Regional Energy Infrastructure Proposals in the Asia-Pacific: Opportunities for Cooperation (Part – VI)
1.1 Natural Gas Pipeline Proposals
ASEAN & North East Asia
There are various proposals, prepared by various parties and elaborated to different degrees, for exporting gas from Eastern Russia and/or the countries of Central Asia to China, Korea, and/or Japan. These proposals range from relatively short pipelines linking Sakhalin Island to Japan, to pipelines covering many thousands of kilometers to link Central Asia with the Far East. Chart 11 summarizes some of these proposals. What virtually all gas pipeline proposals have in common is high capital cost (a range of $1.2 to 20 billion has been cited, and costs of $1-2 million per kilometer of pipeline), long lead times for completion (typically five years or more), and formidable technical and (especially) political barriers to implementation.
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Chart 11 & 12: Several Proposed International Natural Gas Pipeline Routes, Prospective PNG Projects in NEA
Similar proposals are also under consideration in ASEAN. The foll0wing chart shows various proposals.
Chart 13: trans-asean gas pipeline
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LEGEND
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Possible Trans-Asean Interconnections
1. Duri to Malaka
2. West Natuna to Duyong
3. East Natuna to Erawan
(a) East Natuna to JDA
(b) JDA to Erawan
4. East Natuna to Kerteh
(a) E. Natuna to W. Natuna
(b) W. Natuna to Kerteh
(c) W. Natuna to Singapore (upgrade)
5. East Natuna to Luzon
(a) E. Natuna to Sabah
(b) Sabah to Malampaya
6. JDA to Block B
7. Pauh to Arun
Existing Pipeline w/Excess Cap
(A) West Natuna to Singapore
(B) Gresik to Singapore
(C) M’sia to Singapore (Tebrau Crossing)
South Asia-Central Asia
In South Asia, with increasing consumption of oil and gas and expected import dependence on outside regions, there is a considerable deliberation on energy infrastructure for trans-border oil and natural gas trade. There are three major proposed pipelines, namely, Turkmenistan-Afghanistan-Pakistan-India (TAPI), Iran-Pakistan-India (IPI) and Myanmar-Bangladesh-India (MBI).
Turkmenistan-Pakistan-India (TAPI) Pipeline Route Iran-Pakistan-India (IPI) Pipeline Route
The Trans-Afghanistan Pipeline (TAP or TAPI) is a proposed natural gas pipeline being developed by the Asian Development Bank. The pipeline will transport Caspian Sea natural gas from Turkmenistan through Afghanistan into Pakistan and then to India. The 1,680 km pipeline will run from the Dauletabad gas field to Afghanistan. From there TAPI will be constructed alongside the highway running from Herat to Kandahar, and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be the Indian town of Fazilka, near the border between Pakistan and India. The pipeline will be 1,420 mm in diameter with a working pressure of 100 atm and the capacity of 33 billion cubic meter (bcm) of natural gas annually. Six compressor stations are to be constructed along the pipeline. The cost of this international infrastructure is estimated at US$3.5 billion (2005 figures). Proponents of the project see it as a modern continuation of the Silk Road. The Afghan government is expected to receive 8% of the project's revenue.
The IPI pipeline is proposed to start from Asaluyeh, South Pars stretching over 1,100 km in Iran itself before entering Pakistan and traveling through Khuzdar, with one section of it going on to Karachi on the Arabian Sea cost, and the main 
section travelling on to Multan. From Multan the pipeline travels to Delhi where it ends. This project offers great opportunities to Pakistan, as the gas pipeline will also set the course for possible oil and gas pipelines to China, as China in the past has expressed its willingness to bring oil and gas via Pakistan. With a total length of 2,775 km and an estimated cost of $7 billion (2006) the pipeline is bound to change the face of regional politics in South Asia. The much talked about “pipeline of peace” brings with it multi-faceted implications for gas hungry Pakistan and India, and also for Iran, home to world’s second largest natural gas reserve.
1.2 Oil Pipeline Proposals
Oil pipelines have been proposed to link oil fields of Siberia to terminals in northern China, to link the oil fields of Russia's Sakhalin area with Japan, and even to connect the Caspian region with consumers in China and beyond. There are also similar proposals of trans-border oil pipelines in South Asia, involving India, Nepal and Sri Lanka.
4. Opportunities for Cooperation
The nature of the Asia Pacific’s energy sector problems, however, means that an approach that focuses on integrated energy infrastructure for the whole region is imperative. For this, a multi-pronged approach on a number of fronts is required, with a large suite of coordinated, smaller, incremental projects addressing needs in a variety of areas. Therefore there is vast scope for cooperation among countries in the region through a proper functional institutional arrangement involving governments, private sector, IFIs, regional multilateral bodies, etc.
¨ Generally, energy infrastructure development projects have certain peculiar characteristics:
¨ Huge investment over long period
¨ Thorough studies of profitability and international competitiveness
¨ Private sector investment is broadly used (PSA)
¨ Existing international financing institutions are also largely involved
¨ Political factors play a major role in investment decisions
This peculiarity of energy infrastructure projects, therefore, makes a strong case for regional cooperation.
5. Role of Regional Multilateral Bodies
There are several examples of multi-country transmission projects – the Manantali hydroelectric project in West Africa (encompassing Mali, Mauritania and Senegal); the South Eastern Europe Regional Electricity Market – which enabled the countries of south east Europe to establish a robust transmission infrastructure for electricity trade; etc. All these projects have become successful due to the active participation of regional multilateral bodies along with respective government bodies, private sector and other stakeholders. The International Financial Institutions (IFIs) and regional multilateral bodies like, ADB and UNESCAP can share the experience under those projects with the Governments, to assist them in establishing similar projects. They could play a significant role in the structuring and financing of projects for energy infrastructure in and between the regions.
6. Conclusions: Near-term Regional Cooperation Options
There are numerous options for energy infrastructure development in Asia Pacific region, which are extensive, of long-term propositions, with a host of formidable technical, economic, political, and sometimes environmental barriers to be overcome. Regional cooperation on energy facilities, however, provides an important "hook" for the substantive engagement of all nations in constructive, peaceful, and mutually beneficial solutions.
Although hardly either a quick fix or a short-term project, it is imperative and attractive, from the perspectives of virtually all of the countries in the region, to move ahead with the consideration of electricity grid interconnections and urgently required trans-border pipeline. The driving force for the implementation of such infrastructure development and interconnections calls for a functional intergovernmental institutional arrangement facilitated by regional multilateral bodies.
(Concluded)
Corporate Strategies that Address Climate Change
(Excerpts from a report title Getting Ahead of the Curve: Corporate Strategies that Address Climate Change, by Andrew J. Hoffman)
Synthesis Report
Introduction
This report compiles the collected wisdom and experience of companies with a history of addressing climate change. It provides a model for corporate action, from making the business case for a proactive approach, to developing appropriate goals and targets, to implementing innovative strategies. Exploring the risks, rewards, opportunities, and barriers companies have encountered and documenting their successes and failures yields insights for those considering similar action and suggests best practices for assessing future efforts. As Yolanda Pagano, Director of Climate Strategy and Programs at Exelon, explains, “Many others—companies, governments and NGOs—have plowed this road before. Seek to leverage their learnings.” One prime motivation for early action on climate change is the looming threat of greenhouse gas (GHG) controls. Nearly all companies in this report (90 percent) believe that government regulation is imminent, and 67 percent believe it will take effect between 2010 and 2015 (see graph below). All face systemic risks from changing policies and higher energy and feedstock prices as a result of GHG controls. But they also have individual reasons for addressing the issue. Some companies are deeply engaged in the scientific debate over climate change. For others, that debate is secondary to the potential business impacts of regulation. Still others look to market changes and opportunities caused by shifting consumer and investor demands. All companies see a business reason for undertaking climate-related strategies, and each of their strategies reflects a different sense of the changing business and policy environment.
Graph: 1 Anticipated date of Federal Standards on Climate Change
Total Respondents: 24
A. The Business Case for Climate Action Grows
Is a carbon-constrained world inevitable? Should companies engage the policy debate? Is there a business opportunity in this changing landscape? An increasing number of companies realize that the answer is yes.
Climate change and related policies create systemic risks across the entire economy, affecting energy prices, national income, health, and agriculture and creating regulatory, physical, and reputational risks at the sector, industry, and company-specific levels. In short, climate change is altering the competitive environment, and certain companies, industries, and sectors will be more at risk than others. Some see the electric utility, steel, and aluminum industries as particularly vulnerable. Others warn of impacts to oil and gas companies or automakers. Some see American companies overall as less prepared than their European and Asian counterparts. Few sectors are immune from these effects.
In the public arena, there are signs that a national climate policy is very near. Much like the process that led to the formation of the U.S. Environmental Protection Agency (EPA) in 1970, states are increasingly enacting climate related legislation. As of July 2006, 266 mayors representing over 47 million Americans had signed the U.S. Mayor’s Climate Protection Agreement, committing each city to achieve significant emissions reductions and which urges “the U.S. Congress to pass the bipartisan greenhouse gas reduction legislation, which would establish stronger national emissions trading system.”
A growing “patchwork quilt” of state and regional regulation is motivating a growing number of corporations to support stronger national policy. Activity in Congress has also increased. In 2003, 43 senators voted for the McCain-Lieberman GHG cap-and-trade bill and in 2005, 54 supported a non-binding resolution sponsored by Senator Bingaman (D-NM) calling for a “national, mandatory, market-based program to slow, stop, and reverse growth of [GHG] emissions.” The first hearing on designing such a program was held by the Senate Energy Committee in 2006 and several major corporations testified. A number of senators have since joined McCain, Lieberman, and Bingaman in proposing their own solutions to the climate problem.
Movement can also be observed in other arenas. On the financial front, mainstream investors are beginning to take notice with companies like Goldman Sachs, Bank of America, JPMorgan Chase, and Citigroup adopting guidelines for lending and asset management aimed at promoting clean-energy technologies. The intersection of fiduciary responsibility and climate risk is coming into focus, particularly around the “materiality” of GHG emissions under the Sarbanes-Oxley Act of 2002, which some believe creates new climate-related legal risks for companies (and their directors). This possibility is not just hypothetical: eight states and New York City have filed a lawsuit against five of the nation’s largest power companies demanding that they cut carbon dioxide (CO2) emissions. Some major insurers have since expressed concern about exposure to Directors’ and Officers’ (D&O) liabilities if climate risk is not properly disclosed and/or addressed, even as the number of shareholder resolutions requesting financial-risk disclosure and plans to reduce GHG emissions grew from 20 in 2004 to 30 in 2005. Rising energy prices have also affected all areas of the economy and have strengthened the business case for reducing energy consumption and moving toward alternative energy sources while creating new demand for hybrid and flexible-fuel vehicles and efficient appliances. The Carbon Trust forecasts that “climate change could become a mainstream consumer issue by 2010,” placing corporate brands at risk.
On the technology Research and Development (R&D) front, President Bush laid out new priorities for energy research in his 2006 State of the Union address. As coal is expected to figure prominently in future energy supplies, not only in the United States but worldwide, attention has focused on new, high-efficiency coal combustion options such as integrated gasification combined-cycle (IGCC) technology with carbon capture and sequestration, as well as on the next generation of nuclear technology. Clean-energy markets are also growing dramatically: global investment in wind and solar power reached $11.8 billion and $11.2 billion in 2005, up 47 percent and 55 percent respectively from the year before. Announcing a set-aside of $100 million for investments in cleaner energy, transportation, air, and water technologies, venture capitalist John Doerr of Kleiner Perkins Caulfield & Byers has said, “This field of greentech could be the largest economic opportunity of the 21st century. There’s never been a better time than now to start or accelerate a greentech venture.’’
Americans have become more attuned to the potential consequences of climate change in the wake of recent natural disasters, as has the insurance industry, which faced $78 billion in losses from such catastrophes in 2005, the largest amount to date. Future warming could disproportionately affect vulnerable sectors such as agriculture, fisheries, forestry, health care, insurance, real estate, and tourism- as well as offshore energy infrastructure (such as oil rigs and pipelines) - prompting many in those sectors to begin exploring adaptation strategies. Meanwhile, the scientific community continues to develop research and data on a variety of possible impacts, including glacial melt, sea-level rise, ocean acidification, and associated impacts on global water currents. Indeed, in the mainstream scientific community, the issue is no longer whether climate change is happening, but what can be done to slow its progress and mitigate its effects.
All of these developments create an increasingly compelling case for corporate action on climate change. Indeed, according to Ceres, the number of American companies addressing the issue has risen notably just since 2003. In this changing business environment, action by one company can affect many others. Wal-Mart, for example, recently announced that it will begin giving preference to suppliers who set goals for aggressively reducing GHG emissions (“Wal-Mart Mini Case Study”), while Toyota has been able to take market share from other automakers in part by aggressively pursuing hybrid vehicles. Putting it all together, the Conference Board warns, “Businesses that ignore the debate over climate change do so at their peril.”
B. Scope
This report focuses on “climate-related strategies”—defined as the set of goals and implementation plans within a corporation that are intended to reduce GHG emissions, produce significant GHG-reduction co-benefits, or that otherwise respond to climate-related changes in markets, public policy, or the physical world. Corporate activities encompassed by this rubric include measures for achieving direct and indirect emission reductions from a company’s own operations (such as energy efficiency initiatives); research, development, and investment in low-carbon production and process-related technologies as well as climate-related financial and business services; reductions obtained through emissions offsets and trading; activities to reduce “upstream” or “downstream” emissions along the value chain; and adaptation strategies.
C. Methodology
The research team for this report utilized two data-gathering methods. The first was a 100-question survey of 27 members of the Business Environmental Leadership Council (BELC) of the Pew Center on Global Climate Change and four non-BELC members. The survey sample was weighted toward large, publicly held, multinational corporations based in North America (see Table 1).
The second data collection method involved six in-depth case studies of five BELC member companies and one non- BELC member, each of which had a stated commitment to reduce GHG emissions. To develop the case studies, the research team conducted face-to-face and telephone interviews with key executives and managers, typically including vice presidents for environment, health and safety (EHS); sustainability managers; operations managers; research and development personnel; and senior managers in governmental affairs and communications. Interviewers raised a consistent set of questions and topics to assure comparability between case studies and augmented the data gathered, where relevant, with information from secondary literature. The Pew Center has gathered feedback from BELC companies throughout the process.
Table: 1 Survey Demographics
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Category |
Results |
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Sector Representation |
Electric Utility: 28 percent High Tech: 9 percent Metals and Mining: 9 percent Oil and Gas: 9 percent Other*: 46 percent |
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Ownership Status |
Public: 87 percent Private: 13 percent |
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Headquarter Location |
North America: 90 percent |
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Multinational Operations |
Yes: 72 percent No: 28 percent |
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Market Segment** |
Business-to-Business: 47 percent Business-to-Customer: 60 percent |
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Annual Revenue |
< $1B: 10 percent $1-10B: 45 percent $10-100B: 45 percent |
* Other includes the following: Chemicals, Consumer Goods, Pharmaceuticals, Paper and Forest Products, and Cement.
**This figure exceeds 100 percent because some companies offer both services.
(To be continued)
Courtesy: PEW Center on Global Climate Change
NEWS BRIEF
NATIONAL
OIL & GAS
Upstream
Consortiums pitch for oil, gas exploration off Orissa coast
April 2, 2007. Exploration of oil and gas on and off the Orissa coast has been intensified with three consortiums entering drilling of exploratory wells. The joint consortium of OIL, GAIL and IOC has decided to start an exploratory well by October. The OIL-led consortium is also planning for one more exploratory well in the area by around 2009, depending on the outcome of the drilling in the first well. In the Mahanadi offshore area, ONGC, IOC, GAIL and IOL have jointly drilled two wells, mdw-1 and mdw-2a/2B. One well in mdw 2a/2B has proved to be a gas bearer. General assessment of the well is being done by an international consultant. Two more wells may be drilled in the area. The consortium comprising ONGC, OIL and BPCL has taken up oil and gas exploration in the Mahanadi deep-water area. The consortium of Reliance, Nikko, Gadzdom and ONGC is also working off the Orissa coast for exploration of oil and gas.
ONGC's Mahanadi gas find confirmation soon
April 2, 2007. The potential commercial viability of the gas find by ONGC in the Mahanadi Basin is likely to be confirmed in the next few days. Currently, the DGH team is assessing the find to know the extent and full potential of the gas deposits in the MN-OSN-2000/2 off the Orissa coast. According to the company estimates, the probable in-place hydrocarbons in the block would be in the 5-13 bcm range. Technically this is the first discovery in Mahandi Basin. ONGC had confirmed presence of hydrocarbon in a well (named MDW-2A) in block MN-OSN-2000/2 in the Mahanadi Basin in water depths of about 1,200 m.
OIL eyes Sakhalin-III stake
March 29, 2007. Oil India (OIL) is eyeing a stake in the highly prospective Sakhalin-III oil and gas field in Russia. The company has applied to the petroleum ministry to allow it to piggyback on ONGC Videsh’s (OVL) bid for a stake in the field. OIL, which has expertise in onshore oil and gas exploration, wants to increase its overseas presence. The company already has owns stake in oil blocks in Libya, Iran, Gabon, Yemen and Nigeria. The company has approved Rs 9,000 crore as investment over the next five years.
OIL may float subsidiary for overseas forays
March 29, 2007. State-owned Oil India Ltd (OIL) and Indian Oil Corporation (IOC) may shortly part ways, bringing the curtains down on their existing arrangement to jointly bid for oil and gas producing properties abroad. Instead, the petroleum ministry is considering setting up a new entity, Oil India and Videsh Ltd, as a wholly owned subsidiary of OIL. This will expedite the acquisition of oil and gas assets abroad by the company. So far, the OIL-IOC combine has succeeded in acquiring only prospective exploration assets in Gabon and Libya, but no producing properties.
OIL holds talks with Petrobras
March 29, 2007. The country’s second largest government-owned exploration company, Oil India (OIL), is in talks with Brazilian exploration major Petrobras for jointly bidding and acquiring stakes in deepwater oil and gas exploration blocks overseas. OIL, which has reserves of 154 mn tonne of oil and oil equivalent. The company, in partnership with Oil and Natural Gas Corporation (ONGC) won two deepwater blocks in the Krishna Godavari basin under the sixth of New Exploration and Licensing Policy (NELP VI).
Cairn on oil hunt in Bihar
March 28, 2007. In its search for oil and gas in Bihar, Cairn India has started collecting seismic data in its Ganga valley block in the state. The data is being collected through an aeromagnetic survey over 12 districts spread over 15,500 sq km block. A specially designed airplane has been hired from Canada to survey areas in the Samastipur, Darbhanga and Madhubani districts. Cairn India has a seven-year licence for exploration work in the first phase. It is committed to drilling one well in the region by 2008. The aerial survey will continue for three months covering an area of 15,500 sq km flying 10 hours a day. It will be supplemented with a 2 dimensional (2D) seismic survey that would help the geologists map the structure beneath the surface. The Bihar block is considered a frontier area in terms of prospecting for oil because not too much exploration has been carried out in the region, though there has been evidence of hydrocarbon seepage over the years. Cairn plans to acquire about 500 km of 2D seismic data that will cost about $10 mn.
Rajasthan to set up own oil corporation
April 3, 2007. After Gujarat, the Rajasthan government has now decided to set up a petroleum corporation. The formation of the Rajasthan State Petroleum Corporation will ensure the state's partnership in the exploration, exploitation, transportation and distribution of oil drilled in the state, hence pursuing its business in both the upstream & downstream sectors. The state government's corporation will have an equity base of Rs 5-50 crore. The corporation would allow private sector participation, but the majority share would be held by the state government.
IOC lines up $10 bn expansion
March 28, 2007. IOC has unveiled a major expansion plan in Turkey which includes setting up a $6-bn greenfield refinery, acquiring a majority stake in an existing petrochemical company and entering into fuel retailing. The overseas plan is part of the company’s five-year expansion strategy with an investment of around Rs 43,000 crore. ($10 bn) IOC will hold 51% equity stake in the 15 MT refinery project. The strategic alliance would ensure crude supply to the refinery. The refinery is expected to be build by 2012 and it would also export products to the US and European markets. IOC also plans to market its products in the domestic market through its proposed retail outlets. In order to consolidate itself in downstream segment, IOC also plans to acquire government-run chemicals company Petkim Petrokimya Holdings. The company plans to integrate the refinery with the petrochemical plant.
Transportation / Trade
GSPC and RIL sign gas transportation agreement
April 2, 2007. Gujarat State Petronet Limited (GSPL) and Reliance Industries Limited (RIL) have signed a gas transportation agreement to transport 11 MSMCMD of natural gas from Bhadbhut in Bharuch to RIL’s Refinery and Petrochemical complex in Jamnagar. Under the agreement, RIL has an option to increase the volume of gas up to 14 MSCMD. RIL would transport portion of its KG Gas from Kakinada through its East-West Pipeline and deliver the same to GSPL at Bharuch. For transportation of gas, GSPL would use its existing pipeline and develop new pipelines between Bharuch to Hadala and Rajkot to Jamnagar. The transportation of gas shall commence in the second quarter of 2008. The agreement is valid for a period of 15 years from the start date. Similarly, Gujarat State Petroleum Corporation Ltd. (GSPCL) has signed Gas Transportation Agreement with Reliance Gas Transmission and Infrastructure Limited (RGTIL) for transporting 3.5 MSMCMD of natural gas from its largest KG basin discovery at Kakinada in Andhra Pradesh to Gujarat. As per this agreement, GSPC has an option to increase the volumes of gas upto 11 MSCMD. For transportation of gas from Kakinada to Gujarat, RGTIL is developing a pipeline between Kakinada and Bharuch. The transportation of gas shall commence as soon as GSPC starts the production of gas from its KG basin. This agreement also has validity period of period of 15 years from the Start Date. GSPC has made the largest discovery of natural gas in the KG basin two years before and the commercial production is likely to commence from mid 2009.
Gail to invest $4.13 bn in pipeline expansion
March 31, 2007. GAIL India would invest Rs 18,000 crore ($4.13 bn) for laying 5,000 km of additional gas pipelines in the next five years. The first phase of the project will be completed by 2008-09, coinciding with Reliance Industries’ gas production in the KG Basin. Gail will transport natural gas from KG and Mahanadi basins to various parts of the country. The company is expected to generate transmission revenue of about Rs 5,800 crore by almost doubling the pipeline capacity at the end of 2011-12. Currently, Gail has about 5,600 km of pipelines, generating over Rs 2,000 crore transmission revenue. The ministry of petroleum and natural gas has approved the request of Gail for inviting expressions of interest (EoIs) for five new natural gas pipelines in the country. The five new pipelines will be built on common carrier principle and 33% of the planned capacity would be offered to third parties. The 5,000-km pipelines would enhance Gail’s gas transportation capability to 280 mn scm per day (MMSCMD) from current 175 MMSCMD. The new pipelines include Rs 2,500-crore Dadri-Bawana-Nangal line, Rs 1,000-crore Chainsa-Gurgaon-Jhajjhar-Hissar pipeline, Rs 2,000-crore Jagdishpur-Haldia pipeline, Rs 2,500-crore Dabhol-Bangalore line and Rs 2,500 crore Kochi-Kanjirkkod-Bangalore pipeline. In addition to these, Gail will also lay three new pipelines; Dahej-Vijaipur pipeline (610-km), Vijaipur-Dadri line (505 km), Vijaipur-Auraiya-Jagdishpur pipeline (571 km). Besides, transporting natural gas from KG and Mahanadi basins in the east coast, gas from LNG terminals in Gujarat, Dabhol (Maharashtra) and Kochi (Kerala) would also be transmitted through Gail’s proposed pipelines. Gail has signed agreements with Reliance and ONGC for co-operation in the gas sector, including transportation of natural gas from Krishna Godavari and Mahanadi basins through an integrated pipeline network.
Cairn in talks with ONGC on Rajasthan pipeline
March 28, 2007. Cairn is in discussion with ONGC and the government for laying a pipeline from Barmer to the Gujarat coast. It is proposed that Cairn-ONGC will share the 600-km pipeline at $700-800 mn in the 70:30 ratio and sell the crude oil to refiners in Gujarat and elsewhere. The pipeline will also touch Indian Oil's Viramgam pipeline terminal in Gujarat, which is connected to IOC's Koyali and Panipat refineries. The pipeline will take 12-15 months to build and will be commissioned around the same time when Rajasthan fields start producing in 2009. Cairn is likely to make an application for the right of use (ROU) for the pipeline shortly. Cairn is ready to start production in small quantities from its Saraswati field and it is waiting for finalising of oil sales. In another 12-months, it can put Raageshwari oil field to production but the giant Mangala field would come in 2009 when output peaks to 150,000 bpd. The proposed routing of the pipeline will allow access to the existing pipeline infrastructure and refinery network, with a final coastal delivery point that also affords access to the majority of India's refining capacity. The current estimates for the proven and probable (2P) reserves in place for the six fields Mangala, Bhagyam, Aishwariya, Saraswati, Raageshwari Oil and Raageshwari Deep Gas total 2.2 bn barrels of oil equivalent (boe).
Policy / Performance
March 31, 2007. The Dabhol LNG terminal, the first big-ticket foreign investment in early 1990s with Enron, may be on the block soon. The government has zeroed in on the option after two years of efforts to restart the project. Once completed, the plant will be put up for auction. In the race are Reliance Industries, Petronet LNG, NTPC and GSPC, among others. Gail (India) is now the co-promoter and will have the first option of matching the highest bid once it is auctioned. The government is examining the possibility of auctioning Dabhol’s LNG terminal after completing the project. An investment of over Rs 500 crore is required to complete the terminal that has a five mn tonne capacity. It is proposed that Gail should complete the construction of the entire project. In lieu of this, it would be allowed to match the highest bid and acquire the project if it is beaten in the auction. After completion, bids will be invited from interested parties to buy the hived-off terminal. Gail wants to use a part of the terminal for meeting the gas demands of its other customers.
New Energy Security plan on anvil
March 30, 2007. In a bid to insulate the economy from upheavals in the energy markets and ensure development momentum, UPA Government is readying a new Energy Security Plan. Focus of the new energy security plan will be to move towards usage of non-fossil fuels and renewable energy sources. Lesser dependence on fossil fuels and non-renewable energy resources is being pushed for by the Government. An action plan is also being readied to “reduce the energy intensity of GDP growth” and establish a string of institutes to take up research in developing new and clean sources of energy that include solar, wind, hydrogen fuel cells, bio-fuels, bio-mass and bio-diesel. India proposes to make this energy strategy as a Non Aligned Movement (NAM) initiative, having 118 countries developing and under-developed as its members.
ONGC sets higher target for financial year 2008
March 30, 2007. Oil and Natural Gas Corporation (ONGC) has set an ambitious target of 27.4 MT of crude production for 2007-08. This is despite the company’s failure to meet its current year target of 27.35 MT, which was off by more than an MT. In a memorandum of understanding (MoU) signed with the petroleum ministry, ONGC agreed on a set of performance parameters and targets for the next fiscal. Besides committing to a 6% increase in crude oil production, the oil major has also agreed to produce 25.05 billion cubic metres (BCM) of natural gas in 2007-08, 14% higher than production of 21.97 BCM in the current fiscal. ONGC also has plans to enhance production of value added products to 32.45 MT for 2007-08 from 29.03 MT in the current fiscal. Several new performance parameters have been introduced in the MoU which includes a third party audit of 350 exploratory wells. This move is significant considering the recent tussle between ONGC and the upstream regulator Directorate General of Hydrocarbons (DGH) over the commerciality of the former’s gas finds in KG basin. The MoU also envisages the formation of three joint ventures and alliances with international majors. One of these JVs will be to develop the deep water KG basin block, where ONGC has discovered huge reserves of natural gas and is scouting for alliance with international player.
Oil ministry budges on upstream regulator
March 29, 2007. The petroleum ministry is finally preparing the ground for an independent regulator for the upstream (exploration and production) sector. As of now, all regulatory powers rest with the ministry. The call for an independent upstream regulator, which is over a year old, has been backed by the Planning Commission and various consultants. Earlier since oil companies sign a production sharing contract with the government, the government was of the view that there was no need for an independent regulator in the upstream sector. However, with problems between oil companies and the DGH coming up, the need for a regulator has grown strong. As for the DGH, which currently handles the auction of oil blocks, including providing technical data for the auctions, and clears field development costs of exploration blocks, the plan is to merge it with the new regulatory board. Incidentally, the director general in the DGH was given some regulatory powers in September last year.
Cairn looks to PSUs to sell Rajasthan crude
March 29, 2007. Cairn India may end up selling crude oil from Rajasthan to a bouquet of public sector refiners including IOC, HPCL and BPCL as MRPL has indicated to the petroleum ministry that it would not be able to handle the entire output from Rajasthan. However, Cairn is also in talks with the private sector refiners, Essar and Reliance for selling its Rajasthan oil. Cairn expects to begin production from its Rajasthan fields from December 2009 at 150,000 barrels a day.
March 29, 2007. State-owned oil major Indian Oil Corporation has pressed the pedal on successful bidding for acquisition of E&P assets and crop plantation for bio-diesel as part of its MoU with the Central government for the year 2007-08. Five major projects to be monitored as part of the MoU are Panipat refinery expansion from 12 to 15 mmt per annum (MMTPA), Naphtha Cracker at Panipat refinery, augmentation of Mundra-Panipat crude oil pipeline to 9 MMTPA, Panipat-Jalandhar LPG pipeline, and the Hydrocracker project at Haldia Refinery.
POWER
Generation
Assam’s first hydel project operational
Singareni eyes 40.5 mn tonne coal this fiscal
April 3, 2007. State-owned Singareni Collieries Company Limited (SCCL) is targeting to produce 40.5 mn tonne of coal during the 2007-08 financial year. Besides, it is planning eight new mining projects and expects them to contribute around 16 lakh tonne of coal in 2007-08. The company had achieved a record production of 37.70 million tonne in 2006-07, the best-ever production achieved by SCCL in its 118-year history.
NHPC nod to J&K on hydel projects
March 30, 2007. National Hydroelectric Power Corporation (NHPC) has given its nod to the Jammu & Kashmir government to enter into joint venture for the construction of three major hydel-power projects over the river Chenab. Expected to be completed in next five years from April 2007 onwards, the projects would generate 1830 MW of power. These three projects are Kiru, Rattle and Kawar. They all will be falling in Doda and Kishtwar districts of the State. Kiru hydel power project would generate 600 MW power, Rattle project 690 MW while Kawar nearly 540 MW of electricity.
The estimated cost of these projects has been put at around Rs 7, 000 cr and power per unit may cost around Rs 1.40 as against Rs 2.50 per unit generation cost from Baglihar hydel power project over Chenab in Ramban area of district Doda. Though the NHPC has agreed to take up the projects in collaboration with the Power Development Corporation of the J&K Government, yet it will sign an agreement in this regard with the government shortly.
Lanco-Jindal combine best placed to execute Sasan project
March 30, 2007. According to Lanco Infratech, the company in partnership with Jindal Steel and Power is best placed to execute the proposed 4,000 MW pithead coal based project among all the bidders in fray, despite uncertainties looming large over the fate of the Sasan Ultra-Mega Power project. It will enable to deliver power at its benchmark tariff quote of Rs 1.19 per unit. Lanco had bagged the bid to build the Rs 16,000 crore project in partnership with Globeleq Singapore Pte Ltd, a company that was subsequently bought over by Jindal Steel and Power and Lanco Infratech's holding company Prince Stone Investments. Incidentally, Jindal Steel and Power was one of the eight short-listed bidders in the race for the Sasan project and had qualified on both technical and financial parameters.
Transmission / Distribution / Trade
April 2, 2007. Power equipment manufacturer, AREVA Transmission & Distribution (T&D) division laid the foundation stone of its power transformer factory to be built in Vadodara, at an estimated cost of nearly Rs 210 crore. The new manufacturing facility would directly employ 500 people at full capacity and indirectly hire over 3,000 through creation of supply chain and vendor base. Areva had planned the new facility in view of the increased demand for power transmission lines due to the growing potential for super thermal and mega power projects. The scope of additional generation capacity is at least 20,000 MW per year.
Nagarjuna's Udupi plans power supply from 2009
March 31, 2007. Nagarjuna Power Corporation Ltd which is setting up a 1,015-MW coal-based thermal power plant at Padubidri in Udupi district is planning to supply power to Karnataka by the end of 2009. The company should be in a position to supply power to the state by October or November of 2009, with a distribution of around 500 MW of power to the state from the first unit. Another unit will be able to supply power four to five months after that. An agreement has been signed with the Punjab Government for sale of 10 per cent of the total production. In order to rehabilitate the effected families from this plan the company has taken up township construction for them on 60 acres of land at Admar.
Two transmission projects stalled
March 28, 2007. The implementation of two transmission projects entailing an investment of Rs 5,000 crore through private sector participation has hit a roadblock, with the finance ministry questioning the entire bidding process. Both the projects, strengthening the transmission network in two blocks of the western region (Rs 2,000 crore) and laying a transmission line for the Koldam hydro project in Himachal Pradesh (Rs 3,000 crore) were awarded to Reliance Energy Ltd by PowerGrid Corporation of India Ltd, the lowest bidder. While the Koldam project was awarded in 2004-05, REL bagged the western region blocks in November 2006. PGCIL invited bids based on the recommendations of the Central Electricity Regulatory Commission. It had also incorporated a buyout provision wherein PGCIL could take over a project if the company failed to complete them.
TPC eyes MNC equipment maker for JV
April 3, 2007. TATA Power Company (TPC) is looking to form a joint venture with an overseas electrical equipment manufacturing company like, Hitachi, Mitsubishi and Toshiba. A deal will be finalised before June 2007. TPC, the country’s largest private power producer with 2,300 mw, is in talks with Japanese companies such as Hitachi, Mitsubishi and Toshiba. The company is looking at more coal mines in Australia and South Africa, where low sulphur and low ash coal is available.
RGPPL and MahaVitaran sign PPA for Ratnagiri project
April 2, 2007. Ratnagiri Gas & Power Pvt Ltd (RGPPL) and the Maharashtra State Electricity Distribution Company (MahaVitaran) have signed a long term power purchase agreement (PPA) for the drawal of power from 2,150 MW Ratnagiri project, previously Dabhol project. MahaVitaran has agreed for hike in the fixed cost to 98.05 paise from 96 paise in the per unit tariff component and was agreeable to any further rise in the fixed cost. After taking a tough stand by MahaVitaran, lenders agreed to provide its concurrence to the PPA. Further, MahaVitaran also took aggressive posture on the inclusion of the common loan term agreement as the basis for signing PPA against the Lenders wish.
Tata Power in 1.3 bn dollar Bumi coal deal
April 2, 2007. Tata Power Co came closer to securing long-term fuel supplies to produce cheap power by signing a $1.3 bn deal to buy stakes in Indonesian PT Bumi Resources Tbk's two coal mines. Indian firm had agreed to buy 30 per cent stakes in Bumi's PT Kaltim Prima Coal and PT Arutmin Indonesia, two of Indonesia's largest coal mines, and a related trading company. The two coal mines produced 53.5 mn tonnes of coal per year in 2006. Tata Power will also buy 10 mn tonnes of coal from Kaltim Prima Coal for two proposed power projects with a capacity to generate a total of 7,000 MW). The plants will be built on the west coast of India over next five years.
GAIL open to infuse $1.15 bn in RGPPL
Maha Govt seeks easy power project norms
March 30, 2007. States that are willing to back private investments in mega-power projects with generation capacities of a minimum 1,000 MW or more want the power ministry to remove anomalies in bidding norms. At least 10 states have said adding capacities of 15,000 MW will be possible if the private sector invests in such projects with states acting as facilitators. The timeframe for the bid process extends up to 425 days. But, if more than one distribution licensee in different states intend to buy power and if the preparations for such projects are being facilitated by the Centre, the timeframe is only 270 days. This, the states feel, will unnecessarily delay project-implementation and hike costs. The Maharashtra government, which proposes to develop a 1,600 MW coal-based project at Dhopawe (Ratnagiri district) and a 1,040 MW gas-based one at Uran (Thane district) through competitive bidding, has said that the state should be exempted form selling a certain percentage of power to another state, especially when it was reeling under an acute power shortage.
TPC and REL power stand-off is making Mumbai sweat
March 30, 2007. The proposed power purchase agreement (PPA) between Tata Power Company (TPC) and Reliance Energy (REL), which is still to be signed, may compound the already ominous power situation in Mumbai. REL, which generates 500 MW from its own thermal plant in Dahanu, currently purchases 500 MW from TPC, and distributes the same in the city suburbs. As the summer peaks, REL is expected to face a shortfall of 200-250 MW, and is frantically scouting for additional power. While TPC had asked REL to enter a PPA for the sale of 500 MW, REL had demanded 719 MW from TPC, in the process delaying the signing of PPA. TPC, which has already a PPA in place with BEST for supplying 800 MW, does not generate enough to supply the electricity demanded by REL. TPC, which generates 1,777 MW, also requires 477 MW to supply to its own consumers. Both the firms are close to signing the agreement and TPC had formally agreed to continue the supply until June 2007. At present, there is no legal binding that enforces electricity transfer between the two utilities, said sources close to the development, adding that the PPA issue is being discussed by them over the past two years after the previous agreement lapsed.
Jharkhand yet to decide on Tata Power project
March 30, 2007. The Jharkhand government is yet to take a decision on Tata Power Company's (TPC) application for around 1,000 acres that it had applied for in the Ghatsila-Mosabani area, around 60 km from here, where the power utility wants to set up a greenfield 1,000-mw project. Four applications from a medical-cum-engineering college, a BSF battalion, Core Steel and Tata Power, were pending before the government as to who or who all should be allotted the 900 acres that were available in the area. Tata Power had submitted its proposal to the state in November 2006. The government is yet to take a decision as to whom it would allot the land. TPC had signed an MoU with the Jharkhand government and would evaluate the prospect of setting up generation units at various sites in the state with a potential of around 3,000 mw and also captive coal mining facilities and associated distribution circles. Four units of 250 mw each have been planned for the site at an investment of around Rs 4,500- 5,000 crore, including laying of dedicated transmission lines for Tata Steel's plant in Jamshedpur and also to the state government's grid.
Coal India, DVC keen on MAMC facility
March 29, 2007. Coal India Ltd and Damodar Valley Corporation (DVC) were keen to see the closed central public sector undertaking (PSU) Mining and Allied Machinery Corporation (MAMC) at Durgapur in West Bengal being redeveloped into the central manufacturing and service centre for underground mining equipment and mines as well as power stations. A Memorandum of Understanding (MOU) would be signed between DVC and CIL in the next 7 to 10 days time. Following the MOU, DVC would take up the matter with Power Ministry and CIL would approach the Coal Ministry for approval.
BHEL concedes to 14 project delays
March 29, 2007. Bharat Heavy Electricals Ltd, (BHEL), has finally admitted to considerable delays in the completion of 14 power projects, scheduled to be commissioned in the 10th Five-Year Plan with a total capacity addition of 4,665 MW. According to the company, the delays in these power projects were largely due to a lack of transportation infrastructure like roads and railway sidings, as well as the requirement of road permits for movement of plant and equipment from state to state. Moreover, suppliers of forgings and castings quoted much longer delivery schedules to BHEL due to the sudden capacity surge in China. BHEL was awarded 46%, which comes to 18,786 MW, of the originally planned 41,000 MW, while 56% was to be supplied by others. But these projects are expected to be completed in June, July and August.
Dabhol hits roadblock again
March 28, 2007. Dabhol Power project has hit a fresh roadblock with Punj Lloyd and its British partner Whessoe, the contractors for completing the LNG terminal, threatening legal action against Ratnagiri Gas and Power Pvt Ltd for default on payments. The 50:50 joint venture of Whessoe-Punj Lloyd sent a notice of default on March 16 to RGPPL, the owner of the 2,150 MW power plant as well the adjacent unfinished five million tonne LNG receipt facility, for clearing all payments due against work already completed. The JV has threatened to take legal action against RGPPL in Singapore and remove its equipments from the site if the payments are not made by April 2. RGPPL has paid only Rs 68 crore against Rs 317 crore worth of work executed on LNG jetty and dredging. Bills worth Rs 265 crore are pending with RGPPL. The JV was awarded a Rs 500 crore contract for completing the jetty facilities in June last year with a target date of July 2007 for completion.
March 28, 2007. Ernst & Young (E&Y), the financial consultant to the beleaguered 4,000 MW Sasan ultra mega power project in Madhya Pradesh, has recommended that the award to the Lanco-Globeleq combine be annulled and fresh bids be invited. The recommendation from E&Y has been made even as its own role in clearing the original bid has come in for censure. According to the consultants, Globeleq of Singapore had misrepresented financial and technical details. All the bidders were required to submit details such as capacity and surplus cash flow of the companies participating in the bid. This included subsidiaries and associate companies in which they own 25 per cent or more. This information was to be certified by the board of directors and a chartered accountant. The Lanco-Globeleq bid was accepted because it was signed by the board of Globeleq Singapore and a chartered accountant. Crucially, E&Y’s advice for rebidding comes even as the second-best bidder, Reliance Energy automatically qualifies to bag the project since the Lanco-Globeleq, to whom the letter of intent has been issued, does not fulfill any of the conditions specified. But as per E&Y second-best bidder cannot be considered because the original bid documents did not envisage a situation of the kind that has arisen with Globeleq.
India's World Cup exit reduces extra load on power companies
March 28, 2007. Major cities in the country are breathing a sigh of relief due to the steep fall in power consumption following their first-round exit. Electricity consumption in the beginning of the peak summer season has shown a marked drop after India failed to qualify for the second round. In Mumbai, which has around 35 lakh electricity consumers, the television usage along with lights, fans and air-conditioners, would have accounted for an additional 200MW if they were to watch cricket during the peak hours of 6-10 pm. After India’s defeat, it has shown a remarkable drop in consumption. Viewers tend to switch on additional lights, fans and air-conditioners during cricket matches, pushing up electricity consumption. Besides, most hotels had arranged for special screenings of the India matches. Mumbai’s electricity consumption during this summer is seen at 2,700MW, while Delhi is likely to consume 4,000-4,500MW. At present, Mumbai is getting 2,200MW and the power utilities are in talks with NTPC and various state governments to bridge the gap.
Parekh panel to decide future course of Sasan power plant
March 28, 2007. The government has extended the terms of reference of a committee headed by HDFC chairman to determine the future course of the Sasan ultra-mega power project. Although it is now almost certain that the Lanco-Globeleq consortium may be out of the project, a final call has to be taken on whether the project should be re-bid, or whether the second lowest bidder L2 be awarded the project. As of now, it is a divided house. The evaluation committee, was of the view that the Globeleq-Lanco consortium could not be awarded the project any more. However, the committee was unable to formalise its view, given that its mandate came to an end with the award of the project. The committee had referred the matter to the minister for power, as they did not have the mandate to take a final call on the legalities of the contract. With the extended terms of reference, the committee will now have to decide on the future course of the mega power project. The government may prefer a re-bid, but it is not necessary that the project will manage to attract such competitive tariffs again.
Tax exemption may energies power sector for 7 more yrs
March 28, 2007. The government may extend the deadline for availing income-tax exemption by power sector projects up to March 2017, as I-T exemption under Section 80-IA expires on March 2010. Section 80-IA of Income-Tax Act provides for tax exemption on profits for 10 consecutive years to companies in the infrastructure sector, including power. Currently, power projects enjoy a 10-year tax holiday up to 2010. Given the slew of upcoming projects over the next five years, the government is planning to extend this fiscal benefit to encourage large-scale investments. The exemption was introduced with a sunset clause of phasing out the same by 2010.
INTERNATIONAL
OIL & GAS
Upstream
Petrobras returns block to Bolivia
April 2, 2007. Brazilian energy giant Petrobras has returned an oil block to Bolivia, citing the risk of not being able to recoup its investment and higher taxes stemming from last year's decree nationalizing the country's fossil-fuel resources because the company found oil at the field rather than the natural gas it was seeking. The block in question, known as Irenda, is located in the eastern province of Santa Cruz, near the Brazilian border. It has an area of 25,000 hectares (61,730 acres) and was awarded to Petrobras in 2003 in a public auction. Petrobras had invested close to $3.6 mn in the first phase of exploration of the block and had planned to invest $16.6 mn more in a second phase.
Total makes oil finds off Congo
April 2, 2007. French oil major Total had made two major oil discoveries in the northern part of the Moho-Bilondo concession, about 80 km off the coast of the Democratic Republic of Congo. One discovery was at the Moho Nord Marine-1 well at a depth of 2,645 metres and the second discovery was at the Marine-2 well at a depth of 2,340 metres.
Itochu buys stakes in Gulf of Mexico gas fields
April 1, 2007. Itochu Corp. had obtained concessions in 15 gas fields in the Gulf of Mexico from Range Resources Corp. by acquiring two subsidiaries of the midsize U.S. gas developer. The acquisition is part of Itochu's plans to spend about 100 billion yen ($849.3 mn) to expand its U.S. natural gas business over the next three years. Itochu has secured the natural gas equivalent of 2,300 barrels a day of crude oil from the 15 fields, all of which have already started production.
Zhenhua oil wins exploration rights in Pakistan
March 30, 2007. China Zhenhua Oil Co Ltd, a wholly owned unit of China North Industries Corp, has signed an exploration contract with Pakistan government, acquiring 100 percent of two oil and gas blocks in Pakistan. Zhenhua Oil plans to invest about US$30 mn to drill three wells on the Basca and Bahawapul blocks over the next three years. The two blocks covers a total of 5,000 sq. kms. Zhenhua Oil will also transfer a 49-percent stake to Pakistan Petroleum Ltd (PPL), Pakistan's second largest oil producer.
Stratic announces first gas flows in Turkey
March 29, 2007. Stratic Energy Corporation and its joint venture partners TPAO (the Turkish national oil company) and Toreador Resources Corporation announced that gas has begun to flow from the Akkaya platform in the Black Sea, offshore Turkey. The first two production platforms in the first phase of development of the South Akcakoca Sub-basin are in place and the Akkaya production platform has been tied into the offshore pipeline, with the three Akkaya wells having been tied into the production manifold on the platform. Gas is flowing from the Akkaya platform into the offshore pipeline and the onshore production facility. This initial flow is being used to purge the nitrogen in the offshore pipeline, the production facility and the onshore pipeline to prepare the system for first gas sales. Once the pipelines and plant are filled, the compressors will be test run and pressure built up in the onshore pipeline in readiness for first gas sales. The tie-in of the Dogu Ayazli platform and the two Dogu Ayazli wells is nearly complete, with commissioning checks and communications with onshore control systems to follow. Once the testing is complete, gas flow from the Dogu Ayazli platform will begin into the offshore pipeline and combined with the flow from the Akkaya platform. The Alapli-1 well, which lies just outside the South Akcakoca Sub-basin, yielded a final test result of approximately seven million cubic feet of gas per day from 15 meters of perforations in three zones between 1,068 and 1,242 metres. Stratic has a 12.25% working interest in the area, with Toreador, as operator, holding a 36.75% interest and TPAO holding a 51% interest.
UK approves three offshore gas fields
March 29, 2007. The UK government has approved three new gas fields, including Britain's 350th offshore field. The Caravel, Shamrock and Kelvin fields will be operated by Shell, in partnership with ExxonMobil, and ConocoPhillips. They should add 340 bcf of gas to UK reserves at a time when they are in rapid decline. Caravel is in the southern North Sea and was discovered in 2002. It will be developed through two production wells which will pump gas to the Bacton terminal in east England via existing Shell-operated infrastructure. First production is scheduled for December 2007. The field is operated by Shell, with ExxonMobil as co-licensee, while Shell will also operate the nearby Shamrock field which will be tied to Caravel. The ConocoPhillips operated Kelvin field. Despite new fields coming into production, UK gas output is in steady decline as its older fields become exhausted.
Rosneft and Sinopec ink deal for Veninsky Block
March 29, 2007. Rosneft and the China Petroleum and Chemical Corp. (Sinopec) have signed a Corporate and Shareholder Agreement related to their joint work in exploring and developing the Veninsky block of fields on the shelf of Sakhalin Island (Sakhalin-3 project). According to the document, which was signed in Moscow, the wholly owned subsidiaries of Rosneft and Sinopec Rosneft International Limited and Sinopec Overseas oil and Gas Limited, will become the owners of Venin Holding Ltd., which was established in October 2006. Venin Holding Ltd. will in turn be the sole shareholder of Venineft, the license owner and operator of the Sakhalin-3 project. Rosneft will have a 74.9% stake in the project, with the remaining 25.1% going to Sinopec. Oil resources at the Veninsky block are estimated at 169.4 mn tonnes, and gas resources at 258.1 bcm. The Veninsky licensed sector covers approximately 5,300 square kilometers on the shelf of the Sea of Okhotsk with a depth ranging from 25-150 meters. Seismic survey data has revealed the presence of six promising structures at the block. Rosneft received an exploration license to the Veninsky block in April 2003, which was subsequently re-registered as Venineft. On August 30, 2005, Rosneft signed an interim financing agreement with Sinopec. According to this document, Sinopec is to finance 75% of expenditures during the stage of geological exploration at the Veninsky block. Rosneft is responsible for financing 25% of the expenditures from its own resources. As of January 1, 2007, total investment in the project stands at USD 69.8 mn.
JBIC signs $170 mn Frade field deal
March 28, 2007. Japan's international development bank JBIC has signed a $170mn loan agreement with Japan's FJPL oil consortium for the development of the offshore Frade field in Brazil. Frade is due to start production in 2009 and reach peak production of 100,000b/d. The Japanese consortium, made up of Inpex, Sojitz and Jogmec, has a minority 18.26% working interest in the field operated by US oil company Chevron with 51.74%. Brazil's federal oil company Petrobras has a 30% interest in the block. Frade is in the Campos basin at water depths of 1,000-1,300 m. Chevron already has announced development plans with total investments of some US$2.4bn.
KNOC and CNPC sign overseas coop deal
March 28, 2007. South Korea's state-run oil corporation, Korea National Oil Corp. (KNOC) has agreed with its Chinese counterpart, China National Petroleum Corp. (CNPC) to jointly develop overseas oil resources. Under the agreement, the two companies will work together in places like Southeast Asia, Africa and Russia. An emphasis will be placed on cooperation in special oil resources including oil sands. The companies are expected to set up a joint steering committee and a study group to discuss concerted efforts. The KNOC had control of 411 mn barrels of oil as of 2005, with output reaching 46,200 barrels a day. The CNPC, the top oil and gas company in China, secured 24.4 bn barrels equivalent worth of oil and gas as of 2005. It currently produces roughly 2.81 mn barrels a day.
Turkmenistan to produce 80 bcm of gas in 2007
March 28, 2007. Turkmenistan intends to produce 80 bcm of natural gas and 10.4 mmt (some 78 mn barrels) of oil in 2007. Turkmenistan holds the world's fifth-largest natural gas reserves and substantial oil resources. It is the second gas-rich republic in the former Soviet Union after Russia. In 2005, Turkmenistan claimed its current recoverable gas resources to be as much as 20.42 tn cubic meters. Gas production will grow 1.2-fold and oil output by 15% this year. Under the program, the plans take into account domestic demands and contracts signed with foreign partners as part of long-term intergovernmental agreements. In 2007, the Central Asian country will export 58 bcm of natural gas, including 50 bn to Russian energy giant Gazprom and 8 bn to Iran.
Petrobras to invest $ 1.5 bn in Santos field
March 28, 2007. Brazil's federal energy company, Petrobras has set aside US $ 1.5 bn for investments in 2007 in its Santos business unit, which includes E&P assets in the Santos basin. The Santos basin includes the development of the Mexilhao natural gas field and a plan to increase production at the Merluza field as well as the initial development of the Caravela and Cavalo Marinho fields for the start of production in 2010. Investment in production in 2007 in the Santos business unit will be US $ 1.07 bn including construction of pipelines and natural gas-processing units. This year's investment in exploration is budgeted at US $ 441 mn, including US $ 284 mn in recently acquired exploration blocks in the Santos basin. The Santos business unit, known as UN-BS, was created in 2005 and is one of the company's new development areas. In 2005, Petrobras announced plans to invest US $ 18 bn through 2015 in five development areas that will have 14 oil and gas production units. By 2011, the company plans to produce 30 Mm3/d of natural gas and 100,000b/d of oil in the Santos basin, a starting point for future growth.
Total to develop North Sea gas field
March 28, 2007. Total has launched the development of the Jura gas and condensate field in the North Sea, which should come on stream in the second quarter of 2008. Jura, a discovery made in November, is expected to produce around 45,000 barrels of oil equivalent per day at plateau. The Jura discovery, located in the Alwyn Area, 160 kilometres East of the Shetland Islands and 440 kilometres northeast of Aberdeen, represented more than 170 mn barrels of oil equivalent of proved and probable reserves.
Williams plans natural gas plant in western Colorado
March 28, 2007. Oil and gas company Williams will build and operate a natural gas processing plant in western Colorado, capable of handling up to 450 mcf per day of natural gas from the booming Piceance Basin. Williams is based in Tulsa, Okla., and is one of the top operators in the prolific natural gas basin near Rifle on the Western Slope. Williams’s existing Piceance Basin processing plants can recover approximately 4,500 barrels per day of natural gas liquids. The new plant, called Willow Creek, would recover an additional 20,000 barrels per day of natural gas liquids from Williams' natural gas. The plant is expected to be operational in the third quarter of 2009. The Willow Creek facility will be in Rio Blanco County, approximately 25 miles northwest of Williams' existing facilities in Garfield County. Williams produces approximately 600 mcf of natural gas per day in the area enough energy to supply more than 2.5 mn homes per day.
Exxon Mobil signs new PSC in Indonesia
March 27, 2007. Exxon Mobil Corp. signed a production-sharing contact with the government of Indonesia for the Mandar offshore block the company was awarded in 2006. Exxon Mobil could now start exploration activities at Mandar, which is in Indonesia's Makassar Straits. The 1 million acre block ranges from coastline to water depths of over 6,000 feet. No terms of the contract were immediately disclosed. The company already has a production sharing contract with Indonesia in place at its Surumana block, also in the Makassar Straits.
El Paso sees first Brazil oil at end of 2008
March 27, 2007. U.S. energy company El Paso Corp. expects to start pumping oil from its Pinauna field off Brazil's northeastern coast by the end of next year, as the company was now drilling two wells at the shallow-water field to have a better idea of reserves, which contain light oil with high paraffin content, unusual for Brazil. El Paso is transforming two barges into platforms that will be fixed on the field and is working on the development project to see what other equipment will be necessary, particularly for storing the oil, which could be via a pipeline to the shore or to an tanker connection at sea. El Paso plans a total of 8 wells for the field, including water injectors. The initial minimum production would be 12,000 bpd.
Downstream
Thailand’s PTT mulls $2-bn-oil refinery in Philippines
April 2, 2007. Thai oil giant PTT Public Co. Ltd. is exploring the possibility of putting up a $2-billion refinery or expand the existing one to make it bigger in the Philippines. At present, there are only two oil refineries in the Philippines. One is controlled by semi-government Petron Corp. while the other is owned by the Royal Dutch Shell Group’s Pilipinas Shell Petroleum Corp. It is expected that PPT Public Co. Ltd would be requiring a minimum investment of between $1.5 bn to $2 bn. PTT operates a fully integrated gas business with a key role in distribution and international trading of petroleum and petrochemical products, together with investments in domestic petroleum and refining businesses.
New York firm buys 11 Oahu gas station properties
April 2, 2007. A New York-based real estate investment trust has purchased 11 convenience store and gas station properties on Oahu leased by Aloha Petroleum. The properties purchased by the Getty Realty Corp. include five in Honolulu, two each in Kaneohe and Waianae, and one each in Haleiwa and Waipahu. The stations will remain under the Aloha brand at the discretion of that firm’s tenants. The acquisitions were part of 59 convenience store and gas station properties in nine states purchased for $78 mn. Getty Realty Corp. owns and leases more than 1,100 properties throughout the United States. The 11 Oahu stations are Getty Realty's first investment in Hawaii.
March 29, 2007. Saudi Aramco, U.S. giant Exxon Mobil and China's Sinopec will invest $5 bn in their refinery, petrochemicals and marketing joint venture, much more than originally planned for $3.5 bn. Production is expected to start in early 2009.
Transportation / Trade
GS Caltex to supply fuel oil to North Korea company
April 2, 2007. South Korea's second-largest refiner, GS Caltex, was picked as the supplier of fuel oil promised to North Korea in return for shutting down a plutonium-producing reactor by April 14. GS Caltex plans to skip fuel oil exports in April to divert 50,000 tonnes to state-run Korea Electric Power Corp. (KEPCO), which has been tasked by Seoul to send the fuel to North Korea and is now building up the stocks. The supplies appeared uncertain at the moment as talks on North Korea's nuclear programme ended abruptly last month, derailed by the issue of funds frozen in a Macau bank.
Under the February accord, North Korea will get an additional 950,000 tonnes of fuel oil from the six-party participating countries after getting 50,000 tonnes from South Korea once it permanently disables the plutonium factory at Yongbyon and reveals all its nuclear-related materials and programmes. The 950,000 tonnes will be divided among the countries involved in the six-party talks. They said GS Caltex, a 50:50 joint venture between South Korea's GS Holdings Corp. and U.S major Chevron Corp., was likely to supply high-sulphur fuel oil to the North.
US Pentagon buys $2 bn in fuel for domestic use
April 2, 2007. The U.S. military has purchased about $2 billion worth of jet fuel and other petroleum products to supply North American bases. The Defense Energy Support Center (DESC), which oversees Pentagon fuel purchases, late last month awarded about 20 companies term fuel contracts running through April 2008. The DESC awarded the bevy of military fuel contracts, ranging from jet fuel to turbine fuel and naval distillate fuel. The fuel would be used domestically and not for Iraq or other Middle East activities as tenders for operations there were made in the Middle East to cut transport costs. The biggest individual contract went to a unit of Exxon Mobil Corp., which got a $926.8 mn, indefinite delivery, indefinite quantity, contract to supply jet fuel from its Baytown, Texas and Baton Rouge, Louisiana, refineries. ConocoPhillips got a $267 mn contract to supply aviation turbine fuel from its Bartlesville, Oklahoma refinery, and Refinery Associates of Texas Inc. got a $171.8 mn contract to supply naval distillate fuel.
Thailand’s PTT keen on gas pipeline from Batangas to Manila
April 2, 2007. Thailand’s PTT Public Co. Ltd. is keen on participating in the Philippine National Oil Corp.-Exploration Corp.’s (PNOC-EC) Batangas to Manila (Batman 1) gas pipeline project. Discussions for the same are on. PTT owns and operates Thailand’s domestic onshore and offshore transmission pipelines, which run over 2,400 kilometers. The company sources natural gas and transports it through this extensive network of pipelines to gas separation plants that filter out gas components with commercial value that are then sold to industries. If the company’s plans to participate in the PNOC-EC project pushes through, the Batman I will eventually be connected to this vast network of gas pipelines. The Batman is a priority project of the Philippine government and has been declared by the National Economic and Development Authority as a project of national significance. The project aims to extend the use of Malampaya natural gas to potential users in the industrial, commercial, transport and residential sectors.
China Shipping and PetroChina to set up LNG transport JV
March 30, 2007. The parent of China Shipping Development and PetroChina Co. Ltd. Asia's largest oil and gas producer, plan to set up a venture to transport liquefied natural gas, furthering Beijing's campaign to boost useage of the cleaner fuel.
China may import oil and gas from Russia
March 29, 2007. China could import Russian oil and gas. China and Russia signed a memorandum of understanding on natural gas supplies to China. It is expected that from 2011, China will import 60-80 bcm of natural gas from Russia every year. With the construction of oil pipelines well underway and cooperation in natural gas being strengthened between these two nations.
Shell drops plan to build LNG terminal in Gulf of Mexico
March 29, 2007. The Shell Oil Co. drops plans to build a liquefied natural gas terminal in the Gulf of Mexico that had become a symbol of environmental degradation for fishermen and government officials. According to Shell its decision to disband plans for Gulf Landing LLC was based on market considerations and not a reaction to the bad publicity it had received in Louisiana and other Gulf states. Instead of building its own terminal, Shell will rely on others both onshore and offshore to transport LNG into the Gulf and it may opt to buy capacity rights at other facilities. Shell's pull out leaves four terminals on the drawing board in the Gulf and only one that is actually receiving shipments of LNG, Excelerate Energy's Gulf Gateway Energy Bridge.
Oneok Partners to build $120 mn pipeline
March 28, 2007. Oneok Partners L.P. with its joint venture with Williams Cos. Inc. plans to build a $120 mn natural gas liquids pipeline. The proposed 150-mile pipeline will transport natural gas liquids from an existing Williams plant and a new processing plant that Williams plans to build and operate in the Piceance Basin in Northwestern Colorado.
Codelco may ship LNG by boat to Chile
March 27, 2007. Chile's Codelco, the world's largest copper producer, and other miners are evaluating a temporary measure to bring natural gas to the country's northern mining district by boat. Chile's mining district is a chief consumer of electricity in the region, and most of that is produced with natural gas imports from neighboring Argentina that are dwindling. The plan would be temporary and intended only to hold miners over until other, coal-fired electricity plants can be built. Codelco's largest presence is in the country's north, where it is also building the new Gaby mine slated to start production in mid-2008. It will need access to more electricity before coal-fired plants are ready around 2011.
Policy / Performance
Petrobras will continue to invest in Iran
April 2, 2007. Brazil's state-run oil firm Petrobras, will continue to invest in Iran despite U.S. concerns. According to Brazil, foreign investment in the petroleum and gas sectors in Iran is contrary to the international interest of pressuring the Iranian regime to suspend its enrichment-related and reprocessing activities.
Iran has the world's third-largest oil reserves and second-largest natural gas reserves. Iran has also been holding 15 U.K. sailors and marines it detained last week in the Persian Gulf. Petrobras will sign a $470 mn contract with Iran to develop Caspian Sea oil reserves. Petrobras will drill three wells in blocks 06 and 29 in the Iranian section of the Caspian Sea.
Rosneft to bid for YUKOS’s gas assets
April 2, 2007. State-owned oil company Rosneft had filed a bid for the auction of bankrupt oil firm YUKOS’s gas assets. Former had already paid a deposit to take part in the auction. Gazprom and Rosneft are seen as the key bidders. Rosneft’s subsidiary RN Razvitiye won an auction of a 9.44 percent stake in Rosneft, which was owned by YUKOS. Rosneft paid approx. $7.6 bn for the stake. This was the first of YUKOS bankruptcy auctions. The package included $1-bn ordinary shares in Rosneft (9.44 percent) and promissory notes of YUKOS’s subsidiary Yuganskneftegaz worth a total of approx. $137 mn.
EU insists Russia should open its gas pipelines
March 30, 2007. According to EU’s Competition Commissioner, Russia must grant access to its gas pipelines for European energy companies as part of a new partnership agreement being negotiated between Brussels and Moscow. This is despite of strong opposition by the later. Russia and senior officials in Gazprom, have resisted calls by the EU to allow foreign energy companies access to Russia's vast pipeline network, which would allow them to transport gas from parts of Central Asia to markets in Europe. Under current arrangements in Russia, any domestic or foreign company that wants to send gas to Europe can only use the Russian pipelines if they sell their gas to Gazprom. In many cases, those prices are set not at world market prices but at domestic levels, which are still heavily subsidized by the Russian government.
Japan & China to discuss joint gas exploration in China Sea
March 30, 2007. Japan and China began bilateral cooperation to conduct a joint gas exploration project in the disputed East China Sea. China proposed a plan at the seventh round of talks in Tokyo to jointly develop natural resources with Japan in the disputed waters, but no details were been released. The exploration of natural resources has caused conflict between the two nations because their economic waters overlap in the East China Sea without any clear demarcation line.
Argentina cancels oil deal with UK
March 28, 2007. The Argentine government terminated its agreement with the United Kingdom for the exploitation of hydrocarbons in the South Atlantic, referring to the unilateral British call for a public tender in the conflict area. The Joint Declaration established that, the exploration should be carried out in maritime areas subject to a sovereignty dispute but the United Kingdom intended to limit cooperation with our country to an area of only 21,000 square kilometers.
Russia, China sign $4 bn of trade deals
March 27, 2007. China and Russia signed four billion dollars' worth of trade focused on securing new energy sources. The presidents oversaw the signing of 21 contracts, including an agreement by Russian state oil company Rosneft to supply jet fuel to China. China received a total of 15 mn tonnes of Russian oil last year.
Power
SEB plans to develop several power projects
April 2, 2007. Sarawak Energy Bhd plans to develop several hydroelectric dam projects to generate over 5,000MW to make Sarawak a major regional power producer. The company had targeted to generate some 6,800MW through hydro and coal-fired plants by 2020. This will enable SEB to be a powerhouse of the region. SEB needed RM25bil to build some 15 hydroelectric dams and other power stations, and another RM10bil to construct high voltage transmission lines to bring electricity to the major users and export points. Most of the power generation projects are self-financing where returns of the project cash flow are sufficient to cover the cost of fund and operations to make the project viable. Transmission projects are financed from internally generated funds. The energy produced by Bakun hydroelectric dam project (2,400MW) and other existing power plants, the state should have a combined capacity of 10,000MW by 2020.
Alstom in Russian nuclear energy joint venture
April 2, 2007. French rail transport and power generation engineer Alstom signed a joint venture deal to build nuclear power plants with Russia's state controlled Atomenergomash. Alstom will have a 49 percent share in the venture to build conventional islands, essentially most of a nuclear power plant except for the reactor, and the partners will invest over 200 million euros ($266 mn) in cash and assets. The joint venture is a flagship deal as Russia launches a new drive to boost nuclear power, 20 years after the Chernobyl disaster exposed the failings of Soviet nuclear management. This agreement is of major strategic and operational importance.
March 29, 2007. Russia's fifth-largest steel maker Mechel had won an auction to acquire 93.35 percent of the shares of Southern Kuzbass Power Plant for $265.5 mn. The objective of acquiring the plant is to increase Mechel's performance through the possibility of producing high value-added product in the form of electric power using Mechel's own steam coal. Mechel's Southern Kuzbass coal firm will supply the power station's annual needs of 1-1.2 million tonnes of steam coal, rising to 2 million tonnes if the plant's production capacity rises. Southern Kuzbass Power Plant was spun off from the Kuzbassenergo utility as part of Russia's power sector reforms. Its installed electric power capacity is 554 MW, and the heat power capacity is 560 gigacalories per hour.
Two nuclear power plants planned near Karachi
March 28, 2007. The Pakistan Atomic Energy Commission is in the process of setting up two nuclear power plants on the outskirts of the city. A piece of land measuring over 585 acres is being acquired next to the Karachi Nuclear Power Plant (Kanupp). The nuclear power plants will be able to do away with power shortages that the city has lately been facing. There is no timeline had been drawn up for the establishment of the plants. The electricity demand of energy-starved Karachi has been growing at around seven per cent. It peaked at 2,350 MW in the summer of 2006. PAEC had been tasked to generate 8,800 megawatts through nuclear power plants by 2030. The two nuclear power plants on the outskirts of Karachi are part of the same plan.
Transmission / Distribution / Trade
BG Group to buy Masspower for $150 mn
April 2, 2007. UK gas producer BG Group Plc had agreed to buy Masspower Power Plant in the United States for $150 mn. BG Group is expected the deal to buy the 262 MW gas and oil fired combined cycle facility located in Indian Orchard, Massachusetts to complete in the second quarter of 2007.
Policy / Performance
Jordan plans to build nuclear power plant by 2015
April 2, 2007. Jordan intends to build its first nuclear power plant by 2015. Israel's eastern neighbor will use nuclear energy for various purposes such as electricity and desalination. Jordan is a signatory of the nuclear non-proliferation treaty, according to which the IAEA monitors nuclear projects for peaceful purposes in countries seeking to establish a nuclear reactor. Jordan's deserts reportedly contain 2 percent of the world's uranium reserves.
Russia, Kazakhstan to cooperate on NPP project
March 30, 2007. Russia and Kazakhstan are considering cooperating on a nuclear power plant project. Federal Nuclear Power Agency chief Sergei Kiriyenko said the facility could be built in the southwestern Kazakh port of Aktau, to get maximum benefit from the surviving infrastructure of an old Soviet-era BN-350 fast breeder reactor. A modular reactor employing technology used in nuclear-powered submarines could now be built at the site. The sides have agreed to jointly invest in the new reactor's development, but no schedule for the project has been drawn up yet.
WB to loan Iraq power plant $124 mn
30 March 2007. The World Bank approved $124 mn in credit for an electricity reconstruction project in Iraq. The project aims to increase generating capacity at the Hartha power station in the southern Iraqi city of Basra. The project will double the output of the Hartha power station from 400 megawatts to 800 MW, providing additional generating capacity to the national grid and benefiting household and industrial consumers. The total cost of the project is estimated at $150 mn. The bank approved an additional $6 mn from a donor fund administered by the World Bank and the Iraqi government is contributing $20 mn. This is the second power rehabilitation project in Iraq to be funded by the World Bank.
HP aims to cut global energy use 20 pct
March 28, 2007. Hewlett-Packard Co., the world's largest technology company, wants to become a global leader in improving corporate energy efficiency. It plans to reduce its global energy consumption 20 percent over the next three years, based on 2005 energy use levels. HP plans to cut energy use by as much as 30 percent for some printers and 50 percent for some computer servers. It pledged to reduce carbon dioxide emissions from facilities. The 20 percent cut, includes savings from previously announced plans to consolidate its 85 data centers worldwide into six facilities in the United States. HP's effort reflects a growing awareness among technology companies that greener policies can translate into cost savings.
Renewable Energy Trends
National
BEML mulls 5 MW wind farm at Chitradurga
April 3, 2007. Bharat Earth Movers Limited (BEML), a defence PSU, is setting up a 5 MW wind farm at a cost of Rs 25 crore at Chitradurga in Karnataka. The company will supply the electricity generated at the mill to the state power grid and draw the power at Bangalore and Mysore to meet its needs. The company has entered into a 30-year lease with Suzlon, a wind power solutions provider, for setting up the wind farm on a turnkey contract basis. This wind farm, once commissioned, will help the company save Rs 7 crore on its electricity bill.
TNT India introduces bio-fuel in its vehicles
March 29, 2007. TNT India has followed its Dutch parent in introducing bio-fuel in its express transportation vehicles. A pilot has been started to study the gamut of supply chain management of the fuels' availability, its cost advantages and economics of operation in the next three months. TNT India, which operates its services through 1,600 leased vehicles (this includes 100 vehicles of Speedage Express Cargo Services), was acquired last year by TNT. TNT India Pvt Ltd, had taken the lead in the country in using bio-fuel and would take a decision on its scalability depending on the complete economics of cost, supply chain issues of fuels and their availability.
Late winter snow ups HP power generation
March 29, 2007. Late winter snow has raised energy production in hydel power projects dotting Himachal Pradesh. According to Himachal Pradesh State Electricity Board, hydel generation in March has almost doubled to 5.5 million units, as compared to last year. Power generation in the 60 Mw of Giri project has gone up four times to 1.2 million units per day in March due to the late snow and rains. The generation in the 126 MW Larji project has almost doubled. Besides HPSEB, other private and central public sector companies running hydel projects in the state have also reported higher production of electricity. Sutlej Jal Vidyut Nigam Limited also said the water level in the Sutlej and its tributaries had risen.
Danish firm picks up 50 pc in Emmvee Solar
March 28, 2007. Danish company SolarCAP, a solar thermal company, has picked up a 50 per cent stake in Bangalore-based Emmvee Solar Systems for an undisclosed sum. Emmvee Solar Systems produces Solarizer brand of solar heaters and has a top line of close to Rs 50 crore. The company’s profitability is around 15 per cent. Emmvee Solar, with this infusion, is looking to expand its manufacturing capacity from the present 5 lakh sq metre of solar collector area to 20 lakh sq metre area in the next six months. SolarCap is a Rs 1,500- crore company and will offer technology to Emmvee to target the global markets in addition to the proposed expansion. with SolarCAP acquiring a stake in Emmvee Solar Systems, the combined strengths of the two companies would soon be able to offer the customer in India a range of solar thermal products and services comparable with global standards. This tie-up will result in Emmvee Solar offering high-end technology in pump-based and non-pump based systems for domestic, commercial and industrial use.
Gammon-Barmaco in JV to set up biomass power plants in Haryana
March 28, 2007. A consortium of Gammon Infrastructure Projects Pvt Ltd and Barmaco Energy Systems Ltd will soon set up renewable power generation plants at eight places in Haryana. The consortium was formed to obtain the tender and a special purpose vehicle would be formed to execute and run the projects. Gammon signed the memorandum of understanding with the Haryana Renewable Energy Development Agency on February 25 this year for the generation of 154 MW biomass based power. An investment of Rs 4.2 crore per MW is required for setting up such projects. It will amount to about Rs 677 crore of investments for the completion of the projects.
Global
JA & Canadian Solar sign solar cell supply agreement
April 2, 2007. JA Solar Holdings Co., Ltd. and Canadian Solar Inc. announced a supply agreement valued at approximately US$50 mn to US$60 mn from April to December 2007. Under the agreement, JA Solar will supply solar cells to CSI for use in CSI's solar modules. Initial deliveries will start immediately.
Laidlaw Energy to build 50 MW biomass energy plant in Berlin
April 2, 2007. Laidlaw Energy Group, Inc. and its affiliate, Laidlaw EcoPower, LLC, has agreed to acquire certain property and assets of the Fraser Paper Mill, located in Berlin, New Hampshire. Laidlaw plans to convert the facility to operate as a 50 MW biomass energy power plant. The mill, which closed in May 2006, has significant infrastructure in place that is suitable for biomass energy, including a large Babcock & Wilcox boiler that was installed in 1993 at a cost of nearly $100 mn.
The Berlin facility is located in the heavily forested Northern, New Hampshire area, which makes it ideally positioned to take advantage of the area's abundant biomass resources. Prior to its closure, the mill processed approximately 1 mn tons of biomass per year. The newly reconfigured plant will use over 500,000 tons of biomass per year. The reconfigured Berlin biomass-energy facility is expected to commence operations in late 2008.
Iberdrola in 500mn euro Italy wind deal with API
April 2, 2007. Spain's Iberdrola had signed a deal with Italy's API holding to build and operate wind plants in Italy with 350 MW in generating capacity for US$668 mn. Seven wind power plants will be built in Sicily and Puglia between 2008 and 2009 by the 50-50 joint-venture. Iberdrola had 4,100 MW in wind generating capacity at the end of last year.
March 30, 2007. TXU Wholesale, a subsidiary of TXU Corp., and Airtricity, a world-leading renewable energy company based in Dublin, Ireland, today announced that Airtricity has completed construction of the Forest Creek Wind Farm, increasing TXU Wholesale's renewable energy capacity by 125 MW. The wind farm is expected to provide power for more than 24,000 homes, enough to meet the annual energy needs of about 56,000 Texans. It is located approximately 25 miles southeast of Big Spring, Texas.
World largest solar power inaugurated in Portugal
March 29, 2007. The world’s largest solar power plant has been inaugurated in Portugal. The 11 MW, US$70 mn plant, a joint project of GE Energy Financial Services and PowerLight Corporation of America, and the Portuguese renewable energy company Catavento, is located in Serpa, 200km (124 miles) southeast of Lisbon. Southern Portugal has as much as 3,300 hours of sunlight a year and the plant will produce enough power to supply 8,000 homes. It will also prevent the emission of 30,000 tonnes of greenhouse gases a year when compared to fossil fuels. The photovoltaic system it uses employs silicon solar cell technology to convert sunlight directly into electricity. The plant would produce 40 percent more energy than the next largest, in Germany.
Largest wind farm in North Dakota announced
March 29, 2007. Minnkota Power Cooperative, Inc., and Otter Tail Power Company announce a contractual agreement with FPL Energy to develop the Langdon Wind Project. The wind farm will be constructed south of Langdon, North Dakota, in Cavalier County. This multipart wind project includes 25-year agreements with Minnkota to purchase 99 MW of wind-generated electricity and with Otter Tail Power Company to purchase 19.5 MW of wind-generated electricity. Otter Tail Power Company also will own an additional 40.5 MW at the project site, bringing its total to 60 MW. In 2006 Minnkota Power Cooperative and Otter Tail Power Company issued separate requests for proposals (RFPs) for long-term renewable energy supply contracts. Before any of the subsequent legislative renewable energy standards and objectives passed in Minnesota and North Dakota, the companies identified FPL Energy's proposals as most economical and feasible. The Langdon Wind Project is sized for 159 MW at peak output. It will use 106 General Electric turbines, each having a nameplate capacity of 1.5 MW. The wind farm will provide more than 350 mn kilowatt hours annually to Minnkota and more than 215 mn kilowatt-hours to Otter Tail Power Company. The project will result in up to ten new jobs in the Langdon area for operations and maintenance. FPL Energy will build and operate the 159 MW project and own 118.5 MW. The two utilities, under Minnkota's lead, will upgrade 35 miles of existing 41.6 kilovolt transmission line to 115 kilovolts between Langdon and Hensel to deliver the wind-generated electricity into the high-voltage transmission network. The participants anticipate completing the wind farm and the associated transmission line late in December of 2007 or early 2008.
Ritter signs solar, wind, biomass energy bill
March 28, 2007. Gov. Bill Ritter signed a bill into law that requires Colorado utilities to get more electricity from the sun, wind, or plant and animal waste. House Bill 1281 sailed smoothly through the state legislature, clearing the House and Senate, both with Democratic majorities, in about five weeks before landing on Ritter's desk last month. The law requires utilities to get 20 percent of their electricity from renewable sources such as the sun, wind or biomass by 2020, double the goal of 10 percent by 2015 set by Amendment 37, which voters passed in November 2004. Customers eventually would pay the cost incurred by utilities to comply with the renewable standards.
Sicily to build world's first solar power plant
March 28, 2007. The world's first solar power plant, which will yoke the power of the sun with gas, will go on stream on the sunny east coast of Sicily by 2009, if a deal signed by the Italian government according to plan. The project is named Archimedes, after the famous resident of the nearby city of Syracuse. The existing gas-fired power plant on the site will be augmented by Archimedes, which should produce 5 MW of electricity, enough for 4,500 families. It will produce solar energy 24 hours a day, not just when the sun is shining. The plant's battery of parabolic mirrors will focus the sun's rays on pipes, through which runs a saline liquid that can store heat up to 550C and retain it for hours. The addition of the solar plant to the power station should significantly reduce the amount of gas burnt at the plant and cut carbon dioxide emissions by 7,300 tonnes.
March 27, 2007. Israel's Solel Solar Systems Ltd., a maker of solar thermal technology for central power plants, won a new contract with FPL Energy LLC for the supply of thousands of its solar thermal receiver systems. FPL Energy, a unit of FPL Group, is one of the leading providers of electricity in the United States and is the co-owner and operator of seven solar power plants in California's Mojave Desert. Eight months ago, Solel announced an agreement with FPL Energy to upgrade its solar plants with 48,000 new thermal solar systems. The new agreement for the additional units will enable FPL Energy to increase its output of clean electricity and reduce the costs associated with operating its solar plants.
EDP to buy Goldman's Horizon wind for $2.2 bn
March 27, 2007. Portuguese Power Company Energias de Portugal (EDP) agreed to buy U.S. wind-farm company Horizon Energy from Goldman Sachs Group Inc. for $2.2 billion, boosting its renewable energy business. As per EDP, Portugal's largest industrial company, the purchase gives it a foothold in the United States as concerns about global warming increases demand for wind, wave and solar power as alternatives to fossil fuels. Horizon has developed wind farms in New York, Iowa, Pennsylvania, Washington and Oklahoma, and has projects under construction in Minnesota, Oregon, Texas and Illinois. The transaction is expected to close in June. Goldman declined to comment on the expected financial gain from the sale, though people familiar say the gain will be material and broken out in the firm's third-quarter results.
BP mulls biofuels production in Brazil
March 27, 2007. BP Plc is mulling strategies for a possible entry into Brazil's booming ethanol industry as it diversifies from core fossil fuels activities to biofuels. Brazil is the world's leader in sugar cane-based ethanol output, which is cheaper and more efficient than corn-based ethanol made in the United States, a promoter of greater ethanol use. BP estimates that biofuels could account for 30 percent of the international fuels market by 2030 if they overcome challenges, including recent environmentalists' resistance. Biofuels, which include ethanol and diesel fuel made of oilseeds and plants, currently make up just around 3 percent of the international fuels market. Biofuel cultivation competes with food production, which means more energy could fuel food shortages. Ethanol made from lignocellulose, using all of the plant including bagasse, and planting in low-grade soils with low water usage could be environmentally more sustainable.
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