MonitorsPublished on Jun 27, 2006
Energy News Monitor |Volume III, Issue 1
Mega sized coal fired power projects in West Coast (Part – II) (Shankar Sharma – Energy Consultant)

(Continued from Issue  - 51)

- Socio-environmental impacts and viable alternatives



he alternatives for large size power projects of such high societal impact:  The potential for the high societal impact as listed in part I of this series will beg to ask the question whether such large projects, whether coal based thermal projects or dam based hydro electric projects, are really essential for our society.  An objective assessment of the following issues will help to provide a stark reality as far as viable alternatives are concerned:

·          The existing electricity industry infrastructure of our country in the areas of generation, transmission, distribution and utilizations are known to be grossly inefficient as compared to the international benchmark. There is a considerable scope for improvement in these areas, which alone can do away with the need for additional power generation capacity for few years.

·          There is a considerable potential to add to the generating capacity at the existing stations through modern techniques like R, M & U and through replacing old inefficient units with higher capacity efficient units. 

·          The overall efficiency of energy conversion from Indian coal to electricity and then to heating/motive power is very low, probably of the order of 15%. Despite this low conversion efficiency level and the heavy pollution potential our planners have embarked on coal energy as a primary source of electricity for next few decades at a tremendous cost to our resource starved society.

·          Though the transmission losses in some pockets of the network may compare with that of the international benchmark, the aggregate transmission losses are increasing and have considerable potential for reduction.

·          The aggregate technical and commercial losses in the electricity industry are unbelievably high, of the order of about 40%.  There is a scope to bring this down below 10%, if international best practices are adopted effectively. 

·          In addition, the utilization sector also has tremendous potential for improvement as per the National Productivity Council, which is of the opinion that there are opportunities to save energy to the extent of a minimum 25%.  The agricultural sector alone, which is known to be consuming about 40% of all the available electricity in Karnataka, is understood to be wasting 40 to 50% of the energy consumed at the individual pump set level. 

·          A conservative estimate of potentially hidden energy in all the above mentioned areas reveals that the overall efficiency in the utilization of the generated electricity for productive use in our country as a whole could be of the order of only about 20 - 30%.  The international experience is that this efficiency can be improved to above 60%.

·          A 25% increase in the efficiency of the industry could mean virtual addition of about 1,200 MW on a base of 4,500 MW installed capacity in the state of Karnataka alone.  As the Bureau of Energy Efficiency has mentioned, at the prevailing cost of additional energy generation, it costs a unit of energy about one fourth the cost to save than to produce it with new capacity. This is in comparison to 1,500 MW as demanded by Karnataka from the proposed ultra mega project in coastal Karnataka. 

·          The potential available with non-conventional energy sources is very huge for a tropical country like ours. The solar power technology for agricultural water pumping, water heating and lighting has a great potential to reduce the demand for grid quality electricity.  It is estimated that in Karnataka even if 75% of the AEH consumers, 50% of agricultural pump sets, and 50% of the houses /offices /schools /street lights etc. can be encouraged to install solar panels for water heating, pumping and for lighting, a conservatively estimated 1,500 MW of morning peak demand, about 800 MW of evening peak demand, and about 3,000 to 5,000 MU of energy per year could be saved. 

·          The bio-mass and wind energy also offer a lot of opportunities to reduce demand for grid quality electricity in the state.

·          In view of all these possibilities a perplexing question to the common public is as to why our society has not embarked in a big way on efficiency improvement and demand side management measures, before adding new installed capacity based on conventional fossil fuel technology at a huge cost.

·          Such alternative measures have smaller gestation periods, minimum environmental impact, least social cost, and no recurring additional fuel cost, and technical losses.  

·          Distributed generation sources like solar, wind power and bio-mass are ideally suited for isolated villages under rural electrification programme.

·          Such distributed generation sources, if deployed effectively, can reduce the dependence on grid quality electricity and on the govt. expenditure perpetually to a large extent, and could change the scenario from chronic energy deficit to sustained energy security.

·          Distributed generation sources have the potential to be the main sources of electrical energy in the long run without any of the problems associated with the large size centralized generation projects.

·          Most of these alternative measures, aimed at high energy efficiency and generating green power, could be eligible for Carbon Exchange Credits under Clean Development Mechanisms with industrialized countries, which means that a sizeable portion of the relevant costs can be recovered from Carbon Income.

·          India, though not a signatory to the Kyoto protocol, is the sixth largest emitter of Carbon-di-oxide, which is a green house gas known to be contributing to the global warming phenomenon.  Sooner than later there will be international pressure on developing countries like India and China also to reduce the Carbon emission. Even otherwise, it is only expected of a responsible member of the comity of Nations that India demonstrates a sense of responsibility by minimising the Carbon emission.

·          The electricity industry as a whole has the potential to be the biggest polluter of our environment, if not managed responsibly. 

·          Hence it is very sad that the local population and other concerned sections of the society have not been consulted at all before deciding to go ahead with such proposals.  On the other hand the governments, even before preparing the pre-feasibility report and any public consultation, are issuing statements to the effect that all preparations are going on definitely in favour of the project.  It is unthinkable that in a democratic society like India, such major policy decisions are being made without taking all the stake holders into confidence.

·          Various governments and government agencies in our country would do well to remind themselves that unlike 50 years ago, now the society has more number of relevant experts outside of governments than inside the governments.  The expertise and the good intention of such people should be put into effective use.


To be concluded

 (Views are personal)

Russia initiates SCO energy club

(Dr. Sergei Kolchin - RIA Novosti)


ussian President Vladimir Putin's proposal to set up an energy club within the Shanghai Cooperation Organization, voiced at the SCO summit in Shanghai, has been met with alarm in the West.

Concerns have been expressed that a gas analogue of OPEC may appear in the East. There are reasons to believe this is true. The SCO's oil resources are not overly significant: even with Iran, which has observer status within the organization, they do not exceed 20% of the world's total. The situation with gas is different: the gas reserves of Russia, the Central Asian states, and Iran make up more than 50% of the world's proved reserves. Iran's proposal to determine gas prices and principal transportation routes together with Russia only added oil to the flame.

Is Russia really trying to set up an OPEC analogue within the SCO? Hardly. First of all, it is now too busy supplying energy westwards. It has quite a few long-term contracts, and their number will grow.

Secondly, setting up an OPEC analogue is difficult from political, economic and organizational points of view. Russia is hardly willing to assume such a burden, even despite its leading role in global gas supplies.

Thirdly, potential members of this gas cartel (e.g. Russia and Turkmenistan) have some unsettled issues between them, such as gas prices, tariffs and routes. Under such circumstances, Russia's initiative to set up an SCO energy club can only be seen as a proposal to cooperate, nothing more.

Then came the official announcement that Gazprom was willing to take part in the construction of the Iran-Pakistan-India gas pipeline, also made by Putin in Shanghai. "Gazprom is ready to take part and provide technological and, if necessary, financial assistance, and we are willing to provide an unlimited amount of it, especially for a project that is certain to pay off," he said.

The pipeline is not the only transportation project that requires joint efforts and coordination of the parties' interests. The SCO countries are continuing their foreign economic expansion on the oil and gas market without regard for similar moves by other members-countries, which worries their leaders.

For instance, Kazakhstan and China have recently begun operating the 962.2 km Atasu (Kazakhstan) - Alashankou (China) pipeline, with an annual capacity of 20 million tons of oil. During the first stage, it is expected to deliver 10 million tons to China annually. The pipeline was constructed in line with the bilateral agreement on cooperation in the oil and gas sector signed in May 2004, during Kazakh President Nursultan Nazarbayev's visit to China. Investment in the project totaled $700 million.

But Russia is also working actively to supply oil to China in accordance with bilateral agreements.

China, in turn, is working hard to build up cooperation with Arab countries. Recently, Chinese Foreign Minister Li Zhaoxing signed the Action Plan on energy with Amr Musa, Secretary General of the Arab League. The two sides agreed to create a forum for discussing energy. "The parties attach significant importance to energy cooperation, especially in the oil and gas sector and in the sphere of renewable energy sources," the document reads.

The Plan also envisions that China and Arab countries will encourage national companies that are willing to build up mutual investment cooperation in the energy sphere to set up joint ventures and exchange technologies.

So oil and gas exporters within the SCO are competing for promising markets, such as China and other dynamically developing East and South Asian nations. To coordinate moves, the organization needs the energy club proposed by President Putin. Its principal difference from OPEC will be that it will unite both energy producers and key consumers, i.e. China, India and Pakistan (the latter two have observer status in the SCO).

SCO members also need to coordinate their steps in joint energy production and transportation projects. Kazakhstan, for example, is taking part in the Caspian pipeline consortium project, which is mainly being carried out by Russia. Under it, some Kazakh oil will be transported along this route. At the same time, Kazakhstan is showing interest in the Baku-Tbilisi-Ceyhan oil pipeline and has even signed an agreement on joining this project.

Russia has some gas disputes with Turkmenistan as well. They appear to have been settled by now, but the situation remains unstable. Turkmen President Saparmurat Niyazov said he was willing to sign a large contract on gas supply with Russia in the second half of 2006. In 2003, the two countries signed a 25-year framework agreement on gas supply, but agreed to regularly review prices and amounts.

So the need to coordinate members' actions within the SCO is obvious. It is this coordination that is the goal of the energy club proposed by Putin, rather then the establishment of a "gas OPEC" so feared by the West. Due to different energy interests, the SCO members would rather set up a coordination center than a cartel based on common production policies. Such a center, provided it succeeds in achieving its goals, could become a good example of taking into account the interests of both energy exporting and importing countries.

(Courtesy: RIA Novosti)

India’s Hydrocarbon Scenario: A Journey from Protected Past to Competitive Future – Part X

(Dr. Samir Ranjan Pradhan®)


s the above analysis shows there are tremendous business opportunities in the deregulated Indian oil and gas regime. The prospective business opportunities in the form of volume of investment required in each sector can be summarized as follows:

·          Exploration: Investment perspectives for petroleum exploration till 2010 might be of the order of about US $ 4-6 billion. This amount covers the G&G (Geology and Geophysics) and exploratory drilling activities for oil and gas. Investment for other alternative energy exploration (Coal-Bed Methane, Gas-Hydrates, etc.) in this period could be around US$ 200 million.

·          Oil-Gas Production: Rehabilitation and redevelopment of some of the major oil-gas producing fields has become one of the principal investment agenda, which need substantial investments. It is estimated that the production side of the upstream sector might require on investment of about 1 billion during the next 10-12 years. Therefore, the Indian owners of these fields are often looking for suitable partners who can participate in recharging, rehabilitation, and redevelopment of the fields on mutually acceptable terms.

·          Refining: investment opportunities in the Indian refining sector during next 8-10 years aggregate to about US$ 20-25 billion, in order to achieve capacity addition of about 110 MMTS.

·          Natural Gas: The quantitative mega images of the emerging investment opportunities in the business of natural gas in India for the next 15 years are like this:

-       Proposed sub-sea pipeline from Oman to India for importation of LNG from Oman: US$ 5 billion.

-       Setting up of LNG terminals of 2.5 MMTSPA-10MMTSPA: US$ 1.1 billion.

-        Southern Gas Grid: US$ 2.4 billion.

-       Domestic Transportation Network of 2000 Km: US$ 3.0 billion.

-       Downstream (GAS) Business: US$ 10 billion.

-       Importation of gas from Iran and/or other neighboring countries and other related activities: US$ 5 billion.

-       City distribution projects and technological development in principal sectors of gas business in India: US$ 3.5 billion.

-       Total: US$ 30 billion

Source: Oil Asia Journal, January-March, 1999, p. 16.

The latest development[1] in the policy front by the Government of India also signifies major emerging opportunities in the oil and gas sector. The government in January 2004 lifted almost all curbs on foreign direct investment in the petroleum sector. Foreign investors will now be able to bring in 100% FDI in refineries, marketing, explorations and pipelines — both natural gas and LNG. While removing existing FDI caps in these sectors, the government has also allowed investments via the automatic route instead of the existing FIPB route. This investor-friendly move will encourage investments and do away with procedural delays.

The sectors where 100% FDI has been allowed via the automatic route include refineries, marketing, investments in small and medium sized exploration blocks and petroleum product pipelines. However, these foreign investments are subject to sectoral conditions and guidelines. For instance, in the case of retail marketing where the existing cap of 74% has been done away with, 100% FDI has been allowed subject to the existing sectoral policy and regulatory framework. The policy requires companies to invest Rs 2,000 crore in the petroleum sector either in refining, exploration or infrastructure (relating to the petroleum sector) to qualify for marketing licence. The licence is to be issued by the regulator in the oil and gas sector. This move is expected to attract foreign investments given the market size of the country and the growth potential of the industry.

In case of refining, where the government has allowed 100% foreign equity investments via automatic route, as against the existing policy of going through the FIPB route, it has been specified that this policy will not include PSU refineries where the cap of 26% remains, but only be applicable for private sector refineries. However, given the existing refining capacity in the country which is in surplus to the demand in the country, it will be sometime before foreign investments come into this sector. In the case of pipelines, while the existing cap of 51% has been removed, 100% FDI via the automatic route has been allowed only in the petro-product segment. As far as natural gas and LNG pipelines are concerned, investments will have to be approved by the FIPB.

The new policy also removes the present FDI limit in oil exploration of 60% in unincorporated joint ventures and 51% in incorporated joint ventures. The government has allowed 100% FDI via the automatic route in both small and medium sized fields subject to the policy on private participation in exploration of oil and the discovered fields of national oil companies.

Thus as the above discussion shows, India is vastly growing to be one of the largest energy markets of the world. It is a developing economy transiting from state regulated centrally planned economic discipline to the options, imperatives and practicalities of competitive market economy. Therefore it can be said that the Indian oil-gas sector is in the process of transformation from its normative present to a combative future. As mentioned by one analyst,

“The sector is confronted with reserve replacement, stagnant oil production, surmounting oil-gas demand, depleting and/or dysfunctioning reservoirs of some of the major oil fields, vastly expanding oil demand of the national economy, technological deficiencies, impacting developments of deregulating oil-gas regime, and massive need of capital. All these problems and hazards are radically altering the risk, reward and rationalize the future of business in Indian oil-gas sector. On the other side, it is throwing up new possibilities and attractive opportunities for those countries/organizations/companies who are not threatened with the impermanence of corporate prosperity in a constantly changing business world”[2].

Prognosis of segment-wise investment potential for the next 10-12 years (see Table 3.14), of both upstream and down stream sectors of Indian petroleum industry, opens up new opportunities for the oil and gas exporting GCC countries, given that, GCC countries are the traditional energy suppliers to India and presently GCC countries as a whole account for 65% of India's energy imports.

Table 3.14: The Oily Demand of Investment in Indian oil-gas sector till 2010 (US$ billion)


Investment Requirements

1.         Oil-gas and Coal Bed Methane   Exploration


2.        2. Oil-gas Field development, Rehabilitation and production


3.        Natural Gas and LNG, Storage, Importation, Transportation, Distribution and Marketing


4.        Oil Refining


5.        Product Pipelines


6.        Tankage, Storage and Port Facilities


7.        LPG Import, Distribution and Marketing


8.        Oil products distribution and marketing



Source: Oil Asia Journal, January-March 1999, and p.44.

In fact in recent years, two important developments in the Indian oil and gas sector epitomizes the strength and enormous potential of the sector in the coming years. First and foremost is the acquisition of oil and gas assets by Indian companies abroad (see figure below) and second is the discovery of oil and gas domestically, importantly by the domestic and foreign private companies. Various oil and gas projects have been announces by number of companies in Indian which amounts to investments over US$ 30 billion upto the year 2008 (see table. 1.10).

Table: Planned major Investments by 2008 (US$ billion)

Proposed Projects

Value in US$ Billion

Gas Pipelines


GTICL (RIL) Pipelines


GAIL Pipelines




Petronet LNG, Dahej (Expansion)


Petronet LNG, Kochi


Shell LNG, Hazira


Dabhol LNG, commissioning


Mangalore LNG


Refinery and Retail Expansion


Downstream projects by PSUs


Downstream projects by Private sectors




RIL KG Basin (Development)


Upstream Exploration (Private)




Source: MoPNG, 2006, Union Budget, 2005-06.

Table: India’s Overseas Oil and Gas assets (OVL Assets)

Producing Assets



Sudan: GNOP (25%) Producing oil @ 300,000 BPD

Russia, Sakhalin – I (20%) in Development

Iraq Block 8 (100%) in exploration


Sudan: 5A (24.125%) & 5B (23.5%) in exploration product pipeline project

Qatar, Najwat Najim (100%) in exploration

Vietnam Block 6.1 (45%)

Producing Gas @ 7.5 MMSCM per day

Egypt: North Rannadan (70%) in exploration

Syria: Block 24 (60%) in exploration

Iran: Farsi Offshore (40%) in exploration

Libya: NC 188&189 (49%) in exploration

Ivory Coast CI 112 (23.5%) in exploration

Mayanmar: Block AI (20%) discovered gas in Jan 2004

Nigeria: San Tome & Principle Block 2 (15%) in exploration

Thus the Indian oil and gas sector is on the trajectory of great strides in the ambit of globalization. There are outstanding opportunities for investors and companies in the liberalized regime. Nevertheless, there are certain structural rigidities and policy stalemate that may hinder the future integrated growth of the industry. This commends astute policy making on purely commercial grounds to make the sector truly competitive in the global arena.

Views are personal


CDM Potential in Oil and Gas Industry part – II




nergy efficiency can be improved primarily in one of the two ways: by improving the individual efficiency of one or a number of technologies, or by improving process efficiency. Given below are some of the options for emission reduction through energy efficiency options for oil and gas industry.

1         Optimization of steam distribution system and reducing the amount of steamproduction in petroleum refining industry.

Steam is used in most industrial processes all over the world, particularly in chemical and petroleum refining applications. The petroleum industry uses about 40 percent of its energy use to generate steam, a figure that is even higher in the chemical industry. Four basic components make up a steam system: a boiler, distribution piping, heat exchangers and/or process equipment, and a condensate return system. As steam is distributed through the system, it begins to lose energy and by the time the steam reaches the point where it does work (at a heat exchanger or process equipment), it begins to turn back to water (condensate). Condensate also forms along the distribution system. When condensate forms, it needs to be removed right away because it very quickly reduces the quality of the steam and efficiency of the system. A closed-loop system (returning the condensate) is optimal, because the condensate, with its waste heat, can be reused – saving a great deal of energy and water, chemicals for treatment and sewer charges. Steam traps are essential to removing condensate.

Steam traps are mechanical valves installed through the distribution system that open to discharge condensate, air and impurities that reduce the efficiency of steam lines. When using steam, at any temp. and pressures, failure to remove the condensate, the air and non-condensable substances reduce the heat transfer and causes “water hammer”, leading to significant energy waste and unsafe working conditions. In most industrial facilities, steam traps are often not applied nor installed properly, not inspected often enough, or not replaced when determined to be failed.

Failed steam traps fall into two categories with associated consequences:

1          Failed closed or undersized and flooded – this type of steam trap failure obstructs the process, not allowing the condensate to be removed and possibly blocking the flow of steam through the system.

2         Failed open, leaking or blowing through – this type of failure causes steam loss leading to performance inefficiencies and other steam system problems.

In addition, steam leaks frequently occur in piping, valves, steam traps and other connections. In all the above conditions, if no actions are taken, the steam loss is significant, fossil fuel is wasted and the level of GHG emissions is increased.

The projects for optimizing the steam distribution system, reducing the amount of steam production needed to meet end-use requirements will reduce CO2 emissions in two ways:

·          Optimize and redesign the condensate return system - When steam moves through a distribution line, it begins to lose energy, and as a result, some steam condenses to hot water. This project will enable the heated water to be removed from the system, treated – with impurities removed – and reused. The waste heat embedded in the condensate will then be put back into the system (boiler feed water), requiring less steam at the deaerator. Because the feed water to the deaerator is hot condensate and not cold water, it takes less steam to bring up the temperature to the required level, i.e. 115°C. In large industrial facilities such as Funshun (Fushun Petrochemical, a subsidiary of PetroChina ), steam is generally produced on-site. Coal savings can be calculated from steam savings based on the measured boiler efficiency. Coal savings can then be converted to CO2 reductions based on the coal’s average carbon content.

·          Improve the steam distribution system - When steam loses energy and condenses to water, it greatly reduces the efficiency of steam distribution. Thus, condensate has to be discharged as quickly and often as possible to maximize efficiency, and the method for discharge is a mechanical valve called a steam trap. If a trap fails, leaks or is blowing through steam, efficiency suffers significantly, requiring a greater amount of steam generation to cover for the steam losses throughout the system. By conducting a steam trap survey and replacing faulty traps with durable, high-quality technology – steam system efficiency is significantly improved. This method of steam trap survey and replacement is applicable to any industrial facility that uses steam. A steam trap maintenance program, including training, measuring instruments, and data collection and analysis techniques are included in most steam trap retrofit projects to ensure savings are realized and maintained.

The GHG emissions will be reduced as all the reusable condensate will be returned to the power plants in the different areas and all the steam traps losing steam/not-removing condensate will be repaired or replaced. By efficiently removing hot condensate and reusing it as feed-water for the deaerator, less steam will be required to generate the same amount of boiler feed-water at the required temperature as the baseline scenario which uses much cooler raw water in the deaerator. In the absence of this activity, more steam and therefore more coal would be required to generate the same amount of product.

Exhibit – A

Steam System Efficiency Improvements in Refineries in Fushun, China

Fushun Petrochemical, a subsidiary of PetroChina, is a major producer of petroleum, paraffin, lubes and alkyl benzene. Its other main products include diesel, coal oil, ethylene, acrylic fiber, acrylonitrile, fatty alcohol and chemical plastics. The purpose of this project is to reduce the amount of steam needed in the production process. This project will optimize the steam distribution system, reducing the amount of steam production needed to meet end-use requirements. The project will lead to reduced Greenhouse Gas (GHG) Emissions, because, by saving steam, less fossil fuel will be required for steam generation in FP, in order to maintain the desired production levels. This project reduces CO2 emissions in two ways:

·          Optimize and redesign the condensate return system.   

·          Improve the steam distribution system.

The project during its overall crediting period of 10 years was able to reach 2,269,563 Tonnes of steam saving.

Economics of emission reduction in energy efficiency: Per tonnes of steam saving results in to a total of 0.36 tonnes of CO2 reduction. Generating an average CERs revenue of US$ 1.8 per tonnes of steam saving.

2.       Energy efficiency through compression of natural gas1

GHG emissions from the compression of natural gas are a large single point source of emissions in the midstream and upstream natural gas industry, including their use in LNG facilities. In the pipeline industry, companies have an incentive to invest in energy-efficiency improvements, as transporting large volumes of gas with minimal energy consumption provides a competitive edge over the competition. With compressor stations often in service for up to 40-50 years, a potential exists for improving the energy efficiency of these units and components. Two significant opportunities for reducing emissions from reciprocating compressors results from improving the performance of the compressor cylinder ends and recovering waste heat. For centrifugal compressors, the greatest opportunity is to recover the waste heat for use to preheat the inlet air or fuel gas in the system (McKee, et al. 2000). At some gas turbine compressor stations old driver engines were replaced by newer driver engines, reducing fuel consumption 20-30 per cent. Construction of combined cycle plants can improve compressor total efficiency by saving approximately 18-22bcm of fuel gas annually in Russia (Krivoshein et al., 2000). Optimizing the load at which compressors are operated provides another significant opportunity for reducing emissions.

Exhibit – B

Reducing the Burden on the Environment by Optimizing Gas Transmission

Russian/German AIJ project, “Reducing the Burden on the Environment by Optimising Gas Transmission,” is a good example of a project to improve the overall efficiency of compressors by optimising load. The project focused on optimising the flow of natural gas through a segment of the Volgotransgas pipeline. Optimising flows through the system minimises the energy input required to maintain temperature and pressure of the natural gas under normal operating conditions and prior to maintenance. These energy savings translate into a reduction in GHG emissions. Software technology already in place at Ruhrgas was adapted for the Russian system to model optimal flow rates throughout the system. The project exceeded the 150,000 tons of annual CO2 reductions projected for the optimized pipeline corridor, achieving more than 231,000 tons CO2 per year.


Switching to fuels with lower carbon content for power production for example from coal to oil or gas and oil to gas can contribute to significant emissions reductions.

Exhibit – C

Graneros Plant Fuel Switching Project, Nestlé Chile S.A.

Graneros Plant Fuel Switching Project in Chile whose project design document was prepared by MGM International, Inc., in August 2003.

The project activity is to switch the fuel (from coal and/or petroleum fuels to natural gas) of some element processes of a facility. The project activity does not increase the capacity of final outputs and lifetime of the existing facility during the crediting period (i.e., this methodology is applicable by the end of the lifetime of existing facility if shorter than crediting period), and the proposed project activity is defined as fuel switching applied to element processes and does not result in integrated process change, except for possible associated changes in other energy use (such as electricity for coal processing) outside the affected element processes, which shall (could) be treated as leakage. The project affects both CO2 &CH4 emissions. Overall, the project has the capacity to reduce CO2-equivalent GHG emissions by 408,324 tonnes over a 21 year period.


This means that a fuel, usually natural gas, is used directly in a large power turbine that generates electricity for running the plant. The hot gases emitted from the turbine can then be used to produce hot water and steam, required to transform raw materials into consumer products, without consuming other fuel for that purpose. The overall efficiency of this process can be twice as high as older approaches, where oil and gas were burnt to generate steam, and electricity was bought from outside companies. Cogeneration units make economic sense, save energy and reduce carbon emissions.


(To be concluded)

(Dr Parag Diwan, Vice Chancellor, Meenu Mishra & Mainpal Bhola - University of Petroleum and Energy Studies)

Gas redistribution in Eurasia

(Dr. Igor Tomberg - RIA Novosti)


azprom is ready to support the construction of a gas pipeline from Iran to Pakistan and India with financial resources and technology. First proposed by Iran in 1996, the projected pipeline is estimated to have a cost of $7 billion and will be 2,775 km long. Construction is to be completed in 2009, and starting in 2010 India and Pakistan are set to receive 35 bcm of gas annually, and in 2015, as much as 70 bcm. The project was developed by Gazexport, Gazprom's export arm, and now it has been transferred to the gas monopoly's foreign economic relations department.

From an economic point of view, the pipeline is absolutely necessary. The project is very lucrative for India because the route will be rather cheap. According to Iranian sources, it will allow India to save $300 million annually. Pakistan also needs the pipeline because it will not only receive natural gas (Islamabad will sorely need gas imports by 2010) but will also be paid as much as $500-600 million for gas transit. Given China's growing energy demand, there are plans to continue the pipeline to the Chinese province of Yunnan. Pakistani President Pervez Musharraf made this proposal at a meeting with businessmen from member states of the Shanghai Cooperation Organization.

The project's political risks have recently been significantly reduced. For a long time, the Indian authorities refused to participate for fear that Pakistan would not be able to guarantee the pipeline's safety. In June 2005, during Indian Petroleum Minister Mani Shankar Aiyar's visit to Pakistan, Musharraf said that "Islamabad guarantees the safety of the pipeline and wants to launch its construction next year."

Iran's proven gas reserves are estimated at about 28 tcm, while its gas output grows by 10% every year. At present, almost all of it is sold to the domestic market: about 100 billion cu m is supplied to commercial consumers (out of which 35 bcm goes to power plants) and 40 bcm is pumped into oil beds to maintain the well flow rate. Iran has over 22,000 km of gas pipelines. Its export capacity is growing quickly, which makes it a potentially powerful rival of Russia. It is no coincidence that many of Europe's plans to diversify its gas supply involve Iran. In this context, Gazprom's participation in the Iran-Pakistan-India pipeline can be viewed as a successful move in the competitive struggle for the European market: The new pipeline will direct the bulk of Iranian resources to Asia and therefore at least postpone their appearance in Europe.

In the geo-economic context, the gas initiative voiced by Tehran in Shanghai is of extreme importance. At a meeting with Putin, President Mahmoud Ahmadinejad proposed to jointly determine gas prices and the main routes of gas pipelines. Experts believe that Russian-Iranian rapprochement in the gas sphere will create the conditions for an influential international organization of gas producers along the lines of OPEC. The merging of the Russian and Iranian gas transportation networks will allow Gazprom to take part in managing almost the entire Asian gas pipeline network. Gazprom's role will be increased even further because Turkmenistan is seriously considering joining the system (through the Turkmenistan-Iran pipeline), which will bring in Central Asia. This will create a gas market uniting Turkmenistan, Iran, Pakistan, India and China.

Tehran's initiative means that the Islamic Republic, which controls the world's second-largest gas reserves after Russia, does not intend to compete with Moscow too toughly in the gas sphere. Moreover, Iran is proposing that the two share a coordinated strategy on the global gas market, including a coordinated price and transportation policy. In this case, the Russian-Iranian gas alliance could control 75.5 tcm of gas, or 43% of the world's proven reserves, and therefore set major parameters for the development of the Eurasian and global markets in the long term.

However, it is unlikely that a cartel will officially be formed any time soon. The Russian President dismissed this idea in Shanghai by saying, "OPEC is a cartel, but we will have a joint venture." Apparently, such an initiative could tarnish Russia's image as the host of the G8 summit as well as its claim to be the guarantor of international energy security. It is also important to bear in mind Russia's bilateral agreements with existing and potential gas producers - Algeria, Libya and Iran. They have the potential to put in place an efficient mechanism to regulate the piped gas market in producers' interests. So Gazprom's participation in the Iran-Pakistan-India pipeline project will be doubly beneficial for Russia: The potential rival - Iran - will direct its resources eastwards, seriously reducing Europe's chances of diversifying its gas supply. Simultaneously, Russia will gain new leverage on gas distribution in Eurasia, implementing its own strategy of diversifying sales. This is a very good geopolitical move ahead of the G8 summit in St. Petersburg.                                   (Concluded)

Coal Production in India

Weight: 3.22%



Production (in Million tones)

Growth Rates (%)














































































Note: 1. Cumulative total may not tally with monthly total           

2. Production data and Growth rates are provisional.

Source: Department of Coal


Electricity Generation in India

Weight: 10.17%



Generation (in Million Kwh)

Growth Rates(%)




















































































Note: 1. Cumulative total may not tally with monthly total

2.        Generation and Growth rates are provisional.          

3.        Electricity generation data includes also imports from Bhutan 

Source: Ministry of Power



The Article ‘India’s Slippery Oil Diplomacy’ published in Issue no. 52 Vol. II was written by Dr P R Kumaraswamy, Associate Professor, CWAAS, School of International Studies.





Reliance finds oil off east coast

June 27, 2006. Indian petrochemicals giant and oil refiner Reliance Industries Ltd has discovered oil in its exploration block in the Krishna Godavari basin, off India's east coast. This discovery signifies a large geological play that could result in future discoveries.

Work on oil reserve to start next yr in M’lore

June 22, 2006. The construction of the strategic crude oil storage reserve at three locations in South India is expected to commence from July next year and the filling of crude oil is expected to start by 2011-12.  The project, to be set up through a special purpose vehicle, the Indian Strategic Petroleum Reserve Ltd (ISPRL), aims at storing 5 million metric tonnes in two strategically placed locations - at Mangalore and near Vishakapatnam. The filling of the reserves will take at least three years till 2014.  The government has said the capital cost of the construction of the reserve facilities will be Rs 2,397 crore ($521 mn). It has pegged the cost of the crude oil at Rs 8,870 crore ($1.93 bn), assuming $55 per barrel of oil as the average cost of the India basket and an exchange rate of Rs 44 to the dollar.  Such reserves are also used to balance oil prices for domestic consumers in the event of extreme price fluctuations in the international oil market. Countries like the United States maintain a strategic reserve of up to 180 days. 

ONGC loses Russian oil asset to China

June 21, 2006. ONGC Videsh (OVL) has lost out yet again to China over oil assets in Russia. TNK-BP which controls the OAO Udmurtneft fields in Russia is learnt to have decided to opt for Sinopec of China to OVL for the assets. Udmurtneft pumps 115,000 barrels a day of oil and holds 551mn barrels of proven oil reserves. This is one of the first big ticket oil asset acquisitions by China in Russia. Over the last one year alone, OVL has lost bids close to $8bn in assets ranging from Kazakhstan to Nigeria and Angola. While ONGC Mittal Energy lost out after an aggressive bid for PetroKazakhstan, OVL also had to concede to China in the Encanna deal for oil assets in Equador.

ONGC Mittal bags 2 blocks in Nigeria

June 20, 2006. ONGC Mittal Energy, (OMEL) has finally opened an oil account with two blocks - OPL 212 and 209 - in Nigeria, estimated to have reserves of about 500 mn barrels each and that too for a song. Although, OMEL will be pumping in almost $6 bn back-to-back infrastructure support to Nigeria in return for the blocks, it has managed to acquire these blocks in the mini-bidding round by offering a signature bonus of just $50 mn and $65 mn respectively. OMEL is now in negotiations with the Nigerian government over the production sharing contract for the blocks. It is likely to take on board a local content vehicle partner for the oil blocks. OMEL which had the option of bidding for three blocks under this round opted to bid only for two.


BPCL to spend $1.7bn in refining

June 26, 2006. Bharat Petroleum Corp Ltd aims to spend about 80 billion rupees ($1.7 billion) over five years to upgrade refineries and sees long-term growth in natural gas. BPCL, country's third largest refiner, also aims to sell 5 million tonnes of imported LNG each year by 2012. BPCL operates a 240,000 bpd refinery in Mumbai, 150,000-bpd refinery in the southern city of Kochi is run by its subsidiary Kochi Refineries Ltd. BPCL had begun a phased expansion of the Kochi refinery by 50,000 bpd and hoped to complete it by late 2009. The company will import 13 million tonnes of crude in the year to March 2007, mostly in term deals from the Middle East, for use in both refineries.

MRPL likely to open retail outlet by Oct

June 21, 2006. MRPL is likely to commission its first retail outlet in the country at Mangalore by October this year. Most of these retail outlets will come up in Karnataka. Mangalore was also the first city to get ONGC's retail outlet in the country. In April 2005, it commissioned its retail outlet under the brand name OVaL (ONGC Values). Based on the customer feedback and facility design for the outlet in Mangalore, the company decided to go in for new prototypes for MRPL and ONGC outlets.

Transportation / Distribution / Trade

IOC inaugurated $89 mn pipeline

June 27, 2006. Indian Oil Corporation first pipeline project in south India, the Rs 409-crore ($89 mn) Chennai-Trichy-Madurai petroleum products pipeline, was inaugurated. The 683-kilometre pipeline, covering 11 districts in the state, would carry petrol, diesel and kerosene to major consumption centres such as Trichy, Salem and Madurai, from where the products would be transported to hinterlands through tank trucks. The petroleum products would be pumped from the Chennai Petroleum Corporation premises at Manali, Chennai. 

GSPL commissions pipeline to ONGC

June 22, 2006. Gujarat State Petronet Ltd has commissioned a pipeline project from Mora to Hazira plant of Oil and Natural Gas Corporation (ONGC) to provide connectivity to the Panna Mukta Tapti field in the offshore area of Gujarat. The company has also started transportation of 1 million standard cubic meters per day (mmscmd) of gas from PMT field.

Policy / Performance

‘Soaring oil prices may affect growth’: PC

June 27, 2006. The Planning Commission has warned that rising oil prices can retard growth by up to 1% and suggested that the government take appropriate monetary and fiscal policies to deal with the threat. Simulations with macro-models suggest that if oil prices increase sharply in future, growth rate could be lowered between 0.5% and 1% below the levels projected with present levels of oil prices.

Stating that all such estimates had a large margin of error, the Plan panel said even these simulations showed that with appropriate oil pricing policies, increased exports and appropriate fiscal and monetary policies, the adverse impact of high oil prices on GDP could be substantially moderated in the medium-term. It was difficult to predict what would happen to oil prices in the next five years period but current assessment suggested that prices would remain high, the Panel said and pointed out that this would exert contractionary pressures on the economy, both directly and also through their impact on world economic growth.

The impact of high oil prices on the world economy is somewhat muted thus far partly because industrialised countries have been more able to adjust to higher oil prices but, as pointed out, there are macro-imbalances in the world economy which make it vulnerable. For India, the persistence of high oil prices did pose difficult choices like passing on the price increase to the consumer, lowering taxes on petroleum products or squeezing the oil companies, the commission observed. But each of these options was fraught with negative consequences and the government had resorted to a negative combination of all three in the past 12 months.

ONGC says no decision yet on Rosneft stake

June 27, 2006. Oil and Natural Gas Corp Ltd had not yet decided on a strategic investment in Russian oil firm Rosneft. Russian state oil firm Rosneft would go ahead with its $11 billion initial public offering, potentially the world's fifth biggest, despite falling stocks in emerging markets and litigation risks. ONGC has been shopping for oil assets globally to ensure long term supply for growing demand in Asia's third largest economy which has been growing at an average of 8 per cent annually in the past three years. It has already established a presence through acquisitions in Russia, Vietnam and Sudan. Rosneft, Russia's number three oil firm, had agreed with banks involved in the IPO to value the firm at $60 billion to $80 billion, or up to 33 per cent more than the market value of Russia's number one oil firm, LUKOIL. Those valuations imply between 13 and 19 per cent of Rosneft would be floated.

Experts moot coal-to-oil conversion to meet fuel needs

June 23, 2006. Leading fuel experts have suggested coal to oil conversion to reduce the country's dependence on imported oil. Such conversion, it is felt, will help the country achieve self-sufficiency in energy needs. India imported 75 per cent of its required oil in 2004-05, which is expected to rise to 94 per cent by 2030, costing $2,000 billion a year. The country would continue to depend on imported oil because India has only 0.8 per cent of the global oil and gas reserves as against its share of 17 per cent of the world's population.

ONGC tells Centre to remove adhoc subsidy sharing

June 23, 2006. The Oil and Natural Gas Corporation urged for a change in the present “ad hoc” policy of subsidy-sharing on account of burgeoning oil prices. ONGC is expected to bear an extra burden of Rs 22,000 crore ($4.78 bn) and has appealed to the Centre that subsidy-sharing be fixed based on a transparent mechanisms. ONGC had not received any communication from the Centre on subsidy-sharing for 2006-07. Subsidy sharing had been on the rise since 2003-04. It was Rs 2,700 crore ($586.9 mn) in 2003-04, which increased to Rs 4,100 crore ($891 mn) in 2004-05 and Rs 11,959 crore ($2.6 bn) in 2005-06.

DGH puts ONGC in a spot

June 23, 2006. The ongoing spat between the Directorate General of Hydrocarbons (DGH) and Oil and Natural Gas Corporation (ONGC) has intensified with the DGH recommending to the petroleum ministry termination of the production sharing contract (PSC) with ONGC for Mumbai offshore block MB-OSN-97/4. The ministry is yet to take a decision on the recommendation.

DGH's strong recommendation comes in the wake of ONGC's refusal to fulfil certain terms and conditions of completion of work programme. DGH wanted ONGC to ensure that the winning companies fulfil the work commitment. The production sharing contracts provide that in case the contractor fails to complete the minimum work programme (MWP) as bid for, the company would be required to carry out equivalent or an additional / substituted exploration work programme, failing which it would be required to pay the equivalent money to the government. ONGC has been awarded MB-OSN 97/4 exploration block with a total area of 13,954 sq km under the New Exploration Licensing Policy (NELP). Petroleum ministry sources told FE “ONGC had already availed a 12 month extension and had applied another 9 month extension. DGH was prepared to give six months more provided ONGC fulfilled the conditions laid down. However, is believed to have declined to fulfil the conditions and served a notice to the DGH for arbitration. In view of these developments DHG has recommended that the ministry should terminate the contract.”

In a related development, the petroleum ministry has declined ONGC's request to enter into strategic alliance for the nominated blocks in KG basin, Gujarat Kutch and Kerala Konkan. The ministry observed that the proposal submitted by ONGC was incomplete as no work programme commitment for exploration period had been agreed upon with the strategic partner for three of the five blocks proposed by ONGC.

The ministry said that due to several discoveries in the KG basin area in the recent years, there has been significant interest and highly competitive terms have been offered by companies for the KG blocks offered in NELP rounds. The ministry added that it was quite suprising that ONGC received only a single offer for these blocks.


Panel to look into fuel excise row

June 22, 2006. A committee of Central Board of Excise and Customs officials has been constituted to resolve the tricky dispute over central excise duty on transaction value for domestic LPG and subsidised kerosene for a five-year period from August 2000 to February 2005.  The need for this arose as the legal possibilities under existing excise rules did not allow for a waiver of the duty, imposed earlier this year.  It has to submit its report to the CBEC by July-end. It is holding consultations with the ministry of petroleum in order to find a tenable solution. 

Govt should focus on gas pipelines: Plan panel

June 22, 2006. The Planning Commission has said the government should lay emphasis on trans-national gas pipelines to ensure energy security in long term. "The scope for trans-national gas pipelines needs to be explored from a long term perspective," the Commission said in its draft paper on approach to the 11th Five Year Plan. Consumption of petroleum products is likely to rise from 112 MT in 2005-06 to about 135 MT by 2012, gas from 20 MTOE to 55 MTOE and LNG imports from five to 20 million tonnes. Energy security has dominated India's bilateral dialogues in recent times. Among the options, changing the energy mix to reduce reliance on a single source is being pursued vigorously.

One such option is natural gas. Incidentally, India does not have an equivalent gas reserve to match its growing need. The country has been aggressively pursuing the idea of importing gas through three pipelines; Iran-Pakistan-India (IPI), Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Myanmar-Bangladesh-India (MBI) pipelines. The IPI pipeline has hit a roadblock with no consensus having emerged during the Islamabad trilateral meeting earlier this year on the gas price and project framework. The $3.5 billion trans-Afghan pipeline is to supply gas from the Daulatabad fields in southeast Turkmenistan to India via Multan, Pakistan (1,271 km), with a 640 km extension to India. The TAPI pipeline, of which India became a part after the pro-US regime tookover in Afghanistan and Indo-Pak relations improved, appears to be the most risky as it involves two volatile transit countries, Afghanistan and Pakistan. 

MCX gets FMC approval for natural gas futures

June 21, 2006. The Multi Commodity Exchange (MCX) has received approval from the Forward Markets Commission for launching forward contracts in natural gas. The contracts will be linked to Nymex and will be launched in early July. The FMC was insisting on the launch of a delivery-backed contract for better price relevance in the Indian markets, absence of a local spot market and lack of interest from service providers have been the bugbear for the exchange.



PFC may spend $15 mn for ultra mega projects

June 27, 2006. The Power Finance Corporation is expected to spend around Rs 70 crore ($15 mn) for preparing the detailed project reports and allied activities for shell companies of the seven ultra mega power projects of 4,000 MW each. The total investment on the seven projects will be around Rs 1.12 lakh crore.  So far, the special purpose vehicles (SPVs) for Sasan, Mundra, Girye, Tadri and Akaltara have been set up and chief executives for these SPVs have been appointed.  SPVs that have been incorporated are Sasan Power Ltd, Coastal Gujarat Power Ltd, Coastal Maharashtra Mega Power Ltd, Coastal Karnataka Power Ltd and Akaltara Power Ltd. The SPVs for the Ib Valley project in Orissa and Krishnapatnam in Andhra Pradesh are yet to be set up. The land acquisition for these projects is yet to be completed. As soon as the land is acquired, the SPVs will be set up. While the power ministry is acting as a facilitator for the whole arrangement, the shell companies are working independently to reach a stage where major tie-ups, statutory clearances and linkages are in place. 

NTPC approved hydel project in Uttaranchal

June 26, 2006. Power major NTPC Ltd has approved setting up of the 600 MW Loharinag-Pala hydroelectric power plant in Uttaranchal at an estimated investment of Rs 3,282.9 crore ($7.136 bn). The board also approved construction of a lift pump house of Farakka feeder canal as capital addition scheme at Farakka super thermal power plant at a cost of Rs 128.4 crore ($27.9 mn). The Loharinag-Pala project is part of NTPC's foray in the hydroelectric sector. The company is working on various hydel projects with a total capacity of about 4,400 MW. NTPC is the country's largest power generating company with a total installed capacity of more than 24,000 MW. 

Delhi to set up power plant in Chhatisgarh

June 26, 2006. Delhi government has decided to set up a power plant of 2000 MW capacity in coal-rich Chhatisgarh. The proposal for setting up the power plant, to be set up at an estimated cost of Rs 10,000 crore ($2.17 bn) for exclusively meeting the capital's electricity needs, was discussed at a high-level meeting. Bids will be soon floated to invite private parties to invest in the power plant. The power plant, expected to be set up in four years' time at an estimated cost of Rs 10,000 crore ($2.17 bn), will supply electricity exclusively to the national capital, enabling it to be independent of the Northern Grid. The power project will have the Delhi Government setting up the plant and putting in place the transmission system to bring electricity here, while private parties will be invited to fund and operate it. Delhi government had been looking at Jharkhand and Chhatisgarh as the two likely places for setting up the power plant. 

NTPC, Coal India tie-up for Orissa plant

June 22, 2006. NTPC Ltd may enter into a 50:50 joint venture with Coal India Ltd for setting up a 4,000 MW power generation plant in Orissa. The plans for the proposed plant have gathered momentum with the application for land clearance being filed. The JV will be made functional in the form of a special purpose vehicle that leverages the two firms’ core competencies.  The coal pit-head project will involve an investment of around Rs 16,000 crore ($3.47 bn), with 70 per cent of it being funded through debt and the remaining through equity. Both companies will put in Rs 2,400 crore ($521.7 mn)  as their equity contribution for the project. 

While NTPC Ltd will provide the technical know-how and help in the running of the plant, it will be CIL’s responsibility to ensure delivery and dispatch of coal to the project. The power major believes that such an arrangement will facilitate cost-effective operations, besides ensuring availability of coal in the long term. As Coal India has an exhaustive supply of coal, it makes sense to join hands with them for a readily available coal supply. This will lead to fuel security in terms of coal quantity as well as the price. NTPC Ltd buys 100 million tonnes of coal from CIL. 

Transmission / Distribution / Trade

NTPC wants special treatment for bids

June 21, 2006. State-run NTPC Ltd has urged the power ministry for a special exemption on bidding for the upcoming seven ultra mega-power projects with 4,000 MW generation capacity each. If granted, the exemption will enable the NTPC board to approve equity investments with enhanced limits as part of a consortium and participate in the bidding process.  These projects are to be developed in Maharashtra, Karnataka, Gujarat, Madhya Pradesh, Chhattisgarh, Andhra Pradesh and Orissa.  NTPC has been exploring the possibility of tying up with state-run Bharat Heavy Electricals Ltd (BHEL) as a consortium or a joint venture partner for the bidding process.

But the existing norms for navratna companies do not allow such partnerships. Further, the equity required for ultra mega-power projects, along with development of coal mining with a debt equity ratio of 70:30, is expected to be about Rs 6,000 crore ($1.3 bn).  NTPC has argued that it may have equity from 74-89 per cent, which exceeds the Rs 1,000 crore ($217 mn) limit available to navratna companies.

Policy / Performance

Call to amend Electricity Act

June 25, 2006. The State Electricity Minister, has requested Members of Parliament from the State to work for amending the Electricity Act of 2003 that helps retain the status of State Electricity Boards or, better still, allows the State Governments to have their way with the sector. The 2003 Act has forced the corporatisation of the power utilities, mostly against their will. In keeping with its status as the transmission licensee for the State, the Kerala State Electricity Board (KSEB) has requested for extended time for possible corporatisation under Section 172 of the Act. This breather is set to end by December 9 this year. Corporatisation will stop the KSEB in its track at a time when it is priming itself to make the next big move after achieving the target of reaching electricity to all villages in the State.

Orissa to tax power sold outside state

June 23, 2006. The Orissa government’s plans of levying a surcharge on the power sold to utilities outside the state has foxed the Central Electricity Authority and the generation companies.  It wants 5 paise on every unit of power sold by the power generation utilities outside the state and 12 per cent subsidised power, for which it will pay only fuel charges.  The bulk of the power generated in the state is not utilised within it. A substantial chunk of it is sold to Karnataka and Maharashtra. The state has come up with this demand as it wants to be compensated for the environmental loss.  Orissa has a total installed power generation capacity of around 7,000 MW. Out of this, the power generation utilities owned by the state contribute 2,320 MW with the central public sector unit’s NTPC Ltd’s power generation plant at Talcher contributing 3,000 MW.  The Orissa government had asked for 12 per cent free power from the proposed 4,000 MW ultra mega power project in the state. It later dropped this demand. 

Exploration of 10 Coal India blocks put on fast track

June 22, 2006. The ministry of coal has accorded top priority for fast-track exploration of 10 Coal India blocks, which have total reserves of 3,065 million tonnes. Another 35 blocks with total reserves of 5,056 million tonnes will be taken up in the second round.  The ministry will soon take a decision on the modalities for fast-track exploration, including the key question of who will undertake the development work of the blocks, which are not exclusively reserved for Coal India.  The blocks in the priority area are Pinderkom (North Karampura), Duni (West Bokaro), Mara-I, Mara-II, Chatrasal (Singrauli), Jaipur, Mahanadi, Sakhigopal and Machhakata (Talcher).  Blocks that are next in order of priority are located in the coalfields of Raniganj, Jharia, Auranga, Hutar, south Karanpura, Bandar, Wardha valley, Pench-Kanan and Talcher.  Promotional exploration for establishing resource for open cast potential in Talcher, Ib Valley, North Karanpura, Korba, Wardha Valley and Singrauli coalfields was proposed in the Tenth Plan. 

New power policy soon: Kerala

June 21, 2006. The Kerala Government will come out with a new power policy soon. During the past month power theft to the tune of Rs 2.16 crore ($0.46 mn) was detected and Rs 1.25 crore($0.27 mn) was realised from the offenders. The majority of the thefts were noticed among the extra-high tension, high-tension and VIP customers. The Government has announced a voluntary disclosure scheme. While the details of such customers will not be revealed, they will have to pay the penalty. The Electricity Act, 2003, was not sufficiently armed to give stringent punishment in power theft cases.  The Kerala State Electricity Board (KSEB) has power charge arrears to the tune of Rs 1,500 crore ($326 mn). Of this, Rs 800 crore ($174 mn) was due from public sector undertakings and the rest from the private sector. The board suffered an annual loss of Rs 240 crore ($52 mn). Besides, transmission loss and power theft amounted to 24 per cent and seven per cent respectively.

Bihar Govt asks PM to raise funds for rural power

 June 21, 2006. Bihar Govt has sought the intervention of Prime Minister to increase the budgetary provision for village electrification to Rs 14-15 lakh per village against a national level of Rs 6.5 lakh per village.  Bihar Govt has asked for allocations nearing 50 per cent of the power generation of upcoming plants in the region. The plants are Kahalgaon phase-II (600 MW), Barh (792 MW), North Karanpura (972 MW), Teesta HEP (255 MW) and Tala (500 MW).  The allocation of 1,323 MW from power generation plants in the region will help in rural electrification programmes and cover all rural households by 2012. The plants will generate a total of 3,119 MW.  The state has asked for 40 per cent allocation of power from Kahalgaon phase-II, Barh, North Karanpura, and 50 per cent from Teesta HEP and Tala. On the rural electrification front, the state government has said the task is tough as only 10 per cent of rural households receive electricity.  The state govt has requested that budgetary provisions be made and detailed project reports (DPRs) for the rural electrification programme be approved, keeping the above conditions in mind. 

11th Plan for efficient use of power resources

June 21, 2006. The Eleventh Five-Year Plan will contain several policy measures for the power sector.  The working group on power headed by Power Secretary is examining legislative and policy issues and use of inputs such as coal, gas and transport for the sector.  The working group which recently held its first meeting has constituted eight sub-groups — on demand projection and generation planning, transmission planning, distribution including village and household electrification, legislative and policy issue formulation, energy efficiency and conservation.  The sub-groups will submit their reports over the next eight weeks after which the working group will finalise a comprehensive report by September this year.  The approach paper to the Eleventh Plan clearly outlines that the utility-based generation capacity should increase by 60,000 MW in order to be consistent with a growth rate between eight to nine per cent per annum.  The Central Electricity Authority had been asked to identify coal, gas and hydro based project sites to be taken up for commissioning during the Eleventh Plan.




Gazprom, Iran mulls joint oil and gas projects

June 27, 2006. Gazprom and Iran have agreed to study the possibility of forming a joint enterprise to develop oil and gas deposits. They also agreed to cooperation in the oil and gas sphere, including joint prospecting and the development of new deposits, transportation and sales of natural gas. Moscow and Tehran could determine prices for natural gas together. Iran has confirmed reserves of natural gas total 28 tcm and produced 140 bcm of gas in 2005.

Japan aims for breakthrough on carbon gas storage

June 27, 2006. Japan plans to capture a sixth of its carbon dioxide pollution and store the gas underground in a bid to tackle climate change. The proposals would see Japan bury some 200m tonnes of carbon dioxide each year by 2020, a huge increase on the scale of existing schemes, the largest of which store about 1m tonnes annually. It could begin as soon as 2010 and it is estimated cost up to 6,000 yen (£30) a tonne of stored carbon dioxide.

Chevron’s first oil production from Angola

June 26, 2006. Chevron Corporation commenced oil production from the Lobito Field, in deepwater Block 14, located offshore Angola.  The Benguela, Belize, Lobito and Tomboco fields form the BBLT Development, one of Chevron's "Big 5" projects. Chevron announced first oil from the Benguela Belize compliant piled tower in January. First oil from the Lobito-Tomboco subsea project was achieved on June 7, 2006.

InterOil discovered gas and gas liquids

June 26, 2006. InterOil Corporation a Canadian company with operations in Papua New Guinea had a gas and gas liquids discovery at ELK #1 in Papua New Guinea. The well flowed wet gas at 2,000 psi at an estimated 30 to 50 MMCFPD for approximately. A drill stem test conducted on June 24, 2006 demonstrated a wet gas flow at surface and a surface pressure on the casing of 3,150 psi, indicating a bottom hole pressure of approximately 3,700 psi. The calculated absolute open flow of the well based on the drill stem test was 150 MMCFPD.

Anadarko buys two gas producers for $21 bn

June 26, 2006. Oil and natural gas producer Anadarko Petroleum acquired two multibillion-dollar smaller producers Kerr-McGee and Western Gas Resources to boost its North American output and more than double its annual sales. Houston-based Anadarko will pay $16 billion (R120 billion) in cash for Oklahoma City-based Kerr-McGee, a 40 percent premium. Anadarko will also pay $4.74 billion to buy Western Gas Resources, an independent natural gas explorer, and assume $560 million in debt, a 49 percent premium

El Paso gas storage project in Arizona

June 22, 2006. El Paso Corporation, its Western Pipeline Group plans to develop a new underground natural gas storage facility near Eloy, Arizona. The facility will bring much needed storage capacity to Arizona -- helping to meet rapidly growing demand for clean-burning natural gas and to ensure the reliability of Arizona's energy supplies well into the 21st century. Plans call for the Arizona Natural Gas Storage project to be located in a currently unincorporated area about 40 miles southeast of Phoenix. The location is particularly well suited to ensure steady natural gas supplies to meet the increasing heating and electricity generation needs of Arizona's growing economy. Based on customer demand and final determination of geologic suitability, the project could consist of four underground salt caverns capable of storing approximately 3.5 billion cubic feet of natural gas. The facility would be able to deliver 350 million cubic feet of natural gas per day, enough to meet the electric energy needs of 735,000 homes on a daily basis. The storage caverns will support nearby pipelines, ensuring reliable delivery of natural gas to power plants and other customers in the region.

Arizona is predicted to be one of the top five fastest-growing states in the nation during the next 30 years. That growth will increase demand for energy to sustain economic development in the state, and natural gas storage is one of the most efficient, low cost and least environmentally disruptive ways to provide that energy to meet the needs of consumers. El Paso is the largest operator of natural gas storage in the United States; it expects to file an application for project approval with the Federal Energy Regulatory Commission in the third quarter of 2007. Subject to federal and state regulatory approvals, construction could begin in 2008. The company estimates the first cavern will be in service by mid-2010 and the remaining three caverns by 2011-2012.

BP to invest $20 mn in Pak

June 22, 2006. Oil giant BP Plc will invest $20 million in oil and gas exploration off Pakistan in collaboration with Pakistan's Oil and Gas Development Corporation. BP aims to invest a minimum of $20 million in offshore exploration jointly with OGDCL. Pakistan imports 85 percent of its energy needs, including about $4 billion worth of oil a year. It is struggling to increase domestic oil production of about 63,000 barrels per day, which it hopes to raise to 100,000 bpd within five years. The government estimates the country has 27 billion barrels reserves of oil and 280 tcf of natural gas.

Kinder Morgan to build new crude storage facility in Canada

June 21, 2006. Kinder Morgan Energy Partners L.P. will invest about C$133 million to build a new crude oil storage facility in Edmonton, Alberta, through its Kinder Morgan Terminals Canada unit. It has entered into long-term contracts with customers for the available capacity at the facility, which will have nine tanks with a storage capacity of nearly 2.2 million barrels. The company expects service to begin in the third quarter of 2007.

Ecuador needs more wells in seized oil fields

June 21, 2006. Ecuador urgently needs to drill more oil wells in the fields seized from Occidental Petroleum to prevent a further drop in production. The fields' current wells are experiencing a natural decline in oil output. Production at the fields has already dropped this month to 97,000 barrels per day from the average 100,000 bpd. Ecuador's Block 15 and the Eden-Yuturi and Limoncocha fields, located in the country's poor Amazon region, passed into state control. Ecuador has ruled out a joint venture with another Latin American state oil company to operate the block. The new unit is widely expected to run the fields until the end of the year.

Husky finds more oil at Canada's White Rose field

June 20, 2006. Husky Energy Inc. has discovered more oil at its new White Rose field off Canada's East Coast, a find that could extend the life of the project by up to two years. Husky, which has a 72.5 percent stake in White Rose, also said it planned to boost overall output capacity to 125,000 barrels a day by the end of 2006 from 110,000 later this month by bringing a fifth and sixth well into production. Going public with its second big exploration success in less than a week, its 0-28 delineation well in the North Atlantic off the Newfoundland coast may have uncovered 40 million to 90 million barrels of recoverable oil resource. That would be in addition to the 240 million barrels of proved and probable reserves already accounted for at White Rose, which started production in November, 22 years after its discovery. The field is currently producing 85,000 barrels a day from four wells. It plans to test the performance of the field's floating production, storage and offloading vessel this summer and ask regulators to boost the daily allowable production beyond 100,000 barrels a day.

Murphy Oil finds oil in Gulf of Mexico

June 20, 2006. Murphy Oil Corp. discovered oil at the Thunder Bird prospect in the deepwater Gulf of Mexico, Mississippi Canyon Block 819. Development options have not been finalized but oil found at Thunder Bird will likely be produced as a subsea tie-back to a facility nearby. Murphy owns a 37.5 percent working interest in the field and is the operator. Partners are a unit of Dominion Resources at 25 percent, Hydro Gulf of Mexico LLC, 25 percent, and a unit of Marubeni Corp., 12.5 percent.

Exxon sees offshore Madagascar drilling in 2007

June 20, 2006. U.S. oil giant ExxonMobil sees exploratory drilling operations off the northwest coast of Madagascar getting under way in 2007. Exxon has interests in four blocks along the Indian Ocean Island’s northwest coast.  The block is in 2,000 to 3,000 metres of water and there are only a few rigs that can operate at such depths. Exxon has a 50 percent stake in the Majunga block while 30 percent is owned by UK gas firm BG Group Plc and 20 percent by South Korea's top oil refiner SK Corp.  There is huge interest in alternative oil sources to the unstable Middle East and sky-high prices are providing the industry with an influx of cash for fresh investments and exploration. East Africa's coast remains relatively unexplored though West Africa is one of the world's fastest growing oil producing regions.


Iran’s Esfahan refinery to boost production

June 27, 2006. Esfahan Oil Refining Company is planning to boost its gasoline production from the current nine million liters per day to 18.5 million liters per day within the next 30 months.  As one of the world’s top 17 and Iran’s most frugal refineries, Esfahan Oil Refinery produces nine million liters of gasoline, two million liters of light and heavy jet fuels, 18 million liters of diesel oil, 12 million liters of fuel oil, two million liters of liquefied natural gas (LNG), 5.4 million liters of kerosene as well as some 100 tons of sulfur per day.  Also, 20 percent of the total gasoline, 24 percent of LNG, 24 percent of diesel fuel, 30 percent of kerosene and 18 percent of the fuel oil requirements of the nation are produced in the refinery.

Rosneft to upgrade Far East refinery

June 26, 2006. Rosneft is planning to invest $350 million in the second stage of the modernization of the Komsomolsk oil refinery by 2010. The Komsomolsk refinery is the largest refinery in Russia's Far East and exports to the energy-hungry Asia Pacific region, which Russia regards as a highly promising trade target. The modernization program would move the refinery toward production of gasoline and diesel, whereas the share of heavy fuel oil would fall considerably. The company is also planning to switch to production of Euro-3 and Euro-4 gasoline, a program that comes with a $17 mn price tag.

Shell to open filling stations in India

June 26, 2006.  As demand for fuel grows strongly in Asian markets, petroleum major Shell plans to build a filling station in India. Unlike the mature retail markets of Europe, the potential in some Asian markets is limited only by how fast petrol stations can be built and staff recruited and trained. The fuel retail markets in the three countries, (China, India and Indonesia) previously monopolised by domestic firms, opened up to foreign players only in late 2004-05. The company has a licence to build a network of up to 2,000 petrol stations in India. It currently operates 12 sites.  A joint venture with national oil giant Sinopec saw Shell taking over nearly 200 stations in China's eastern province of Jiangsu, with the potential for 500 new or existing sites.

Transportation / Distribution / Trade

Ukraine to buy gas from Russia

June 23, 2006. Ukraine's national oil and gas company Naftogaz Ukrainy had arranged to buy additional natural gas from Russia to build up the reserves in its underground storage system for the winter period. The country experienced a severe shortage of gas during the cold spell last winter, after Russia's Gazprom temporarily cut off supplies in early January due to a pricing dispute. As of June 22, 2006, a total of 5 bcm of natural gas has been pumped into Ukraine's underground gas depots. The gas volumes pumped in this June have exceeded the indicators planned for this period by 127 mcm.

Gazprom enters British gas distribution market

June 22, 2006. Russian gas giant Gazprom has entered the British gas distribution market through its acquisition of assets in the British group Pennine Natural Gas Limited (PNG). While PNG is not considered a leader in the gas distribution sector, it nonetheless offers Gazprom a chance to get a foothold in the British market. Gazprom's plans to expand its distribution operations in Europe have provoked concern, notably in Britain where there is uneasiness at the possibility that the Russian state monoply might acquire Centrica, Britain's leading gas supplier.

Russia, S. Korea to sign gas supply deal

June 22, 2006. Russia and South Korea are planning to sign an agreement on supplies of natural gas to the southeast Asian country by yearend. Gazprom and Kogas, a South Korean state-controlled importer of liquefied natural gas (LNG), signed a 5-year cooperation agreement on supplies of Russian gas to South Korea in May 2003. To meet the country's increasing demand and to ensure a stable supply of natural gas, KOGAS imported 22.3 million tons of LNG in 2005. South Korea imports LNG from Qatar, Oman, Indonesia, Malaysia, Brunei, Australia and Russia.

Sinopec to build south China LNG terminal

June 22, 2006. Top Asian oil refiner Sinopec Corp. is in early discussions to build a liquefied natural gas (LNG) terminal in the southern Chinese city of Zhuhai. Sinopec is vying with CNOOC Group, which is leading a race to build a string of LNG terminals along coastal China, as Beijing aims to boost the country's use of cleaner gas to 8 percent of its energy mix by the end of this decade.  If it goes ahead, Sinopec's terminal would be the second LNG terminal in wealthy Guangdong province. The first was near Shenzhen, which neighbours Hong Kong and received China's first imported cargo of the super-cooled, compressed gas from Australia's North West Shelf in May.

Petronet seeks LNG supply

June 20, 2006. Petronet LNG Ltd, a liquefied natural gas importer, is seeking additional supplies from planned projects in Australia in addition to fuel it expects to buy from the Chevron Corp-led Gorgon venture. Petronet may buy 10 million metric tons a year of LNG from Australia within a decade, from projects such as ConocoPhillips's proposed Darwin expansion, an enlarged North West Shelf venture in Western Australia, and Woodside's planned Pluto and Browse ventures. Petronet started importing LNG into India in January 2004 with shipments from Qatar's RasGas Co., with whom the company has a 25-year agreement to buy 7.5 million tons of LNG annually. It may conclude an agreement by the end of July to buy 2.5 million tons a year of Gorgon gas for Kochi terminal.

Petronet is also looking to Oman, Nigeria and Malaysia for future LNG supplies to supply proposed new LNG terminals in the country. India's LNG consumption may rise from between 6 million and 7 million tons a year now to 30 million tons by 2013, driven by economic growth and increasing demand from power generation companies. Rising prices for LNG are unlikely to crimp growth in demand in India and Indian domestic gas prices are set to match international market prices within two or three years.

Acergy S.A. awarded $245 mn contract in Brazil

June 20, 2006. Acergy S.A. announced that it had been awarded a deepwater installation contract valued at $245 million by Chevron Frade LLC located in the Northern Campos Basin in Brazil. The contract is for the installation of a 41 kilometre flexible gas import/export pipeline between the Frade FPSO and the Roncador pipeline manifold, together with flexible risers and well control umbilicals, in water depths ranging between 100 to 1,200 metres. Offshore installation is scheduled to take place throughout 2008.

Morgan Stanley, Itochu ship Asian gasoline cargoes to US

June 20, 2006. Morgan Stanley, the biggest oil trader and Japan’s Itochu Corp are shipping Asian gasoline to California to take advantage of higher fuel prices in the US. Morgan Stanley and Itochu loaded tankers from South Korea and Singapore earlier this month to carry gasoline to the US west coast, where the fuel costs more than in Asia. Traders in Asia have booked vessels since April to ship gasoline to California, a so-called arbitrage trade where price differences make it profitable to ship fuel around the world. Gasoline prices in the US have surged in the last year after Hurricanes Katrina and Rita damaged refineries along the Gulf Coast, disrupting supplies. Refiners boosted overseas purchases to meet peak summer demand and imports have averaged more than 1 million barrels a day for 18 of the last 19 weeks. Gasoline in the US West Coast costs at least $8.14 a barrel more than in Singapore, Asia’s biggest oil-trading centre, leaving profit for traders after shipping costs.

Policy / Performance

Korea signs deal to build Oman gas storage centre

June 27, 2006. State-run Korea Gas Corp. signed an initial pact with the Oman government to jointly build and operate a LNG storage facility.  Both sides signed a MoU on the cooperation. Last year, South Korea imported a total of 22.3 million tonnes of LNG, of which 28 per cent were from Qatar and 25 per cent from Indonesia. Oman supplied 19.4 per cent.  The expansion is part of its efforts to meet steady growth in demand and better cope with supply disruptions, the domestic gas monopoly had said in a filing to the stock exchange.

Kogas plans to build six 200,000-kilolitre storage tanks, with a combined capacity equivalent to 27 per cent of its current capacity, and three regassification plants with a combined capacity to handle 600 tonnes per hour.South Korea has a long-term strategy to almost double its LNG storage capacity by 2017.

Venezuela eyes ethanol production with Cuban

June 21, 2006. Venezuela plans to produce significant amounts of ethanol for domestic use with Cuban assistance and parts from the island's closed mills. Cuba dismantled 71 of 156 mills in recent years and an additional 43 were closed but maintained in 2005.  Venezuela is experimenting with adding 10 percent ethanol to gasoline in the eastern part of the country, importing 1,000 barrels a day from Brazil. Venezuela, Cuba's closest political and economic ally and a major oil producer, will need to plant 300,000 hectares of cane and build 21 distilleries by 2012 if it wants to add 10 percent ethanol to all gasoline pumped.

Gazprom and Hungary strike pipeline deal

June 21, 2006. Gazprom signed a cooperation agreement with Hungary's MOL Group in Budapest. The document states that the parties have agreed to establish a company on parity terms in Hungary to carry out a technical and economic feasibility study for a project of building new transnational gas transportation capacities and a system of underground gas storage facilities on the republic's territory. The project's working title is the South-European gas pipeline. The purpose to create a new gas transportation system (for gas originating from both Russia and other countries) to European markets. The project provides for a possible use of the Blue Stream gas transportation system along the Black Sea bed.

Considering Gazprom's resource potential, its existing contract portfolio and prospective export agreements, the gas holding considers this the only feasible gas supply route through southeastern Europe. It is also worth noting that Hungary is used as a hub for any similar project. The agreement also envisages cooperation between the companies in regional investment projects in South, East and Central Europe.



Hitachi, GE to build U.S. nuke reactors

June 23, 2006. Hitachi Ltd. and General Electric have been tapped to build two nuclear reactors in the U.S. in a $5.2 billion project that underlines how soaring oil prices are boosting global interest in nuclear power. NRG Energy Inc. is also likely to help the Japanese electronics and power plant manufacturer compete better against rivals. Japanese electronics maker Toshiba Corp. recently purchased Westinghouse Electric Co. of the United States, striving to become the world's No. 1 nuclear power company. A final contract is expected in 2007 or 2008, and the reactors are to start operating by 2014.

Govt signs off on $350 mn south coast power station

June 21, 2006. The New South Wales Government has signed a construction agreement for a gas-fired energy plant on the state's south coast. The $350 million Tallawarra power station is being built 13 kilometres south of Wollongong. It is expected to be finish by 2009. This produces less than 50 per cent of the emissions of a normal coal-fired power station of the equivalent size.

Turkey plans to build 3 nuke plants

June 21, 2006. Turkey plans to build three nuclear power plants by 2015 to meet the country's growing energy needs. Turkey has limited energy resources, relying on natural gas supplies from Iran and Russia. Turkey has signed the Nuclear Nonproliferation Treaty and strict agreements with the International Atomic Energy Agency.

NRG to build 10,500 MW generation

June 21, 2006. Merchant power generator NRG Energy Inc. would build 10,500 MW of new electric generation capacity, representing a total investment of about $16 billion. The company would include 2,700 MW of new nuclear generation in Texas. It would finance the expansion with project financing, "third-party equity partners" and cash flow.  In total the company would build around 8,000 MW of baseload generating capacity and about 2,500 MW of intermediate and peaking capacity. The new fleet will also include wind power and "clean coal" technology, and will reduce the overall carbon intensity of its baseload generation by 20 percent to 25 percent. The new generation is expected to come online between 2008 in the case of some gas-fueled peakers  and 2015 for the new south Texas nuclear capacity.

Transmission / Distribution / Trade

Uganda to import electricity from Kenya

June 25, 2006. The Uganda government is to buy 50MW of power from Kenya Electricity Generating Company, a move intended to alleviate the electricity crisis in the country. KenGen had registered a surplus in its production and had now agreed to sell some of the power to Uganda, which has a deficit of hundreds of megawatts. KenGen is the leading electric power generation company in Kenya, producing about 80 percent of electricity consumed in the country. The company utilizes various sources to generate electricity ranging from hydro, geothermal, thermal and wind.

Uganda currently faces a power shortfall of 200 MW, which have severely affected production as a result of persistent power rationing. It is a turn of fortunes for Uganda, which has for many years been an exporter of power to her regional neighbors. The power crisis has forced Uganda to revise its economic growth forecast downwards from 5.8 percent in 2005/06 to 4.9 percent. In the medium term, Government has said it will fast track the construction of the Bujagali power dam in Jinja and another at Karuma on the River Nile in a period of about 42 months. In the short run, the government proposes to install two additional thermal power plants, which would supply 50MW each.

PJM OKs construction of $1.3 bn in power transmission

June 23, 2006.  The PJM Interconnection Board approved its first 15-year regional electric transmission plan designed to maintain the reliability of the PJM area transmission system, which serves 51 million people in 13 states and the District of Columbia.  As part of the plan, PJM authorized construction of $1.3 billion in upgrades, including a 240-mile, 500-kilovolt-transmission line from southwestern Pennsylvania to Virginia by Allegheny Energy Inc. and Richmond, Virginia-based Dominion Resources Inc. Allegheny, of Greensburg, Pennsylvania, has estimated it would cost about $850 million to build the line. The total plan upgrades will ensure continued grid reliability through 2011 and will reduce congestion costs by $200 million to $300 million annually. Moreover, to meet long-term needs through 2021, PJM will continue to study 10 transmission line proposals totaling $10 billion of potential new investment. PJM has authorized more than $4 billion of transmission investment since its planning process began six years ago, resulting in the interconnection of more than 18,000 MW of new generation in the region.

Consol in 20-year supply deal with FirstEnergy

June 22, 2006. Coal miner Consol Energy Inc. would supply more than 128 million tons of high-BTU coal to FirstEnergy Corp. over 20 years, starting in 2009. The deal replaces a previous pact that began in 2003 and was to run to 2020. Consol will increase its shipments by about 2 million tons per year.

Policy / Performance

TXU in $8.7 bn service agreement with new venture

June 26, 2006. TXU Corp. formed a new joint venture to provide utility infrastructure and management services and its electric delivery unit signed a 10-year, $8.7 billion service agreement with the new venture. The new business, InfrastruX Energy Services, is a joint venture between TXU and utility infrastructure services company InfrastruX Group. It will provide utilities with maintenance, construction, power restoration and other services. TXU Electric Delivery will continue to own its distribution and transmission system and associated assets. It said that the service agreement and joint venture are not expected to have a material effect on its projection for 2006 and 2007 operational earnings.

Seoul forges energy ties with Latin American nations

June 26, 2006. The government announced that it agreed with Argentina to jointly develop copper ores and energy, stepping up Korea's opportunity to strengthen energy ties with Central and South America. The team, comprised of experts from relevant private and public institutions, began their first mission in the Central and South America regions. Task force members is expected to help open the way for Korea to take part in Mexico's gold exploration projects and its nuclear power plant construction projects.

Two power plants approved by Pak

June 25: With about 1700 MW estimated power shortfall in three major cities (of Punjab) by January 2,007, the National Electric Power Regulatory Authority has allowed the setting up of two 420 MW thermal plants at a tariff that goes up to 14.5 cents per unit (Rs8.715 per unit). The decision practically revises the much criticized 1994 power policy that had envisaged loan repayments on a front loaded basis resulting in higher tariffs in the first 10 years. There has been no addition in the power generation capacity for the last 20 years other than those committed under the 1994 policy that had offered an across the board upfront tariff of 6.1 cents per unit and added more than 3,000 MW power generation capacity.

The new rates have been approved in two separate determinations for 209 MW Saif Electric (SEL) and 215 MW Sapphire Electric Company (SECL). The average consumer tariff at present is about Rs4.10 per unit. Nepra acknowledged the National Transmission and Dispatch Company’s estimates that Wapda’s distribution companies of Lahore, Faisalabad and Gujranwala would face an overall shortfall of 5250 MW in January 2007.

The NTDC, a corporate company of Wapda, is responsible for purchasing power from generation companies and selling it to distribution companies. Of it, about 3,580 MW power needs will be met through excess generation in the southern areas, leaving a shortfall of about 1,700 MW, including about 1,000 MW shortage in Lahore alone. There will be another shortfall of about 5,500 MW in 2,010, says Nepra in one of the two determinations. These shortages are other than those currently being faced in Karachi and estimated at more than 1,300 MW in 2,007.

Under policy directives of the federal government, Nepra has approved a tariff of Rs8.7 per unit (13.716 cents per unit) to 230 MW SECL for diesel-based power generation for 10 years, to be sold to the Central Power Purchase Authority on behalf of Lahore, Faisalabad and Gujranwala electric supply companies.

The SECL project, to be located in Muridke near Lahore, will have an estimated cost of $185 million and will be a combined cycle plant, with gas as base fuel and diesel as alternative fuel. The diesel-based tariff for 11-30 years has been calculated at Rs7.4 per unit. As such, levelised tariff over 30-year life of the project has been allowed at Rs8.23 per unit. The project will run on natural gas on a nine-month basis until 2,010, after which, the government or gas supply companies do not offer any commitment for gas availability. The gas-based power tariff for the SECL has been approved at Rs4.03 per unit for first 10 years and Rs2.7 per unit for next 20 years. As such, levelised tariff for 30 years will come to about Rs3.6 or 5.95 cents per unit.

Sasol, China set for coal plant project

June 23, 2006. Sasol signed a deal to proceed with second-phase feasibility studies for two coal-to-liquids (CTL) plants in China, the potential to transfer South African technology to China for converting its massive coal reserves to oil. The plants, which will cost at least $5 billion (R34.3 billion) apiece, could be operational as early as 2012. The petrochemicals group said that initial prefeasibility studies had confirmed that "all key drivers" were in place for establishing a viable CTL business in China using Sasol's low-temperature Fischer-Tropsch technology. The group believed that there was potential to build at least 12 CTL plants in China, a country that could produce volumes of liquid fuel equivalent to those produced from the world's proven oil reserves using just a fraction of its coal reserves. One of the plants could be built in China's Shaanxi Province, 650 KM west of Beijing, and the other is in Ningxia Hui Autonomous region, 1 000KM west of Beijing. The group is also investigating CTL opportunities in the coal-rich nations of India and the US. In order to reduce greenhouse gas emissions, Sasol aims to design carbon capture facilities at the plants.

Renewable Energy Trends


Suzlon plans windmill facility in Udupi

June 27, 2006. Suzlon, a multinational company, plans to set up a windmill-manufacturing unit in the Energy Special Economic Zone at Nandikur in Udupi district.  The Rs 4,000-crore project will be set up in 800 acres, which was earlier marked for the NTPC thermal power plant.  The initial investment would be Rs 1,000 crore ($217 mn) and the first phase would be commissioned by January 2007.

Emami to set up bio-diesel plant in Haldia

June 23, 2006. The Rs 700 crore ($152 mn) Emami Group, with major interests in personal and healthcare products, paper and retailing, has zeroed in on the port town of Haldia in West Bengal as the first site for its proposed bio-diesel plant. The suppliers of plant and machinery for the multi-feed bio-diesel plant at Haldia would be finalised by July-end, and project would begin by mid-August. Work on the cultivation front has already started in West Bengal and Orissa in a big way. The capacity of the Haldia unit would initially be of 50,000 tonnes per annum, with provision built-in to scale up production to 1 lakh tonnes. The plant was to set up at least three such plants at various locations. The plant cost at around Rs 100 crore ($21.7 mn). The entire bio-diesel project would entail a total investment ranging between Rs 300 crore ($65 mn) and Rs 500 crore ($108 mn).

D1 Oils, RPMC in pact for biodiesel manufacture

June 21, 2006. D1 Oils plc (D1), the UK-based biodiesel producer, has signed an oil supply agreement with Rural Power Marketing Company Pvt Ltd (RPMC), an agri-business consultancy, covering 14,000 hectares of jatropha, the primary feedstock, in northern India. Under the agreement RPMC will develop jatropha plantations of 10,000 hectares in Uttar Pradesh and 4,000 hectares in Himachal Pradesh in 2006. Over the next three years, RPMC intends to step up jatropha planting across the two states. The planting will be carried out through a combination of RPMC managed plantations and contract farming. RPMC will supply the crude jatropha oil (CJO) produced to D1 for biodiesel production.


Nanosolar to build 430 MW solar cell factory

June 21, 2006. Nanosolar Inc., a global leader in solar power innovation, has started executing on its plan to build a volume cell production factory with a total annual cell output of 430MW once fully built out, or approximately 200 million cells per year, and an advanced panel assembly factory designed to produce more than one million solar panels per year. Presently in pilot production in its Palo Alto, California facility, has started ordering volume production equipment for what is going to be the world's largest solar cell manufacturing factory. Its first cell fab will be located in the San Francisco Bay area and that its first panel fab  for a broad array of novel product form factors using advanced processes  is expected to be located in Berlin, Germany. A factory of this capacity would cost more than one billion dollars to build if one used conventional solar technology.

DuPont, BP link up for biofuels production

June 20, 2006. Chemicals Company DuPont Co. and BP Plc they would develop, produce and market biofuels for transportation, with the first production scheduled to hit the UK market in 2007. The product, biobutanol, would be a gasoline component. The fuel will be produced in conjunction with British Sugar, a unit of Associated British Foods Plc .



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[1] Full FDI flow for oil exploration, refining & sales, Times News Network, Friday, 16, 2004 01:20:33 AM, on line at


[2] B.K.Bose.

1 The compressor itself does not produce CO2 emissions, rather the emissions are actually from the driver, either a gas/diesel engine or gas turbine. “Compressors” throughout this document refer to the whole unit of the driver and compressor.


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