MonitorsPublished on Oct 31, 2006
Energy News Monitor |Volume III, Issue 19
Note: Source Energy 2003 (CMIE) Report Renewable Energy for India: A blueprint for the next decade

(C L Gupta, Professor of Applied Sciences, Sri Aurobindo International Centre of Education, Pondicherry, [email protected])



fter fifty years of work in the field of solar energy – including thirty years of planned R&D (research and development) since 1975 – India is at the threshold of a major solar revolution. A widespread awareness, state-level delivery mechanisms, sound manufacturing base, and a district-level advisory mechanism for RE (renewable energy) are in place. We have to be focused to take the leap. In spite of exhortation from the President, India has already chosen nuclear energy as its newer energy route. Accepting that, we can still make an impact and achieve 10%–12% of energy budget by 2020 or even earlier, if we stop backtracking and getting confused about our strategies in relation to national energy projects.  Village electrification is a single large opportunity, if we can make it successful.  We must however freeze our technology options with reference to sites and go full steam ahead with full support from the Ministry of Power, Government of India. Village electrification can be extended to village energization, and biofuel can be made to power stationary engines.  This will not only generate livelihoods in rural areas but also avoid problems of biodiversity damage apart from providing piped water, creating sanitation facilities, and ensuring food security. 

What has been achieved so far? 

Many national programmes, relevant to societal needs and based on in-house R&D supported by the MNES (Ministry of Non-conventional Energy Sources), have been initiated during the last thirty years of planned work. Some examples are, biogas, cookstoves, domestic PV (photovoltaic) lighting systems, gasifier-based energization, solar cookers, solar PV pumps, and passively tampered energy-conscious buildings. The progress in these sectors is recorded annually in reports of the MNES. It would, however, be instructive to list matured technologies developed under the sponsorship of MNES.  Matured technologies are those, which have successfully gone through qualifying tests and field trials, and are ready for commercialization or have been commercialized already. 

Solar thermal

Solar water heating from 100 LPD (litres per day) to 100 000 LPD

Roof-integrated solar air-heating systems up to 400 m2  (square metres) for plantation crops, spices and pulses, and textile processing

Solar passive systems for space heating in cold climates

P Solar cookers for domestic and community cooking for up to 10 000 persons/day

Solar distillation for laboratories, railways, petrol stations, primary health centres, and light houses

Solar photovoltaic 

Roof top lighting systems for homes and schools (up to 5 kW  [kilowatt]) 

Pumping systems for water supply for agriculture and community use from wells up to 100 m (metres) deep 

Solar power systems up to 100 kW peak with grid inter- phasing or stand alone with battery backup

Passive and low-energy architecture 

Roof top fabric cooling systems for multi-storeyed buildings such as offices, hotels, and hospitals 

Passive draft evaporative cooling systems for commercial buildings and laboratories 

Roof pond with moveable shades for houses for hot–dry and hot–humid climates 

Earth tunnels for agro buildings, libraries, zoos, and museums 

Low-energy building materials with embodied energy per unit floor area at one third of the existing norms without reduction in comfort

Wind power 

Multi-bladed wind pumps with rotor diameter of up to 7.5 m, and well depths of up to 100 m 

Wind chargers of up to 4 kW

Wind generators with considerable indigenization up to 1.65 MW (megawatt) for a single machine with a farm configuration of over 350 MW 

Wind generators up to 300 kW in a single machine of indigenous design

Small hydropower 

Micro hydro plants up to 1 MW with heads up to 100 m: lowest being 3 m and a few kW


Biogas plants of various capacities with wastes from animals, human beings, kitchen, vegetable markets, slaughter houses, and also mixed wastes including garbage 

Biogas plants up to 10 000 m3 per day from distillery spent ash and 135 m3 per day from sugar press mud 

Biomass gasifiers of up to 500 kW based on wood, woody wastes, and powdery biomass including sawdust, rice husk, and coffee grinds 

Refuse-derived fuel from solid municipal wastes up to 500 TPD  (tonnes per day) 

Micro power systems 

Thermal and power requirements for sugar-cum-distillery complexes and paper mills 

Complete power requirements for agro industries such as marigold flower processing, and starch making


Between 1975 and 1990, a full-fledged infrastructure has been installed, and a manufacturing base established for the above RE systems including balance of systems in the country 

Significant policy shifts

If one analyses the policy scenario for RE in India during the last 30 years, four phases can be discerned. 

Pre-1975: Concerted attempts were made primarily at NPL (National Physical Laboratory), New Delhi; CSMCRI (Central Salt and Marine Chemicals Research Institute), Bhavnagar; and CBRI  (Central Building Research Institute), Roorkee but without any coherent national vision

1975–90: Planned research was initiated as per the Energy Policy enunciated as part of National Committee on Science and Technology Exercises at the Department of Science and Technology in 1975. The guiding criteria were to satisfy minimum needs of rural areas for domestic and agricultural sectors. There was practically nothing for industry/urban areas, and the strategy was to concentrate on indigenous standalone thermal systems.  SPV (solar PV) was still very uneconomic, and work on biomass had not matured. 

1990–2003: In accordance with liberalization of economy, globalization, and market forces, the emphasis shifted from subsistence- level energy availability to energy quality and security for rural, industrial, and urban areas. After 1980s SPV came into picture and India graduated to a world leader in sub-megawatt biomass gasification.  In rural areas, the objective became income enhancement, and in urban areas energy quality and reliability.  Hybrid systems started being considered for economy and reliability.

2003 onwards: Taboo on imported systems was scrapped.  For the first time, it was officially recognized that 80 000 villages out of 700 000 could be handed over for RE applications.  Already 18 000 villages have been put under charge of MNES for electrification and energization. This is the golden hour for RE to make a decisive and visible impact; after all it is a national priority. 

Current scenario

Biofuels: For meeting CDM  (clean development mechanism) and pollution standards, and in view of the rising costs  of petroleum products, a national  policy has been declared  on use of ethanol and development  of biofuels primarily for  transportation. The harm to biodiversity by large-scale monoculture of jatropha for big refineries is not discussed. Also possibility of employment generation in rural areas by using locally grown non-edible oilseeds for powering stationary engines to pump water and produce small power has not been articulated nationally. But it is funded internationally and demonstrated successfully in remote villages of Orissa.  There is a need for two parallel streams: one large scale for transport, and one small  scale for enterprise  development. 

Enterprise development: For creating employment- /income generating enterprises by using RE and training for RE technicians, an example of six case studies has been detailed in a document submitted to ‘YES’  (youth employment summit). It is now understood, that YES, an ancillary associate of Johannesburg conference has started such a training course in Hyderabad in collaboration with an Indian agency. MNES may need to give attention to this aspect also. 

Chinese ETCs: The solar thermal scene has changed drastically with the emergence of Chinese evacuated-tube technology.  By mass production and elimination of heat-transfer circuit via heat pipes/ u-tubes with fins, etc., they have reduced the price by a factor of eight with no problem of scaling, corrosion, or leakage.  As such, temperatures between 80 °C and 90 °C have become economically viable in solar thermal option. For water heating, the system option used is not optimum thermally, and has problems for large systems but it works excellently for domestic systems. In spite of repeated offers in early 1990s, this option is yet to take off in India. 

Growth of ESCOs (energy-supply companies): To act as intermediaries between government, banks, manufacturers, and users. They get all the loans from banks on behalf of users. They do installation and service maintenance warranty for users at minimal fees (five per cent or less). This is useful to cut downtimes and field expenses for suppliers, provide locally accountable services for users, and for creating enterprises.  It is already happening but rather slowly. The spate of Ashden awards to Indian NGOs  (non-governmental organizations) during the last three years underscores the potential for this approach for India. It should be the cutting edge of delivery systems, and vigorously promoted by MNES.

Fast track thrust areas for the next decade

These are detailed in the context of Indian needs but with due regard to global trends and what has already been done.  Medium temperature (80– 150 °C)  • Use of CPC (compound parabolic collector) thermal systems; stationary PTCs  (parabolic trough collectors); and ETCs for hot water, hot air, desalination, detoxification, pasteurization, and absorption refrigeration systems  • Dish-type community solar cooking systems using Clique/Scheffler/Auroville bowl-type concentrators 

High-temperature thermal systems (250–600 °C)  • 25-kW distributed dish sterling systems for power  • Large-scale community systems generating steam for cooking/drying 

SPV systems  • Building-integrated SPVs for heat, light, and power for commercial/ public buildings  • Solar pumping  • Solar charkha for export quality khadi 

Biofuels: bio-diesel  • Large scale for urban transport  • Small scale (20-litre units) for distributed local rural power upto 5 kW for water/ sanitation and domestic lighting using locally grown non-edible seeds 

New technologies  • Hydrogen systems, hybrid green cars, fuel cells, and micro turbines using hydrogen or ultra pure producer gas/ biogas 

Remote area power  • Hybrid systems using renewables, for example, SPV and wind; solar thermal and biomass; hydro and biopower or renewables and diesel 

Design tools  • Economic/energy optima protocols for hybrid systems  • Application engineering data for mainstreaming design of energy-conscious buildings using amenable design programmes for small-scale offices requiring half day's data input 

BOS systems  • Intelligent and efficient power-conditioning units for small-scale power < 1 kW, and for wind machines up to 300 kW or more  • Metering systems for power supply and for hot water supply to multi-storeyed flats from roof-top solar systems owned by group housing cooperatives or for supply to individual hamlets from rural mini grid powered by 25-kW SPV power unit


While the presented issues may not be exhaustive, an attempt has been made to draw the attention of all concerned players of the RE sector, including policy-makers, for overall development. It is hoped that these suggestions would help all concerned to focus on thrust areas into RFP (report for proposals) specifications for government–industry–academic partnership in a time-bound, focused programme for rural as well as urban/industry sectors.  Instead of doing every thing lukewarmly, it is preferable at any time to select critical thrust areas for making pre-commercial impact in a time span of five years/less, and move on as industry and society can take over the first set of the Mark II technologies.  There is no mercy for somnambulists in a global world. 

Courtesy: Akshay Urja Newsletter (May–June 2006, Volume 2 • Issue 3) by Ministry of Non-Conventional Energy Sources    

The Cost of Oil Inefficiency

(By Paul McDonnold)


eelings about the recent discovery of a vast new oil deposit beneath the Gulf of Mexico could be mixed. This new find, in what is known as the Jack field, will sharply increase US oil reserves. That is a good thing. Our dependence on overseas oil is far too great, given the region's instability. The new find may also sharply decrease the price of petrol. That is the part that bothers me.

When it comes to oil, America's behaviour needs to change. As an econ-omist, what bothers me is the inefficiency of it all, and the opportunity costs. I would be afraid to estimate the amount of oil we use, the pollution we create, without even moving our cars an inch.

Another example of our inefficient use of oil is found in the immense size of many of our automobiles, a result of cheap fuel. One person going to work in a vehicle built for eight requires much more oil than should be necessary to get that person from point A to point B. Oil, along with its partner the internal combustion engine, has been our blessing, but also our curse. It is part of a broader technological revolution that has effectively shrunk space. It has drawn our economy closer together, powering growth.

Opportunity costs

But what are the opportunity costs of our oil addiction? According to the Bureau of Economic Analysis, Americans spent over $280 bn on petrol and oil in 2005. How much of this money could be saved with smaller, more efficient cars, more petrol-electric hybrids, more and better mass transit? For argument, let's say half. That would be $140 bn that could be used to meet more critical needs.

Oil has its substitutes. Biofuels, solar power, electric automobiles, renewable-source electricity generation, and other technologies exist and are waiting to be developed further. But they cannot compete with oil as long as it is cheap. Until these alternatives can compete, they will not be improved as rapidly as they could be.

Moralising will not break our addiction to oil, but sustained high prices certainly would. People would respond to such a market signal by slowly changing their behaviour cars would become smaller, more efficient. Better mass transit would be built and used. More people would live close to their workplaces. Traffic jams would shrink. The air would clear.

The discovery of a new oil source in the Gulf of Mexico makes that scenario less likely. An oil supply close to home is a good thing, but cheap oil has a downside.

Fuel prices at $4 per gallon might be the only way to break America's oil addiction. With the news from Jack field, $2 per gallon is more realistic. The former looks like the better bargain to me.

Courtesy: The Christian Science Monitor

India Wind Monitoring Stations  (as on 31.03.2006)

State / Union Territory

Total Stations

No. of Stations
in operation

Andaman & Nicobar



Andhra Pradesh



Arunachal Pradesh


















Himachal Pradesh



Jammu & Kashmir















Madhya Pradesh



























Tamil Nadu









Uttar Pradesh



West Bengal






Source: Centre for Wind Energy Technology






Winners of NELP-6 bids to be named soon

October 31, 2006. The winning bidders for the 55 oil blocks auctioned for exploration under the sixth round of the New Exploration and Licensing Policy (NELP-6) were likely to be formally announced very soon. Recommendations for the award had already been sent to the Cabinet by the DGH. Around 160 bids were received for the 55 blocks, of which 23 were deep water, 25 onshore, and six offshore. A majority of the blocks are expected to be cornered by public sector exploration companies such as ONGC and Oil India. Around 4 lakh sq km of exploration area would be offered in the next round, and there would be more deep-water blocks coming up for bidding.  Under the open acreage policy, blocks would be available throughout the year and companies could visit the data room any time of the year and bid, unlike in NELP where the government invited bids at specific times. The government was also working towards creating a national data repository, where data from the areas already awarded and those to be awarded would be stored for public viewing. The NELP system and open acreage system would co-exist for some time.

ONGC’s KG basin plan before secys’ panel

October 30, 2006. An Empowered Committee of Secretaries (ECS) will take a final call on whether ONGC should be allowed to retain the three deepwater blocks in the Krishna Godavari (KG) basin which it proposes to develop jointly with British Gas as its strategic alliance partner. The ECS will also give its verdict on the joint development of another block in the Kutch offshore region by ONGC and British Petroleum. Licences for the three KG blocks end in May 2007 and for the Kutch block in August 2008.

The hectic lobbying was on by the British authorities through diplomatic channels to help the two British oil and gas majors secure these deals. The British High commissioner recently met petroleum secretary, in this regard. While ONGC has agreed to give 50 per cent participating interest to the two British companies in these four blocks, the deal came under the petroleum ministry's scanner when ONGC approached it for an extension of the petroleum exploration licenses (PELs) for these blocks. As previous extensions had ended without any success, the ministry turned down ONGC's request for another extension of the PELs and asked ONGC to surrender these blocks so that they could be offered under the next round of NELP Block by Block.

As ONGC represented against the ministry's decision in August, the case was finally referred to the Directorate General of Hydrocarbons (DGH) for an opinion. In line with the ministry’s decision, DGH, too, upheld that ONGC may be asked to return the blocks at the earliest for being re-offered under the next NELP round. The ministry is not happy with the way ONGC has inducted BG and BP as its alliance partners. In a recent note to the cabinet secretariat, it said, “Despite the cabinet approval to ONGC in 2001 for alliance with experienced E&P companies, ONGC was unable to finalise its partners till 2004. Despite the high prospectively of the KG basin, ONGC succeeded successful in getting only a single tender for the three KG basin blocks. As against this, other blocks in the KG basin offered during the same time under NELP-V have seen a highly competitive bidding scenario”.

Setback to ONGC's drilling plan

October 26, 2006. Oil and Natural Gas Corporation Ltd's plan to resume drilling at Bengal offshore in October has suffered a fresh setback. The company is still awaiting extension of the minimum work programme time frame by the Directorate General of Hydrocarbons (DGH). The block is held jointly with IOC (15 per cent). Having signed the product sharing contract for the NELP-II block (WB-OSN-2000/1) in July 2001, ONGC had failed to complete the due exploration work within the stipulated five-year time frame. Though a late attempt was made in March 2005 to complete the minimum exploration drilling, the effort ended in a whimper as the company had encountered a series of technical problems leading to damage of the rig and time overrun. As against a targeted schedule of drilling four exploration wells in two years beginning March 2005, ONGC had suspended the activity after a year with the sole consolation of hitting a dry well.

Precious time and money was lost in repairing the rig and which was finally deployed to carry out exploration drilling in Mahanadi basin. While ONGC hopeful of being granted an extension for carrying out the residual exploration work in Bengal offshore, industry observers pointed out the recent cancellation of ONGC's exploration licence in three blocks in Krishna-Godavari (KG) basin for failure to fulfil the minimum work programme within the stipulated period. Also considering the fact that the Sunderban region where the block is located offers very limited weather window during the winters, further delay in receiving the due approval from DGH and the Union Ministry of Petroleum and Natural Gas would in effect make it tough for ONGC to complete the drilling activity.


Oil cos finalise ethanol price in UP

October 31, 2006. The Indian Oil Corporation has finalised a deal to source ethanol from sugar mills in Uttar Pradesh at Rs 21.50 per litre ex-distillery. With this, the stage has been set for rollout of the gasohol programme — involving sale of 5 per cent ethanol-doped petrol — in the State within the next few days.  The public sector oil marketing companies had, kick-started final price negotiations with sugar mills, following the opening of technical and financial bids in all States for tenders floated to purchase an aggregate quantity of 54 crore litres. While IOC is looking after ethanol sourcing in the northern and eastern regions, HPCL is undertaking the same for the western and BPCL for the southern States. The Rs 21.50 a litre base price for UP has been arrived on the basis of the lowest bid quoted by Bajaj Hindusthan Ltd (BHL). All other mills — there were around 31 bidders in UP — quoted Rs 22 a litre. Mills had quoted different rates in various States, ranging from Rs 21.50-22 in UP to Rs 21.50-22.50 for Bihar, Jharkhand and West Bengal, Rs 21.50-23 in Karnataka, Rs 23 in Tamil Nadu, Rs 22.50-23.25 in Gujarat, Rs 24.20 in Maharashtra and Rs 25 in Andhra Pradesh. There were, in all, eight bidders for Bihar and Jharkhand, 13 in Punjab, 28 for Delhi and Haryana, 17 for Rajasthan, six for Orissa, four for West Bengal and 42 for Maharashtra.  The Rs 21.50-23 per litre ex-distillery price for ethanol would more or less correspond to the current landed price of Rs 24-27 per litre for petrol at the depots, after accounting for transport and local levies

HPCL to offload 50 per cent holding in Vizag refinery

October 31, 2006. State-run Hindustan Petroleum Corporation is in talks with Total of France and Kuwait Petroleum to offload up to 50 per cent stake in proposed 15 MMTPA Vizag refinery. A new SPV would be formed on the lines of the Bhatinda refinery, the company proposes to spend over Rs 18,000 crore for expanding the refinery and for setting up a petrochemical complex.  Meanwhile, the company has also firmed up its plans to offload 50 per cent stake in its 9 MMTPA Bhatinda refinery to state-run Oil India (OIL) after British Petroleum backed out of this project even after signing an expression of interest. HPCL is likely to achieve financial closure for Bhatinda refinery by the end of this fiscal.

IOC eyes stake in Indonesia’s Tuban Petro

October 30, 2006. State-owned Indian Oil Corporation is eyeing equity participation in the Indonesia petrochem firm PT Tuban Petrochemical Industries (Tuban Petro) which owns a giant $3 billion petrochemical complex. A detailed proposal will be put up for approval in the next board meeting of the company. The company already has a memorandum of collaboration with the leading Indonesian oil and gas firm PT Medco Energi International Tbk (Medco) for jointly acquiring exploration and producton (E&P) assets in India, Indonesia and third countries.

Medco is planning to set up a green field refinery project in Indonesia and IOC has shown its initial interest to evaluate the opportunity. Around 70 per cent of TubanPetro is owned by the government of Indonesia. The other shareholders of the Tuban complex are Pertamina, Itochu Corporation, Tuban Petrochemicals Pte Ltd, and Sojitz Corporation. The Tuban petrochem plant has a combined capacity of 3.6 million tonne per annum (TPA) of petrochemicals products, comprising 1 million TPA of aromatics (500,000 tonne paraxylene, 200,000 tonne benzene, and 150,000 ton toluene), 1 million TPA of naphtha, and 1.6 million TPA of kerosene and diesel. Indonesia is the largest petroleum market in the ASEAN region, currently estimated at 50 mtpa of petroleum products. To pursue upcoming opportunities in the Indonesian petroleum retail sector, IOC already has in place its board approval for setting up a wholly owned subsidiary in Indonesia.

Transportation / Distribution / Trade

GSPC plans LNG import

October 27, 2006. Gujarat State Petroleum Corp (GSPC) is in talks with Oman, Qatar, Algeria and Egypt to import liquefied natural gas. GSPC wanted to import spot cargoes of LNG and use Royal Dutch Shell’s terminal at Hazira or Petronet LNG Ltd’s Dahej terminal to receive and regassify LNG. Both Shell and Petronet’s terminals are connected to GSPC’s gas grid in Gujarat. There is lot of fertiliser plants willing to buy regassified LNG at the current spot prices. India has so far received 10 spot cargoes this year in the range of $8.50 to $11.50 per million British thermal unit. GSPC was keen to get into LNG business and was in talks with the Adani group and HPCL to set up a LNG import terminal, possibly at Pipavav or Mundra port.

Delhi signs pact for gas purchase

October 27, 2006. The Delhi government signed an agreement with Petronet LNG Ltd for purchase of natural gas for fire generation projects with a capacity of about 1,500 MW, to tide over shortages by the 2010 commonwealth games. PLL and Pragati Power Corporation Ltd signed an MoU for 1.5 million tonnes of gas from 2009-10. The agreement between Petronet and Pragati Power comes 2 months after the Delhi government signed agreements with the Haryana and NTPC and Damodar Valley Corporation for projects with a capacity of about 4,500 MW.

Policy / Performance

India plans JV with Russia's Gazprom

October 31, 2006. India has proposed an exploration venture with Russian gas major Gazprom and sought a stake in the Sakhalin-III oil and gas project with a view to strengthening Indo-Russian ties in the oil sector. Petroleum minister has made the proposal during his meeting with Russian counterpart in Moscow. With regard to Gazprom, he has proposed setting up a 49:51 joint venture company between Oil and Natural Gas Corporation and the world’s largest natural gas producer. The proposed joint venture could look at exploring for oil and gas in India, Russia and other countries, besides working on projects to liquefy gas found in Russia for shipment to India. The oil and gas minister proposed partnerships between Indian and Russian companies in Sakhalin-III project. In return, he offered similar arrangements for Russian firms in Indian Oil Corporation’s proposed 4-bn dollar Paradip refinery and petrochem project in Orissa.

Oil firms slash ATF prices by 8 pct

October 31, 2006. Public sector oil firms slashed aviation turbine fuel (ATF) prices by 7.9% in line with fall in international oil prices. Jet fuel or ATF prices for domestic airlines, which have to pay local sales tax, was cut by Rs 3,179.9 per kilo litre to Rs 37,123.92 per kilo litre in Delhi, an Indian Oil Corp. In Mumbai, the prices were cut from Rs 45,837.72 per kilolitre to Rs 42,511.80 per kilo litre. For international airlines, which do not have to pay sales tax, ATF prices were cut by $53.62 per kilo litre to $621.68 per kilo litre in Delhi, while in Mumbai, they fell from $704.48 per kilo litre to $650.64 per kilo litre. Public sector companies—Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd - revise ATF prices on the first of every month in line with movement in international prices. In line with the softening in international prices, the oil firms had cut ATF prices by 8.3 per cent on October 1. The prices were on the upswing since April 2006 and were cut for the first time on October 1.

Gas policy likely to propose setting up of advisory body

October 26, 2006. The soon-to-be-announced policy for natural gas pipelines and city or local natural gas distribution networks is likely to suggest setting up of a National Gas Advisory Body (NGAB), which would advise the Central Government on the issue. To promote and develop the gas pipeline network and the city or local gas distribution networks, constitution of NGAB has been envisaged, which would advise the Government on the subject. However, the advice of the Body would not be binding on the Government. It has been proposed that the Secretary, Ministry of Petroleum and Natural Gas, would be the Chairman with representatives from the major gas consuming ministries, State Governments, oil and gas industry, consumer organisations, apex industry chambers and expert bodies as members. The Petroleum Ministry may notify the constitution of the Body from time-to-time.

The objective of the policy was to promote investment from public as well as private sector in natural gas pipelines and city gas distribution networks, to facilitate open access for all players to the pipeline network on a non-discriminatory basis and promote competition among entities, thereby avoiding abuse of dominant position by any entity.

To secure consumer interest in terms of gas availability and reasonable tariff for natural gas pipelines and city or local natural gas distribution networks are some of the other areas policy would seek to address. The Petroleum & Natural Gas Regulatory Board (P&NGRB) Act, 2006, provides the legal framework for the development of the natural gas pipelines and city or local gas distribution networks, but the policy will provide the crucial links for those in the business.

As regards the contentious issue of marketing exclusivity, it is likely to propose that the entity authorised to lay, build, operate or expand a city or local natural gas distribution network will need to follow the market service obligations as may be prescribed by the P&NGRB in accordance with the Act. The Board may decide on the period of exclusivity in accordance with its regulations in a transparent manner while protecting consumer interest. It is also likely to suggest that the Board may consider different exclusivity periods for setting up of city gas distribution network and for marketing gas by the entity developing such network. To begin with, the policy may suggest a limited period exclusivity, the time frame of which would be decided by the Board.



Essar, Lanco set for Indonesian power play

October 31, 2006. Essar Group and Hyderabad-based Lanco Infratech are in the race to bid for two proposed coal-fired power projects in Indonesia with an aggregate capacity of 400 MW. These projects — a 200-MW plant in Bali and a 200-MW plant in Sumatra — need an investment of Rs 1,500 crore, reports Nevin John & Nishanth Vasudevan in Mumbai. Indonesian state electricity firm PT Perusahaan Listrik Negara (PLN) has started the pre-qualification bid process and the names of the qualified companies will be announced by December ’06.

In addition to these two projects, Essar Power (EPL) had submitted pre-qualification bid for a 1200-MW project at Cerebon in western Java in March ’06. But the process has not been completed as yet due to objections raised by an international consortium led by Japan’s Marubeni against the bidding procedure, said sources. Marubeni has demanded government guarantee for the project but nothing has been decided by PLN. This project needs as investment of Rs 4,500 crore. If Essar wins the bids, the company will have to shell out Rs 6,000 crore to set up three power plants with an aggregate capacity of 1,600 MW. Other two bidders for the 1,200-MW project include consortiums led by Malaysia’s YTL and Japan’s Marubeni.

For the Bali and Sumatra projects, EPL and Lanco have submitted pre-qualification bids and the selection would be completed by December ’06. Lanco is the sole Indian contender for EPL and has tied up with a local partner as well. PLN will be the exclusive buyer for the power generated from these three plants. Cerebon plant will have two 600 MW units, which are scheduled to be completed by ’10. The Bali and Sumatra projects are likely to be completed in two years. Both the companies have plans to source coal from Indonesia for their projects in India. Indonesian coal is cheaper when compared with the Australian variety, though the quality is not good enough. The coal sourcing is important since EPL has an ambitious Rs 7,000-crore expansion plan in India and aims to produce 3,000 MW, mostly coal-based, by ’10. Lanco, on the other hand, wants to produce 3,800 MW by ’10, a large majority of which is coal-based.

IL&FS readies ONGC's power project for execution

October 29, 2006. Infrastructure Leasing and Financial Services Limited has completed the ground work for setting up of ONGC's 750 MW integrated gas-based power project in Tripura at a cost of Rs 3,700 crore. The debt component of the power project with associated evacuation system will be Rs 2,500 crore while the remaining will be equity.

Alstom to expand manufacturing units in India

October 26, 2006. Alstom, the French power equipment supplier, has plans to expand its manufacturing facilities in India to meet the growing demand in thermal and hydro projects. The company is also eyeing emerging opportunities in the nuclear power sector. It is also in talks with the Nuclear Power Corporation of India for technology tie-up for manufacturing nuclear turbines in India. Alstom, which has a tie-up with the state-run Bharat Heavy Electricals Ltd for 800 MW supercritical boilers, manufacture some components for these units at the Durgapur and Shahabad plants.

NTPC may acquire plant for equipment manufacturing

October 26, 2006. Power generation major NTPC, which has forayed into equipment manufacturing, is contemplating acquiring the plant of another central PSU to commence operations. The manufacturing plant, which could help in faster capacity addition, will serve the equipment needs of NTPC. This comes at a time when the country has set an ambitious generation target of 1,75,000-2,00,000 MW for the 11th Plan as against the current generation of 1,27,000 MW. NTPC would also look at roping in a foreign company as partner in the equipment manufacturing venture, which has been proposed on the lines of BHEL.

Ministry also warned companies, which have been allotted coal blocks for supplying raw material to thermal power units, that their contracts would be cancelled if they fail to start operating in six months. On shortfall in generation due to slippage, the government has planned 8 ultra mega power projects each with a capacity of 4,000 MW.

Transmission / Distribution / Trade

Bhel likely to bid for Hisar power plant

October 30, 2006. Haryana government has invited fresh bids for awarding turnkey contract of up to Rs 4,500 crore for the 1,000-1,200 MW Hisar thermal power project after Reliance Energy emerged as the sole bidder. The Anil Ambani group firm is understood to have been the only company to have submitted a bid for executing the thermal project of Haryana Power Generation Corporation (HPGCL). REL’s engineering, procurement and construction division (EPC), which is already executing the 600-MW Yamunagar Thermal Project in the state, had proposed to set up the Hisar plant within 30-36 months after getting all approvals.

PSU Bharat Heavy Electricals and South Korea’s Doosan are likely to submit their bids in the revised offer. HPGCL had invited bids for setting up a 1,000-1,200MW coal-based plant in May this year. The contract was earlier expected to be awarded by November, but it could now take longer. HPGCL, which has acquired about 1,000 acres of land for the project, is believed to have relaxed the time schedule by a few months in the revised offer for completing the project. REL’s EPC division is likely to retain Shanghai Electric of China, which is providing equipment in Yamunanagar, as its main supplier for the Hisar project. The Rs 4,000-crore project is proposed to be funded in a debt-equity ratio of 80:20. It can have unit configuration of 2x250 MW to 300 MW or two units of 500-600 MW and is likely to be commissioned in ’09-10.

ONGC assures transmission system for Tripura plant

October 25, 2006. Oil and Natural Gas Corp will synchronise the commissioning of the over Rs 2,000 crore power plant in Tripura with the construction of a transmission system to evacuate electricity from the power plant. The power plant is ONGC's first mega 'Gas-to-Wire' project to monetize significant idle and stranded gas production potential from wells there. ONGC has established a production potential of four million standard cubic meters per day and will increase it to five mmscmd by boosting exploration. While ONGC would implement the mega 2x370 MW advanced class combined cycle power plant at Palatana, a special purpose vehicle (SPV) would implement the transmission project. Power Grid Corp of India Ltd (PGCIL) and ONGC would take up 26 per cent and 15 per cent equity respectively, and 59 per cent would be picked by private partner. The transmission network would link the power plant with PGCIL Grid at Bongaigaon. The project is estimated to cost around Rs 2087.6 crore and would be implemented by end of 2009. The generated power will cater to the north-east demand and also be transmitted to Northern Grid to feed demand in north India.

Policy / Performance

AP Govt announces coal-mining policy

October 31, 2006. The Andhra Pradesh government has announced the coal mining policy to facilitate the state-owned Andhra Pradesh Mineral Development Corporation (APMDC) to take up coal mining activity across the country keeping in view its massive capacity addition plans in thermal power generation. This will effectively create a parallel entity to the Singareni Collieries Company Limited (SCCL) owned by the state and Centre in 51:49 equity shareholding.  The state cabinet, approved the policy according to which the corporation would float a separate company to share coal blocks with other state or central public sector undertaking and would sell the additional coal to industries after meeting the requirements of the state-owned APGenco and other power companies. 

The price of coal from the mines operated by APMDC would be determined by the state government. APMDC has so far applied for about 20 coal blocks in the country, including six in Andhra Pradesh, and it has already received in-principle allotment of the Nuagaon Telisahi coal block in Orissa to be shared with Orissa Mining Corporation on 50:50 basis. The 15-sq km Nuagaon coal block, which is estimated to have about 750 million tonnes of coal reserves, will be primarily used for meeting the coal requirements of the 1,600 MW watt thermal power project at Krishnapatnam proposed to be set up by APGenco. The six coal blocks, with an estimated reserves of 480 million tonnes in Khammam district in Andhra Pradesh, are located in notified tribal areas where only the state or central public sector undertakings or tribal societies can take up mining activity. By encouraging APMDC entry into coal mining in a big way, the state government is planning to develop its own coal base, which has hitherto been monopolised by SCCL in the state. 

Pvt sector more sensitive to coal industry’s needs

October 30, 2006. The corporate sector in Jharkhand has lauded the decision of the Centre to allot coal blocks to private mining companies and called it “a good step forward”. But they said, although industries like sponge iron, power, steel, cement and fertiliser were allowed captive mining of coal for self-use, 90 per cent of coal mining activity was still dominated by state-run Coal India Ltd (CIL). CIL and its subsidiaries sell their output either through industry-linkage routes or e-auction/other routes. While India produced 5.48 million tonne (mt) of sponge iron in 2000-01, it witnessed an increase of around 7 mt in 2005-06 with a production of 12 mt. Going by the yardstick that 1.6 million tonne of coal were needed to produce 1 million tonne sponge iron, one could reckon by how much the requirement of coal in the sponge iron industry alone had gone up during the last 5 years. Generation of power, production of cement, steel had gone up substantially in the country during the last 5 years, leading to increased consumption of coal. The country's future coal requirement could only be met by opening up coal mining to the private sector as Coal India is unable to meet the increased need. While big industries in the country are, for some time now, being allotted coal blocks for captive use, they, as also others, have the option of importing any grade of coal they require under the open general licence. Thus the medium-scale user industries in Jharkhand, mainly those getting coal through the linkage route, are viewing the proposed opening up of the coal industry to private sector mining as a step that will be away from red tape.

The entry of the private sector into coal mining, would result in the user industry getting the right variety of coal at all times, apart from an enlarged choice to buy from. Industry sources alleged there had often been complaints in the past about user companies being supplied the wrong grade of coal by CIL subsidiaries than they had applied and paid for (on a linkage basis). CIL has A to F grades of non-coking coal. On a linkage basis, if one had applied for, say the B grade, the buyer will sometimes be supplied the C or D grade coal (the classification being on the basis of ash as well as carbon content).

CIL has a procedure to register complaints about such things, but the end result is not encouraging most of the time,” alleged an industry user. One can have a transparent penalty clause for a private sector mining operator so that whenever the customer receives sub-standard coal (which does not meet the specifications agreed upon), the clause could more easily be enforceable. Similarly, users feel, competition to CIL from more efficient private players, may also lead to a better service at a cheaper cost. The entry of the private sector will, apart from increasing the available supply of coal in the country today, also help the not-so-big consumer with the choice to buy coal from different sources as distinct from today's situation when everything is virtually under CIL control.

There are today several small sponge iron units in Jharkhand which are in need of coal. Most of them have already applied to the coal ministry for coal blocks. Instead of earmarking coal blocks to each small player, the government is perhaps wanting such units to buy their coal from big private sector mining companies. Industry is, thus, awaiting the announcement of guidelines on coal blocks and how companies will be required to operate in the country, even though the 100% FDI route is already open to them.

Selling of coal by CIL subsidiaries through the e-bidding route (by enterprises like metal had, over the last couple of years, put a check on wrong elements to a large extent. This has even led to an increase in profits at some of the CIL subsidiaries, which are now planning to use the e-auction route more frequently. They feel that over the next few years, during which the Internet platform will have become even more widespread than today, mafia elements will be further sidelined. Also, with a separate corridor being envisaged by the railways for transportation of all kinds of freight, most feel increased movement of coal in coming years, once the private sector steps in, will not result in any kind of problem for coal movement in the country.

Committee invites ideas for alternative oil sources

October 27, 2006. The Parliamentary Standing Committee on Petroleum and Natural Gas has invited comments from various stakeholders on the `Strategy for Development of Alternative Sources of Oil & Gas' before preparing a report on the issue and submitting to the Parliament. Keeping in view the significance of the subject, the Committee have decided to invite written memoranda containing views / suggestions / comments from interested individuals / associations / experts / professional organizations / institutions on the subject, especially on ethanol and bio-diesel production / jatropha plantation and matters relating thereto.

The subject involves issues relating to development of different alternative energy sources ethanol-blended petrol, bio-diesel / jatropha plantation, coal bed methane, underground coal gasification, gas hydrates, and hydrogen fuel. The memoranda which might be submitted would form part of the records of the Committee and would be treated as strictly confidential and would not be circulated to anyone, as such an act would constitute a breach of privilege of the Committee. Besides, those who would like to give oral evidence before the Committee apart from sending the memoranda could intimate the same to the Lok Sabha Secretariat for consideration of the Committee. The decision of the Committee to invite the persons for appearing before the Committee shall be final.

Merchant power plants a reality

October 26, 2006. The country will soon have power plants set up exclusively for power trading. In a move that will create over 12,000 MW of capacity that can be traded by private developers, the government has earmarked a 2.4-billion-tonne coal reserve for merchant power plants. Unlike other power projects, merchant plants will not be required to enter into long-term power purchase agreements (PPAs) to sell power. They will help distribution licensees meet their short-term needs, besides catering for open access consumers.

The power and coal ministries have identified 15 coal blocks with 3.6 billion tonne of reserves for private players planning captive (1.2 billion tonne) and merchant (2.4 billion tonne) projects of 500 MW to 1,000 MW capacity. The modalities for merchant power plants are being finalised. The allocation of coal blocks for both merchant and captive power plants would be carried out by a screening committee. These 15 blocks were part of Coal India’s 42 de-reserved blocks identified for fuelling 70,850 MW capacities. The blocks cumulatively hold 15.7 billion tonne of coal reserves. Of the remaining 27 coal blocks, 10 holding over six billion tonne of reserves will be allocated to central (1.49 billion tonne) and state sector (4.59 billion tonne) utilities, including NTPC and SEBs. This is in addition to the eight blocks with five billion tonne of reserves allotted earlier to NTPC and its joint ventures.

RGPPL strives to meet Dabhol plant deadline

October 26, 2006. The Ratnagiri Gas & Power Pvt Ltd (RGPPL) is struggling to restart the 740 MW block of the Dabhol plant from November 1. The company is in the midst of sourcing nearly 40,000 tonne nephtha. RGPPL has already inked power purchase agreement with MahaVitaran, and the power would be supplied up to March, at Rs 5.10 a unit, as cleared by the Central Electricity Regulatory Commission.

Orders are being placed to procure naphtha. The Centre has already waived customs duty on naphtha up to March. Maharashtra is facing acute power deficit, and the state government has already assured RGPPL adequate bank guarantee and letter of credit coverage for 30 days, naphtha requirement through MahaVitaran. This has been done in order to facilitate the import of naphtha, as RGPPL is not in a position to offer adequate security to arrange both. Moreover, Maharashtra government has assured to address the issue of waiver of entry tax on imported naphtha.

MahaVitaran has also settled unpaid bills of around Rs 1 crore to RGPPL. Furthermore, RGPPL has called upon the Maharashtra government to facilitate the process of formalising the shareholders’ agreement between equity holders — NTPC, GAIL India, IDBI-led lenders and MSEB Holding Company Ltd. The plant has been closed since July 4, after the ad hoc power purchase deal between RGPPL and MahaVitaran was over. RGPPL could not operate the plant for want of naphtha. The Central Electricity Regulatory Commission’s order delivered on October 17, further made RGPPL to accelerate the restart process.

Bhilwaras in talks with PE funds for power business

October 25, 2006. The LNJ Bhilwara Group is all set to give its energy portfolio a new punch. The Rs 2,400-crore diversified conglomerate is incorporating a new company, Bhilwara Energy (BEL) as a flagship entity in the power business. BEL will serve as a holding company for the group’s existing power generation firms, Malana Power Company (MPCL) and AD Hydro Power (ADHPL), which is a subsidiary of MPCL. BEL is now in talks with 3-4 private equity firms to raise Rs 250 crore in the first phase, and the deal is expected to crystallise in the next six weeks. LNJ which is looking to ramp up its power generation capacities to 1,500MW in next 5-7 years, plans to invest close to Rs 7,000 crore during the period. The first phase of investments will come from private placement and for the subsequent phase shall look at an IPO and even GDRs.

BEL will focus on diversifying the group’s portfolio into the power business. It’s now planning to enter power transmission, distribution, trading and generation from non-hydro sources like thermal heat, wind power and nuclear energy. The company is looking at developing or acquiring new greenfield power projects in states like Himachal Pradesh, Uttaranchal, Sikkim, Madhya Pradesh, Chattisgarh and Arunachal Pradesh and is keen on projects involving renovation and modernisation of old power stations. LNJ Bhilwara had earlier signed a JV with SN Power Norway in ’04 to boost its hydro power initiatives. The group is also providing consultancy services in energy generation in India, with major emphasis on hydroelectric power, under Indo Canadian Consultancy Services, a joint venture with a Canadian firm, RSW International. 




Oil finds in Libya

October 31, 2006. Libya's state-owned National Oil Corporation (NOC) announced two oil discoveries. One was made by NOC's Zueitina Oil Company, acting as Operator for NOC, Occidental Petroleum and OMV, in Block NC74A, south west of the Sirte sedimentary basin. The new field, 42 km (26 miles) north of Zella Field, contained oil at a depth of 5,032 feet. Production tests showed a daily production rate of 550 barrels of high quality oil through a 128/44 inch choke. The other discovery was made by Germany's RWE Dea North Africa & Middle East, Libya Branch, in Block NC193 at Sirte Basin. The primary test was made in the Dahra formation at depths of between 4,244 to 4,214 feet, where the crude oil flowed at an average of 410 barrels per day through a 32/64 inch choke. The discovered crude gravity was about 35 degrees API. NOC says less than a third of Libya, Africa's fourth largest country, has been explored for hydrocarbons. Its estimated reserves of 37 billion barrels so far have put it among the top 10 oil reserves owners. Libya wants to attract foreign investment to help it increase its oil output capacity to more than 3.0 million barrels per day by 2010/12 from about 1.6 million bpd at present.

Gazprom to invest $100 mn in Angola oil & gas projects

October 31, 2006. Gazprom will invest $100 million on exploration and production of oil and gas in Angola. Gazprom and Angola's Sonangol plan to cooperate on oil and gas exploration and production in Angola, and investments may total $100 million. Gazprom and Angola's state-controlled oil and gas concessionary Sonangol signed a memorandum on cooperation following talks between Russian President and Angolan counterpart.  The memorandum primarily concerns prospecting and production of natural gas to be used in a liquefied natural gas project, whose first phase will be implemented as early as next year. The sides will form a coordinating committee that will prepare a prospecting plan outlining territories and specifying investment amounts.

Statoil discover gas in Venezuela

October 27, 2006. Norwegian energy group Statoil had discovered gas in an exploration well in block 4 of Venezuela's Plataforma Deltana. Statoil had found a reserve of seven tcf of gas in Plataforma Deltana, which lies off eastern Venezuela. Statoil has a 51 percent interest and is operator of the block 4 licence. France's Total has the remaining 49 percent. Venezuela's PDVSA Gas has a right to acquire a participating interest of up to 35 percent once a commercial discovery has been declared. The exploration well, called Cocuina-2X, was begun in August from Transocean's Sovereign Explorer rig. It is the second of three wells that Statoil is committed to drilling under the licence awarded in 2003. The first of the three wells, Ballena-1X, was abandoned last year due to mechanical failures and worries about the safety of the drilling rig, but the company said in August that it plans to re-enter that well. The third well, dubbed Orca-1X, is expected to be drilled in 2007. The company has estimated the cost of the three-well programme at around $200 million.

PetroChina finds oil, gas flows in Junggar basin

October 27, 2006. Top Chinese oil and gas firm, PetroChina, has found industrial oil and gas flows in three exploration wells in northwestern China's Junggar basin. Dixi 14, in the middle of the basin, spouted 150,000 cubic metres of gas a day while Mana 1, a well in the south, gushed out 510,000 cubic metres, the highest daily output in the basin. China has been focusing its oil and gas exploration works on the country's remote northwest to boost reserves, as production in the mature eastern fields decline.

CNOOC Ltd. Starts Production from WZ 6-1

October 30, 2006. CNOOC Limited has successfully brought on stream Wei Zhou (WZ) 6-1, an independent oilfield in the Western South China Sea. The new field, via two wells, is producing over 2,500 barrels of oil per day currently. WZ6-1 is located in the Beibu Gulf, about 65 kilometers from Beihai city, Guangxi province. The field, with an average water depth of 35 meters, is also near the producing filed WZ11-4 and WZ12-1. There's only one unmanned wellhead platform in WZ6-1 oil field. Its development mainly relied on the facilities and sub-sea pipelines of the adjacent WZ 12-1 oil field. WZ 6-1 is expected to see 3,700 barrels of oil per day at its peak production.

Citic buys big Kazakh oilfield for $1.9b

October 27, 2006. China's CITIC Group has agreed to buy the Kazakhstan oil holdings of Canada's Nations Energy Company Ltd. for $1.91bn.The agreement, signed will allow CITIC to develop the Karazhanbas oil and gas field in Mangistau Oblast, Kazakhstan. It has proven reserves in excess of 340m barrels of oil and current production is over 50,000 barrels of oil a day. Nations Energy's Kazakhstan oil assets also include a 100 per cent interest in Argymak Trans Service LLP which provides transportation services and Tulpar Munai Services LLP which provides drilling and training services.

The CITIC deal will help it develop its petroleum and natural gas business. If the takeover is approved, it will provide CITIC with an important base from which it can expand its energy business in Kazakhstan, the most important petroleum producer in Central Asia. It is also planning a feasibility study on developing local oil refining and is looking for partners in other sectors such as construction and financing.

S. Korean energy developer to explore gas in Timor

October 26, 2006. South Korea's state-run energy developer will search for gas at the East Timor-Australia joint petroleum development area starting next month, South Korea. It has a 30 percent stake in the prospective gas block, while LG International and Samsung Corp. each holds 10 percent. The remainder is owned by Petronas Carigali, the operator of the block located between Timor-Leste and Australia. KOGAS said that once initial tests are completed next year, exploratory drilling will begin in the first half of 2008.Development of any natural gas and condensate found is expected to begin in 2009. The exact size of the gas the block may contain has not been announced. South Korea has been pushing to develop new overseas gas and oil fields to reduce the country's dependence on foreign energy supplies. South Korea produces only very small quantities of oil and gas, but wants to raise its self sufficiency levels past 10 percent in the coming years from 4 percent at present.

Sinopec join hands with Egypt in well drilling

October 26, 2006. Egypt had signed an agreement with China Petroleum & Chemical Corporation (Sinopec) on building a joint venture in Egypt. The 50-50 joint venture started constructing on December 26, 2005 with registered capital of USD 18 million. According to the agreement, the joint venture will build three drilling platforms in 2007, seven in 2008 and twenty in 2010.The company deals in oil and gas drilling and will extend to other fields. The two parties cooperate technically only at present. Egypt's crude oil reserves have risen to 15.5 billion barrels. Its oil and gas production will reach 100 million tons in 2010. The export value of oil and gas products was USD 10 billion in fiscal 2005-2006 and is expected to top USD 15 billion in 2010.

Titan opens oil storage terminal in South China

October 26, 2006. Titan Petrochemicals Group has launched operations at its oil storage terminal facility in Nansha in China's Guangdong Province with the discharge of 40,000 cubic meters of fuel oil into the newly-commissioned tanks by the tanker Higher Fidelity. The delivery marks Titan's entry into the fast growing oil logistics market in China. Coming on stream is Phase One of the terminal with a storage capacity of 410,000 cubic meters for fuel oil. Construction of Phase Two for an additional capacity of 1.39 million cubic meters of oil products and chemicals is already underway and scheduled for completion by the end of 2007. Total investment of the project is estimated to be more than RMB 2 billion (about US$250 million).

The terminal, with a total expanded capacity of 1.8 million cubic meters when completed, was jointly invested by Titan with a 70 per cent interest and Guangzhou Nansha Assets Operation Co. Ltd holding the remaining 30 per cent. On completion it will be the largest independent storage facility for petroleum and petrochemical products in southern China. It also has an extensive jetty system consisting of 21 berths which are capable of handling tankers from 1000 deadweight tonnes (dwt) up to 100,000 dwt. The Chinese Government has designated the terminal as part of the Nansha Bonded Petrochemical Logistics Zone. Oil and petrochemicals stored in the terminal are exempted from import tariffs and can be transshipped to other countries.

Azeri SOCAR may explore Caspian gas field in 2007

October 26, 2006. Azeri state oil firm SOCAR may start exploratory drilling of prospective natural gas structures at the Babek-Umid block in the Caspian Sea in the spring of next year. If the company wanted to proceed before February 2007, it would first have to resolve legal issues with U.S. oil major ConocoPhillips, which is party to a MOU over the block. The memorandum between the two companies, which expires in February, has not led to a joint deal to explore the block. Umid-Babek is expected to produce 14-15 billion cubic metres of gas a year at its peak, according to SOCAR's estimates. The exploratory drilling with a semi-submersible platform owned by Denmark's Moeller-Maersk would provide data for calculating reserves and could open up the gas field. SOCAR planned to start operations on the Nakhichevan offshore block on the expiry of its liabilities to another U.S. oil major, Exxon Mobil which previously was the operator and owned 50 percent in the project.

GE unit, Sunland, buy $101 mn gas, oil reserves

October 26, 2006. GE Energy Financial Services and Sunland Resources LLC acquired natural gas and oil reserves in northern Louisiana for $101 million. The reserves were acquired from a consortium led by Caruthers Producing Co. Inc. and include 26 producing wells; two proved, developed nonproducing wells; and 11 low-risk, proved, undeveloped drilling locations in the Caspiana and Black Creek fields.

Shell plans to develop Gulf of Mexico

October 26, 2006. Shell Offshore Inc. will develop the Great White, Tobago and Silvertip Fields via a Perdido Regional Development host, located in Alaminos Canyon, offshore Gulf of Mexico, approximately 200 miles south of Freeport, TX. Moored in about 8,000 feet of water, the regional DVA (direct vertical access) spar will be the deepest spar production facility in the world. First production from Perdido is expected around the turn of the decade, with the facility capable of handling 130,000 boe/d. The concept for regional development includes a common processing hub in Alaminos Canyon Block 857 near the Great White discovery that incorporates drilling capability and functionality to gather, process and export production within a 30-mile radius of the facility. This concept will provide regional synergies, reduced cost and lower risk. This regional concept will also reduce the number and size of the facilities and operations in this challenging frontier area, resulting in a lower environmental impact than would otherwise be achieved. Shell, a leading oil and gas producer in the deepwater Gulf of Mexico, is a recognized pioneer in oil and gas exploration and production technology. Shell Oil Company is an affiliate of the Shell Group, a global group of energy and petrochemical companies, employing approximately 109,000 people and operating in more than 140 countries and territories.

Western agrees to Shell Canada oil sands expansion

October 25, 2006. Western Oil Sands Inc. has formally agreed to participate in Shell Canada Ltd.'s planned expansion of its Athabasca oil sands project at an expected cost to the company of $1.95 billion. Calgary-based Western Oil Sands' main asset is its 20 percent stake in the project, which is slated for a 100,000 barrel a day expansion. The expansion is likely to cost about C$11.2 billion. In July, Shell Canada pegged the price of the project at anywhere between C$10 billion and C$12.8 billion. The project includes the expansion of an oil sands mine north of Fort McMurray, Alberta, and an upgrading refinery near the provincial capital of Edmonton. If the project goes ahead, output will be more than 255,000 barrels of synthetic crude a day. Western is the first of the partners to give a formal go-ahead to the project. Shell Canada, which has a 60 percent stake, said it would make a formal decision on whether to proceed by year-end.

Oil companies get new Alaska exploration rights

October 25, 2006. Energy companies and private investors won the rights to explore for oil and gas in one of the most promising areas of Alaska's North Slope region. The bidding focused on more than 200,000 acres of land and state-controlled waters bordering the National Petroleum Reserve-Alaska, a federally managed land unit on the western North Slope that is seen as a hot prospect for new oil finds. Companies and investors bid $2.53 million to win rights to 44 onshore North Slope tracts and $684,723 to win rights to 13 offshore Beaufort Sea tracts. The bidding volume was light compared to a lease sale held in March offering exploration rights in the same core North Slope development areas, but the per-tract bid amount was similar to past sales. The state's North Slope and Beaufort area-wide sales are normally held annually, but the division's leasing schedule was shuffled this year to expand the program. The sale schedule will return to normal next year.

Myanmar to reopen onshore blocks to foreigners

October 25, 2006. Myanmar's government plans to lift a ban on granting new onshore oil exploration permits to foreign companies because its own state oil company found the work too expensive and difficult. The Energy Ministry is seeking production-sharing contracts with foreign oil companies for exploration in six onshore fields in Upper Myanmar. The ministry last year barred new awards to foreign companies for onshore exploration blocks, saying they would be reserved for the state-run Myanmar Oil and Gas Enterprise.

Myanmar's military junta is planning to reopen six onshore blocks to foreign oil companies due to the high cost and complexity of exploration. The onshore blocks to be reopened to outside firms were A1, B1, B2, O, P, and Q. A-1 is on the upper Chindwin River region in northern Kachin State, B1 and B2 are in the Hukaung Valley of Kachin State and blocks O, P and Q are in the Irrawaddy delta region. In March 2005, the junta stopped issuing licences to foreign firms for onshore oil exploration, saying MOGE would operate in these areas. However, seven foreign companies already granted onshore licences were allowed to continue their projects. There are 46 demarcated onshore exploration blocks in Myanmar and at present, seven foreign oil companies — are India's Essar Oil Ltd, Focus Energy Ltd., MPRL Exploration and Production Private Ltd., Goldpetrol, China's CNOOC and Sinopec and Chinerry Assets. Myanmar produced 7.962 million barrels of crude oil in 2005-2006, up from 7.484 million barrels the previous year. Natural gas in 2005-06 was 404,357 million cubic feet, the data showed, up from 377,584 mcf in 2004/05. The plan to increase oil production from 9,400 barrels per day to 10,000 BPD by December, which is a fraction of the 50,000 barrels Myanmar consumes each day.


Iran, Venezuela, Syria oil refinery project

October 31, 2006. Iran, Venezuela and Syria have formed a consortium to construct an oil refinery in Syria. They signed a MoU to implement the project. According to estimates, funds for implementation of the project are about $1.5 billion, and relevant studies will determine each party's share in investment. At this time, there are two possible locations for construction of oil project near Damascus, but one of them will be chosen for implementation of the project. The three countries' presidents raised the plan of the joint venture to construct a refinery with the capacity of 140,000 bpd of oil. Iran, Syria and Venezuela's common political and economic stances are based on combating US expansionism to promote multi-polar world order which can enjoy development, freedom and sovereignty.

Parsian refinery on the full swing by Dec

October 29, 2006. Phase II of Parsian Refinery in Fars Province, southern Iran, is expected to come on stream in early December 2006. Fed by Homa, Shanol and Varavi gas fields, the phase is going to refine 37.5 million cubic meters of gas, the second part of the Phase I will be operational concurrently while the initial part with the capacity of 25 million is already on the go. The total capacity for initial phase is defined at 46 million cubic meters.

BP, Shell opening 1,000 gas stations in East China

October 27, 2006. Global energy giants BP and Royal Dutch Shell are each erecting 500 service stations under the alliance with Sinopec, Asia's top oil refinery. The two foreign players have already set up oil sales joint ventures with Sinopec to prepare for the gas stations thanks to Beijing's WTO commitments of opening the product oil retailing market at the end of 2004. The venture between Shell and Sinopec kicked off in August 2004 as the Anglo-Dutch oil group's first product oil sales subsidiary in China. The total

investment it roughly CNY 1.5 billion, of which CNY 830 million is the registered capital.

Based in Jiangsu, a Chinese province in the east, it was designed to build 500 gas stations mainly in cities of Suzhou, Wuxi and Changzhou.Meanwhile, the venture between BP and Sinopec is based in Zhejiang Province, which is also along China's eastern seaboard. The investment amounted to CNY 2.1 billion, one third of which is the registered capital. It was scheduled to open 150 service stations in Hangzhou, the capital of Zhejiang, and Ningbo, a major city of Zhejiang, each year since the establishment and lift the total number to 500 in three years. Government-backed Sinopec owns a 60 percent stake in both joint ventures and its foreign partners the remaining respectively.

Sinopec is also the sole oil provider for these gas stations. By December 2005, Sinopec had run 29,647 gas stations in China, 2,280 of which were franchised ones. The annual average fueling charge for each station exceeded 2,321 tons, up 16 percent from 2004.Its archrival PetroChina by last December owned up to 18,164 such stations, inching up 4.4 percent year on year. PetroChina has for years promoted the settlement in IC cards which makes it more convenient for both stations' operators and customers. The state-owned PetroChina in May 2004 signed an agreement with BP to offer the product oil business in Guangdong, a southern province bordering Hong Kong. They planned to erect a joint venture and to operate 500 service stations there via direct establishment and acquisitions over the following three years after the venture's inception. The project is to cost altogether CNY 4.7 billion or so with a 30-year operation.

Among China's about 85,000 service stations, Sinopec has owned as many as 55 percent and PetroChina 32 percent. Foreign players, including BP and Shell, have only less than 5 percent of the total by the two. Still, as the country is to fully open the product oil wholesales market by the year end, foreigners are expected to strive for a bigger slice. Reportedly, PetroChina's parent China National Petroleum Corporation is now talking with Lukoil, Russia's largest oil company, to build more than 100 gas stations in the Chinese Northeast region which consists of three provinces, Heilongjiang, Jilin and Liaoning.Once it succeeds, Lukoil is to be the second Russia's oil company to enter China's oil retailing market but also the first Russia's oil company to erect gas station in China.Oil maker Rosneft from Russia this March signed an agreement with PetroChina to explore oil in Russia, build joint venture refinery and sell oil products in China. The project is estimated to need a USD 2 billion investment and refine 10 million tons of crude oil each year. Still, they have had no plan to set up gas stations in the world's most populous nation.

Belarus ready to give up control of oil refineries

October 26, 2006. The Belarusian government is ready to sell stakes in and even give up control of a number of its companies, such as Belarusian oil refineries or tire works Belshina, on the condition that investment obligations are a mandatory part of the agreements.

Panda Ethanol to build ethanol plant in Nebraska

October 26, 2006. Panda Ethanol Inc. intends to build a 100 million gallon-per-year ethanol plant in Lincoln County, Nebraska. When finished, the facility will annually refine approximately 38 million bushels of corn into a clean-burning, renewable fuel for the nation's transportation needs. The ethanol produced by the Lincoln plant could displace approximately 2.6 million barrels of imported oil a year. The Lincoln facility is the fifth 100 million gallon ethanol project announced by Panda, and the company's first to be located in the state of Nebraska. The plant will be built on a 400-acre site three miles east of the village of Wallace and will be fueled by natural gas.

Construction of the Lincoln County ethanol plant will take approximately 18 months. The completion date is dependent upon financing, regulatory approvals and other conditions. Panda has submitted its request for an air permit with the Nebraska Department of Environmental Quality.

Panda Ethanol previously announced that it successfully completed the debt and equity financing on its 100 million gallon ethanol plant in Hereford, Texas. The company has begun facility construction on the 380-acre site and anticipates ethanol production to commence in the second half of 2007. The company also announced that it has entered into a merger agreement with Cirracor, a publicly-held corporation which trades over the counter. The merger is currently expected to become effective in the fourth quarter of 2006, subject to the satisfaction of certain requirements, and the combined entity will operate under the name of Panda Ethanol Inc.

Fluor wins contracts for BP refinery construction

October 25, 2006. Engineering and construction company Fluor Corp. has been awarded engineering and fabrication packages from BP Products North America Inc. for its $3 billion Canadian heavy crude refinery upgrade in Whiting, Indiana. The initial award of approximately $300 million will be booked in Fluor's fourth quarter. Construction on the project is tentatively scheduled to begin in 2007, with completion by 2011.

James Monroe begin construction of ethanol plant

October 25, 2006. James Monroe Corporation has announced that construction of another ethanol plant is to begin ahead of schedule, starting January 3, 2007. The new A500 plant will produce a minimum of 500,000 gallons per year, and is expected to average revenues of roughly $500,000. Present ethanol plant valuation methods usually value the plants at 5 times their annual earnings. Average publicly traded, reporting companies typically trade at 17.6 times their annual earnings. Public ethanol companies trade at much higher price to earnings multiples, however new technologies that the company will include in the plant are its own biofiltration units, remote computer monitoring, cold microwave technology, and possibly cogeneration.

Transportation / Distribution / Trade

UBS to start Europe power and gas trading in 2007

October 31, 2006. UBS AG, one of Europe's largest banks, plans to start an electricity and natural-gas trading business in Europe during the first quarter of next year, similar to its existing North American business. UBS, which has expanded its U.S. capital markets and investment banking in recent years, acquired the energy-trading business of failed energy merchant Enron in 2002. The deal helped it to become the leading physical supplier of gas among U.S. banks and brokers. Although only a third of the European gas and power market has been deregulated to date, many experts believe that the trend toward further liberalization will continue, opening up considerable potential. The bank observed that Europe's consumption of gas and power is about 80 percent of the level in the United States. UBS disclosed its European energy plans as part of a management discussion about its global investment banking businesses. UBS also began trading coal in the United States and built a structured derivatives and marketing group in North America, Europe and Asia. Investment banks are raising their profile in energy markets, expanding trading teams in response to demand from investors and corporate clients to manage the risks of volatile energy and commodity prices.

India ONGC sells Sokol crude to ExxonMobil

October 31, 2006. India's Oil and Natural Gas Corp. has awarded its third tender to sell 700,000 barrels of Sokol crude from Russia's Sakhalin-1 oilfield to ExxonMobil at a $4-4.25 premium to Oman/Dubai quotes. ExxonMobil is the operator of the Sakhalin-1 oilfield with 30 percent stake, while a Japanese consortium of traders and energy firm called Sodeco owns another 30 percent. Russian state oil firm Rosneft and ONGC hold 20 percent each.

Petronas to supply LNG to China

October 31, 2006. Malaysia’s state energy firm Petronas will supply China with liquefied natural gas for the first time in a landmark deal worth 25 billion dollars over 25 years. Petronas will supply 3.03 million metric tonnes of natural gas annually to China's Shanghai LNG Company Ltd. This is Petronas' first LNG deal with China. The deal will further enhance the economic ties between the two countries. The deal was the latest in a string of natural oil and gas deals for China which is urgently scouring the globe for fresh supplies to power its booming economy and a growing middle class snapping up energy-consuming appliances. Today, China consumes about 43 billion cubic meters of natural gas per year and experts like Kwong expect that to rise to 113 billion tonnes by 2015.

Gazexport to increase gas supplies to UK

October 31, 2006. Gazexport intends to increase natural gas supplies to Britain to 12 billion cubic meters per year by 2010-2012. Gazexport intends to export 5 bcm of gas to Britain in 2006. The company's total gas exports in 2006 would be 2.7-3.4 per cent higher than in 2005, reaching 151-152 bcm. In 2005, Gazexport exported 147 bcm of gas, of which 80 per cent went to European countries under long-term agreements. Natural gas export accounted for 15 per cent of Russia's exports in the first half of 2006.

Russian oil transit via Kazakh to China to hit 7 mn tons in 2007

October 31, 2006. The transit of Russian crude oil to China via the Atasu-Alashankou pipeline running through Kazakhstan could total 7 million tons in 2007. The transit of Kazakh oil via Russia could reach 15 mn tons (110 mln bbl) along the Atyrau-Samara pipeline during the year, and 3 mn tons (22 mln bbl) could be pumped via Makhachkala in Russia's North Caucasus republic of Dagestan. The 962.2 km Atasu-Alashankou pipeline is the second part of the Kazakhstan-China inter-state oil transportation project, and has capacity of 20 mn tons (147 mln bbl) a year.

Iran mulls gas exports to Europe soon

October 31, 2006. Chinese companies’ participation in North Pars gas projects, the construction of three new refineries and the expansion of two more, and possible indigenization of Azadegan field. The Chinese would be taking on North Pars projects in the near future and an agreement is likely to be reached during the current Iranian calendar year, which ends on March 20, 2007. The layer, at a depth of 5,225 meters, is expected to produce 45 million cubic feet of gas per day and is one of the most important projects in the Middle East. The upper pressure for this stratum stands at 12,500 pounds per square inch with the flow at 6,000. The fluid molecular weight is 38.3 at 300 degrees Fahrenheit. Moreover, the construction and development of three new and two existing refineries are among 28 petrochemical ventures underway in the country, while the Nabucco pipeline talks for gas export to Europe via Turkey are also being discussed. Iran is currently producing 4.2 million barrels of crude per day, which is a new record in its oil production capacity.

China to build 4 more VLCCs

October 29, 2006. State-owned China Shipping (Group) signed a contract to build four very large crude carriers, part of China's plans to transport a bigger ratio of its oil imports in its own ships. China Shipbuilding Industry Co. agreed to deliver the 308,000 deadweight ton ships in 2009 and 2010. The new ships will boost China Shipping capacity to import oil to 100 million tons a year. The company currently has three VLCCs, and another shipbuilder is due to deliver five more starting in the second half of 2007. China imported 127 million tons of crude oil and over 30 million tons of oil products last year, and crude imports are expected to exceed 200 million tons in 2010. To ensure its energy security, China aims to raise the proportion of its crude oil and products imports carried by Chinese ships to 50 per cent after 2010, up from less than 20 per cent now.

Foster Wheeler gets Saudi Moneefa oilfield contract

October 29, 2006. Saudi Aramco and Foster Wheeler signed a front-end engineering and design contract for the Moneefa oilfield development, which is expected to add 900,000 barrels per day of crude oil by mid-2011. The front-end engineering for the onshore portion of the development programme was expected to begin in early November and be completed in the third quarter of 2007. Saudi Arabia, the world's top oil exporter, has fast-tracked oilfield expansion plans to boost production capacity and maintain spare capacity of at least 1.5 million bpd. The Gulf Arab OPEC producer plans to increase output capacity to 12.5 million bpd by 2009 from 11.3 million bpd. Aramco has said it would start developing Moneefa in the first quarter of 2007 and that the increment would be of Arab Heavy crude. Moneefa is also expected to produce 120 million cubic feet per day of gas. The project includes onshore oil and gas facilities and deeper water offshore drilling facilities.

Dana Gas consortium in Pakistan LNG terminal deal

October 29, 2006. A consortium including Dana Gas has signed an agreement to develop a liquefied natural gas terminal in Pakistan at an estimated cost of $200 million. Dana Gas, Single Buoy Moorings (SBM) and U.S.-based Granada Group signed the MoU for the LNG terminal at Port Qasim, Karachi, which would have an initial capacity of 3.5 million tonnes a year. Dana Gas has the objective to develop a network of LNG terminals mainly in the MENA (Middle East and North Africa) region and to tap into the LNG value chain including LNG trading activities. It said Dana Gas signed a cooperation agreement with SBM, under which the United Arab Emirates firm would focus on LNG marketing activities and SBM on the supply and operation of LNG floating storage and regasification terminals.

Pakistan, which has its own gas fields, expects to have a supply deficit as soon as 2008. Plans to import LNG and pipeline gas from Iran and Turkmenistan are based on projected gas demand growth of about 6.5 percent a year. They expected the LNG terminal to be completed around 2010. Dana Gas was set up to deliver gas to utilities and industrial users in the UAE. With an agreement to import Iranian natural gas delayed, Dana Gas' second-quarter earnings came entirely from investments and financing activity. It aims to invest in the upstream gas industry in the Middle East, the transmission and distribution sector and gas-related industries such as petrochemicals. The natural gas consumption in the Middle East has been growing by an average 5.9 per cent a year in the last 10 years, driven mostly by demand for power generation due to growing populations and an industrialisation drive.

Chinese oil giant CNOOC signs LNG deals 

October 27, 2006. China National Offshore Oil Corp the nation's third-biggest oil producer, has inked framework agreements to purchase LNG from three foreign energy suppliers to meet its ambitious import plans. CNOOC signed the master agreements for LNG spot cargos with Suez SA, Total SA and Shell Eastern Trading (Pte) Ltd respectively. The two-part LNG spot trading agreements differ from CNOOC's long-term fuel supply contract for its terminals in Guangdong and Fujian provinces. The sellers and buyers will elaborate on trading details when a particular transaction is made. Beijing-backed CNOOC is leading the push for LNG terminal construction along the eastern coast amid government efforts to diversify the nation's energy supply and alleviate its heavy reliance on coal and oil. CNOOC plans to build as many as seven LNG-importing terminals in six provinces and municipalities, only two of which have obtained government approval and gas supplies. The market is heating up as CNOOC's bigger domestic rivals Sinopec and PetroChina strive to take a share, with plans to build terminals in places such as Shandong, Hebei and Jiangsu.Although industry analysts have speculated the country may postpone its massive natural gas import blueprint against the backdrop of high energy prices. This agreement with CNOOC a company which expects to be purchasing between 20 and 25 million tons of LNG per year by 2010 confirms once more Suez's role at the forefront of the LNG business.

Policy / Performance

Canada regulators OK Kinder Morgan pipe expansion

October 31, 2006. Canadian regulators have approved an expansion of its Trans Mountain oil pipeline, part of a project that will boost capacity by a third to 300,000 barrels a day in three years. The company said the National Energy Board gave the go-ahead for what is termed a "looping" project on the pipeline system, which runs to Vancouver, British Columbia, and Washington state's Puget Sound region from Edmonton, Alberta. The project is expected to cost C$438 million ($390 million). The work will add almost 160 km (100 miles) of new pipeline through Jasper National Park and a British Columbia provincial park in the Rocky Mountains. The company will also expand a pumping station by April next year. That will boost output to 260,000 barrels a day from a current 225,000. The looping project, when complete in 2009, will further boost capacity to 300,000 barrels a day. The project is one of a number of new and expanded oil lines planned for Western Canada as output from the Alberta oil sands is expected to nearly triple to 3 million barrels a day by 2015.

Indonesia breaks ranks with OPEC by not cutting output

October 31, 2006. Indonesia, OPEC’s second-smallest producer, publicly broke ranks with its peers who are cutting output, saying it should be spared from the group's first supply curbs since 2004 because of its falling production. While few had expected Indonesia to make any significant cuts in output as a result of Opec's deal to reduce supplies by 1.2 million barrels per day, the public refusal to do so may stoke anxieties about wider compliance among other producers. Indonesia was due to cut 39,000 bpd of production after the Opec decision. That amounts to less than five per cent of production, now running at just below 900,000 bpd. Its output ceiling under Opec's defunct quota system is 1.45 million bpd. Saudi Arabia and the UAE have both informed refiners of output cuts beginning next month, but oil traders are anxious to see more evidence amid fears that still relatively high prices of over $60 a barrel will mean many members keep pumping.  But the cuts put Indonesia in a delicate position, as it sometimes imports more crude than it exports and is forced to buy about a third of its national fuel supplies, which means higher oil prices do it more harm than good. Indonesia has struggled to maintain output as the country has failed to tap new oilfields fast enough, with its crude oil production dropping to a succession of more than three-decade lows before rising slightly last month to 862,900 bpd. Indonesia was a net importer of crude oil in July, June and May this year after production continued to fall.

Australia's Santos signs PSC in Vietnam

October 30, 2006. Oil and gas producer Santos Ltd has signed a production-sharing contract (PSC) in Vietnam with the Vietnam Oil And Gas Corporation. Under the contract, Santos will operate for 30 years, with an exploration period of seven years, the so-called Block 101-100/04 in the offshore Song Hong Basin, holding a 55 per cent interest in the venture. The Singapore Petroleum Company Ltd will hold the remaining 45 per cent stake. Under the deal, the pair are required to process and interpret existing seismic data, acquire and process new 3D seismic, as well as drill one exploration well within the first three years of exploration.

Iraq, China to revive $1.2-bn oil deal

October 30, 2006. China and Iraq are reviving a $1.2 bn deal signed by Beijing and Saddam Hussein’s government in 1997 to develop an Iraqi oil field. Officials will meet next month to renegotiate the pact over the al-Ahdab field. China is the world’s second-largest oil consumer and has been investing heavily in trying to secure access to foreign supplies. State-owned China National Petroleum signed the al-Ahdab deal in the midst of UN sanctions that barred direct dealings with Iraq’s oil industry. Beijing was waiting for sanctions to end when the US invasion in ’03 overthrew Saddam’s government. The new Baghdad government courted Beijing because Chinese producers have been willing to invest in Angola, Sudan and other countries considered too dangerous or politically isolated. All other energy contracts signed by foreign producers during Saddam era also must be renegotiated after Iraqi lawmakers enact a new oil and gas law, which is likely to happen this year. Beijing had been thought to be out of the running for major contracts in postwar Iraq, with the best deals going to the US and its allies. But the upsurge in violence there has made the country less attractive to Western producers. Iraq will need up to $20 bn in investment to develop its oil infrastructure.

Energy firms sign new Bolivian agreements

October 29, 2006. All foreign energy firms operating in Bolivia have now signed new agreements governing their operations. It is the culmination of an ambitious nationalisation plan by the President. With minutes to go before the deadline eight remaining companies, including the two largest, signed up to new contracts with the Bolivian government. Bolivia has the second largest gas reserves in Latin America. Britain's BG Group, Spain's Repsol and Brazil's Petrobras have all now agreed to new terms. The deals force companies to give a larger share of their revenues to the government and to work in partnership with the re-founded state company, YPFB.



China group to take up Thar coal project

October 30, 2006. The Shenhua Group of China has offered to take up the $1 billion coal-based 600 MW power project at Thar at the rate of 6.4 cents per unit. The project also includes mining of coal, which is to be used for power generation. The project was earlier shelved because of a dispute between the government of Pakistan and Shenhua group of China on the question of power tariff.

Russia wins tender to build Belene NPP in Bulgaria

October 30, 2006. Russia's nuclear power equipment and service export monopoly Atomstroiexport has won a tender to build the Belene nuclear power plant in Bulgaria. The board of Bulgaria's National Electric Company (NEK) said it had selected Atomstroiexport to build two 1,000 MW reactors for the NPP in Belene, about 150 miles from the country's capital, Sofia. The company also planned to attract the French firm Areva NP and Germany's Siemens to help build the plant. The NPP's first unit was planned to be launched by 2011, and the second in 2013. The Czech Republic's Skoda and British-American consortium Westinghouse were the other two bidders for the NPP's construction. Atomstroiexport implements intergovernmental agreements to build nuclear facilities abroad. It is the world's only company simultaneously building five nuclear power units, in China, India and Iran.

China to build new nuclear power plant

October 25, 2006. China will build a new nuclear power plant in the central province of Hunan with an investment of 7.5 billion US dollars. The plant, designed with six nuclear reactors with installed capacity of six million KW, will be located at the Xiaomoshan Hill in Yueyang City. The Xiaomoshan Hill, about 184 km south of the Hunan provincial capital of Changsha, was picked as the plant site in April last year by the State Power Design Institute and other authorities concerned. The project was approved by the State Development and Reform Commission, the top planning body, in November last year and a feasibility study covering 26 subjects was then started. So far 23 subjects in the feasibility have been completed and the remaining three are expected to be completed by the end of this month. The plant will be built in three phases and all the initial preparatory work has been going on smoothly. China's power consumption has increased rapidly as a result of fast economic growth. The electricity consumption in the first quarter this year reached 624.98 billion kWh, a year on year rise of 11.81 per cent. Currently, China has nine nuclear generators in commercial operation with a total capacity of about seven million kW. China has decided to develop nuclear power projects in its inland regions and plans to increase the installed capacity to 58 million kW by 2020.

Transmission / Trade / Distribution

Epcor extends pact to sell power to Excel

October 25, 2006. Edmonton-based Epcor Power LP has reached a 10-year extension to sell electricity from its 300 MW natural gas-fired Manchief power plant in Colorado to a subsidiary of Xcel Energy. The deal is between Epcor and Public Service Co. of Colorado. The 10-year extension will replace two current agreements in which power from Manchief is sold to Xcel, and will expire April 30, 2012. The terms of the extension are mostly the same as the current ones, and Xcel in the latter part of the 10-year period can buy the Manchief plant.

Policy / Performance

Chile's AES to invest $1 bn in new complex

October 31, 2006. Chile electrical company AES Gener  a unit of the U.S. company AES planned to invest about $1 billion to build a thermoelectric complex in northern Chile. It had already presented environmental impact studies for the project to Chilean authorities. The complex will include four carbon-fueled generating plants and will feed electricity into Chile's northern grid (SING). The so-called Angamos thermoelectric complex is to be built in Mejillones.

USEC says signs uranium enrichment deal for more than $200 mn

October 31, 2006. Energy company USEC Inc. has signed a long-term contract for uranium enrichment with PPL Susquehanna LLC valued at more than $200 million. The contract is to supply uranium enrichment for PPL Susquehanna's nuclear power plant in Luzerne County, Pennsylvania.

GE, M'bishi to mull nuclear business tie-up

October 30, 2006. Mitsubishi Heavy Industries Ltd. plans to start talking with General Electric Co. about cooperation in the nuclear business to better compete with the Toshiba Corp. and Westinghouse camp in the rapidly growing market. Mitsubishi Heavy, Japan's largest machinery maker, would be able to expand its global market share, mainly in the United States, if it could ink a large-reactor deal with GE.

A series of recent tie-up discussions by Mitsubishi Heavy indicates a change in the company's policy of insisting on domestic production and its proprietary technologies, as the nuclear power market has regained the spotlight amid growing global energy demand and high oil prices, intensifying competition. Mitsubishi Heavy lost out to Toshiba to buy Westinghouse a company with which Mitsubishi has had ties for more than 40 years. Toshiba has completed a $4.2 billion deal to take control of Westinghouse, the U.S. power plant unit of British Nuclear Fuels. Mitsubishi Heavy's nuclear power plant business generates about 200 billion yen ($1.70 billion) in annual sales, out of overall group sales of 2.8 trillion yen.

Renewable Energy Trends


Maharashtra to bring 3 lakh acre under jatropha

October 31, 2006. The Maharashtra government is planning to bring around 3 lakh acre of government-owned and barren land in Maharashtra under jatropha cultivation. With a major focus on bio-fuel, the state government is planning the cultivation of jatropha on around 3 lakh acre of government-owned and barren or waste land throughout Maharashtra. The government is also considering the utilisation of forest land for the cultivation of jatropha. All district collectors have been asked to collect information on the availability of government-owned and waste land in each district and details in this regard will be made available shortly. Two oil extraction plants, one each in Aurangabad and Latur, have already come up in the state.

The government also aims to create rural employment and prevent soil erosion through the cultivation of jatropha. Besides, it wants to create a model for energy self-sufficiency in rural areas.  Around 300 acre of land is already under jatropha cultivation in Nashik district and is gradually increasing. Isonox Bio-Energy, the first bio-diesel manufacturing unit in Nashik, has already started its operation. The unit, which manufactures bio-diesel from jatropha curcas seeds, currently has a production capacity of 2,000 litre per day.  The unit is also promoting the cultivation of jatropha in the district to meet its demand for jatropha seeds. 

UN registration for MSPL wind energy project

October 31, 2006. The 125 MW wind energy project implemented by the Karnataka-based Mineral Sales Private Ltd (MSPL) of the Baldota Group has been registered as a clean development mechanism activity under the United Nations Framework Convention on Climate Change (UNFCCC). There is an increasing focus on renewable energy across the world. India too represents a lucrative market for clean energy and this project will provide an advantage over others. UN will add 50 MW of wind farm every year and reach the 300-MW capacity by 2008. MSPL, an iron ore mining company, diversified into generating wind power in 2001.

Micro-turbine biogas project commissioned in Purulia

October 30, 2006. The country's first micro-turbine project using biogas, launched with partial assistance from the US, was commissioned in Purulia. It will generate 30-KW benefiting around 100 families and a local dairy farm, which is hosting the project. The project is estimated to cost Rs 13.5 crore, out of which the US Government funding is approximately Rs 29.5 lakh. Initiated in September 2003, the US-Asia Environmental Partnership (USAEP) provided funding for a pre-feasibility study on potential of micro-turbine technology in India based on biomass/biogas applications. USAEP also organised an orientation visit led by the Power Minister and other key stakeholders to the US in June 2004. Capstone Turbine, the US company, participated in the pilot project and supplied micro turbine and other equipment for the project. The entire project, coordinated by WBREDA, was supported by the USAID.


TexCom begins Biodiesel plant construction process

October 30, 2006. TexCom, Inc. that it has executed its Engineering, Procurement & Construction contract with Lurgi PSI to build a 35 million gallon per year Biodiesel Plant for TexCom subsidiary Houston Biodiesel, LLC, in Seabrook, Texas. Lurgi will initiate construction process steps immediately, including final engineering and procurement activities. The Seabrook plant, located at the LBC Houston, LP terminal, includes the capability to store conventional petroleum diesel, allowing TexCom to blend and market B20 and other biodiesel blends as well as B100. Refined vegetable oil feedstock will be brought in via barge or rail to the site, located on the Houston Ship Channel, to produce the renewable fuel. This facility is the first of several Biodiesel production sites that TexCom currently plans to build and operate in the south central United States. Lurgi PSI, based in Memphis, Tennessee, is recognized as a worldwide leader in the design and construction of Biodiesel facilities, having completed numerous facilities in Europe and recently a plant in Iowa similar in size to the Houston Biodiesel plant.

Largest solar power plant in Australia

October 25, 2006. The Australian government will help build the largest solar power plant in the world as part of a new strategy to combat global warming. The government, under fire for refusing to sign the Kyoto Protocol on reducing greenhouse gas emissions, will contribute $57 million to the $319 million project to build a 154 MW solar power plant in Victoria state that will use mirrored panels to concentrate the sun's rays. The project aims to build the biggest photovoltaic project in the world. The government also announced $38 million funding toward a $274 million project to reduce carbon emissions from an existing coal-fired power house in Victoria.

The project aims to reduce pollution in part by capturing and storing emissions from the burning coal. The two projects are the first to be funded under a $379 million package announced to combat global warming. Environmental groups and opposition lawmakers said the government needed to do more to address Australia's reputation as the world's worst greenhouse gas polluter per capita. While Australia and the United States refused to sign on to Kyoto, both have become founding members the Asia-Pacific Partnership on Clean Energy Development which also includes China, Japan, India and South Korea.

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