supply in worst-hit Ganjam district. About 4,000 out of 55,000 consumers in 70 locations, including 33 villages and 37 hamlets, are waiting for power restoration in the district. The power distribution company also claimed to supply power to almost all the public utilities like the water supply points of the Public Health Engineering Department, health centres and BSNL towers. (

Coal India has signed 157 FSAs so far

December 9, 2013. Coal India Ltd (CIL) has signed 157 fuel supply agreements (FSAs) so far for a capacity of 71,145 MW. The Minister said as per New Coal Distribution Policy (NCDP) 2007, CIL has to supply coal to such power plants with which it has entered into fuel supply agreements. The government had recently approved coal supplies to thermal power plants which are commissioned/to be commissioned by March 31, 2015. Coal India has been dispatching more than 90 per cent of the quantity committed under fuel FSA/memorandum of understanding (MoU). As per the coal stock report of Central Electricity Authority (CEA) as on Nov 28, 2013, coal stock position of Thermal power plants (TPPs) was 16.03 million tonnes (MT) as against 9.19 MT during last year. Amid continuous delays, the Cabinet Committee on Investment (CCI) had earlier said that timelines for signing of fuel supply pacts for power projects of 78,000 MW capacity should be met. Two deadlines set for signing of the fuel supply agreements by CIL with the power producers could not be adhered to. The Coal Ministry had set the deadline of August 31 for signing of the FSAs, which could not be met. (

IEX sees oversupply of electricity; fall in trading volumes

December 5, 2013. Indicating sluggish power demand, Indian Energy Exchange (IEX) saw a decline in electricity trading volumes in November even as the availability continued to remain high. The fall in volumes was mainly on account of the onset of winter in the northern region where the demand for electricity fell as much as 25 per cent. November saw 2,481 MUs (million units) traded in the market, marking a decrease of around 6 per cent from the 2,645 MUs traded in October, IEX said. Total sell bids touched 4,239 MUs, while the buy bids were for around 3,660 MUs. According to the exchange, with winter season in northern India, the constituent states in the region traded almost 25 per cent less power in November compared to the previous month. Besides, congestion in transmission network restricted inter-regional flow of electricity. (

India to set up HVDC transmission line with Nepal, Bhutan

December 5, 2013. India is working to set up an energy efficient power transmission line (HVDC) with Nepal and Bhutan as part of its energy security plans, External Affairs Minister Salman Khurshid said. India also hopes to have power transmission connectivity with ASEAN and SAARC countries, including Pakistan, Afghanistan and Myanmar, he said. He, however, did not elaborate on the transmission connectivity plans to ASEAN nations. India has been working for the last few years to put in place a multilateral SAARC Market for Electricity (SAME) and has plans to set up a larger SAARC (South Asian Association for Regional Cooperation) transmission grid. In October, Prime Minister Manmohan Singh had dedicated to the nation the 71-km Baharampur-Bheramara HVDC transmission link, which connected electricity grids of India and Bangladesh. The link is designed to facilitate cross-border electricity transfer of up to 500 MW from India to Bangladesh. As far as Bhutan is concerned, India's transmission link with that country is already in place. The government has plans to augment the existing line to import upto 5,000 MW power from Bhutan by 2020 through HVDC (high voltage direct current) transmission line. On the other hand, Nepal currently imports about 150 MW power from India. Last year Power Grid Corporation of India (PGCIL) had completed a 40 MW transmission line to the Himalayan nation. Besides, many Indian companies have plans to set up power plants in Nepal to tap its hydro-power generation potential. In HVDC technology, less electricity is lost in transmission than with conventional AC technology. It also requires fewer transmission lines, which means less land has to be cleared. (

Independent agency to determine power purchase rate from NTPC

December 5, 2013. The state government has instructed power trading company Gridco Ltd to engage an independent agency to find out power purchase rate from NTPC, which has demanded higher rate citing rising cost of generation due to use of imported coal. NTPC has two power plants in the state, a super thermal power plant of 3,000 MW and Talcher Thermal Power Station (TTPS) having 460 MW capacity. It needs about 60,000 tonne coal per day to run the units. While TTPS provides its entire generation to state grid, the super thermal unit supplies 518 MW to the state from its 6 X 500 MW complex. Odisha also gets around 1,100 MW from different power stations of NTPC situated out of the state, as per its entitlement. (

Policy / Performance

Incentives should be on actual generation than supply: NTPC

December 10, 2013. Responding to draft proposals of the electricity regulator, state-run utility NTPC said the company's generation incentives should be linked to the actual power produced instead of supply. The draft guidelines of the Central Electricity Regulatory Commission (CERC) have proposed that the incentives given to the thermal power projects should be linked to the PLF (plant load factor) of the plant and not PAF (plant availability factor). The PLF may vary depending on the demand from the electricity distribution utilities but the actual generation capability or PAF remains the same. The company has said that it will respond to the draft regulations by the CERC. Revision of tariff regulations is reviewed every 5 years by CERC. The existing regulations (2009-14) will expire on March 31, 2014 and the revision of guidelines for 2014-19 is underway. (

Coal India eyes mine acquisitions in Indonesia

December 8, 2013. Coal India Ltd (CIL) is actively looking at as many as five proposals for acquisition of mines in Indonesia. CIL's overseas plans come at a time when the company is facing flak for acute shortages of coal, which is hurting country's key sectors including power and fertiliser. Coal India had said that it invited an expression of interest inviting global companies to offer overseas assets. Coal Minister Sriprakash Jaiswal earlier said that acquisition of coal mines overseas should be done in an aggressive manner to meet the country's energy requirements. In order to tide over the fossil fuel shortages, the government is also proposing to import coal. Meanwhile, CIL has already finalised bids for further drilling its twin mines in Mozambique. Two coal blocks - A1 and A2 - at Motaize, in Tete Province of Mozambique, are spread over 200 sq km. CIL has proposed a capital outlay of ` 25,400 crore in the 12th Five Year Plan, plus an ad-hoc provision of ` 35,000 crore to acquire coal assets abroad and develop the acquired coal blocks in Mozambique, according to the coal PSU. The capital expenditure for current fiscal has been envisaged at ` 5,000 crore, along with additional ad-hoc provision of ` 4,000 crore to acquire coal assets abroad and develop coal blocks in Mozambique, it said. The demand-supply gap of coal was 135 million tonne last fiscal and may widen 185.5 million tonnes in 2016-17. (

PowerMin's meeting to discuss amendments to tariff policy

December 6, 2013. The power ministry, which has released draft amendments to the National Tariff Policy to further promote competition and reduction in distribution losses, would be meeting to discuss the amendments with key stakeholders. The ministry has proposed competitive bidding process and power purchase agreements for the renewable energy sector, stable renewable power obligation regime to promote renewable energy sources, cuts in cross subsidies and encouragement of open access. Further, the ministry has proposed that consumers below the poverty line with a consumption of 30 units per month would continue to receive special support through cross subsidy without re-examination of the provision after five years. The ministry has proposed a road map of reduction of cross subsidies to be specified by state electricity regulatory commissions (SERCs) in line with the spirit of the Electricity Act, 2003. SERCs may calculate cross subsidy surcharge based on the estimation that the distribution company will avoid purchase of the quantum of power for which open access has been sought. This can be adopted in areas where there are no power shortages. For the hydro sector, the ministry has proposed that the graded reduction in percentage of allowable merchant sales will be limited to delays attributable to the developer. This is in view of the time and cost over runs involved due to the reasons which are beyond the control of the developers. Maharashtra Electricity Distribution Company (MahaVitaran) said most distribution companies are in financial stress which is slowing the growth of the power sector in the country. Maharashtra Electricity Regulatory Commission said the proposed amendments will help in the development of a competitive power market. The formula for arriving at cross subsidy surcharge and tariff deregulation of open access consumer category would help consumers at large. (

Coalgate: CBI likely to start filing charge sheets soon

December 5, 2013. CBI is likely to start filing charge sheets in the cases related to coal blocks allocation scam soon as it has wound up its probe in at least five of 14 cases registered by it so far. The sources, refusing to share details of the cases in which final reports can be filed as it is a Supreme Court- monitored probe, said they would file the charge sheets this month. They said the agency has completed its probe in at least five cases and charge sheets in some of them may be filed by the end of the month. CBI has registered 14 FIRs so far in connection with the alleged graft in allocation of coal blocks in which AMR Iron and Steel, JLD Yavatmal Energy, Vini Iron and Steel Udyog, JAS Infrastructure Capital Pvt Ltd, Vikash Metals, Grace Industries, Gagan Sponge, Jindal Steel and Power, Rathi Steel and Power Ltd, Jharkhand Ispat, Green Infrastructure, Kamal Sponge, Pushp Steel and Hindalco have been named. The Supreme Court is monitoring the probe in the coal block allocation scam. The court is scrutinising coal block allocation since 1993 on three PILs seeking cancellation of the blocks on the ground that rules were flouted in giving away the natural resources and that certain companies were favoured in this process. (

Power Ministry taking steps to remove hurdles for hydel power plants

December 5, 2013. The Power Ministry is taking several steps to remove bottlenecks for implementation of hydel power projects. The Government has taken several steps to remove bottlenecks for implementation of hydel power projects in the country, Power Minister Jyotiraditya Scindia said. He said that each power project is monitored by the Central Electricity Authority (CEA) through frequent site visits, interaction with developers, critical study of monthly progress reports, etc. A power project monitoring panel has been set up by the Ministry of Power to independently follow up and monitor the progress of hydro projects. Scindia said hydro power projects face certain bottlenecks during implementation which include, difficult geological conditions (natural), uncertain weather conditions (natural), local area agitations (man-made), etc. (

Power companies asked to seek defence nod via nodal ministries only

December 4, 2013. To ensure a proper check on credentials of power projects and their developers, Defence Ministry has sought routing of applications seeking its clearance for the proposed facilities through the concerned ministries only. Subsequently, the Defence Ministry would not entertain any applications unless they are routed through the Power Ministry or the New and Renewable Energy Ministry, as per the nature of the project. This has been communicated by the Defence Ministry to the two other ministries after being flooded with defence clearance applications directly from a number of private sector and PSU developers for their respective projects. (




Woodside sees Israel deal alternatives with decision in 2014

December 10, 2013. Woodside Petroleum Ltd. (WPL), Australia’s second-largest oil and gas producer, expects to decide in the first half of 2014 whether to complete a deal to invest in Israel’s Leviathan venture. Woodside’s purchase of a stake in Israel’s largest gas field has faced delays because of uncertainty over the nation’s export policy and discussion by the partners about alternatives to building a liquefied natural gas development. The Australian company targeted LNG exports from Israel when it agreed a year ago to make an initial payment of $696 million to the companies. Woodside lowered its 2013 spending estimate to $1.1 billion from its previous expectation of $2.3 billion, mainly because of deferred investment in Leviathan.

Woodside also gave an output forecast for 2014 that’s lower than analysts’ estimates. Woodside expects production of 86 million to 93 million barrels of oil equivalent for next year, lower than the 93.3 million barrel median estimate of five analysts surveyed. Domestic customer contracts expiring at the North West Shelf LNG development, aging oil fields and asset sales are among factors that will impact production in 2014, Woodside said. The company is expanding overseas in countries including Myanmar after delays at proposed LNG ventures at home. (

Lexaria discovers oil at PPF-12-7 well in Belmont lake in US

December 9, 2013. Lexaria announced that PPF-12-7 well has reached total depth and indicated the presence of about 20ft of oil bearing pay in the sidewall core analysis. The well, which is located at Belmont lake, township 2 North - range 4 West of Wilkinson country, Mississippi, has been drilled in section 41. The newly drilled well that is operated by Griffin & Griffin Exploration, was encountered oil and yellow fluorescence from 3,140.5ft to 3,162 ft with recovered oil samples grading as high as 33 API. (

OMV boosts gas production in Pakistan

December 6, 2013. Austria's OMV reported that it has boosted its gas production in Pakistan after two successful field developments. OMV said that, after completing the development of the Latif gas field in October, it expects to double production from the field to 6,200 barrels of oil equivalent per day in 2014. The Latif field development decision had been delayed for some time, but was declared economically feasible due to the new 2012 Petroleum Policy of Pakistan that provided for higher prices for new discoveries and for investments leading to incremental production over and above the reserves approved and certified. (

China private energy firm to invest $4 bn in coal-to-gas

December 6, 2013. Privately-run Chinese firm Guanghui Energy Co Ltd will invest $4 billion in the northwestern region of Xinjiang to turn rich coal deposits there into cleaner-burning gas, the company said. The firm said the project, which would produce four billion cubic metres of gas a year, would need final government approval after getting an initial greenlight from the National Development & Reform Commission in September. China, the world's top energy user, wants to turn coal in remote areas into gas and then pipe it to cities, where residential and industrial use of the fuel is growing rapidly. From coal miners to power producers and private firms to state giants, companies are pushing to convert China's abundant and cheap coal into gas, using a mix of locally developed and imported technology similar to that used to produce synthetic fuel in apartheid-era South Africa. Beijing has so far approved four pilot projects able to supply 15 billion cubic metres of natural gas annually by 2015. The first such project, built by state-run utility Datang Power, started pumping gas to Beijing this month. (

Shell halts $20 bn Louisiana gas-to-liquids project

December 6, 2013. Royal Dutch Shell Plc, Europe’s biggest oil company, halted plans to build a $20 billion gas-to-liquids plant in Louisiana, citing the potential cost and uncertainty about future crude and natural gas prices. The project would have used natural gas to produce 140,000 barrels a day of liquid fuels and other products normally made from oil, The Hague-based company said. Despite ample U.S. gas supplies from a boom in shale production, gas-to-liquids isn’t “a viable option for Shell in North America,” the company said. Shell started the first commercial gas-to-liquids plant in 1993, using a process developed in Germany and used to make fuels during World War II. The company completed the $19 billion Pearl gas-to-liquids facility, the world’s largest, in Qatar in 2011. South Africa’s Sasol Ltd., the largest producer of motor fuel from coal, announced plans last year to build a $14 billion gas-to-liquids plant in Louisiana. (

Eni CEO says unlikely Kashagan re-start delayed to 2015

December 6, 2013. Oil production from Kazakhstan's Kashagan field is unlikely to be delayed to 2015 after output from the world's biggest crude discovery in half a century was halted due to a gas leak, the CEO of Italy's energy group Eni, Paolo Scaroni said. Eni is part of the North Caspian Operating Company (NCOC), which is developing Kashagan and also includes Kazakh state oil firm KazMunaiGas, U.S. ExxonMobil, Royal Dutch Shell , France's Total, and Japan's Inpex. Scaroni also said the company was ready to start with a planned share buyback but it would take time to complete it. He said a previous buyback, also for up to 10 percent of the group's capital, had taken nine years to complete. (

Chevron’s $6.4 bn China gas project pushed back again

December 6, 2013. A $6.4 bn gas project being built by Chevron in China is facing further delays due to disagreements with partner PetroChina over how to develop the technically tricky fields. The Chuandongbei project, the US firm’s largest investment in China, is now not expected to deliver first gas until the second half of 2014, nearly 7 years after the firms clinched a 30-year deal to produce 7.6 bn cubic metres of gas a year. The latest setback follows a series of delays for Chuandongbei, which Chevron has described as one of its larger capital projects for 2013. PetroChina initially expected first gas to be delivered in 2010, while its parent CNPC forecast just four months ago that production would start by end-2013. China, the world’s top energy user, but the fourth-largest consumer of gas, is racing to unlock supplies of the cleaner-burning fuel by boosting imports and domestic exploration. (

Statoil, ExxonMobil find 2-3 Tcf of gas offshore Tanzania

December 6, 2013. Statoil ASA and Exxon Mobil Corp. have announced a fifth gas discovery in Block 2 offshore Tanzania. The discovery is of between 2 and 3 trillion cubic feet (Tcf) of gas in place in the Mronge-1 well. The discovery brings total in-place volumes in Block 2 to between 17 and 20 Tcf. The well discovered gas at two separate levels, with the main accumulation at the same stratigraphic level as proven in the Zafarani-1 well. The Zafarani-1 well was drilled in 2012 and was a play opener for the block, Statoil said. The secondary accumulation was encountered in a separate, younger gas-bearing reservoir in a play that previously had not been tested in Block 2. (

Ghana parliament ratifies oil exploration deal

December 5, 2013. Ghana's parliament ratified an oil exploration deal with a subsidiary of private oil firm AGM Gibraltar after an influential think tank stirred debate by saying the pact did not serve the country's interests. The deal, enabling exploration in the offshore South Deepwater Tano block, is the latest step in the expansion of the fast-growing West African state's petroleum sector. It also marks an evolution in scrutiny of Ghana's oil sector by watchdogs such as the African Centre for Energy Policy (ACEP), which initially opposed the deal on the grounds that the company lacked experience, but eventually recommended ratification. ACEP said it recommended ratification of the bill after its concerns that AGM Petroleum Ghana lacked upstream experience had been assuaged, but it retained questions over the company's ability to raise the necessary capital. Ghana began producing in 2010 when Tullow Oil lifted from the Jubilee field. Oil is also unlikely to dominate Ghana's economy. Output at Jubilee is ramping up to a plateau level of 120,000 barrels a day. Ghana's government forecasts growth of 8 percent in 2014, up slightly from this year. (


Brazil union plans Petrobras refinery strike after fire

December 9, 2013. A Brazilian oil union said that it plans to go on strike to protest allegedly unsafe conditions at state-run oil company Petroleo Brasileiro SA's REPAR Refinery, the site of a Nov. 28 fire that shut more than 10 percent of Brazil's fuel output. The shutdown at the facility, if it lasts through the end of the year, could cost Petrobras as much as 1.3 billion reais ($560 million) because of additional fuel imports needed to make up for lost production. The estimate calculates the cost of gasoline and diesel that Petrobras will have to buy abroad in order to meet demand for the fuels normally produced by the refinery. Combined, the imports would total 70 percent of the gasoline and diesel that Petrobras imports each month. Petrobras plans to restart the refinery on Dec. 18, with full operations following about five days later. But the head of the Sindipetro labor union in Santa Catarina said workers would strike because they considered the timeline to be unsafe. (

Costs leap 50 pc for Alberta bitumen refinery project

December 5, 2013. Building a 50,000 barrel a day refinery to upgrade bitumen from the Alberta oil sands into diesel fuel, a project backed by the Alberta government, will cost 50 percent more than estimated and take a year longer to complete, operator North West Redwater Partnership said. The estimated cost of building Phase 1 of the Sturgeon Refinery project, 45 kilometers (28 miles) northeast of Edmonton, has leapt to C$8.5 billion ($8 billion) from C$5.7 billion. The forecast start-up date has been pushed back to September 2017 from mid-2016. Alberta will supply 75 percent of the feedstock for the plant using oil sands bitumen paid to it in lieu of royalties, and will pay tolls to have the bitumen processed. Over a 30-year term the province will take three-quarters of the returns on the refined products the plant sells. Canadian Natural will supply the remaining 25 percent of feedstock. (

Transportation / Trade

Pakistan, Iran agree to speed up gas pipeline project

December 10, 2013. Pakistan announced it had agreed with Iran to speed implementation of a much-delayed gas pipeline project designed to link Iran's giant South Pars gas field with consumers in South Asia. The United States opposes the $7.5-billion project because it could violate sanctions imposed on Iran over nuclear activities Washington suspects are aimed at developing an atom bomb, although Tehran denies this. Pakistan said both sides would speed up work to finish construction of the pipeline. Pakistan needs the pipeline from neighbouring Iran, which sits on the world's largest reserves of gas, to alleviate severe energy shortages that have crippled the economy. But it has made little progress on its section of the pipeline for lack of funds and warnings it could be in violation of U.S. sanctions. Iran, for its part, has spent hundreds of millions of dollars and nearly completed the 900-km (560 mile) pipeline to the Pakistan border. Under the contract, Iran would export 21.5 million cubic meters of gas per day to Pakistan from next year. (

Oman Oil Co plans piped gas system for Muscat

December 10, 2013. Muscat residents could be set to receive piped natural gas to their homes under plans being considered by the Oman Government, it was reported. Oman Gas Co (OGC), which supplies natural gas to industries and public utilities in Oman, confirmed it was looking into a pipeline system to replace LPG. OGC said that the piped gas plan was in the early stages. (

TransCanada begins filling Gulf Coast oil pipeline

December 9, 2013. Transcanada Corp said that it has begun filling its new 700,000 barrel per day Gulf Coast pipeline with oil but gave no indication on when it expects the line to begin commercial service. The company said that line fill operations began and will require about 3 million barrels of crude to complete. The line, the southern leg of TransCanada's controversial Keystone XL project, will take crude from the Cushing, Oklahoma, storage hub to refineries on Texas's Gulf Coast. (

SOCAR announces gas delivery to Turkey, Europe

December 7, 2013. The date of delivering the gas produced during the second stage of Shah Deniz field development to Turkey and Europe was announced. The first gas will be delivered to Turkey in 2018 and to Europe in 2019, Azerbaijan's state energy company SOCAR said. SOCAR's plans are not confined to opening the Southern Gas Corridor and transporting the Shah Deniz-2 gas through it. Currently, Shah Deniz and the European Commission are jointly working on an alternative option for delivering gas to Bulgaria. Azerbaijan enjoys over 3 trillion cubic meters of proven gas reserves, and several exploration projects are underway. A powerful gas transportation system consisting of three parts - the South Caucasus Pipeline, the Trans-Anatolian pipeline (TANAP), and the Trans Adriatic Pipeline (TAP) - is required for supplying gas. Azerbaijan's gas will be initially transported via the TANAP pipeline. In the future, gas of other manufacturers from the eastern part of the Caspian Sea will be supplied via this pipeline. (

Canada crudes weaken as oil pipeline said to apportion shipments

December 6, 2013. Canadian crudes weakened on the spot market as Enbridge Inc. was said to have issued a mid-month apportionment notice for shipments on one of its crude oil export pipelines. Enbridge told shippers apportionment on its Line 4 crude oil pipeline increased to 17 percent from the 10 percent level issued. Line 4 can ship 796,000 barrels of oil a day from Edmonton, Alberta, to Superior, Wisconsin. Apportionment occurs when there’s more demand to move oil through a pipeline than there is space, creating a logistical bottleneck. Western Canadian Select (WCS) heavy crude for December delivery weakened by $1.50 a barrel to a $35.50 discount to U.S. benchmark West Texas Intermediate oil, according to Calgary oil broker Net Energy Inc. January and February WCS shipments also weakened. January deliveries fell $1.95 a barrel against WTI to a $32.75 a discount, and February declined by $1.15 a barrel to a $29.15 discount, the broker said. (

France urges gas suppliers to boost LNG imports as crunch looms

December 5, 2013. Gas supplies at the southern French hub of Marseille are running dangerously short on a dearth of liquefied natural gas (LNG) deliveries, cold weather and low stocks at the onset of winter, pushing prices there to among the highest in the world. It has prompted French gas grid GRTgaz to call on utilities to raise LNG imports into the southern Fos terminal urgently to avoid a supply crunch, it said. This comes after French energy officials, the regulator and GRTgaz repeatedly voiced concern over the past few months about low gas stocks in France ahead of winter. Cold weather across northwest Europe drained storage last year. GDF Suez, France's main gas supplier, said the group would ensure its clients are supplied this winter. The supply issue is a cause of concern for heavy gas industrial users in the south of the country, who could be cut off in the event of a supply crunch due to a cold snap, said Claude Conrad, head of oil and gas at Uniden, the lobby group for energy-intensive industrial businesses. LNG flows at Fos' two import terminals were down 8.8 percent in November against the same month last year, port data shows. Gas storage levels in France are 66 percent full, against 72 percent at the same time last year, according to Gas Infrastructure Europe data, following a poor injection period. France is divided into three gas hubs, but pipeline bottlenecks between the Northern hub called Peg Nord and the southeastern Peg Sud prevent Norwegian and Russian pipeline imports from flowing to the south of the country. (

Cheniere, Pertamina sign 20 year LNG SPA

December 5, 2013. Cheniere Energy announced that its subsidiary, Corpus Christi Liquefaction, has entered into a liquefied natural gas (LNG) sale and purchase agreement (SPA) with PT Pertamina (Persero) under which Pertamina has agreed to purchase approximately 0.8 million tonnes per annum (mtpa) of LNG upon the commencement of operations from the LNG export facility being developed near Corpus Christi, Texas. The Corpus Christi Liquefaction Project is being designed and permitted for up to three trains, with aggregate design production capacity of 13.5 mtpa of LNG. Under the SPA, Pertamina will purchase LNG on an FOB basis for a purchase price indexed to the monthly Henry Hub price plus a fixed component.  LNG will be loaded onto Pertamina's vessels. The SPA has a term of twenty years commencing upon the date of first commercial delivery and an extension option of up to ten years. Deliveries are expected to occur as early as 2018. (

Policy / Performance

OPEC pumps least crude in more than 2 yrs as Saudi cuts

December 10, 2013. The Organization of Petroleum Exporting Countries (OPEC) reduced crude production in November to the lowest level in more than two years as output dropped below the organization’s 30 million barrel-a-day ceiling for a third month. OPEC pumped 29.63 million barrels last month compared with 29.83 million in October, OPEC said. That’s the lowest since May 2011. The group decided to maintain its output limit of 30 million at a meeting in Vienna because members were “all satisfied,” Ali al-Naimi, Saudi Arabia’s oil minister said. Analysts at banks including BNP Paribas SA, Citigroup Inc. and Deutsche Bank AG predict that some members of OPEC, notably Saudi Arabia, will probably need to reduce output in 2014 to prevent a global glut. The U.S. is producing the most oil in a quarter-century, while Iraq, Libya and Iran have said they plan to increase exports in the next several months. (

Omani minister slams Gulf culture of energy subsidies

November 10, 2013. Subsidised petrol and electricity programmes are causing a huge waste of energy across the Gulf and threatening economies, Oman's oil and gas minister Mohammed bin Hamad Al Rumhy said. Energy prices are heavily subsidised in the six member states of the Gulf Cooperation Council (GCC), giving little incentive for their fast-growing populations to moderate use of big gas-guzzling cars or around-the-clock air conditioning. As a result, top crude oil exporter Saudi Arabia is the world's sixth biggest consumer of oil, despite being only the 20th largest economy, and GCC members are all among the least energy-efficient countries globally. The United Arab Emirates and Oman have already seen their gas exports constrained by ballooning domestic demand. In a rare reform, Oman announced plans in early 2013 to double its industrial gas price to $3 per million British thermal units, still cheap by international standards, by 2015. Omani diesel is still so cheap that trucks from the UAE drive over the border to fill up on it. Population growth and artificially low energy prices in the GCC member countries - Bahrain, Kuwait,Oman, Qatar, Saudi Arabia and the UAE - mean the countries that the world has long relied upon for oil and gas need to spend heavily over the next decade just to meet their own energy needs. (

Deutsche Bank cuts 2014 crude price forecasts $10 from this year

December 10, 2013. Deutsche Bank AG reduced its crude price forecasts for 2014 by about $10 a barrel from this year on booming U.S. production and the prospect of an easing in supply disruptions in the Middle East and North Africa. The bank lowered its 2014 estimate for U.S. West Texas Intermediate (WTI) to $88.75 a barrel from $98.59 this year. Brent, the benchmark for more than half the world’s crude, will average $97.50 a barrel versus $108.91 in 2013, the bank said. Deutsche Bank joined analysts at BNP Paribas SA and Citigroup Inc. in predicting that some members of the Organization of Petroleum Exporting Countries, notably Saudi Arabia, will probably need to reduce output in 2014 to prevent an oversupply. The U.S. is producing the most oil in a quarter-century and Iraq, Libya and Iran have said they plan to increase exports in the next several months. (

Mexico joint energy proposal to break $95 bn monopoly

December 8, 2013. Senators from Mexico’s two biggest political parties proposed a bill to break the nation’s 75-year oil monopoly by amending the constitution to allow production sharing contracts and licenses for outside producers. The joint legislation would allow private companies such as Exxon Mobil Corp. to develop fields in the largest unexplored crude area after the Arctic Circle as state-owned Petroleos Mexicanos seeks to reverse eight years of falling output. The bill would allow companies to log crude reserves for accounting purposes, which may make it easier to secure project financing. The bill comes after four months of political wrangling following the release of separate plans from President Enrique Pena Nieto’s ruling Institutional Revolutionary Party, or PRI, and the opposition National Action Party, known as the PAN. The government says an energy overhaul would lift economic growth 1 percentage point by 2018 and reverse oil production losses. Senators from the two parties, which with congressional allies have the two-thirds majority needed to pass the bill, are seeking to amend the nation’s charter to allow private and foreign oil companies to pump crude in Mexico’s $95 billion energy industry for the first time in more than seven decades. Similar to the concession model proposed by PAN, licenses would grant broader operational control than the government’s initial profit-sharing model and allow companies to manage oil directly. In production-sharing contracts, companies can register crude reserves as assets for accounting purposes, the bill says. The oil remains state property until it is pumped. The bill also calls for the creation of a sovereign fund, originally proposed by PAN, that would be used to manage oil profits for long-term investment and savings. The sovereign fund will be a public trust that will be operated by Mexico’s Central Bank, which will act as trustee, and receive all the earnings derived from contracts. (

Great Wall of Canadian energy keeps Chinese on outside

December 6, 2013. Canadian Prime Minister Stephen Harper said developing the world’s third-largest pool of oil reserves is as difficult as building China’s Great Wall. Chinese companies may find themselves outside looking in. Harper announced that Canada will keep state-owned enterprises from acquiring oil sands businesses -- one of the last and biggest steps in an overhaul of foreign-investment review rules that govern takeovers of Canadian companies together worth more than C$1.87 trillion ($1.75 trillion). (

Brent seen over $100 for 4th year as OPEC bets on demand

December 5, 2013. Brent, used to price more than half the world’s oil, will probably exceed $100 a barrel for a fourth year in 2014 after OPEC bet that demand won’t weaken enough to warrant production cuts. The 12-nation group, accounting for 40 percent of global supply, kept its 30 million barrel-a-day output target in Vienna. Brent will average $105 in 2014, according to the median of 31 analyst estimates compiled. Six analysts said they wouldn’t adjust their forecasts if the OPEC quota was unchanged. (

South Korea to focus on exploration as cuts overseas energy spend

December 4, 2013. South Korea's state-owned energy firms will focus on exploration as the import-reliant nation cuts back its total spending on overseas energy and resources development, the energy ministry said. Asia's fourth-largest economy rapidly expanded overseas investments to develop oil and gas reserves between 2008 and 2012, as it grappled with inflation driven by costlier imports. But the country's new government, which took office in February, has criticised state-owned firms for running up large debts and for investing in already producing fields. The country's three state firms - Korea National Oil Corp, Korea Gas Corp and Korea Resources Corp - invested $23.2 billion between 2008 and 2012. (



ADB to lend $900 mn for coal plant unit in Pakistan

December 9, 2013. The Asian Development Bank (ADB) will lend $900 million to build a 600 MW coal-fired power generation unit in Pakistan as part of efforts to provide cheap and reliable power. The unit will be built at an existing power plant in the town of Jamshoro in Sindh province, about 150 kilometers (93 miles) east of Karachi, the multilateral lender said. The project raised concerns in developed nations such as the U.S., Britain and Germany about taxpayer money going to finance power plants that burn the most polluting fuel, according to the Natural Resources Defense Council. The new unit is expected to be completed by December 2018, according to the ADB. (

Pakistanis Nepra issues licences for generation of 845 MW

December 8, 2013. The National Electric Power Regulatory Authority (Nepra) has issued power licences to six generation units with a cumulative capacity of 845 MW. These units include three hydel generation units: Karot Power with a generation capacity of 732 MW; Ranolia Power of 17 MW and Machai Power of 2.6 MW. Pakistan is blessed with three major rivers and more than hundred of small and medium sized tributaries feeding these rivers with an estimated hydropower generation potential of about 40,000 MW. In order to meet the long-term power needs of the country, the Water and Power Development Authority in the year 1975 had initiated a ranking study of a number of cost-effective hydropower generation schemes under a grant from the Canadian International Development Agency. This study was completed in 1983. Furthermore, Nepra granted a licence to one thermal power generation unit, Lotte Powergen with a capacity of 48 MW. (

Qatar said to mull Turkish power plant investment

December 5, 2013. Gulf Arab state Qatar is considering investing in Turkey's Afsin-Elbistan coal-fired power plant project, which the UAE dropped out of this year, the Turkish energy minister said. Turkey is keen to make the most of its own coal resources to reduce its dependence on imported natural gas, and Energy Minister Taner Yildiz said that the talks could result in a deal being agreed within two to three months. mAbu Dhabi National Energy Co and Turkey's state-owned Electricity Generation Company in January agreed on a $12 billion project to build several power plants using lignite coal reserves inTurkey's Afsin-Elbistan region. China and South Korea, among others, are also interested in investing the Afsin-Elbistan region. (

Transmission / Distribution / Trade

Spanish firm wins $105 mn power deal in Kuwait

December 7, 2013. Spain's Isolux Corsán has been awarded a contract for the engineering, procurement and construction of 172km of 300kV transmission lines in Kuwait. It will be the company's first project in the Gulf state, with the contract worth $105 million. The work will take place under a turnkey contract, within a maximum execution period of 22 months in Al-Rawdatain. Isolux Corsán, with more than 12,000km of transmission lines and 100 high voltage substations under its belt, is one of the leading T&D builders in the world. The Kuwait project will be divided into three parts with the first including the construction of 76km of transmission lines. In the second, another 82km of transmission lines will be laid with 14km of transmission lines included in the final phase. Isolux Corsán, with more than 12,000km of transmission lines and 100 high voltage substations under its belt, is one of the leading T&D builders in the world. (

Policy / Performance

EBRD scraps most financing for coal power plants

December 10, 2013. The European Bank for Reconstruction and Development (EBRD) will scrap most assistance for coal-fired power plants, joining the World Bank and the U.S. in a retreat from supporting the most polluting fossil fuel. The lender’s board voted on a new investment strategy that includes the policy on coal financing, the London-based EBRD said. Funding of power plants that burn the fuel will now go ahead only in “rare and exceptional circumstances”. The EBRD operates in 34 countries across eastern Europe and central Asia. It has invested 52 billion euros ($71 billion) in sustainable industry, infrastructure and energy since 2006, including 6.3 billion euros in power and utilities. (

Fukushima investigator says atomic power needs global black box

December 10, 2013. The global atomic power industry needs to share cross-border information to prevent nuclear accidents, replicating the transparency of international air-traffic control, said the head of the investigation into Japan’s Fukushima disaster. Nuclear plant operators and regulators need an international common language and standard for investigating and preventing disasters, Kiyoshi Kurokawa, who headed the Fukushima Nuclear Accident Independent Investigation Commission, said. (

ADB approves $136 mn grant to upgrade Golovnaya hydropower plant in Tajikistan

December 9, 2013. The Asian Development Bank (ADB) has approved a $136 mn grant, the largest single transaction ever provided by the institution to Tajikistan, for a project to increase supply of renewable energy to national and regional power systems. The project will refurbish electric and mechanical equipment for power generation and transmission at the Golovnaya Hydropower Plant (HPP). Its installed generation capacity is 240 MW, which makes it the fourth largest hydropower plant in the country. The construction of the Golovnaya HPP started in 1956, and the first unit was commissioned in 1962. (

Japan finds scrapping nuclear boosts pollution, fuel cost

December 6, 2013. Japan gave its strongest signal yet that it wishes to keep nuclear power following the meltdown in Fukushima almost three years ago, shifting away from the previous government’s intention to phase out the technology. Japan last month backtracked on an ambitious goal to cut greenhouse gases, saying its new target assumes nuclear capacity will remain shut. It will review that goal after making final decisions on its energy policy, including the mix of generation technologies that will supply Japan’s electricity. That requires Prime Minister Shinzo Abe to balance voter opposition to nuclear power with efforts to cut pollution and energy costs. Nuclear reactors provided more than a quarter of Japan’s electricity before the earthquake and tsunami caused the accident in 2011. Japan’s 50 atomic plants have been shut since then, and Abe has said he’d like to reduce the country’s dependence on the technology. The previous government run by the Democratic Party of Japan set a target of phasing out nuclear by the end of the 2030s in an energy policy set in Sept. 2012. The new draft policy from Abe’s coalition government said that Japan will reduce its nuclear dependency “as much as possible.” (

Fukushima radiation to reach US Coast at safe levels, NRC says

December 6, 2013. Water exposed to radiation from Japan’s wrecked Fukushima atomic plant will reach the U.S. at safe levels, the chairwoman of U.S. Nuclear Regulatory Commission (NRC), said as the first isotopes linked to the plant near the West Coast. The impending arrival of water exposed to the March 2011 accident at Tokyo Electric Power Co.’s Dai-Ichi plant to the U.S. West Coast has prompted concerns about health impacts. Council members in the San Francisco Bay Area city of Fairfax passed a resolution calling for more testing of coastal seafood and for international experts to work on reducing radiation emissions from the Japanese plant. Radiation released during explosions at the plant meltdowns and during subsequent leaks of contaminated underground water will reach mainland U.S. shores by early 2014. (

Czech atomic expansion deemed hopeless by CEZ without aid

December 5, 2013. The Czech Republic’s ambition to secure future energy independence with a $15 billion nuclear expansion will be thwarted unless the state guarantees a price for the power, the country’s largest electricity producer said. CEZ, like other power producers in Europe, has seen profit margins squeezed after economic stagnation cut demand, dragging down prices. The utility has delayed choosing a supplier of two new reactors for its Temelin plant pending assurances from the government that the project will make money. The state, CEZ’s main shareholder, is counting on the project to counter a loss in capacity as aging plants are retired over the next 15 years. (



Singapore co projects demand for solar chargers in rural India

December 10, 2013. Singapore-based solar charger maker, Third Wave Power, expects a strong demand for its power packages in rural India. Present demand is nominal in the range of a few thousand pieces a year. The company's initial survey of India's rural market for portable solar charges shows demand would come from places away from the main electricity grid or even those within the power network but facing chronic shortage of electricity supplies. Based on such high potential demand, Third Wave has designed light solar chargers which include necessities such as flash light and radio in every piece. The Indian market is a major model for the company which exports its light-weight solar chargers to markets in Asia, Europe and the United States. (

'Per capita consumption of power has increased to 883.63 kWh'

December 9, 2013. The per capita consumption of electricity in the country has increased from 566.69 kilowatt hour (kWh) in 2002-03 to 883.63 kWh in 2011-12, minister of New and Renewable Energy Farooq Abdullah said. He said that 92.7 per cent of urban households and 55.3 per cent rural households in the country were using electricity as the main source of lightening as per the 2011 census. The minister said that his ministry is providing various renewable energy systems for decentralised generation of electricity. So far, 10,752 villages have been electrified using various renewable energy systems. About 2.55 lakh solar street lights, 9.93 lakh solar home lightening system, 9.39 lakh solar lanterns and 138 MW of decentralised solar power plants have been installed, Abdullah said. He said that the government is encouraging generation of electricity from various renewable energy sources such a wind, solar, small hydro, biomass by giving various fiscal and financial incentives. The state governments are procuring electricity from renewable energy projects at preferential tariff. So far, 29,536 MW of renewable power capacity has been installed in the country which includes 19,933 MW from wind, 2079 MW from solar, 3746 MW from small hydro and 3776 MW from bio energy, Abdullah said. (

Odisha plans ` 4 bn solar power plant at Boudh

December 9, 2013. The state energy department plans to set up a 50 MW solar power project at Manmunda in Boudh district at an investment of around ` 400 crore. The power plant will be set up by Green Energy Development Corporation of Odisha Ltd (GEDCOL). Solar Energy Corporation of India has proposed to set up solar projects of 750 MW in different parts of the country and GEDCOL will bid for 50 MW project to be set up in Odisha at the proposed site. (

Researchers develop technique to reduce cost of solar power

December 9, 2013. Researchers here have claimed to have developed a simple and economical way of processing to manufacture graphene-based solar cell, whose use may reduce the cost of producing solar power considerably. The research was undertaken by Sanjay Behura, Sasmita Nayak and Omkar Jani of Gujarat Energy and Research Management Institute (GERMI) and Indrajit Mukhopadhyay of Pandit Deendayal Petroleum University (PDPU), Gandhinagar. The paper detailing the new research is expected to appear in journal 'Carbon' in February. These researchers have demonstrated the possibility of using graphene as a component of solar cells, which is expected to reduce their manufacture cost by 10-15 per cent. At present, silicon is being used for making these cells (also called photovoltaic cells) as it is considered energy efficient. However, this material is expensive, and squeezing higher efficiencies out of silicon-based solar cells has proved a challenge. The simple fabrication technique of graphene and silicon can be exploited for other applications also. The fabricated solar cell showed an efficiency of 0.02 per cent, which can be enhanced by optimising the device structure, the paper said. (

EDF Energies to invest ` 5 bn in Indian solar industry

December 5, 2013. French EDF Energies Nouvelles, the renewable energy arm of French electricity utility Electricite de France S.A is entering the Indian solar power production market with an investment of ` 550 crore. Looking to bid at least 100 MW in the current phase of the National Solar Mission, the company has formed a joint venture with an Indian energy solutions provider ACME Cleantech limited. ACME Solar limited is a joint venture with ACME Cleantech holding a majority stake of 50% and EDF and natural resources saving group EREN with 25% each. (

CERC to review regulation on wind power companies

December 4, 2013. Following opposition from various wind power producers lobbies, Central Electricity Regulatory Commission (CERC), the apex electricity regulator, would review its regulation on day-ahead forecast by wind power producers. The CERC order has been challenged in three high courts of the country by three different organisations. Indian wind power association has filed an injunction against the regulation in Delhi High Court, Wind Independent Power Producers' Association in Madras High Court and a recent addition, Gujarat Mineral Development Corporation in Ahmedabad High Court. Wind power producers have challenged the regulation on grounds of both feasibility and legality. Some power producers have also questioned the preparedness of the national grid to handle modern data collection technology. (


ArcelorMittal-backed lobby warns against French green-energy tax

December 10, 2013. A French industry lobby with members including ArcelorMittal, Arkema SA and Total SA said a plan by lawmakers to force energy-intensive producers to pay more tax to fund development of renewable power will hurt competitiveness. Lawmakers adopted an amendment Dec. 6 to raise the maximum contribution large power consumers pay for the so-called CSPE tax that subsidizes renewable energy. Uniden’s intervention is the latest in a Europe-wide trend of electricity producers such as GDF Suez SA complaining green-energy subsidies are too high. Under French politicians’ plans, the maximum payment for an industrial site consuming large amounts of power would rise to 695,829 euros next year from 569,418 euros in 2013. Renewable tax exemptions for industry apply to almost a fifth of the power France uses. The Senate still needs to vote on the measure. In the future, the maximum contribution would vary with the tax rate rather than inflation. This implies a 22 percent jump in 2014 should the rate rise to 16.50 euros a megawatt hour, as slated, from 13.50 euros. In contrast the increase would be 1.3 percent under the peg to inflation, according to the amendment. (

Israel, Jordan, Palestinians in water-sharing pilot plan

December 10, 2013. Israel, Jordan and the Palestinians signed a memorandum of understanding that outlines regional water-sharing initiatives from the Red Sea to Dead Sea to relieve shortages in the arid lands, the World Bank said. The agreement includes an 180-kilometer (112-mile) pipeline northward from Jordan’s Red Sea port of Aqaba to the Dead Sea to channel 100 million cubic meters of water a year. The pipeline will cost $300 million to $400 million, Israel Regional Development Minister Silvan Shalom said. The projects feature the development of a desalination plant in Aqaba that will produce water to be shared with Israel, increased water quotas to Jordan from Israel’s Sea of Galilee and the sale of waters made potable and salt-free from Israel to the Palestinians, the bank said. The understanding is an outcome of talks between Israel, Jordan and the Palestinian Authority that took place as part of a larger, more ambitious Red Sea-Dead Sea Water Conveyance Study Program that’s been overseen by the World Bank. (

Saudis plan $4 bn in water storage investments

December 10, 2013. Saudi Arabia, straining to meet water demands from the kingdom’s oil and population needs, is planning 15 billion Saudi riyals ($4 billion) in water-storage projects. The state projects are part of a $13.6 billion water-resources investment in one of the richest nations in oil yet among the poorest in water. Jeddah on the Red Sea will be the site of the first storage project starting next year with contracts also awarded to build water-storage dams near the port. Dams are planned as well for Mecca and the capital Riyadh. (

Dubai to spend $100 mn on solar for Expo 2020

December 10, 2013. Authorities in Dubai will need to spend about $100 mn on developing solar energy capacity ahead of the Expo 2020, according to a third-party estimate. The Gulf emirate requires about 50 additional megawatts of solar power capacity by the time the six-month event takes place. This new target would assist Dubai in reaching its target of generating half the power needed to run the Expo from renewable resources. Energy demand in Dubai is rising by about 5 percent per annum and the emirate plans to source about 5 percent of its energy requirements from renewables by 2030. (

Quebec carbon credits sell for lowest price in first auction

December 7, 2013. Quebec sold a third of the carbon-emission allowances offered in its first cap-and-trade auction and the permits cleared at the lowest possible price. Bidders purchased 1.03 million of the 2.97 million 2013 permits auctioned Dec. 3, according to results released by the province. They sold for the floor price of $10.75 per metric ton of carbon dioxide because of the low demand. Quebec’s program will be integrated with the larger California cap-and-trade market next year, when emitters from both jurisdictions will be able to buy common carbon credits. At California’s last auction on Nov. 19, the state sold 16.6 million tons of carbon allowances for a price of $11.48 each. The province said it sold a combined C$29 million (US$27.2 million) in 2013 and 2016 allowances in the auction. The Quebec environment ministry said the first sale was a success. Quebec plans to sell the remaining 2013 carbon allowances in future auctions, which will be held every quarter starting March 4. Carbon dioxide emitters will have until Nov. 1, 2015, to buy and submit carbon allowances for emissions created during 2013 and 2014, Genevieve Lebel, an environment ministry said. (

Shanghai orders cars off roads as pollution exceeds scale

December 6, 2013. Shanghai ordered vehicles off the road and factories to cut production after pollution reached hazardous levels, as Hong Kong announced plans to introduce an air quality index that assesses health risks from smog. A heavy fog shrouding Shanghai caused widespread flight cancellations and sent an air quality index monitored by the U.S. consulate in the city surging past 500 to the “beyond index” category. Hong Kong’s air pollution index reached “very high” levels at three roadside monitors, according to its Environment Protection Department. Heavy pollution may undermine plans for the financial hubs to attract foreign talent and investment and push up health-care costs. Outdoor air pollution can cause lung cancer, the International Agency for Research on Cancer, a World Health Organization agency said in October, ranking it as a carcinogen for the first time. (

Big oil anticipates 10-fold surge in carbon emission cost

December 6, 2013. International oil producers are girding for carbon emission costs that may surge to almost 10 times the current prices in Europe, the world’s largest greenhouse gas market, as governments around the world step up efforts to curb climate change. Exxon Mobil Corp., the biggest energy company by market value, is basing plans for future capital investments on the assumption that it will have to pay $60 a metric ton for carbon emissions. That’s the most among 11 U.S. and European companies that provided figures in a report released by Carbon Disclosure Project (CDP), a nonprofit that compiles environmental performance data for investors. Royal Dutch Shell Plc and BP Plc are planning on $40, and Total SA anticipates a carbon cost of $34, according to the New York-based group formerly known as the Carbon Disclosure Project. (

Total and Amyris form JV to make renewable fuels

December 6, 2013. Amyris Inc. and Total SA, France’s largest oil producer, formed a joint venture (JV) to manufacture and sell biofuels. The companies each own 50 percent of Total Amyris BioSolutions BV. Total is Emeryville, California-based Amyris’s largest shareholder with about 18 percent of outstanding shares. The new venture is an effort to shift Amyris’s technology from the lab to full production. The biofuel company uses genetically modified microorganisms to convert plant-sugars into farnesene, a hydrocarbon that can be processed into fuels or specialty chemicals. (

Keystone backers await report vital to pipeline’s fate

December 6, 2013. Supporters and foes of TransCanada Corp.’s Keystone XL pipeline are bracing for the release of an environmental analysis from the U.S. government that could determine the $5.4 billion project’s fate. While the report isn’t the final step, it’s eagerly anticipated because it will answer a question central to whether President Barack Obama approves the project: would Keystone contribute significantly to climate change? Obama has said he wouldn’t support the pipeline if it were found to substantially boost carbon-dioxide emissions that many scientists say are raising the Earth’s temperature. (

Record German wind power lifts renewable share over ’20 goal

December 5, 2013. Record output from wind farms lifted Germany’s share of renewable electricity production above its 2020 target of 35 percent as a storm from Scandinavia battered the nation’s northern coast. A low pressure system dubbed Xaver, with hurricane-force winds of more than 140 kilometers (87 miles) an hour, hit the northern coastline of Germany, according to the country’s weather service. Electricity produced by sun and wind supplied 27.2 GW, or 36 percent, of Germany’s power, according to the European Energy Exchange AG. Germany is already Europe’s biggest producer of electricity from wind and sun and its newly formed coalition government agreed last month to get as much as 45 percent of electricity from renewables by 2025. The share of power from wind and solar rose to 49 percent on Nov. 9. The average share of renewables in Germany across the whole of last year was 22 percent. (

EU may extend aviation carbon freeze to 2020

December 5, 2013. Europe may decide in the next five months to extend a freeze on emissions limits for foreign flights to as long as 2020. EU lawmakers will consider the position of nations, including the U.K., that are unwilling to have the bloc’s emission limits imposed on flights outside the region. The EU’s suspension of emissions curbs on international flights applied to 2012 and was called stop-the-clock. Unless the bloc renews or changes the rules by April 30, airlines have to hand in allowances to match their 2013 emissions. The U.K. said it will seek to extend the halt, which was brought in to avoid trade conflicts and enable global talks on ways to curb aviation emissions. The bloc’s carbon market, the world’s biggest, allocates tradable emission permits to polluters, which must surrender them to cover discharges or pay fines. The EU expanded its program last year to cover airlines, triggering protests from Saudi Arabia to the U.S. that prompted it to suspend the carbon curbs on foreign flights for a year. The United Nations’ International Civil Aviation Organization agreed in October to complete a plan in the next three years for an aviation emissions market to start in 2020. Envoys at the meeting in Montreal declined to validate the EU’s plan to include foreign flights in its emissions trading system before the start of the global program. The commission is proposing to make the regional portion of foreign flights subject to emission curbs from 2014, which the U.K. is seeking to modify, according to the country’s Department for Energy and Climate Change. (

China doubles renewable energy capacity amid push to cut pollution

December 4, 2013. China doubled the pace of adding renewable energy capacity in the first 10 months of the year as the government worked to cut pollution in its largest cities. Including nuclear power, the nation installed 36 GW of clean energy capacity in the 10 months through Oct. 31, the National Energy Administration said. Windpower increased by 7.9 GW, while solar rose 3.6 GW and nuclear expanded 2.2 GW. Hydro electric power accounted for the remainder. The additions bolster China’s case that it’s tackling climate change by using less-polluting forms of energy in economy that has surpassed the U.S. as the biggest polluter. China is on course by 2035 to add more electricity generating capacity from renewables than the U.S., Europe and Japan combined, according to the International Energy Agency. (

NASA app shows effects of climate change on Earth

December 4, 2013. NASA has launched a new app that gives users a glimpse into how climate change and natural disasters are quickly transforming the landscape of the Earth. Human activities, a changing climate and natural disasters are rapidly altering the face of our planet, NASA said. Now, with NASA's Images of Change iPad application, users can get an interactive before-and-after view of these changes. The app presents pairs or sets of images of places around the world that have changed dramatically. Some of these locations have suffered a disaster, such as a fire or tsunami, or illustrate the effects of human activities, such as dam building or urban growth. Others document impacts of climate change such as persistent drought and rapidly receding glaciers. (

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